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SEC public hearing on proposed regulations on protection of derivatives business customer assets under the Derivatives Act



Tuesday 26 September 2023 | No. 166 / 2023


Bangkok, 26 September 2023 – The Securities and Exchange Commission (SEC) is seeking public comments on the principles and draft regulations regarding treatment and protection of customer assets under derivatives brokers to ensure that customer assets are safe and complete, and that the assets are allocated back to customers fairly in the event that any derivatives broker becomes a debtor by judgment or a debtor under receivership. 

On 15 August 2023, the Capital Market Supervisory Board Meeting No. 8/2023 passed a resolution approving the principles and draft regulations related to protection of derivatives business customer assets in accordance with the Derivatives Act B.E. 2546 (2003) to ensure clearer protection of customer assets. The main focuses of the proposed regulations are as follows:       

          1. Where a derivatives broker has advanced its own asset to secure or satisfy the obligations incurred incidental to, or resulted from, a derivatives transaction for the account of a customer, the derivatives broker shall prepare a monthly account, and when derivatives business operators stop doing businesses or are suspended from operating their businesses to segregate customer assets from the derivatives broker and provide data for systemic risk management. The data must be kept for at least five years from the transaction date;   

          2. A derivatives broker may become a debtor by judgment or a debtor under receivership. Under such circumstances, in managing assets deemed to be owned by customers, the customers who are not associated with the derivatives broker shall be entitled to receive the allocated assets prior to others. These customers must not be individuals with a relationship to the derivatives broker in such manners as director, executive, major shareholder and controlling person of the derivatives broker including spouse, cohabiting couple and minor children thereof, and any person who has facts or circumstances that allow the SEC to consider that he/she is the undisclosed principal, whose name has not been revealed, or an agent without disclosing the name of any person above in any action related to the derivatives trading account of such person. Furthermore, they must not be a parent company or a subsidiary of the derivatives broker on the filing date of the case.          

The consultation paper is available at https://www.sec.or.th/TH/Pages/PB_Detail.aspx?SECID=942. Stakeholders and interested parties are welcome to submit comments and suggestions via the website or email: sutasanee@sec.or.th or witchulada@sec.or.th. The public hearing ends on 10 October 2023.

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NEWS
Securities and Exchange Commission
Corporate Communication and Investor Service Department
Tel. (66)2033-9502-5 E-mail: press@sec.or.th
No. 166 / 2023 Tuesday 26 September 2023
SEC public hearing on proposed regulations on protection of derivatives business customer assets under the Derivatives Act

Bangkok, 26 September 2023 – The Securities and Exchange Commission (SEC) is seeking public comments on the principles and draft regulations regarding treatment and protection of customer assets under derivatives brokers to ensure that customer assets are safe and complete, and that the assets are allocated back to customers fairly in the event that any derivatives broker becomes a debtor by judgment or a debtor under receivership. 

On 15 August 2023, the Capital Market Supervisory Board Meeting No. 8/2023 passed a resolution approving the principles and draft regulations related to protection of derivatives business customer assets in accordance with the Derivatives Act B.E. 2546 (2003) to ensure clearer protection of customer assets. The main focuses of the proposed regulations are as follows:       

          1. Where a derivatives broker has advanced its own asset to secure or satisfy the obligations incurred incidental to, or resulted from, a derivatives transaction for the account of a customer, the derivatives broker shall prepare a monthly account, and when derivatives business operators stop doing businesses or are suspended from operating their businesses to segregate customer assets from the derivatives broker and provide data for systemic risk management. The data must be kept for at least five years from the transaction date;   

          2. A derivatives broker may become a debtor by judgment or a debtor under receivership. Under such circumstances, in managing assets deemed to be owned by customers, the customers who are not associated with the derivatives broker shall be entitled to receive the allocated assets prior to others. These customers must not be individuals with a relationship to the derivatives broker in such manners as director, executive, major shareholder and controlling person of the derivatives broker including spouse, cohabiting couple and minor children thereof, and any person who has facts or circumstances that allow the SEC to consider that he/she is the undisclosed principal, whose name has not been revealed, or an agent without disclosing the name of any person above in any action related to the derivatives trading account of such person. Furthermore, they must not be a parent company or a subsidiary of the derivatives broker on the filing date of the case.          

The consultation paper is available at https://www.sec.or.th/TH/Pages/PB_Detail.aspx?SECID=942. Stakeholders and interested parties are welcome to submit comments and suggestions via the website or email: sutasanee@sec.or.th or witchulada@sec.or.th. The public hearing ends on 10 October 2023.

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