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Bangkok, August 4, 2014 ? The SEC will allow commercial banks to offer for sale to retail investors, Basel III tier 2 instruments with condition of conversion to equity and specified floor conversion price. The said instruments will be permissible for investment of mutual funds, except money market funds, under certain investment limit. The relevant regulations are expected to become effective by the fourth quarter of this year with the aim to provide more investment choices and help strengthen the financial system.

SEC Secretary-General Vorapol Socatiyanurak revealed that the Capital Market Supervisory Board recently approved regulations to allow offer for sale of commercial banks? Basel III tier 2 instruments to retail investors. Mutual funds, excluding money market funds, will also be permitted to invest in the instruments offered domestically or overseas, to the extent specified by investment limit. The regulations aim to widen both channels for banks to strengthen their capital and investors? investment choices.

In addition, the floor conversion price of Basel III tier 2 instruments has been set at 50 per cent of the commercial banks? common stock prices at the offering period. The floor conversion price will also be applicable to Basel III additional tier 1 instruments with condition of conversion to equity. The commercial banks must file registration statement and clearly disclose features of instruments while intermediaries and selling agents must have in place the procedure to ensure their clients? understanding of associated investment risks and returns before making investment decision.

?The Basel III tier 2 instruments? complexity and associated risks are different from those of plain debt securities because the holders will be forced to convert them into common shares if the banks face financial problems. As a result, the floor conversion price has been standardized to reduce complexity and enable investors to learn of the highest exposure. In addition, banks will be able to determine the number of shares for conversion prior to the offering of instruments. In order to provide investors with sufficient information, moreover, intermediaries and selling agents must apply the procedure for selling of high risk securities such as suitability test, key information disclosure and warning of the securities? high risks or complexity.? Mr. Vorapol added.