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SET chief Pakorn calls for alternative savings optionsÂ
Bangkok Post – 11 November 2008
DARANA CHUDASRI
Thailand's capital market should aim to offer alternative savings options to the public together with prudent regulation and protection, according to Pakorn Malakul Na Ayudhya, the chairman of the Stock Exchange of Thailand.
He said Thailand's capital market had made progress in its development but was still behind in several areas.
First, Thailand lacks "world-class products" accessible to the general public. Mr Pakorn said only 2% of the country used capital market products.
Thailand also needed to embrace globalisation and build linkages with the international market, he said.
Mr Pakorn, speaking at a conference yesterday on market development, said regulators had two basic options in developing the capital market.
The first was to strive to become a regional or global financial centre, similar to Singapore and Hong Kong. The second alternative was to focus on domestic needs and on creating a strong domestic capital market - a choice Mr Pakorn favoured for Thailand.
Regulators have been working for several years to expand the capital market's breadth and depth with new products such as forwards, options and derivatives.
The SET is considering a plan to "demutualise", or transform into a private company, to improve efficiency and facilitate linkages with other markets.
Mr Pakorn said liberalisation and market demutualisation were both necessary for the future of the Thai capital market.
Rubin Lee, founder and chief executive of the Oxford Finance Group, said the current crisis should not be taken as a failure of the capitalist model. He said capital markets remained critical to any economy.
Mr Lee said the origins of the current crisis were complex, involving corporate sector weaknesses spreading to entire industries and the overall market. Liquidity problems became solvency problems, while the political will for stiffer regulation was lacking before the crisis.
Alan Cameron, chairman for market supervision of the Australian Securities Exchange, said US regulators were directly to blame for the current crisis. He said it stemmed from three key problems in the US markets involving investor regulation, transparency and efficiency. Ultimately, these become a systemic risk.
Banyong Pongpanich, the chairman of Phatra Securities, said Thai regulators should consider liberalising the market now. Large institutional investors could directly access the market at lower transaction costs than retail investors, he said.
In other markets, including the London and Sydney exchanges, liberalisation ultimately promoted an increase in trading liquidity, benefiting the overall capital market, Mr Banyong said.
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