Thailand - Waseda University

1 Section 10: Thailand Bond Market GuideiASEAN+3 Bond Market Guide | Volume 1 | Part 2 ASEAN+3 Bond Market Guide | Volume 1 | Part 2 Thailand Bond Market Guide Section 10: Thailand Bond Market GuideiiiASEAN+3 Bond Market Guide | Volume 1 | Part 2 Acknowledgement ..viiI. Structure, Type, and Characteristics of the Market ..1A. Overview ..1B. Types of Bonds ..2C. Money Market Instruments ..6D. Segmentation of the Market ..6E. Listing of Debt Securities ..7F. Methods of Issuing Bonds (Primary Market) ..7G. Public Offering and Private Placement Markets ..8H. Wholesale and Retail Investors ..16I. Definition of Professionals and Professional Investors.

2 17J. Definition of Qualified Institutional Investors ..17K. Credit Rating System ..18L. Related Systems for Investor Protection ..19M. Governing Laws on Bond Transfers of Interests in Bonds ..24O. Definition of Securities ..25P. Self-Governing Rules behind the Bankruptcy Procedures ..27R. Bondholder Representative ..28S. Event of Default ..28T. Major Market Participants ..29U. Degree of Opening of Domestic Bond Markets to Foreign Investors and/or Issuers ..29V. ASEAN Bond Market Development Scorecard (Revised): Thailand ..30 Primary and Secondary Market Regulatory Frameworks ..33A. Rules and Regulations in the Thai Market Regulatory Structure.

3 33B. Securities Issuance Rules in Brief ..38C. Filing and Approval Criteria ..41D. Bond Electronic Exchange s Rules Related to Bond Listing, Disclosure, and Trading ..48E. Thai Bond Market Association s Rules related to Trading, Reporting, and Registration ..48F. Bank of Thailand s Regulations on Non-resident ..48 ContentsSection 10: Thailand Bond Market GuideASEAN+3 Bond Market Guide | Volume 1 | Part 2ivG. Credit Rating Requirements ..48H. Exemptions for Private Issues (Private Placement) ..49I. Minimum Lead Time for Registration Approval ..49J. Availability of Shelf Registration and Associated Documentation Requirements.

4 49K. Regulated Suspension Period ..49L. Other Requirements ..49M. Continuous Disclosure Rules or Requirements ..49N. Restrictions for Investors ..50O. Non-Resident Requirements and Restrictions ..50P. Taxation Framework and Requirements ..51 III. Trading of Bonds and Trading Market Infrastructure ..54A. Trading of Bonds ..54B. Trading Platforms ..55C. Bond Information Center ..56D. Government Bond Yield Curve and Bond Indices ..57E. Bond Futures ..58F. Repo Transactions ..58IV. Possible Items for Future Improvements ..59A. Impediments to the Thai Bond Market ..59B. Significant Factors ..59V. Description of the Securities Settlement System.

5 61A. Securities Settlement Infrastructure ..61B. Bond Settlement Infrastructure Diagram ( Thailand ) ..64C. Brief History of the Development of the Securities Settlement Infrastructure ..64D. Business Process Flowchart in the Thailand Over-the-Counter/Delivery Versus Payment Bond Market ..65E. Thailand Bond Transaction Flow for Foreign Investors ..65F. Role of the Thailand Clearing House ..67G. Definition of Clearing, Settlement and Assessment ..67H. Challenges and Future Direction ..69VI. Cost and Charging Methods ..70A. Average Issuing and Trading Costs for Corporate Bonds and Commercial Papers ..70B. Average Ongoing Costs for Corporate Bonds and Commercial Papers.

6 71 VII. Market Size and Statistics ..73A. Nature and Size of the Thai Bond Market ..73B. Size of Local Currency Bond Market ..75C. Size of Local Currency Bond Market in Percentage of Gross Domestic Product ..77D. Size of Foreign Currency Bond Market in Percentage of Gross Domestic Product, Bank for International Settlement ..78E. Size of Foreign Currency Bond Market, Local Sources ..79F. Issuance Volume of Local Currency Bond Market ..80G. Foreign Holdings in Local Currency Government Domestic Financing Profile ..83I. Trading Volume ..83 Section 10: Thailand Bond Market GuideASEAN+3 Bond Market Guide | Volume 1 | Part 2 ASEAN+3 Bond Market Guide | Volume 1 | Part 2vVIII.

7 Presence of an Islamic Finance (Islamic Bond [Sukuk]) Market ..85A. Current Development of an Islamic Bond Market in Thailand ..85B. Regulations on Plain Vanilla Sukuk ..85C. Specific Regulation on Sukuk ..85D. Infrastructure for Sukuk ..85IX. Brief History of Debt Market Development ..86A. Measures for Bond Market Development ..86X. Next Steps Future Direction ..87A. Capital Market Master Plan (2002) ..87B. Capital Market Master Plan II (2006) ..87C. Capital Market Masterplan (2009) ..88D. Future Direction ..92E. Group of 30 Compliance ..92F. Group of Experts Barrier Report Market Assessment Thailand (April/2010).

8 93 Appendixes ..95 Appendix 1. Survey on Primary Market Questions for IOSCO Jurisdictions ..95 Appendix 2. ASEAN Bond Market Development Scorecard: Thailand ..99 Appendix 3. ASEAN Bond Market Development Scorecard: ASEAN ..102 Appendix 4. Scorecard-Related Explanation ..104 References ..108 Boxes, Figures, and Tables BoxesBox Characteristics of Private Placementa ..9 Box Definition of Institutional Investors and High Net Worth Investors ..11 Box Chapter XI of the Public Limited Companies Act ..12 Box Summary of Permission to Issue Baht-Denominated Bonds or Debentures by Foreign Entities in Thailand No.

9 42/2006 (3 May 2006) ..15 Box Securities Issuance ..38 Box Notification on Characteristics of Private Placement/Exempt Rule ..45 Box Notification on Exemption from Filing of Registration Statement for the Offer for Sale of Debt Securities ..47 Box Excerpt from Primary to Secondary Market Description by the International Monetary Fund ..54 Box A1. Survey on Primary Market Questions for IOSCO Jurisdictions ..95 FiguresFigure Screenshot of Intraday Trading Information ..56 Figure ThaiBMA Government Bond Yield Curve as of 17 June 2011 ..57 Figure ThaiBMA Government Bond Index ..58 Figure Thai Bond Infrastructure Diagram.

10 64 Figure Business Process Flowchart in the Thailand Over-the-Counter/Delivery Versus Payment Bond Market ..65 Figure Thailand Bond Transaction Flow for Foreign Investors ..66 ASEAN+3 Bond Market Guide | Volume 1 | Part 2 Section 10: Thailand Bond Market GuideASEAN+3 Bond Market Guide | Volume 1 | Part 2viTablesTable Segmentation of the Market: Outstanding Value by Type of Issuersa (THB billion)..6 Table ThaiBMA Monthly Summary of Investments in the Bond Market (August 2011 and November 2011) ..13 Table Extract and Summary of Approval and Filing of Bonds in Thailand ..14 Table Summary of Credit Rating System.