The Stock Exchange of Thailand (SET) is taking further steps to discourage speculation as the local market hovers near 18-year highs.
SET officials on Friday doubled to six consecutive weeks the period for trading using cash balance accounts for securities showing abnormal trading patterns. In such cases, investors must pay cash upfront for their shares.
The requirement is in line with current trading conditions and is intended to protect investors from damage, according to a SET statement.
The adjustment will be effective from March 1, when the SET will announce the revised list of stocks subject to the cash balance account rule.
Trading in non-SET 50 stocks has accounted for more than 50% of total turnover in the market since Jan 1, up from 36% last year.
More than 100 stocks are trading at price/earnings ratios of at least 40 times, more than double the market average.
The proportion of retail investors has increased to 62% of total investors this year, up from 50% last year. Many of the newcomers are chasing penny stocks, with hundreds of millions of shares changing hands daily.
Market officials say there has been a rising number of stocks with high turnover and prices not based on their fundamentals. They have specified 44 stocks requiring cash balance accounts so far this year, compared with a total of 50 for all of 2012.
The list of securities required to be traded through cash balance accounts is updated every Friday on www.set.or.th.