Thailand has introduced an emergency decree to grant its capital markets regulator more power in its oversight and supervision after a series of corporate scandals rattled investor confidence.
The Securities and Exchange Commission (SEC) will be able to order listed companies to suspend any major business transactions and projects if it discovers some financial irregularities, Finance Minister Pichai Chunhavajira said on Thursday after the Cabinet approved the decree. Such actions, when carried out promptly by the regulator, can help prevent significant damage to companies and investors, he said.
“The lack of confidence in existing rules and supervision is one of the key reasons for the stock market’s lacklustre performance,” Mr Pichai said at a press conference. “We are optimistic that the tightening steps will help restore some trust from investors.” The new decree will take effect in the next two to three weeks after the Council of State finishes reviewing it, he said.
Authorities in Southeast Asia’s second-largest economy are stepping up measures after a slew of corporate fraud hurt investor confidence. Cable wire maker Stark Corp Plc defaulted on its debt in 2023 after accounting irregularities. Several of the company’s former executives have been charged with wrongdoing.
Thaksin Shinawatra, the de facto chief of Thailand’s ruling Pheu Thai party, earlier this year called on regulators to improve their oversight after almost $170 billion of market capitalisation was wiped off the nation’s equities from a peak in 2023.
For cases that the SEC’s board deems as having a strong impact on markets, the regulator will be able to conduct its own investigation to decide whether or not companies or corporate executives have carried out criminal activities. At present, the SEC can only file complaints of the suspected activities, such as insider trading and stock manipulation, to the police. Probes are typically lengthy, partially due to the police’s limited resources.
The SEC will also be able to impose a penalty on any foreign entities found conducting illegal short selling, said Mr Pichai. The regulator currently can only penalise locally licensed securities companies for those transactions, he said.
The benchmark SET Index has dropped over 15% year-to-date, making Thailand Asia’s worst-performing stock market. International investors have sold a net $1.1 billion of local equities this year.
