The Securities and Exchange Commission (SEC) will allow securities brokers and derivatives agents to conduct trade services, namely programme trading and portfolio advisory with execution, for greater trade efficiency, starting from May 16.
Programme trading will be allowed for securities firms that meet the standard working processes of the SEC, including a team of analysts, disclosing benchmark returns with consent letters from investors, said Archinee Pattamasukhon, director of the intermediaries policy department.
If securities firms do not want to follow the SEC's conditions, but still want to provide programme trading, they can do so under a private fund licence, which must still meet the SEC's work standards, said Ms Archinee.
"Securities companies that provide programme trading, but have not upgraded their working standards to meet the SEC's condition and do not have a private fund licence, are considered in breach of SEC rules," she said.
The work standard is in place to enhance transparency and prevent conflict of interest arising from programme trading.
Portfolio advisory with execution is similar to services offered for a private fund business, but differ in that investment decisions rest with investors and brokers will only pass trading orders instead of having a private fund manager managing investors' assets.
"Investors will have more benefits and have more choices for investment," said Ms Archinee.
"Securities firms and asset management firms have to adopt and develop businesses in the future. Brokerage firms who have complete investment services will be checked by the market regulator on their work standards."
Vasin Vanichvoranun, chairman of the Association of Investment Management Companies (AIMC), said programme trading and portfolio advisory with execution are services of securities firms, which are similar to private funds.
Competition in the capital market industry is expected to increase, but investors will obtain greater benefits from new investment options, said Mr Vasin.
Although asset management firms are experienced with asset management and investment, disruptions from financial technology and wealth advisory services from other financial institutions have forced firms to diversify their businesses, he said.
The private fund industry's value has continued to increase year after year as investors become more aware about asset management and hope to reap higher investment returns, said Mr Vasin.
