The Thailand Futures Exchange (TFEX) is confident it will hit its target of 310,000 daily futures trades this year, citing a new gold futures product and expanded trading hours.
As of Tuesday, the exchange saw average trading volume of 270,217 contracts per day, down from 285,148 in 2016. However, open interest contracts increased to 2.06 million, up from 1.92 million at the end of last year.
"It is not strange to see lower liquidity as market volatility is the lowest in three years," said TFEX managing director Rinjai Chakornpipat.
"When the market doesn't swing there is lower demand from people or businesses wanting to buy futures for risk management, resulting in lower transactions."
Ms Rinjai said market volatility has bottomed out at 6-8% in 2017 compared to 16-17% in the past few years.
The TFEX is set to launch its new Gold-D product on Sept 4 and give investors longer access to trading each day.
Gold-D is a gold futures contract, which is a physical settlement futures contract based on gold bar with 99.99% purity. The product will be quoted in US dollars but the baht will be used as a settlement currency.
Physical delivery is obligated at expiration of the contract. Only physical gold stored in designated vaults appointed by a clearinghouse will be allowed for such physical settlement.
The TFEX will also extend trading hours for gold futures products so investors can more easily adjust their portfolios and strategies.
Night trading will begin at 7pm instead of 7.30pm while the new pre-order session will start from 6.45pm. The closing time will be extended from 10.30pm to 11.55pm.
Ms Rinjai said the extended gold trading hours will help market liquidity as major Western countries normally announce their economic indicators or meetings during those hours.
The TFEX has 130,000-140,000 investors. Thailand's gold futures market is ranked among the global top five. Shanghai takes the top spot followed by Tokyo and India.
