1 tsd’s sbl service the 8 th acg cross training seminar june 28, 2006 busaba kongpanyakul business...
TRANSCRIPT
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TSD’s SBL TSD’s SBL
Service Service
The 8The 8thth ACG Cross Training ACG Cross Training
SeminarSeminar
June 28, 2006June 28, 2006
Busaba KongpanyakulBusaba Kongpanyakul
Business Development DepartmentBusiness Development Department
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OutlineOutline
Background of SBL in Thailand
Roles of TSD
Structure of TSD’s SBL Service
Service Scope
Taxes
Future Outlook
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BackgroundBackground
Year 1999
TSD assumed the role of the lender of last resort to
prevent defaults in securities trading
Some securities companies obtained SBL license from SEC
Current market situation
Small volume of SBL transactions
Lack of supply
Few SBL licensees
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Roles of TSDRoles of TSD
Lender of last resort
Develop SBL Master Agreement
Service Utility for SBL intermediaries
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PHASE 1PHASE 1
LenderLender(TSD (TSD
Member)Member)
LenderLender(TSD (TSD
Member)Member)
LenderLender(TSD (TSD
Member)Member)
LenderLender(TSD (TSD
Member)Member)
BorrowerBorrower(TSD (TSD
Member)Member)
BorrowerBorrower(TSD (TSD
Member)Member)BorrowerBorrower
(TSD (TSD Member)Member)
BorrowerBorrower(TSD (TSD
Member)Member)
TSDTSD(Intermediary (Intermediary
Agent)Agent)
TSDTSD(Intermediary (Intermediary
Agent)Agent)
PrincipalPrincipal(TSD Member)(TSD Member)
PrincipalPrincipal(TSD Member)(TSD Member)
AgentAgent(TSD Member)(TSD Member)
AgentAgent(TSD Member)(TSD Member)
PHASE 2PHASE 2
Structure of TSD’s SBL ServiceStructure of TSD’s SBL Service
Lender Lender (Client)(Client)Lender Lender (Client)(Client)
Lender Lender (Client)(Client)Lender Lender (Client)(Client)
Borrower Borrower (Client)(Client)
Borrower Borrower (Client)(Client)
Borrower Borrower (Client)(Client)
Borrower Borrower (Client)(Client)
PrincipalPrincipal(TSD Member)(TSD Member)
PrincipalPrincipal(TSD Member)(TSD Member)
Lender Lender (Client)(Client)Lender Lender (Client)(Client)
Lender Lender (Client)(Client)Lender Lender (Client)(Client)
Borrower Borrower (Client)(Client)
Borrower Borrower (Client)(Client)
Borrower Borrower (Client)(Client)
Borrower Borrower (Client)(Client)
AgentAgent(TSD Member)(TSD Member)
AgentAgent(TSD Member)(TSD Member)
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Service Scope: Phase 1Service Scope: Phase 1
LenderLender BorrowerBorrowerTRANSACTIONTRANSACTION
TSD’s SBLTSD’s SBLServiceService
MatchingMatching
ConfirmationConfirmation
Corporate ActionsCorporate Actions
ReportsReports
Collateral Mgt.Collateral Mgt.
Clearing & SettlementClearing & Settlement
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ParticipationParticipation
Qualified participants: TSD’s depository members
Apply for participation in SBL and receive an
authorization from TSD
Comply with TSD’s rules and regulations of SBL
transactions
Open SBL account and SBL collateral account
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Types of TSD’s SBL Types of TSD’s SBL TransactionsTransactions
Settlement-Coverage Transactions
To prevent any default during the clearing and
settlement process
Clearing House is the only borrower and acts as a
principal
Put Through Transactions
TSD acts as an intermediary agent
All trade conditions are pre-negotiated between the
borrower and the lender
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Eligible SecuritiesEligible Securities
Scripless form of the securities deposited at TSD
Except:
All kinds of warrants
Suspended stocks, posted “SP”
Stocks posted “C” (Compliance)
Debenture bonds
Thai Trust Funds
NVDR, DR
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Eligible CollateralEligible Collateral
Baht-denominated cash
Government bonds
Listed stocks in the SET
Letter of Guarantee
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Collateral ManagementCollateral Management
Daily mark to market
Stocks: Last closing price announced by the SET
Bonds: Reference price announced by Thai BMA or BOT
Set haircut rates for each type of collateral
Handle margin calls
Eligible margin: baht-denominated cash only
Margin is kept and managed by TSD
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Corporate ActionsCorporate Actions
It needs to be paid to the original owner in full It needs to be paid to the original owner in full amount on the payment date.amount on the payment date.It needs to be paid to the original owner in full It needs to be paid to the original owner in full amount on the payment date.amount on the payment date.
The original owner must recall or request for The original owner must recall or request for collateral substitution at least 4 days before the collateral substitution at least 4 days before the record date. record date.
The original owner must recall or request for The original owner must recall or request for collateral substitution at least 4 days before the collateral substitution at least 4 days before the record date. record date.
Cash/Stock DividendCash/Stock Dividend
Rights IssueRights Issue
Voting RightsVoting Rights
1.1. The original owner indicates the The original owner indicates the intention to subscribe and pays intention to subscribe and pays subscription money to the other party subscription money to the other party at least 1 day before the deadline. at least 1 day before the deadline.
2.2. The other party has to subscribe and The other party has to subscribe and deliver the securities to the original deliver the securities to the original owner by the listing date.owner by the listing date.
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TaxesTaxes
Exempt taxes as follows:
Tax on income from transfer of loaned and
collateral securities
Withholding tax on manufactured
dividend/interest (for Thai or foreign juristic
persons in Thailand)
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Future OutlookFuture Outlook
SBL transactions is expected to increase due
to:
Development of derivatives market
Encouragement of regulators:
• SEC decreases license fee from THB 100,000 to
20,000 and waives annual fee
• Securities firms are allowed sell short
• SEC plans to allow mutual & private funds to sell short