In more detail
For applicants of new licenses
1. Types of licenses
| No. |
Issue |
Proposals |
| a. |
Securities business licenses |
Securities business licenses will be categorized mainly based on types of services rather than types of products offered (as they are currently categorized).
Type 1 securities business license (full license)
This will be equivalent to the current type A securities business license. Applicants must activate the license and undertake securities brokerage, securities dealing, or securities underwriting for at least one type of product.
Type 2 securities business license (asset management)
This will be equivalent to the current Type C securities business license. Applicants must activate and undertake mutual fund management, private fund management, or limited brokerage, dealing, and underwriting in respect of fund units (LBDU).
Standalone licenses
These will remain the same as under the current regime (i.e., securities investment advisory, securities borrowing and lending, venture capital management, inter-dealer brokerage, and financing for securities business licenses). Standalone private fund management license will no longer exist.
|
| b. |
Derivatives business licenses |
Derivatives business licenses under the proposed regime will no longer be categorized based on type of underlying, but mainly on the type of services, as follows:
- Type Sor-1 derivatives business license
- Derivatives fund management license
- Derivatives investment advisory license
For a type Sor-1 license, applicants must activate and undertake either derivatives brokerage or dealing.
Type Sor-2 derivatives business license will no longer exist.
|
2. Qualifications for applicants
| No. |
Issue |
Proposals |
| a. |
Types of eligible applicants |
The following types of entities can apply for all of the abovementioned licenses:
- Securities companies
- Derivatives business operators
- Commercial banks
- Insurance companies
- Other financial institutions, as specified by the SEC
- Newly incorporated companies under Thai laws
- Companies incorporated under Thai laws which undertake business relevant to or beneficial for the securities or derivatives business
All applicants must also comply with their own supervisory laws. For example, commercial banks will still be subject to the restrictions under the Bank of Thailand's regulations on equity products.
|
| b. |
Qualifications |
The proposed regime requires the applicant to be able to demonstrate an understanding of the business for which it applies for license and to be able to show its key operational system for operating the relevant business, as well as plans to improve and develop its operational systems. |
3. Timeline
| No. |
Issue |
Proposals |
| a. |
Consideration period for license application |
The consideration period will remain up to 90 days for the SEC, plus up to 60 days for the Ministry of Finance. |
| b. |
Activation period |
The deadline for activation of the license will be extended from 180 days to 270 days after licensing, with a possible extension of up to 120 days if there are reasonable grounds to do so. |
4. Costs
| No. |
Issue |
Proposals |
| a. |
Application fees |
Increase from THB 30,000 to THB 50,000 |
| b. |
License fees |
License holders will only have to pay a license fee for the businesses that will be operated under the main license, as demonstrated by the example below.
Current regime
Company A is applying for a type A securities business license, solely for debt securities brokerage. It will have to pay the full license fee of THB 20 million up front, whether or not it will initiate any other businesses covered by this license in the future.
Proposed regime
When Company A applies for the type 1 securities business license, it will only have to pay THB 5 million, to cover debt securities brokerage alone. If it wishes to engage in other business activities covered by this license, it will be required to pay separate fees if and when it chooses to operate such business.
|
| c. |
Capital requirements |
The minimum paid-up capital requirement remains the same. |
| d. |
Annual fees |
The annual fees remain the same. |
For existing license holders
1. Auto-migration
Existing license holders will be migrated to the new regime automatically, and while no new physical license will be issued, they will be deemed to hold these licenses, and no additional fees will be charged.
The migrated business operator will be able to conduct the business it is permitted to do under its current license. Based on the hearing, the SEC will update its SEC Check First database on its website so that investors are aware of the change of license, and can trace the type of business each business operator is allowed to conduct.
2. Activation of new business within new license
If a migrated business operator wishes to conduct business that is within the scope of its new license but outside the scope of its current activated license, it will have to go through an activation process and pay applicable fees.
What remains to be seen
A number of issues remain unresolved, such as:
- Whether business operators which have paid up-front license fees under the current regime but which have not activated all businesses under the license will be entitled to a refund.
- Whether other supervising regulators will relax the restrictions imposed on business operators under their supervisory powers given that the SEC allows such business operators to obtain securities and derivatives business license.
Moving forward
The hearing will continue until 11 March 2024, and the new set of regulations is expected to be issued and become effective within the first quarter of 2025. As the proposed reform will cause substantive changes to the current securities and derivatives business licensing regime, companies which are interested in obtaining new securities or derivatives business licenses, as well as existing license holders, are encouraged to keep an eye out for new developments in this area.
For more information, please contact our team at Baker McKenzie.
