In more detail
The key topics in the SEC statement are summarized below.
- Scheme for securities/derivatives license application
To apply for a securities/derivatives business license under Thai law, a foreign business operator must establish a company in Thailand that meets the qualifications prescribed by the SEC, such as paid-up capital, personnel, and appropriate operating systems.
To support Thailand's goal of becoming a financial hub servicing clients outside Thailand, the SEC is going to introduce a "Fast-track" method for the license application process, provided that the applicant has all qualifications and readiness as summarized below:
- Using the work system of a trustworthy company in the same group that has been operating a securities/derivatives business for at least five consecutive years as a primary work system.
- Being under the supervision of a regulator that is a member of the International Organization of Securities Commissions (IOSCO), and a Signatory A to the Multilateral Memorandum of Understanding concerning Consultation and Cooperation and the Exchange of Information (IOSCO MMOU).
- Having a business model that benefits investors and the capital market as a whole.
The SEC also proposed to the Ministry of Commerce (MOC) that services relevant, supportive or necessary to securities/derivatives businesses, when provided to offshore clients (e.g., provision of news, information, and training on capital market products), be exempt from the requirement to obtain a Foreign Business License from the MOC.
- Scheme for foreign securities/derivatives business operators to provide services to Thai Investors without a license
A foreign business operator may operate the following businesses in Thailand in the following manners without having to obtain a securities/derivatives license:
- Apply for derivatives dealer registration with the SEC to provide derivatives dealing services exclusively to institutional investors.
- Provide investment/derivatives advisory services under official exemptions (e.g., providing investment advice exclusively to institutional investors, and providing investment advice through a Thai licensed business operator as prescribed by SEC).
- Provide services by a foreign business operator to a Thai licensed business operator offering investment services in capital markets products denominated in foreign currency to Thai clients.
- Activities that do not require a securities or derivatives business license or registration
A foreign business operator may conduct the following activities without obtaining a securities or derivatives business license or registration:
- Applying for approval to establish a representative office in Thailand to conduct permissible activities, provided that the representative office does not operate a securities or derivatives business or offer securities to Thai investors to conduct permissible activities (e.g., collecting information and analyzing the collected data related to financial businesses).
- Outsourcing partial operations to companies or personnel in Thailand to operate its securities business offshore (e.g., hire Thai personnel to perform back office tasks).
- Activities that are considered as operating a securities/derivatives business in Thailand
This is the first time that the SEC has laid out official guidelines for foreign securities/derivatives business operators that do not hold a securities/derivatives business license in Thailand regarding activities that the SEC could deem to constitute operating a business in Thailand without a license. These activities are summarized below.
- Holding itself out that the foreign business operator is ready to offer securities/derivatives services in the ordinary course of business (e.g., through advertising or distributing brochures).
- Soliciting Thai investors, whether directly or indirectly, to use its offshore services or attend a seminar hosted by an offshore business operator.
- Accepting the opening of a securities trading account, and accepting and sending securities/derivatives trading orders or managing funds in Thailand.
- Offering or providing information and advice on capital market products or any investment in securities/derivatives.
- Sharing the same service channel with a Thai licensed business operator that provides Thai investors direct access to the service of the foreign business operator.
- Hosting a seminar or promotional activity through any means of direct online or offline communication with Thai investors, or to promote the use of its services through a Thai licensed business operator, with the intention to solicit Thai investors to use its services.
- Doing any marketing activity in Thailand, whether on its own or in collaboration with other business operators.
- Having a website or application in Thai language, accepting Thai baht, or facilitating Thai investors to directly use its offshore services.
- Any other activities that may be considered as solicitation of Thai investors to directly use the services provided by the foreign business operator, including receiving direct or indirect compensation for providing securities/derivatives services.
Endnotes
Considering these guidelines are relevant to foreign business operators providing services to investors in Thailand, foreign business operators without a license should carefully monitor their business activities to avoid being classified as conducting securities/derivatives business in Thailand without a license.
For more details, please contact our team at Baker McKenzie.
