Friday, August 8, 2008

Thailand's gold traders move to stall futures listing


The Gold Traders Association has asked securities regulators to delay the introduction of gold futures on the Thailand Futures Exchange. Jitti Tangsitpakdi, the association president, met with the Securities and Exchange Commission last week to ask for the futures delay.

''While gold shops may not be affected much in the first year, we could see over half of the 7,000 shops in Thailand closed in three years as investors move from physical gold investment to futures trading,'' Mr Jitti said.

He compared the launch of gold futures on the TFEX to the entry and expansion of foreign retail hypermarts and the negative impact on the traditional retail sector.

''There are more disadvantages than advantages. We have asked to establish a committee to study the impact [of gold futures],'' Mr Jitti said.

He said the gold market had slowed sharply in recent months, with sales of ornamental gold down 80% to 90% from January due to the economy.

Gold bar sales were also weak since last month, while prices have fallen by more than 1,000 baht per baht-weight to around 14,150 now.Kesara Manchusree, the TFEX managing director, said the exchange was on track for the launch of gold futures next month.

The exchange was now testing the clearing and settlement system in preparation for the launch, as gold joins SET50 index futures and options as items traded on the TFEX.

KGI Securities, Polaris Futures and Globlex Securities will act as market makers for the market. The futures contracts will be based on 96.5% gold bars, a purity standard commonly used in Thailand.

Viwat Techapoonpol, head of the private client group at Tisco Securities, said global gold prices had fallen by 10% since the end of 2007. He said if gold futures were launched on the TFEX, the Gold Traders' Association would try to peg domestic prices to limit fluctuations.

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