Friday, April 24, 2009

10 new underlying stocks for Single Stock Futures

Another 10 new underlying stocks for Single Stock Futures to be debut soon

Investors in Thailand will soon have greater alternatives after the Stock Exchange of Thailand (SET) will add Single Stock Futures of 10 new underlying stocks.

The 10 new Single Stock Futures will be chosen based on trading liquidity and price volatility to allow investors to exploit them in managing risk, SET Chief Marketing Officer Markets & PostTrade Services Sopawadee Lertmanaschai told reporters.

Most of the 10 new Single Stock Futures are banks and the remainders are energy and property developers, she said.

The debut date could not be set exactly yet as some Single Stock Futures with banking stocks as underlying assets are not listed on the SET50 Index, they then needs to seek an approval from the Securities and Exchange Commission (SEC), she said.

SET already submitted the filing to the securities watchdog, she added.

According to the SETs data, Thailand's first six largest commercial banks comprising Bangkok Bank (BBL), Krung Thai Bank (KTB), Siam Commercial Bank (SCB), Kasikornbank (KBANK), TMB Bank (TMB) and Bank of Ayudhya (BAY) listed on the SET50 Index.

Since November last year, Thailand Futures Exchange (TFEX) a unit of SET introduced the first three Single Stock Futures, Advanced Info Service Plc (ADVANC), PTT Plc (PTT) and PTT Exploration and Production Plc (PTTEP) of which are underlying assets. PTT, PTTEP and ADVANC are the SET's three largest market cap stocks at Bt498.45 billion, Bt324.95 billion and Bt229.58 billion, respectively as of April 23, 2009, according to the SET.

The standard size of contract is 1,000 shares and each contract matures in March, June, September and December. Its minimum tick size is at Bt0.10 and the ceiling and floor of 30 per cent of the previous trading day is also applied.

Sopawadee admitted that the first three Single Stock Futures could not catch investors' interest as seen from its thin trading volume.

As of April 23 this year, there are only 56 Single Stock Futures contracts, 16 are ADVANC, 3 are PTT and the rests are PTTEP.

"We hope that after the number of underlying assets of Single Stock Futures increases from 3 to 13, they can increase investors' appetite and trading liquidity. We expect that Single Stock Futures' trading volume would average at 100 contracts per day," she said.

For Derivative warrant (DW), Sopawadee said it would be unveiled in the third quarter of this year and 23 brokers have already expressed interest to becoming DW's brokers.

SET is also conducting a study on an introduction of Exchange Traded Fund (ETF), foreign index of which is underlying asset, on the stock market.

TFEX, which commenced in 2006, now have four products SET50 Index Futures, SET50 Index Options, Single Stock Futures and Gold Futures.

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