TFEX : Thailand Futures Exchange - Education

ภาษาไทย

Guide for Foreign Investors

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Trading on Thai Futures Exchange (TFEX)

     All TFEX derivatives contracts are executed, cleared and settled electronically through its integrated trading and clearing platform, which was developed by “OMX technology”, an internationally-recognized
information technology provider. All traded contracts must be settled and cleared on the next business day (T+1). Each open position is marked-to-market at the end of the trading day based on the declared
settlement price. The margin calculation for institutional investors is based on the OMX Risk Evaluation System (RIVA), which employs the concept of portfolio margining.
     Investors wishing to trade SET50 Index Futures and SET50 Index Options must place their orders with a TFEX member. As of October 31, 2007, TFEX had 25 members, including leading international brokerage firms such as JP Morgan, Credit Suisse, CLSA and UBS securities.
     There are no trading restrictions on foreign investors in TFEX, nor is there any necessity for special or qualified foreign institutional investor’s accounts.

Omnibus account
TFEX requires that every order sent to the central trading system contains the client’s account number. To ease foreign investors’ trading in the Thai futures market, TFEX allows these investors to use an omnibus account, which is treated as a regular account, except for margin calculation, which is done on a gross basis.

Direct market access
For convenience and efficiency, TFEX allows brokers to offer direct market access (DMA) to clients. DMA permits investors to connect their trading applications with a broker’s front-end system, thus enabling a client’s order to be routed automatically through the broker and on to the Exchange without being handled manually. For further information on DMA, please contact TFEX or a member.

Taxation: Capital gains
Private individuals are exempted from capital gains tax for every product traded on TFEX. Institutional foreign investors operating in Thailand are liable for corporate income tax but exempt from withholding tax. Foreign institutional investors which do not operate in Thailand are subject to a 15% withholding tax; such taxes maybe covered by double taxation treaties between Thailand and the investor’s country.
Thailand has double taxation agreements with 52 countries, e.g., Armenia, Australia, Bahrain, Bangladesh, Bulgaria, China, Cyprus, Czech Republic, Denmark, Hong Kong, Hungary, Indonesia, Israel, Japan, Kuwait, Laos, Luxembourg, Mauritius, Nepal, New Zealand, Norway, Oman, Romania, Seychelles, Slovenia, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Turkey, Ukraine, United Arab Emirates, United States of America, Uzbekistan, and Vietnam.

Foreign exchange regulations
Thailand permits both direct and portfolio foreign investments. Capital may be freely transferred into the country by non-residents, but must be placed with an authorized bank to be exchanged for Thai baht (THB), or deposited into a foreign currency account with an authorized bank. All trading on TFEX is in THB. Proceeds from foreign currencies sold or exchanged for investments in equities on The Stock Exchange of Thailand or investments in TFEX can be credited to a non-resident THB account in the normal manner.

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