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Stock Exchange of Thailand: New Spread Not Deter Price Movement

Date 02/11/2001

The Stock Exchange of Thailand (SET) stresses that the new spread system, to come into effect on Monday November 5, 2001, will help investors to trade at various price levels and will not interfere with the integrity of price movements. Investors will not have to buy or sell shares step by step according to the new spread, as skipping price steps will still be allowed. Moreover, the ceiling and floor prices of shares will continue to be within 30 percent from the previous closing price.

President of the Stock Exchange of Thailand, Mr. Kittiratt Na-Ranong said that SET is scheduled to implement new spread next Monday November 5th, 2001. The new spread will help increase liquidity in securities trading at low prices, particularly in those trading below 10 baht, of which there are nearly 200. It will also allow investors a greater choice in buying or selling orders at various price levels.

"Despite the new adjustment, investors will still be allowed to sell or buy securities as normal, as skipping pricing steps will still be allowed. Buyers and sellers are free to choose the step they think most appropriate for them," he said.

"Furthermore, the SET will maintain the 30-percent ceiling and floor rule from the prior closing price as before. As a result, we believe that the new spread will not hinder the stock price from moving freely in any way." Mr.Kittiratt concluded.

From next Monday onwards, all investors are advised to carefully check whether or not their buy and sell orders are in line with the new rule before confirming any transactions. For instance, if the stock price was at 7 baht, each movement shall be by a 0.05 baht. Investors can buy or sell shares by skipping each step in 0.05 baht increments. For example, an investor may buy or sell a share at 7.00 or 7.05 baht and then up by every 0.05 baht as long as this does not exceed the ceiling, in this case, of 7.20 baht. By the same token, in this example, an order cannot move below 6.80 baht, its floor price, such as 6.95 or 6.90 baht, but will still be allowed to move down by skipping every step by 0.05 baht.

In addition, the SET has already informed all securities companies to advise their clients to send their orders in accordance with the new spread. They are also advised to be cautious when making transactions during the early stages of the implementation of the new rules. However, it is strongly believed that this innovation, once familiar, will result in a more flexible trading system and an increase in trading volumes in the long term.

The new spread, effective from 5 November 2001 onwards, will be as follows:

  • Lower than 2 baht, 0.01
  • From 2 baht but lower than 5 baht, 0.02
  • From 5baht but lower than 10 baht, 0.05
  • From 10 baht but lower than 25 baht, 0.10
  • From 25 baht but lower than 50 baht, 0.25
  • From 50 baht but lower than 100 baht, 0.50
  • From 100 baht but lower than 200 baht, 1.00
  • From 200 baht but lower than 400 baht, 2.00
  • From 400 baht but lower than 800 baht, 4.00
  • From 800 baht up, 6.00