New Regulations: Fines for ‘Naked Short Selling’ Increased to Minimum of 1 Million Baht
PUBLISHED: 19 Oct 2024 at 15:09
The Stock Exchange of Thailand (SET) has introduced a significant overhaul of its fine structure for member brokerages, particularly addressing the issue of naked short selling. Beginning November 1, the penalties for this illicit practice will see a dramatic increase, now set at three times the illegal profits with a new minimum fine of 1 million baht. Previously, offenders faced fines equal only to their profits with no minimum amount.
Naked short selling involves selling a security without first borrowing it or confirming its availability. In contrast, legal short-sellers borrow shares and aim to profit from a price decline by repurchasing them at a lower cost.
This regulatory change comes in response to rising concerns from investors regarding market volatility attributed to both legal and illegal short-selling practices. Earlier this year, market regulators also implemented an “uptick rule” designed to stabilize price movements under specific conditions.
In its latest statement, the SET outlined that brokerage violations will now be categorized into four distinct groups:
- Trading, program trading, installation sites, and hardware network connections
- System-based trading supervision by members
- Membership qualifications and duties
- Trading activities
To better reflect the severity and potential impacts of various market offences, fines across multiple areas have been increased. For instance, brokers who do not issue timely margin calls will now incur fines of 30,000 baht, a rise from the previous limit of 10,000 baht.
For further details, refer to the “Circular Letters” section under “Rules and Regulations” on the SET’s official communications.
