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Thailand’s SET and SEC are adapting to tech disruption

According to a recent report, in the coming years, the Stock Exchange of Thailand will adapt its business structure to transform to a partnership platform format that drives “inclusive growth” for new tech start-ups, according to the President who stated this at a seminar on “Creating New Frontier of Capital Markets” last recently.

The Stock Exchange of Thailand will introduce new projects and platforms to support tech start-ups such as Launchpad and Investment Vehicle for Enterprises (Live).

The latter is a platform to bring together start-ups, investors and sponsors and was launched earlier this year under “Live Fin Corp”, a subsidiary company of SET.

In this platform, start-ups seeking investment capital can meet with investors willing to contribute to crowdfunding startup businesses. The platform also aims to create an investor community so that retail investors are informed about various startup businesses as well as the opportunities and risks of investing in them, according to the managing director of a financial firm in Thailand.

The number of Thai start-ups funded through active angel investments, venture capital, and corporate venture capital has been increasing rapidly in recent years.

In 2012, only three funded start-ups in Thailand were officially recognised by a major tech media and conference held in Southeast Asia.

This increased to 50 in 2015, 75 in 2016 and 90 in 2017, according to the Thailand Tech Startup Ecosystem Report Q2/2018 from the media tech conference. It is expected that at least 100 funded start-ups will be seen by the end of 2018.

Meanwhile, the SEC faces various legislative challenges as the market landscape shifts due to the introduction of technological disrupters.

Many in Thailand’s ageing population are seeking to invest in affordable real-estate assets in order to secure a stable source of income as they go into retirement.

As well, the tokenisation of assets is a growing global trend that is now emerging in the Thai market, allowing middle-income investors to invest in a fraction of an otherwise unaffordable asset and become a “fractional owner” of the asset, according to the director of the fintech division of the SEC.

For example, instead of purchasing a whole building, investors can purchase tokens that represent a fraction of the asset, she says.

However, there are still legislative obstacles obstructing the advancement of asset tokenisation in Thailand.

For example, it is still legally ambiguous as to whether an asset token falls under the legal regulations of a property asset or that of a digital asset, she explains.

The director of the fintech division also expressed her concern over Thailand’s regulation of initial coin offerings (ICOs). ICOs are a fundraising method for cryptocurrency companies similar to initial public offerings (IPOs).

However, they have been used by cryptocurrency companies to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.

By passing regulatory laws on ICOs, the director sees a risk that Thai cryptocurrency start-ups may be discouraged and choose to instead launch ICOs in other countries.

This may, in turn, hinder the development of a digital ecosystem within Thailand’s economy. The challenge for the SEC is to strike a balance in its regulatory framework so that cryptocurrency start-ups are not discouraged and investors also feel safe investing in ICOs, she said.

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