For years, every party that got involved with the capital market claimed ownership of the Thai bourse – brokerage houses, asset management firms, listed companies, and even state agencies.

Under the law, the SET was set up as a special corporate under supervision of the Finance Ministry through the Securities and Exchange Commission. The SET, as the operator of the Thai stock market, gets exemption from corporate income tax, which is part of the government’s policy to encourage more fund-raising via the capital market.

During the government of Abhisit Vejjajiva, when Korn Chatikavanij was the finance minister, there was an idea to demutualise the SET in a bid to make it more efficient and free from dominance. This would have made the SET a private entity, which also enables raising of funds via the stock market. Certainly major stakeholders were most likely to be brokerage firms as the SET’s founders.

The idea was greeted with agreement and disagreement.

The disagreement side views demutualisation (privatisation) as unsuitable for the SET even though it agrees with the benefits of demutualisation, as it would make the SET more efficient, flexible, and free from political interference. One reason the opponents give is the SET is not a kind of operator of services related to infrastructure that are a pivot to people’s daily lives. The SET is not ready to do so, as its market capitalisation is not yet sizeable and there is still a shortage of infrastructure preparation.

Given that the SET is a monopoly by nature and requires high capital, once it is demutualised, it could be open to being monopolised by the private sector. Stock markets in the US and EU face fierce competition and need to survive on their own. As is known, the SET holds funds for capital market development worth more than Bt8 billion apart from earnings – derived from transaction fees contributed by brokerage firms, listing fees, and clearing and settlement fees – after expenditure of more than Bt1 billion annually.

The government of Yingluck Shinawatra, under finance minister Kittiratt Na-Ranong scrapped the “demutualisation” plan for the SET.

Current Finance Minister Apisak Tantivorawong also disagrees with the idea of demutualisation, but it has now been floated with a new name – “corporatisation” – meaning the state retains ownership of the SET.

What will change is a reduction in the number of seats on the SET board for the private sector – from five to four – which has not really pleased stock brokers.

And the key point is that the Bt8-billion fund for capital-market development will be moved out of the SET and put under the supervision of a committee, which will be set up by the new law.

At the end of the episode, all this means is that demutualisation is not ncecessary for the SET to prevent interference. The Finance Ministry is the SET’s real stakeholder even though stockbrokers believe they deserve to be the owners.

It would not matter who are the stakeholders in the SET if the capital market is not developed, as it should be.

sasithorn@nationgroup.com