Brokers Push Back on Stock Exchange Over Foreign Trading Report, Say TRS Means Foreigners Buy but Thais Pay
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A group of brokers has disputed the explanation given by Assadej Kongsiri, the president of the Stock Exchange of Thailand, regarding reports of foreign investor trading that do not match actual investment data. They say the discrepancy stems from derivative products known as portfolio total return swaps, or TRS, which some brokers offer exclusively to foreign high-frequency trading clients. The brokers say Assadej gave an incomplete account, and point out that the TRS arrangements in practice amount to foreigners buying while Thais pay, with the broker advancing the money for the share purchases on behalf of HFT clients that lack the funds to hold positions worth hundreds of billions of baht. The brokers benefit from interest charged to HFT clients of about 2%, commissions from very high trading volumes, and increased market share. Meanwhile, the investor category in the reporting is switched from F, meaning foreign, back to P, meaning proprietary investment by the broker, so that the broker can settle the price on the client's behalf. As a result, the reported picture of foreign investment exceeding 50% is distorted, and it is believed the true proportion may be only around 30%. Assadej said the investor proportion figures would be revised retroactively for two years, and insisted that correcting the data in line with the law will not affect fund flow figures.