New Thai SEC Guidelines Simplify Market Entry for Foreign Securities Businesses

On September 18, 2024, Thailand’s Securities and Exchange Commission (SEC) issued comprehensive guidelines to make it easier for foreign business operators to provide investment services in Thailand. These guidelines are designed to support Thailand’s goal of becoming a global financial hub and align with government efforts to enhance the ease of doing business.

The guidelines primarily focus on streamlining the process for foreign firms applying for securities and derivatives licenses, and ensuring quicker and more transparent entry into the Thai market for businesses offering securities (such as shares, mutual funds, and collective investment schemes) and derivatives (such as futures and options).

Fast-Track Licensing

Under the new guidelines, the SEC will provide support to foreign companies wishing to operate securities businesses in Thailand. This support includes a fast-track licensing process for foreign operators that meet certain qualifications, such as having a company incorporated in Thailand, having operated a system of group companies for at least five consecutive years, and being supervised by a regulator under the IOSCO MMoU (International Organization of Securities Commissions Multilateral Memorandum of Understanding).

The SEC will also collaborate with the Ministry of Commerce to grant exemptions from the requirement of a foreign business license for companies providing certain services relating to or supporting securities or derivatives businesses, such as net asset value calculation/confirmation for mutual funds, and promotion of capital market products. Applying for foreign business licenses has long been a complicated process for foreign operators, and this exemption can help reduce such complications.

Targeted License Exemptions to Reduce Regulatory Burdens

Foreign operators providing specific investment services may be exempt from full securities and derivatives licensing requirements, saving time and costs associated with the full licensing process, and allowing them to start their businesses quickly and efficiently. Key exemptions include:

Foreign operators providing derivatives services solely to institutional investors are only required to register as derivatives dealers. This is a light-touch approach compared to the stricter requirements of a license.
Foreign operators (i) offering investment advice under qualified actions/protocols, or (ii) assisting Thai investors in offshore investments through locally licensed intermediaries are exempt from licensing.

Flexibility for Limited Operations in Thailand

Under the guidelines, the SEC continues to allow flexibility to businesses wishing to maintain a smaller footprint in Thailand. Foreign operators are able to:

Set up a representative office in Thailand to gather market intelligence, provided the activities of the office do not involve the operation of a securities business or the offering of securities in Thailand. The establishment of a representative office is still subject to SEC approval.
Outsource non-core operations, such as research or back-office support, to local firms.
Despite the SEC’s increased support and flexibility, foreign operators are recommended to consult local experts before entering the Thai market due to the complexity of the laws and penalties.