The Securities and Exchange Commission (SEC) is asking the Stock Exchange of Thailand (SET) to consider revising the criteria for share distribution to minority shareholders (free-float criteria) imposed on listed companies to ensure trading liquidity with appropriate share pricing.
SEC also views that SET should consider reviewing the trading alert measures, especially in the case of low free-float stocks, and any other measures to protect the interests of shareholders and investors.
SEC Secretary-General Ruenvadee Suwanmongkol said: “The free-float criteria are specified by SET with the SEC Board’s approval. They carry a significant importance to the trading liquidity of listed company shares and are one of the factors in the selection of securities for SET50, SET100 and SETHD.
Yet, given that these important criteria were last revised in 2008, SEC views that it is appropriate for SET to consider reviewing and checking whether or not the criteria still reflect true distribution of shares to minority shareholders amid the changing market conditions.”
The price of DELTA shares, for example, has changed significantly recently. Since last December, SEC has informed SET to monitor the trading activities of such shares closely to protect investors and prevent distortion of the share price and trading volume against normal market conditions.
In this regard, SEC has found that one of the factors for such trading irregularity was that the true free float of DELTA shares was low and the share price changed quickly. Nevertheless, under the current criteria, posting the trading alert sign to warn investors to make investment decisions carefully is not required in this case.
SEC is therefore suggesting that SET needs to review the free-float criteria and the trading alert measures, especially in cases where the prices of low free-float shares change quickly, and consider other measures for protecting shareholders and investors.
“Supervision of securities trading activities to ensure market orderliness and fairness is one of the measures for protecting the interests of shareholders and investors. Once SET proposes revision to the free-float criteria and other measures, SEC will submit the guidelines for revising such criteria and measures to the SEC Board for consideration of approval in due course,” added SEC Secretary-General.