Thailand’s Kasikorn Securities has launched an equity-linked/foreign equities trading platform to capitalise on opportunities in one of the fastest growing markets for structured products in the region with total sales of THB6bn (US$170m) as of Q1 2015, which has grown by 148% since 2013 to reach THB42bn (US$1bn) by the end of 2014.
Thailand’s market is rather new to the latest technologies, but Kasikorn Securities found a need for more automation in the market, said Sutthisit Jamdee, head of financial product development at Kasikorn Securities, adding that the retail investor base has increased by up to 65% in a market.
“KS Automated Trading System (K-SATs), is the first automated trading system in Thailand that allows automated trading of futures and cash equities simultaneously,” said Jamdee. “The system allows individual investors to deploy arbitrage strategies or any other strategies that require simultaneous access to both the Thailand Stock Exchange and the Thailand Futures Exchange.”
The automated trading platform will be available to both retail and institutional investors to instantly execute large volume of stocks with more customized orders. “It will be able to reduce price impacts when the market is not liquid, as well as reducing the overall transaction cost,” said Jamdee. “The platform is targeted to retail clients, but we are hearing positive feedback from the institutional investors to use our system as well.”
After the launch of K-SATs, the firm plans to launch an offshore equities trading platform which will be available in the third quarter of this year, said Jamdee.
“The platform will cover major markets around the world including the US, Japan, Singapore, China, Hong Kong and Europe. “Once the platform is in place, we will have direct access to the foreign stockmarkets and we will be able to consider launching offshore shares linked ELNs in Thailand,” said Jamdee.
In July, Kasikorn Securities filed 14 types ELNs with the Securities and Exchange Commission (SEC) at an issue size of THB4bn.
“We have introduced a covered call, protective put as well as principal protected notes, in order to target investors who are holding stocks in their portfolio, but do not wish to be exposed to unlimited losses,” said Jamdee. “These new ELNs feature a diverse range of strategies while guaranteeing the principal, and investors will be able to better manage their risk of holding local stocks in their portfolio.”
According to Sutthisit, the firm is also looking to launch barrier options embedded knock-in knock-out (Kiko) payoffs as well as equity linked accumulators by the second half of this year.
“Some local issuers used to offer currency-linked accumulators containing exotic features through back-to-back hedges in the past,” said Jamdee. “However, we are considering to offer local stock linked accumulators, which will be directly hedged by us. By holding the position within ourselves, we will be able to offer the products at much lower cost with better expected yield.”
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