The
Thailand Securities Depository Co., Ltd. (TSD) as the Clearing
House and the custodian for securities trading in the Thailand
capital market, has provided the Securities Borrowing and
Lending (SBL) system to manage the settlement risk, to promote
the liquidity in the securities trading, and to improve
the efficiency in utilizing the human resources within the
capital market.
Currently, the TSD has developed
the SBL system to assist the settlement risk management
where one party fails to deliver the securities to the other
parties. As such, the TSD will act as a Lender of Last Resort
for its members and serve as the agent of the borrowing
and lending transactions. Hence, the TSD will match securities
borrowing transactions to securities lending transactions
whereby the fees will be charged on both parties. Moreover,
the TSD will manage the variation margin for the members
where the securities lender will receive a lending fee as
a form of a return.
Moreover, the TSD has developed
the back-Office system to facilitate the customers who are
lenders and borrowers.
The TSD’ s SBL Overview
The SBL is an agreement between
a borrower and a lender. The lender agrees to transfer securities
to the borrower at the agreed date and the borrower agrees
to transfer the borrowed securities back to the lender at
the due date of the agreement. To protect the risk that
the borrower cannot deliver back the borrowed securities,
the borrower agree to pledge his/ her assets, at the same
time, as collateral for the lender. The collateral can be
cash, or other types of securities as agreed by both parties.
The lender will return assets placed as collateral upon
the receipt of the borrowed securities from borrowers on
the due date of an agreement. Generally, the minimum value
of the collateral should be at least equivalent to the value
of securities borrowed, depending on the confident having
upon the other party. On the due date, the borrower must
transfer securities borrowed back to the lender and pay
a lending fee at the agreed rate on the contract date. At
the same time, the lender must transfer collateral back
to the borrower with an interest on that cash collateral.
For the SBL transaction,
each member is able to return securities before the agreement
expiration date (Early Return) or to rollover the agreement.
The above actions are successfully done upon the approval
of the parties. In addition, the TSD identifies each securities
borrowing period for less than one year so the parties are
exempted from the income tax resulting from the securities
and collateral transfers according to the Revenue Department
policy.
Types of SBL Transactions
- Put-Through Transactions: TSD acts as an agent of the SBL service; providing system service for trade management. Therefore, lender and borrower must be agreed in trade condition before input this transaction in SBL system.
- Settlement Coverage Transactions: TSD acts as a lender of last resort for its members. TSD as a Clearing House is the principal to borrow securities for borrower who defaulted to settlement securities. The transaction must be complied with the regulations of Clearing House.
Eligible Securities
- Eligible Securities are securities under the Securities
depository system of the TSD
Eligible Collateral
- Cash in Baht currency
- Government Bonds
- Securities of the companies listed in the Stock Exchange
of Thailand
- Letter of Guarantee
Accordingly, the TSD may
apply different Haircut rates in calculating the collateral
value according to securities types and the remaining duration
of government bonds etc. The TSD will maintain the records
values of any types of collaterals in the SBL system. During
the agreement period, the value of securities lent and collateral
pledged may increase or decrease. Therefore, the securities
or collateral must be continuously appraised to confide
both parties. The TSD as the agent of the SBL service is
also responsible for comparing the value of securities lent
and non-cash collateral or the Letter of Guarantee, briefly
called the Mark to Market, every working day and also calling
for margins from parties. Moreover, the TSD will monitor
to ensure that the parties obtain the corporate actions,
provided by the issuer company, of the borrowed securities
and securities placed as collateral by informing both parties
in advance.
Request for SBL Services
- Must be the TSD depository members
- Must apply for the TSD’ s SBL services
- Must open the SBL account and the collateral for SBL
account
- Must comply with the TSD’ s rules and procedures
Benefits of SBL Services
- To facilitate and reduce burdens upon back-office transactions
- To reduce the overall transaction costs in the industry
- To ensure the members’ confidence in engaging in these
transaction as the TSD acts as the agent for margin maintenance
- To reduce settlement risks via SBL transactions
- Both parties will be automatically informed by the
system about the status of the transactions such as Close
Leg status, Manufactured Payment, Corporate Action, Unit
Process, etc.
Fees for SBL service
- Put-Through Transaction: 5% of Lending Fee with minimum payment of 100 Baht per transaction
- Settlement Coverage Transaction: 10% of Lending Fee
- To be collected from both borrowers and lenders
- Transfer fee occurring from the automated system for securities borrowed and collateral securities is exempted
SBL Application Processes
1. Request / Download Application
Form for SBL services from www.tsd.co.th
1.1
Application for Securities Borrowing and Lending and/or
Repurchase Agreement Service
1.2
Application for Opening Securities Depository Account
1.3
Notification letter indicating Securities Custody Account/
Bank Account Number for SBL Service
1.4
Notification letter authorizing officers responsible for
using TSDs SBL system
1.5
Notification letter for the revocation of authorized officers
/ appointment of additional authorized officers responsible
for SBL system
In
case that the applicants are the BOT BAHTNET members and
have not yet authorized the TSD to execute the transactions
regarding the payment made to and from the BOT, and dealing
with the bank accounts held at the BOT under the linkage
on the securities payment settlement
2. Submit application form
with the following documents.
2.1
A photocopy of the affidavit issued by the Ministry of Commerce
(not more than 3 months)
2.2
A photocopy of the Personal Identification Card of an authorized
person acting on behalf of the depositor
2.3
A photocopy of the Personal Identification Card of an authorized
person
2.4
Revenue stamp (30 Baht per one authorized person)
3. Seek an approval from the
TSD.
4. After the approval, the
TSD will maintain the account number and inform the member
its username and password to access the SBL system.
Diagram of Repo Application processes
If you are interested in applying the SBL service or would
like to request for further information, please contact
the TSD. E-mail: 
or the following officers.
1. Khun Sinhua Saelee Tel. 02-229-2919
2. Khun Benjawan Kitipongsamarn Tel. 02-229-2916
3. Khun Namkhang Khongmeephol Tel. 02-229-2917
4. Khun Ueaporn Rattanathai Tel. 02-229-2918
5. Khun Noppadol Singhanuwattana Tel. 02-229-2920
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