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This is an assessment of the Securities and Exchange Commission of Thailand (SEC) and, secondarily, of certain self-regulatory organizations (SRO) that participate in the regulation of the capital markets of Thailand. This assessment was conducted in February, 2019 as part of the Financial Sector Assessment Program (FSAP) conducted jointly by the International Monetary Fund (IMF) and the World Bank. The financial sector of Thailand shows strong growth and is dominated by banks, which are a major force in other components of the financial sector through separately licensed subsidiaries. The financial system's assets are equal to 259 percent of GDP (February 2018), with Thailand's 30 commercial banks (including 15 foreign branches or subsidiaries) holding 46 percent of financial sector assets and eight specialized (state-owned) financial institutions (SFIs) holding 15 percent. The three largest commercial banks account for 46 percent of banking sector assets, lower than that of its peer comparators. Banking sector growth, however, has been stagnant, growing to 156 percent of GDP (2018) from 153 percent (2012). Other segments of the financial sector have experienced higher growth in recent years. The market capitalization of the SET has grown to 104 percent of GDP (up from 67 percent of GDP in 2005, and from 37 percent of GDP in 2008). Insurance sector assets have grown from 10 percent of GDP in 2006 to over 22 percent of GDP in 2016.

Finance and Financial Sector Development --- Financial Regulation and Supervision --- Securities Markets Policy and Regulation

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This report contains the assessments of BAHTNET and TSD based on the PFMI. The assessment was undertaken in the context of the International Monetary Fund and World Bank Financial Sector Assessment Program (FSAP) of Thailand in November 2018. The assessors were Gynedi Srinivas and Dorothee Delort of the World Bank's Payment Systems Development Group. The assessors would like to thank the Thai counterparts for their excellent cooperation and generous hospitality. The objective of the assessment was to identify potential risks related to the FMIs that may affect financial stability. While safe and efficient FMIs contribute to maintaining and promoting financial stability and economic growth, they may also concentrate risk. If not properly managed, FMIs can be sources of financial shocks, such as liquidity dislocations and credit losses, or a major channel through which these shocks are transmitted across domestic and international financial markets. The scope of the assessment includes two main FMIs as well as the authorities in Thailand responsible for regulation, supervision, and oversight of FMIs. BAHTNET and TSD are assessed against all relevant principles of the PFMI. The authorities, the BOT and the SEC, are assessed using the responsibilities for authorities of FMIs.

Finance and Financial Sector Development --- Financial Regulation and Supervision --- Financial Structures --- Securities Markets Policy and Regulation

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The authorities' vision of ensuring that the capital markets support China's transformation towards a more market-oriented economy has driven capital markets development and, as the authorities recognize, the regulation and supervision of the markets. Looking forward, many of the challenges ahead will continue to require a careful balancing of the developmental and stability mandates, which in turn would have an impact on regulation and supervision. In the case of China, many of the challenges ahead stem from the authorities' vision to further develop the markets and the potential approaches to do so in a manner that delivers more market-based solutions, while ensuring investors' protection and financial stability. For example, to further strengthen the role of disclosure in the public markets and the private exercise of rights work would be required on several fronts, including initiatives to (i) strengthen corporate governance of issuers as a key step to improve the quality of their financial disclosure, (ii) ensure that different gatekeepers comply with their responsibilities, (iii) enhance investors' ability to exercise their rights and (iv) foster greater participation of institutional investors in the markets, some of which are not covered by the IOSCO Principles. Further, from a broader perspective a key challenge for the CSRC and the Chinese authorities is to ensure that the multi-tiered market is implemented in a way that it does not adversely affect investors' confidence in the capital markets as a whole. To this end, the CSRC should keep the National Equities Exchange and Quotation Corporation (NEEQ) and the securities companies that operate in it under close monitoring. In addition, as planned by the authorities, standards should be implemented to facilitate the regional trading platforms to develop safely and operate as an effective way to bring local financing to local businesses. In the long run, the authorities should consider the development of a common framework that encompasses all non-exchange trading platforms, while allowing for differences in the role that the CSRC would play in their oversight. Similarly, further development of the futures markets would require consideration of the potential need for a more sophisticated business model for futures intermediaries and how best to foster the confident participation in the market by endusers. This will require the CSRC to assess whether changes are needed in the regulatory framework as well as education programs and continued close monitoring of market activity and risk management practices. Finally, because of the importance of the audit process for the reliability of financial information across the financial sector, it is critical that the authorities unite their efforts to ensure high quality audits and a well-regulated profession. The creation of a single, independent oversight body might be an option to achieve this objective.

Capital Markets and Capital Flows --- Finance and Financial Sector Development --- Financial Regulation and Supervision --- Securities Markets Policy and Regulation

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The securities and exchange commission (SEC) is the main regulator of the capital market in the Philippines, but its resources are insufficient to adequately address its core functions, especially the supervision of capital market participants, and yet it has to address other legal responsibilities unrelated to capital markets. Other agencies also have capital market regulatory responsibilities, creating a fragmented regulatory framework that causes inconsistencies detrimental to the market and to investors' protection. The existence of regulatory arbitrage, supervisory overlaps, and enforcement gaps evidences the need for an active periodic procedure with other financial system regulators to coordinate supervision activities and review unregulated products, markets, market participants and activities. It should include information sharing and analysis of areas where there may be arbitrage, overlap, gaps, and risks to investor protection and market fairness, efficiency and transparency or other risks to the financial system. A clear and consistent risk-based approach for the SEC supervision of capital market intermediaries is needed. The bank secrecy legislation of Philippines impedes prompt access by the SEC to bank account information.

Capital Markets --- Capital Markets and Capital Flows --- Finance and Financial Sector Development --- Financial Regulation --- Financial Regulation and Supervision --- Securities Markets Policy and Regulation

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Many emerging markets and developing economies (EMDEs) face challenges in developing a vibrant domestic bond market. Only a few have developed such markets to a level of full maturity as Malaysia has. Although the overall size of most domestic corporate bond markets in EMDEs (in terms of percentage to GDP) remains small, the Malaysian capital market is one of the most well-developed among its neighbors and countries of comparable size and characteristics. The IMF's Financial Market Index, a broad-based index to measure depth, ease of access, and efficiency of financial markets (IMF 2016), ranks the Malaysian financial market fifth in Asia after Hong Kong SAR, China, Japan, the Republic of Korea, and Singapore. According to this index, Malaysia's debt market, which is composed of corporate bonds and sukuk, is significantly more developed than those of comparable EMDEs such as Chile and Turkey. This report primarily focuses on the development of Malaysia's local bond market as a source of long-term local currency (LCY) financing. It aims to extract the key lessons that can benefit policy makers as well as stakeholders in both the public and private sectors. This report validates the worth of the building blocks many use for capital market development, as well as the fundamental principles and forces that have shaped and sustained the growth of Malaysia's debt capital market. Malaysia's ability to develop specific segments of the debt capital market can be best demonstrated through two specific cases: the domestic debt capital market has played a vital role in financing Malaysia's infrastructure, and Malaysia has played a significant role as an Islamic finance center.

Capital Markets --- Capital Markets and Capital Flows --- Debt Markets --- Finance and Development --- Finance and Financial Sector Development --- Savings Rate --- Securities Markets Policy and Regulation