Securitization developed in Thailand between 1993 and 1998, first with the Securities and Exchange Act providing the only legal framework. In 1997, however the Royal Enactment on Special Purpose Juristic Persons for Securitisation B.E. 2520 (Securitisation Act) was passed by the legislature.

The new law allowed specified originators to securitize certain asset types. Because the transfer of pre-approved asset types to a special purpose vehicle (SPV) became automatic under the law, it does not require notification to obligors. An SPV can be a public or private limited company, mutual fund, or other form as approved by the Securities and Exchange Commission (SEC). Some degree of protection is provided in case of bankruptcy of the originators. The originators and SPVs are not required to pay transfer fees on assets or collateral. Tax breaks are available for businesses issuing securitized debentures.

In October 2006, the Bank of Thailand (BoT) issued Notification 122-2549, allowing commercial banks to become involved directly in securitization and other related functions. Aside from establishing rules on securitization for commercial banks, BoT’s other objectives in issuing the notification are to:

• increase business channels;
• improve bank liquidity;
• monitor and apply proper charges for risks associated with securitization; and
• promote transparency and good corporate governance.

For structured notes, the SEC issued Notification 4/2546 Re: Application and Permission to Offer Newly Issued Structured Notes in May 2003. The notification allowed companies incorporated in Thailand and commercial banks to issue structured notes. In November 2006, the law was amended to include additional conditions on the sale of structured notes

As of January 2007, 21 securitization bonds were issued and traded in the secondary market with the issue size ranging from THB6 billion to THB77 billion. The types of securitization debt already issued include asset-backed securities, credit card/personal loan receivables, deposit receipts, and future cash flows.