The issuance and trading of bonds are governed by the rules and regulations of the Ministry of Finance, the Securities and Exchange Commission (SEC), the Bank of Thailand (BOT), the Thai Bond Market Association (ThaiBMA), and the Stock Exchange of Thailand (SET). Further details on all these entities can be found by following the links provided below.
Bond Issuing Procedures
The Securities and Exchange Commission (SEC) is the regulatory body approving corporate bond and asset-backed security issuances. Issuers have to be incorporated under Thai law and rated by an SEC-recognized credit rating agency. Regulations are detailed further under Chapter 2 of the Securities and Exchange Act and the SEC Notification—Application for and Approval of Offer for Sale of Newly Issued Debenture, both of which are linked below. International organizations are allowed to issue bonds in Thailand with the approval of the Ministry of Finance.
The Ministry of Finance issues treasury bills, government loan bonds, and savings bonds. The issuance of these securities is facilitated by the Bank of Thailand (BOT). Treasury bills and loan bonds are issued through auctions while savings bonds are issued to acceptable investors through authorized selling agents. The BOT can also issue its own BOT bonds through auctions. Regulations regarding the issuance of BOT bonds can be found at the BOT website, which is linked below. Under the Bank of Thailand Act B.E. 2485, the Financial Institutions Development Fund is also empowered to issue short- and medium-term bonds. The Ministry of Finance manages the issuance and auction of state-owned enterprise (SOE) bonds.
The Thai Bond Market Association (ThaiBMA), formerly The Thai Bond Dealing Centre (Thai BDC), oversees the bond registration process. The linked page below outlines the complete registration procedures. A full list of registered bonds including ThaiBMA codes and identifiers is also available at the ThaiBMA site.
The Stock Exchange of Thailand (SET), which operates the Bond Electronic Exchange (BEX), has a listing manual for debentures, convertibles, and warrants available at its web site.
Licensing
The licensing of securities companies is under the authority of the Securities and Exchange Commission (SEC). Chapter 4 (Securities Business) of the Securities and Exchange Act B.E. 2535 covers regulations in the securities business with a division on "Formation and Issuance of License".
Accounting Standards
The Bank of Thailand (BOT) requires financial institutions to comply with Thai Accounting Standard No. 40—Accounting for Investments in Debt and Equity Securities. This standard, issued by the Office of the Board of Supervision of Auditing Practices, is adopted from International Accounting Standards (IAS) Statement of Financial Accounting Standards No. 115.
This standard requires financial institutions to classify investments as either trading securities, available-for-sale securities, or held-to-maturity securities. Mark-to-market valuation is required for trading and available-for-sale securities. Unrealized gains and losses on the fair value changes are reflected in financial statements.
Bonds are valued based on a BOT formula using the yield curve or bid prices posted at the Thai Bond Market Association (ThaiBMA). Further details are provided in a BOT notification included on its website, which is linked below.
Investment Funds
Investment funds or mutual funds are required to calculate and publish on a daily basis the net asset value of a fund using mark-to-market valuation according to the procedure stipulated by the Association of Investment Management Companies (AIMC), as approved by the Securities and Exchange Commission (SEC).
Capital Adequacy Regulations
Capital adequacy regulations with respect to market risks, which include the risks of bond investments, are covered under Bank of Thailand (BOT) Notification: Market Risk Supervision of Financial Institutions and Related Reports. This regulation requires banks to satisfy risk-based capital requirements that apply mark-to-market practices to risk measurement. Effective June 2005, financial institutions with “significant” trading book volume must maintain capital funds against market risk. Capital adequacy regulations in Thailand are moving towards full compliance with Basel II standards.
The Revenue Department of Thailand provides personal and corporate income tax structures, which are available through the links below.
Three types of bond-related income are subject to taxation: interest, discount, and capital gains. Tax rates vary by type of investor and type of income. Applicable taxes are outlined at the Thai Bond Market Association (ThaiBMA) and the Bond Electronic Exchange (BEX) links below.
Thailand has tax treaties with several countries. The Revenue Department of Thailand website maintains a section on these tax treaties.
A matrix of the taxation for different types of bonds is also provided in the table below.
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