The Stock Exchange of Thailand (SET) was incorporated
under the Securities Exchange of Thailand Act. Operations started on April 30,
1975. As a nonprofit hub for securities trading and related services, SET
serves to promote savings and long-term capital funding for the economic
development of the nation. SET encourages the general public to become
shareholders in domestic businesses and industries. SET core operations include listing
securities, supervision of information disclosures by listed companies,
oversight of securities trading, and monitoring member companies involved in
trading securities, as well as
dissemination of information and education to
Thailand Futures Exchange (TFEX) is a subsidiary of the
Stock Exchange of Thailand (SET) and was established on May 17, 2004 as a
derivatives exchange. TFEX is governed by the Derivatives Act B.E. 2546 (2003).
is under the supervision of the Securities and Exchange Commission (SEC).
TFEX uses the same Price/Time priority rules as the
equity market for order matching. Price/Time priority refers to how orders are
prioritized for execution. Orders are first ranked according to their price;
orders of the same price are then ranked depending on when they were entered.
When you trade
futures, you do not need to pay the full amount. This is similar to a margin
account when trading stocks. An initial margin will need to be deposited before
each trade. Futures price will generally change daily, the difference in the
prior agreed-upon price and the daily futures price is settled daily. The
exchange will draw money out of one party’s margin account and put it into the
other’s so that each party has the appropriate daily loss or profit. If the
margin account goes below a maintenance margin level, then a margin call is
made and the account owner must replenish the margin account. This process is
known as marking to market.
TFEX is allowed to trade Futures, Options and Options on
Futures where the permitted underlying assets are:
• Equities: Index and Stocks
• Debt: Bonds and Interest Rate
• Commodities: Gold, Silver and Crude Oil
• Others: Exchange Rate and other as may be
announce by the SEC
are one of the three main categories of financial instruments, the other two
being stocks (i.e., equities or shares) and debt (i.e., bonds and mortgages).
The oldest example of a derivative in history is thought to be a contract
transaction of olives, entered into by ancient Greek philosopher Thales, and
attested to by Aristotle, who made a profit in the exchange. Bucket shops,
outlawed a century ago, are a more recent historical example.
finance, a derivative is a contract that derives its value from the performance
of an underlying entity. This underlying entity can be an asset, index, or
interest rate, and is often simply called the “underlying”.
Derivatives can be used for a number of purposes, including insuring against
price movements (hedging), increasing exposure to price movements for
speculation or getting access to otherwise hard-to-trade assets or markets.
Some of the more common derivatives include forwards, futures, options, swaps,
and variations of these such as synthetic collateralized debt obligations and
credit default swaps.
contracts, forward contracts, options, swaps, and warrants are common
derivatives. A futures contract, for example, is a derivative because its value
is affected by the performance of the underlying contract. Similarly, a stock
option is a derivative because its value is “derived” from that of
the underlying stock. While a derivative’s value is based on an asset,
ownership of a derivative doesn’t mean ownership of the asset.
belonging to the realm of advanced or technical investing, derivatives are used
for speculating and hedging purposes. Speculators seek to profit from changing
prices in the underlying asset, index or security. For example, a trader may
attempt to profit from an anticipated drop in an index’s price by selling (or
going “short”) the related futures contract. Derivatives used as a
hedge allow the risks associated with the underlying asset’s price to be
transferred between the parties involved in the contract.
derivative is a contract or a financial
between two or more parties whose value is based on an agreed-upon underlying
financial asset (like a security) or set of assets (like an index). Common
underlying instruments include bonds, commodities, currencies, interest rates,
market indexes and stocks. Derivatives are
usually classified into 4 categories as follow:
1. FUTURES : Futures contract is a
standardized contract between two parties to exchange a specified asset of
standardized quantity and quality for a
price agreed today with delivery occurring at a specified
2. OPTIONS : Options is a contract between
two parties for a future transaction on an asset at a reference price. The
buyer of the option gains the right, but not the obligation, to engage in that
transaction, while the seller incurs the corresponding obligation to fulfill
3. FORWARD :
Forward contract or simply a forward is a non-standardized contract
between two parties to buy or sell an asset at a specified future time at a
price agreed today.
4. SWAP : Swap is a contract between two
parties to exchange streams of payments over time according to specified terms.