Algorithmic trading arrives in Thailand

The Stock Exchange of Thailand (SET) is encouraging program trading in a bid to boost the volume traded via this system to 20 percent of the total within three years.

Program, or algorithmic, trading uses computer programs to enter trading orders, with the computer algorithm deciding on aspects of the order such as timing, price or quantity, even initiating orders without human intervention.

Pakorn Peetathawatchai, the SET's chief marketing officer, said the exchange expected program trading would soon grow more popular. Only 3 percent of trading volume is now done using the system.

Program trading has been available for 10 years, but most users are brokers and institutional and foreign investors that are able to execute transactions through a direct market access system. It is not open to individual investors, as it is difficult for small investors to manage the risk involved.

"It's not proved very popular so far, but it can be really helpful, particularly for investing in a number of stocks simultaneously,"said Dr. Pakorn.

Only seven brokers now use the trading platform: KGI Securities, UBS Securities, Asia Plus Securities, KT Zmico Securities, Credit Suisse, Phatra Securities and Bualuang Securities. Most of these focus on institutional or foreign investors.

"The SET will now focus more on promoting program trading to foreign investors, especially during the next international road show in Japan," said Dr. Pakorn.

Retail investors account for 60 percent of all trading on the SET, followed by foreign investors at 20 percent and local institutional investors and proprietary traders at 10 percent each. However, SET president Charamporn Jotikasthira said securities firms still lacked qualified financial professionals to operate the advanced technology trading platform.

The SET announced yesterday that it would hold an algorithmic trading workshop and competition to be organised by Chulalongkorn University's commerce and accountancy faculty.

The contest is open to university students, securities company staff and the general public, with 60 contestants to be chosen to compete.

The deadline for applications is next Friday, with winners receiving cash prizes of 60,000 baht (US$2000).