The trading environment within the Stock Exchange of Thailand (SET) is very different from the NYSE and other western markets. This article provides an overview of the SET bid-offer spread, floor and ceiling limits, and circuit breaker function. It is important that you are familiar with the details of these regulations prior to commencing trading.
Bid-Offer Spread
When you trade on the SET your buy and sell orders will be executed in Thai Baht.
Each Thai Baht is divided into 100 Satang.
As you can see from the table below, the bid-offer spread varies depending upon the market price of the relevant share:
The following image is a screenshot of the live bid-offer spread for a company listed on the SET called Sansiri (SIRI). In this example SIRI is currently trading below 2 Baht so its price spread moves in increments of 1 Satang:
Here’s another screenshot for a company called Jasmine International (JAS). In this second example, JAS is currently trading between 5 and 10 Baht so its price spread moves in increments of 5 Satang.
Managing Volatility
Trading on the SET can become very volatile in the event of significant inflows, or outflows, of foreign capital. This is because, in terms of market capitalization, the SET is a relatively small exchange. To better manage intraday trading volatility the SET has implemented the following regulations:
Floor and Ceiling Price Limits
The SET limits the market price fluctuation of a listed share to a maximum 30% gain, or 30% loss, of it closing price on the previous day of trade. For example, yesterday XYZ closed at 3 Baht per share, so today, the SET will cease processing buy orders if its price rallies to 4 Baht. Conversely, the SET will cease processing sell orders for XYZ if its price drops to 2 Baht. Although the intraday gains or losses on most Thai shares are limited at 30%, please take care to note that there are also some exceptions.
First, the daily gains or losses on (F) type shares are limited at 60%. For more information about (F) shares, and other types of Thai shares that are made available to a foreigner trading on the SET, please read: What are NVDR, (F) shares, and (L) shares?
Secondly, in any of the following circumstances the SET will permit the price of a share to fluctuate within a range of 100%:
- Newly listed and first day of trading
- Trading has been halted for more than 15 trading days
- First day of trading following XD, XR, XS or XA notice
- Current market price is less than 1 Baht
Thirdly, the SET also lists derivatives such as put and call warrants. These are not subject to floor and ceiling limits. For more information about Thai derivatives please read: 360% Profit in 4 Months Trading a Warrant.
Circuit Breaker Function
In addition to floor and ceiling price limits, the SET also relies upon a circuit breaker function to manage unusual volatility in the market. The circuit breaker works as follows:
- If the SET index falls by 10% from the closing price on the previous day, all trading of listed securities is halted for 30 minutes.
- If the SET index continues to fall to 20% from the closing price on the previous day, all trading of listed securities is halted for one hour.
If the circuit breaker is still in effect at the close of market, regular trading will resume at the start the next session.
Your comments or feedback on this article are welcomed. If you want to discuss and learn more about trading Thai shares please visit our forums. If you have a specific question you can post it as a new topic.