Thailand’s Securities and Exchange Commission opened comments Monday, Nov. 9, on proposed rules for depositary receipts and funds, seeking stronger backing standards and tighter safeguards for leveraged products.
The comment period closes Dec. 9. The draft would bar foreign leveraged and inverse ETFs, as well as foreign crypto ETFs, from backing depositary receipts (DRs). It would allow common shares of companies in ASEAN to qualify as underlying securities if their average market capitalization reaches at least 75 billion baht over 15 consecutive business days.
DR issuers would need to check the underlying securities before each issuance and track whether they hold enough underlying securities to cover DRs sold but not yet redeemed. The proposal also calls for systems to keep those securities from being pledged, used as collateral or otherwise encumbered. For DR applications, the proposed process would resemble the existing application process for derivative warrants.
Thai exchange-traded funds (ETFs) could invest in foreign leveraged and inverse ETFs only for portfolio management, with those investments disclosed in their policies. Feeder funds and funds of funds could not make those products a focus of their investment policies or strategies.
For margin loans tied to leveraged and inverse ETFs, securities companies would have to set initial margin rates that reflect leverage and higher risk. Securities companies would have to prevent concentration at the individual-customer and portfolio levels and monitor debtor quality and concentration. The SEC identified volatility and forced collateral sales as risks to investors and securities companies.
The commission said the package aims to improve the quality and transparency of DR backing, support investment in ASEAN and promote consistent supervision. The SEC reported broad support for the principles at hearings held during June and July and again in September 2026. The comment period ends Dec. 9.
