Kesara, TFEX managing director

Thailand Futures Exchange Plc (TFEX) plans to introduce gold futures trading on February 2.

Kesara Manchusree, TFEX Managing Director, said the Gold Futures, which will initially be introduced with a contract size of 50-baht gold, is aimed at allowing investors to better manage risk and profit from gold price volatility.

After a successful year in 2008 when TFEX has a total of 2.15 million contracts, an increase of 69 percent from the previous year, Kesara disclosed that TFEX expects its daily average trading volume this year to reach 10,900 contracts, from an average of 8,837 contracts last year.

“The trading level in 2008 is at a satisfying level, as the average daily trade was at 8,837 contracts, up from 5,219 contracts per day in 2007,” she said.

Average daily total turnover during last year was 3,810 million baht (US$108.6 million), equal to a rise of 32 percent from 2,883 million baht in 2007, which accounts for 24 percent of total trading turnover on the Stock Exchange of Thailand, while the total outstanding volume as of December 31, 2008 was at 22,747 contracts. 
“The global financial crisis last year emphasized investors the importance of using derivatives as a risk management tool. The highest daily trade of derivatives reached 21,474 contracts on October 29 while there were a total of 15,893 active derivatives trading accounts, an increase of 67 percent from 9,531 in 2007. Retail investors were responsible for 56.57 percent of last year’s trading volume, institutional investors for 26.38 percent and foreign investors for 17.05 percent. Derivative trading through the Internet was 14.82 percent of total volume, a rise from 11.31 percent in 2007,” said Kesara.

Currently, TFEX has 36 members and is planning to accept four more members for gold futures trading. Last year, Kim Eng Securities (Thailand) had the largest retail investor base, followed by Trinity Securities Co Ltd, Phillip Securities (Thailand) Plc, KGI Securities (Thailand) Plc and Seamico Securities Plc. 
TFEX launched three Single Stock Futures of ADVANC, PTT and PTTEP on November 24, together with a change in margin calculation to be risk-based portfolio margin to help investors trade derivatives at a lower cost. 
This year, TFEX will review the contract specifications of SET50 Index Options and help support trading facilities to be in accordance with the market’s needs. The futures exchange will also increase market liquidity and promote educational programmes, such as via trading simulations so investors can learn about options trading, which will encourage them to use options in their portfolio management.

Moreover, TFEX also plans to launch additional Single Stock Futures of new underlying stock with large capitalization, high liquidity and popularity. That would help increase our average daily trading volume to reach 10,900 contracts as planned, she added.