The Thai Bond Market Association (ThaiBMA) The Thai Bond Market Association (ThaiBMA) The Thai Bond Market Association (ThaiBMA) is a securities business related association under the Securities and Exchange Commission Act B.E. 2535. Its main purposes are to be a self-regulatory organization (SRO) for a fair and efficient operation of the bond market and to be an information center for the Thai bond market. It also plays functional roles on market development, market convention and standards and being Bond Pricing agency for the industry. In addition, ThaiBMA provides a forum through which industry professionals can response to current issues and play a role in shaping the future of the Thai bond market. Background Although the ThaiBMA was granted a securities business related association and SRO status from the SEC in September 2005, its foundation has started for more than a decade. The first stage of its operation was in November 1994, when it was set up as The Bond Dealers Club (BDC) under the Association of Securities Companies. The BDC played roles as the first and only organized secondary market for bonds and it introduced an electronic bond trading system called ‘Bondnet” for the first time in the history of the Thai bond market. After 3 years of its successful operation, BDC changed its legal status to be in line with its membership structure and to support a more expansive bond market. So it was restructured as the Bond Exchange under the SEC Act and renamed as The Thai Bond Dealing Centre (Thai BDC) in April 1998. The primary roles of the Thai BDC are to facilitate the operation of the secondary market for bond trading and to be a forum for discussing issues on bond market development. One of its missions is to move towards a full self regulatory organization (SRO) to oversee the orderly function of the bond market. ThaiBDC had continuously expanded its functions and had taken active roles in various area of bond market development. In December 2004, the Bond Market Development Committee chaired by the Finance Minister initiated a major reform of the Thai bond market. One of the measures was to centralize the trading platform at the Stock Exchange of Thailand (SET) while ThaiBDC would remain and expand its functions as the SRO and information center for the bond market. Under this policy, ThaiBDC has sold its newly developed electronic trading platform to the SET in 2005. And to reiterate its focus on SRO functions and information center, ThaiBDC with the support from SEC has changed its status and was granted the license of a securities related association under the SEC Act named as “The Thai Bond Market Association (ThaiBMA) ” on September 8, 2005 . ThaiBMA members Membership of ThaiBMA can be classified into 3 types; each of which is subject to different membership fee and requirement; 1. Ordinary member is a financial institution that has the debt trading license (dealer). 2. Extraordinary member is a company that has inter-dealer broker license (IDB). 3. Associate member is provided for a dealer that has monthly average trading value in the past one year less than 100 million baht per month. In December 2021, membership of ThaiBMA consists of 54 commercial banks and securities companies. Roles and functions of Thai BMA ThaiBMA plays key functional roles in five main areas; 1. Self-Regulatory Organization (SRO) ThaiBMA oversees and monitors the conduct of its members in order to ensure fairness and efficiency in debt securities trading industry. It is committed to retaining the confidence of its members, regulators and investors. SRO tasks comprise the following: Act as the front-line regulator to detect any fraud or unfair trading practices by performing intraday market monitoring and post-trade surveillance. Executing onsite and offsite inspection to ensure that members comply with relevant laws and regulations. Issuing rules and guidelines regarding debt securities trading and good market practice. Responsible for bond trader examination and registration and provide them with ongoing education to enhance their professionalism. Implement disciplinary actions and enforcement procedures. 2. Bond Information Center Mandated as the sole information center for the Thai bond market, ThaiBMA collects, integrates and processes the data from both the primary and secondary bond markets. It also develops financial tools and information essential for the bond market and disseminates those information through its website www.thaibma.or.th, and www.ibond.thaibma.or.th. Examples are; Yield curve: ThaiBMA publishes various types of government bond yield curves and corporate yield curve on a daily basis. Bond information: ThaiBMA provides trading data, bond features, reference yields and relevant market news and regulatory updates. Financial data: ThaiBMA develops a wide range of financial and quantitative tools such as Bond indices, Zero coupon yield curve, credit spread curve, key rate duration, bond portfolio analysis, Value-at-Risk (VaR) to be used for bond investment and portfolio management. 3. Association As an association of members, ThaiBMA represents collective voices of members and promote dialogues among market participants to address issues affecting the bond market. ThaiBMA works actively with bond market stakeholders on a comprehensive range of market practices and convention to create and/ or enhance standards within the marketplace. Examples of standard issued by ThaiBMA are bond symbols and standard formula for price/ yield calculation which have become common standard in the market and for various types of bonds. 4. Pricing Agency In the role of “Bond Pricing Agency”, ThaiBMA provides daily mark-to-market prices for investors. For actively-traded bonds, the mark-to-market prices are based on trading and quotation information. For illiquid debts securities and structured bonds, ThaiBMA develops model yield to be used as fair prices and references for investors. 5. Market Development and Education ThaiBMA is committed to enhancing market development and market education. It advocates for efficient bond market and initiates a number of studies to the benefits of the whole industry. To expand investor understanding of the bond market, ThaiBMA provides extensive seminars and training programs for market participants and the general public. It also produces a comprehensive range of publications for the benefits of those involved in the bond market. Next step As part of the bond market reform policies, SEC and related authorities have implemented several measures to support the roles of ThaiBMA. These measures include a mandatory membership of dealers and Interdealer broker at ThaiBMA. There will also be a requirement on registration of all bonds at ThaiBMA. With the strong support from regulators and members, ThaiBMA can perform to fulfill its commitment and bring in stability and integrity of the bond market in accordance to its objectives.