The licensing of financial services in Thailand

How to participate in Thailand’s financial security markets as a foreign investor 

Investment dealer firms:  To act in the Thai markets, brokerage companies can be set-up in Thailand to utilize the relevant physical presence, infrastructure, and competent personnel working on the ground. Traded securities are shares, currencies, commodities, indices, derivatives, cash equities, etc.

Derivatives are financial securities with a value that is reliant upon or derived from, an underlying asset. The derivative itself is a contract between two or more parties, and the derivative derives its price from fluctuations in the underlying asset. The most common underlying assets for derivatives are stocks, bonds, commodities, currencies, interest rates, and market indexes. Derivatives can be traded over-the-counter (OTC) or on an exchange.

Contracts for differences is an arrangement made in financial derivatives trading where the differences in the settlement between the open and closing trade prices are cash-settled. CFD can have different underlying assets, such as foreign exchange, shares, commodities, indices, and metals. There is no delivery of physical goods or securities under such a scheme. 

Binary options are financial exotic option in which the payoff is either a fixed monetary amount or the stake is lost. Such all-or-nothing options typically relate to the expectation whether an underlying asset will be above or below a certain price at a certain time. A binary option is a fast and apparently simple financial instrument in which the investor predicts the outcome from two possible results. This is possible under all market conditions and highly speculative in nature.

Cash equities are traded on major exchanges in the United States of America, Europe, South East Asia, and LATAM. 

Seven legal aspects to be examined under Thailand’s regulatory framework

#1. Incorporation: Restrictions under Thailand’s foreigner legislation regarding the company structure, its shareholders, officers, employees, and operations. Corporate restrictions and requirements regarding the number of shareholders, directors, minimum share capital, etc.

#2. Licenses: Required financial service licenses and the specific license requirements for the Thai respectively foreign entity, its ownership structure, and business operations, implications of a foreign-legislation license. The license application process, documentation requirements, relevant government fees. Reporting requirements towards the relevant regulators regarding stocks and derivatives or other financial products on a one-time, daily, monthly, annually, etc. basis.

#3. Financial product restrictions with respect to the offering of the financial products to different categories of customers, the requirements to conduct appropriateness tests about circumstances, investment objectives and other, rules on the calculation of margins, the segregation between and limitations to the range of underlying assets, and required product governance arrangements, documentation depicting the characteristics of the products, risk warning, and product disclosure statements to the specific customer or on the Client’s website.

#4. Operational restrictions: Restrictions on the offering of bonuses and promotions. Restrictions on the methods of receiving funds from customers in cash, bank cards, bank transfers (wires), etc. Requirements to segregate customer funds and rules of segregation. Operation requirements for directors, dealers, back office, infrastructure, etc.

#5. Financial restrictions on accepting client funds through a payment agent or other third party. KYC/AML/ATF requirements and methods of physical KYC or the use of datasets. Restrictions on the agreements and involvement of payment agents. Investor compensation schemes and emergency and relief fund membership and insurance requirements to cover default cases and the scope of such schemes in order to cover certain services and products proposed to be offered by the Client.

#6. Restrictions on marketing, solicitation promotion, and educational services: Permissible services and content standards for marketing and educational materials. Restrictions on the solicitation/sales of the products to customers. Restrictions on the organization and operation of local training seminars with respect to finance, investments, economics, financial markets, technical analysis, and other pertinent topics

#7. Cryptocurrencies: Specific license requirements to offer CFDs with different cryptocurrencies as underlying assets. Restrictions to offer physical cryptocurrencies for trading to customers in Thailand. Specific license requirements for dealings with cryptocurrencies and digital assets.

Professional services on the licensing of financial service businesses in Thailand

PUGNATORIUS Ltd. is the Bangkok-based specialist provider of transactional legal and tax advice on foreign investments in Thailand’s manufacturing and service industries as well as property acquisition and developments. Advice and assistance on financial service businesses are one of its core business and competence areas.

The Bangkok investment law firm provides reliable and trustworthy advice on how to structure and operate a financial service business in Thailand. It explains the regulatory requirements and the current policies of Thailand’s Security & Exchange Commission, Ministry of Finance, Bank of Thailand, and Thailand’s Revenue Department. It gives advice with respect to Thai compliance requirements for foreign financial services and licensing procedures in Thailand.

Details on other services in the financial service sector are described at Legal advice and support on financial services. The law firm’s activities regarding cryptocurrencies and digital asset businesses can be found at Legal advice, tax structuring for FinTech, cryptocurrency, and digital asset ventures


Disclaimer: A little knowledge is a dangerous thing. This low-resolution high-level outlook constitutes neither legal advice nor an attorney-client relationship. Secure your investment trading in paradise.

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