SEC issues new rules to clarify risks of Bills of Exchange

Bills of Exchange (B/E) have become a frequent source of funds by financial institutions in Thailand.  

Financial institutions issuing B/Es often structure them with terms similar to those used with bank deposits and offer comparable returns.  The SEC has been concerned that investors may be under the mistaken impression that B/Es are therefore entitled to the same protection as bank deposits via the Deposit Protection Agency.  The SEC has addressed this concern by issuing new rules to take effect on 1 July 2012 to prevent misunderstandings surrounding the potential risks involved in purchasing B/Es.   

The revised rules specify that B/E offerings to the public must have a minimum face value of 10 million Baht (with exceptions for qualifying private placements) and must include a disclosure that investments in B/Es are not entitled to Deposit Protection Agency protection.  To limit investment risks, the rules also specify that B/Es may not be transferred unless they include a warning limiting the transferor’s liability to the transferee.  In addition, B/Es as securities must be offered for sale through intermediaries licensed to undertake securities business such as securities companies or financial institutions (please see here for a discussion of the various types of securities businesses operated in Thailand).