Dealers are predicting the launch of equity futures in Thailand later this year will spark a market in options and other listed derivatives. The newly-established Thailand Futures Exchange, a subsidiary of the Stock Exchange of Thailand is planning an initial futures contract on the SET50 in November, a first for the market, according to a senior official at the Futures Exchange in Bangkok. The official continued that following a positive response, bond and interest rate futures will be listed next.
"If they can create a liquid futures contract, then options and a full derivatives market can follow," said Justin Kennedy, managing director in Asia-Pacific equity derivatives at Citigroup in Hong Kong. The exchange official said options on the index and on futures could potentially be launched in the next 2-3 years. Kennedy also noted that with a futures contract in place, longer-dated structured products on the SET50 could emerge. "There has been demand for these products for a while but the costs and logistical issues associated with hedging via stock have retarded development of such products," he added.
The listing follows derivative regulations issued early last year paving the way for the creation of an exchange. The official said systems and procedures are now being put in place for the upcoming launch.