BANGKOK – Thailand’s Securities and Exchange Commission (SEC) is preparing a second round of public feedback on proposed updates to margin loan rules. This signals a stronger push from the regulator to prevent misuse and manage risks in the capital market.
The SEC’s actions follow concerns that some brokers have let clients use margin loans for reasons beyond investing, which could bring new controls and changes to how the industry works.
Margin loans let investors borrow from their broker to buy stocks, using the shares they already hold as collateral. While this borrowing can boost returns, it also increases risk, since the loan must be repaid regardless of the market’s performance.
In Thailand, margin loans should only be used for buying securities. The SEC found some clients using them for personal or business needs, turning these loans into unofficial personal lending, which only banks can legally provide under Bank of Thailand rules.
By April 2025, these loans in Thailand totalled about 62 billion baht, or around $1.77 billion, according to SEC data. This large figure shows that any rule change could have a wide impact.
Margin Loans Abused
Surasak Ritthongpitak, the SEC’s assistant secretary-general, told the Bangkok Post that margin loans are meant to support investment in the capital market, not other spending. He noted that some companies have allowed clients to use margin funds for non-investment purposes, which goes against the intended use.
This kind of misuse can add risk, since breaking loan terms might lead to forced sales of shares, which could unsettle the market.
The SEC has also reviewed issues such as naked short selling, which involves selling stocks you do not own. A recent technical error at a brokerage did not break any rules, but the regulator is keeping a close watch. To improve tracking, the SEC is building a central system called the Security Bureau. This platform will let brokers track margin loans across the industry and make lending more transparent.
The upcoming public consultations, which aim to finish with new rules by the third quarter of 2025, focus on tighter controls for margin loans. The main changes would ban the use of margin credit for anything other than buying securities and require brokers to check that funds are only used for this purpose.
Earlier in the year, the SEC changed rules for IPO margin requirements, adjusted credit limits based on broker finances, and set new rules on how much of a customer’s assets can be used as collateral. Mutual funds can no longer be used to secure margin loans, which should lower the risk of large-scale forced selling.
These measures follow the SEC’s wider role, under the Securities and Exchange Act of 1992, to keep Thailand’s capital markets fair, open and efficient. However, not everyone is on board, as stricter controls could put more strain on brokerages already facing a slow market.
New Requirments Coming
Brokerages are getting ready for the impact of tougher rules. Margin lending is a key revenue source, so further restrictions could cut down on trading and force clients to borrow less. A senior executive at a major Bangkok brokerage, who wanted to stay unnamed, said these changes could hit revenue at a time when the market is already quiet.
The Stock Exchange of Thailand (SET) index fell to 1,056.41 in April 2025, and foreign investors have withdrawn 71.6 billion baht from the market so far this year.
While some rules will take effect soon, the SEC is giving firms more time to adjust to certain parts of the new requirements. This approach aims to balance stronger controls with the everyday pressures of running a business. Still, smaller brokerages may find it tougher to adapt, which could lead to more mergers or some firms leaving the market.
The SEC’s push to tighten margin loan rules is part of its work to protect investors and maintain market stability. As Thailand’s financial sector changes, these updates should bring local rules closer in line with global standards and address current risks.
The next round of public feedback will give everyone involved a chance to share their thoughts and shape the final rules, which could change how brokers and investors work together in Thailand’s financial sector.
Sources: Bangkok Post, SEC Thailand
