Investment Management Companies | Mandatory Risk Test From July 1

INVESTING

Knowledge is power for investors when it comes to bargain and handling their risk. As the local funds marketplace and the products existing expand, marketplace participants have concluded they can do more to ensure that investors know what they are doing.

The Securities and Exchange Commission (SEC) yesterday assimilated groups representing item management companies, banks and brokers in drafting a risk-assessment

assessment that investors will be asked to take before investing in mutual funds and bonds products.Thirachai Phuvanatnaranubala, the SEC secretary-general, mentioned all sides concluded it was critical to urge on investors to pay more consideration to handling their own risks in bonds and derivatives products. Once they admit the risks, it is insincere they could agree to the prospective damage from such decisions.

The necessity is compulsory. Starting July 1, item management companies, bonds firms or banks contingency need investors to do the assessment before investing.

The petition is written to weigh ability about risks of an financier and the results will be used by the product seller to suggest applicable products that fit his or her chance appetite.

Many brokers and item management companies have already requested their customers to expand their in-house questionnaires to ensure they are wakeful of the risks. However, the questions change and a few questionnaires have no self-evaluation test, consequent in investors’ complaints when indemnification occur.

The test, to be reviewed every two years to ensure its relevance, will be used as the typical format is to local funds market, but might be adopted by other Asian markets in the future, mentioned Mr Thirachai.

Paiboon Nalinthrangkurn, chairperson of the Federation of Thai Capital Market Organisation (FeTCO), mentioned the FeTCO would set up a body identical to the credit business for investors’ chance profiles of that data is common amid item management firm, bonds companies and banks. The data will be attainable by the internet for e-banking services.

Pattera Dilokrungthirapop, chairperson of Association of Securities Companies (Asco), mentioned pre-investment analysis was major for Thai investors. For indemnification not caused by product sellers, investors contingency take the losses and pick up from their mistakes.

Of the 600,000 to 700,000 bonds accounts, Asco aims to see holders of 150,000 to 200,000 active trade accounts completing the bearing assessment soon.

Voravan Tarapoom, chairperson of the Association of Investment Management Companies (AIMC), mentioned more than 2 million investors had mutual account products.

The AIMC will use the SEC’s bearing assessment as the typical petition for investors. New investors who do not full the form will not be authorised to deposit in mutual funds. Existing unitholders who flop to expand in the form will not be authorised to deposit in new products either.

Mongkon Leelatum, executive of the Thai Investors Association, mentioned investors should meet halfway and safeguard themselves by carrying out the assessment honestly, as it will gain themselves and lower prospective losses.

Risk from investment in mutual account products comes in 8 levels, whilst chance from bonds trade has 5 levels. Investments in derivatives and universal markets are rated as the top risk.