Singapore Exchange (SGX) and The Stock Exchange of Thailand (SET) have, on Sept 14, announced the introduction of the Thailand-Singapore Depository Receipts (DR) Linkage, the first exchange-level depository receipts (DR) cooperation in Asean.

Under the Thailand-Singapore DR Linkage, DRs representing shares in an SGX-listed security will be issued for trading on SET and vice versa. Investors in Thailand and Singapore will be able to buy and sell securities via a DR through their local broker arrangements and in their domestic currency. The DRs will trade according to their respective home market rules and regulations. 

According to SGX and SET, the collaboration meets rising demand from market participants in both countries for more choice in their investments, playing to the respective sectoral strengths such as REITs in Singapore as well as fast-growing companies in Thailand. The exchanges expect to introduce the first DR of the linkage in the coming 12 months. 

Loh Boon Chye, CEO of SGX, says the Thailand-Singapore DR Linkage will enable the exchanges to build scale together and set a blueprint for future regional collaboration. “By harnessing each other’s capabilities, we can bring greater connectivity not only across borders but across multiple asset classes,” he adds.

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Pakorn Peetathawatchai, president of SET, says, “The Thailand-Singapore DR Linkage not only enables investors to conveniently diversify their portfolio at home country, but also improves price efficiency by linking the liquidity of the two premier ASEAN markets.”

In a separate statement released on the same day, the Monetary Authority of Singapore (MAS) and the Securities and Exchange Commission of Thailand (SEC Thailand) welcomed the launch.

“This initial collaboration between SGX and SET is a welcome addition to Thailand and Singapore cross-border development. SEC Thailand looks forward to the successive implementation and participation from market stakeholders. Meanwhile, we will continue to explore further collaborations with MAS in order to advance our capital markets development in the future,” saays Ruenvadee Suwanmongkol, SEC Thailand Secretary-General. 

Lim Tuang Lee, assistant managing director (capital markets) at MAS, echoes the sentiment. “This initiative demonstrates the collaborative efforts between Thailand and Singapore to improve the inter-connectivity between our two markets and provide investors access to a wider range of investment opportunities,” he says.

“We look forward to the successful introduction of DRs under the DR Linkage, and will continue to work closely with SEC Thailand to further enhance mutual connectivity and broaden investment selections for our investors,” he adds.

David Gerald, founder, president and CEO of SIAS, notes that as the retail appetite for overseas investments grow, the SGX-SET Thai DR Linkage will give investors another way to diversify their portfolio with Thai-underlyings within a familiar and trusted market place.

"Investors nevertheless, should be knowledgeable in the products and do their homework first before investing," he adds.

Melinda Sam, CEO of the Securities Association of Singapore, calls the DR Linkage model "an easy and convenient way" investors here to gain exposure to stocks listed in Thailand and broadens the investor offerings in Singapore.

"This borderless initiative will allow the investing community in Singapore to connect, as a start, to the market in Thailand and many more in the world," she adds.

As at 12.53pm, shares in SGX are trading up 2 cents or 0.2% higher at $10.10.

Photo: Bloomberg