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Home > About Us > Equity Derivatives
Equity Derivatives
KGI Equity Derivatives was established in 1999. Currently, KGI Equity Derivatives provides various products as follows;

 

Derivative Warrants (DW)

              

               More than 5 years, KGI Securities (Thailand) Public Limited Company has been developing its infrastructure and workforce and expects to launch Derivative Warrants (DW). In 2009, KGI was the first securities company in Thailand to launch DW. KGI launched 3 DW i.e. PTT13CA, KBAN13CA and PTTE13CA since June 2009. All 3 DW were highly successful and get great response from investors at IPO period and trading on the exchange, which total IPO subscription amount of all 3 DW was around 150 millions baht.

 

               DW is new investment product in Thailand. KGI plans to educate investors for the deeper understanding, enhancing knowledge and build confidence in DW investment. KGI plans to roadshow to local and foreign institutional investors to public new financial products and attract new clients to invest in Thai Capital Market. KGI launched the first website in Thailand, www.thaiwarrant.com. This website provides information of all DW in Thailand which is useful for investors who are interested in DW.


In 2009, KGI has issued DW as follows;

 

  Name of DW IPO Period Maturity Date
1. PTT13CA 22 - 30 June 200918 December 2009
2. KBAN13CA 10 - 21 August 2009 19 February 2010
3. PTTE13CA 19 - 30 October 2009 30 April 2010

 

Securities Borrowing and Lending (SBL)

 

               KGI was the first broker to act as a principal and agent assisting of clients who want to lend or borrow securities:

1. Institutional Lenders

2. Local and Foreign Institutional Borrowers

3. Retail Borrowers.

                This service will help increase liquidity and price stability to the Thai capital market. In 2009, SBL gained popularity due to the volatile stock market. SBL was popular among local and foreign institutional clients. Especially retail clients, SBL volume increased double from 2008 resulting from campaign Short Selling for Children by Equity Derivatives Department. This campaign summarized total SBL volume from 3 September - 30 December 2009 from retail borrowers. Every SBL volume of Baht 1 million, KGI donated amount for children 100 Baht. The total donation amount equaled to 16,400 Baht and donated to Pakkred Babies' Home and the Foundation for the Welfare of the Mentally Retarded of Thailand. This campaign aimed to contribute to social.

 

                In 2010, the Company plans to expand its SBL business as follows:

1. Reduce SBL fee to handle with new sliding commission rate and to repay the Companys clients and also introduce

    SBL to new clients who never borrow securities before.

2. Expand client base, especially foreign institutional clients who are increasingly interested in borrowing and lending

    Thai securities.

3. Consider to develop internal system to support SECs relaxation on regulations. Among the relaxation is the allowance

    of SBL on cash account over than only credit balance account in the past.

4. Consider to develop internal system to support SBL on DMA for local and foreign institutional clients. Moreover,

    KGI plans to develop SBL on internet to make retail clients more convenient.

 

OTC Derivatives

 

                KGI is recognized as one of the leaders in innovation in the development of derivatives products in Thailand. KGI has spent more than 10 years preparing for issuing and trading of derivatives products. The major shareholder, the KGI Group has also provided valuable assistance by transferring knowledge and technology to the Company. The KGI Group sent derivatives experts to train our staffs to be ready for this new market in Thailand. At the same time, KGI sent staff to its related companies in Taiwan and Hong Kong to closely study their sophisticated derivatives markets.

 

                KGI adopts the same program and software as those used in Taiwan and Hong Kong. The software is widely recognized in developed derivatives markets in many countries and should be effective in the Thai market as well. Such system will greatly enhance the risk management capability of the Company in hedging our derivatives positions. KGI is ready to provide services relating to derivatives products to clients. KGI Group and the Company always develop such system to handle every market situation. KGI is completely ready for OTC Derivatives. At the moment, the Company focuses mainly on institutional clients who have better understanding about the risks and rewards of such products.

 

1. OTC Equity Derivatives

 

       OTC Equity Derivatives products are tailor-made, and designed according to clients request.

In 2009, OTC Equity Derivatives gained popularity due to the volatile stock market. OTC Equity Derivatives was popular among local and foreign institutional clients including Private Fund, purposely to manage their risk and gain their return.

 

The Company provides three types of OTC Equity Derivatives,

1) Basic Options, which are Call Options and Put Options

2) Combination Options, which are Call Spread Options, Put Spread Options, and Strangle, etc.

3) Exotic Options, apart from the basic options and combination options, the Company has been launching more

    complex derivatives, such as Asian Call Spread Options and Digital Call Options, Auto Redemption Options,

    Forward Start Options, and Himalaya Options and will innovate more and more to match clients risk and return

    profiles in the future.

 

      In 2010, KGI views the market is still volatile from both internal and external factors including low interest rate trend, so KGI expects OTC Equity Derivatives will maintain its popularity. KGI formed a partnership with reputed foreign banks in the area of OTC Equity Derivatives on foreign equity underlying covering markets; Hong Kong, Japan, Singapore, Australia, USA, and Europe. KGI will regularly organize training/seminars to ensure that our clients thoroughly understand the products before investing in equity derivatives with us and that our equity derivatives products would help reduce risk and/or enhance return of clients portfolios.

 

2. Structured Products

      KGI is focusing on developing structured products that combine equity derivatives with money market instruments to serve clients who want to invest in both the equity market and money market. KGI offers structured products exclusively to institutional clients and private funds with a good understanding and knowledge of derivatives.

      The structured product that KGI provides is:

      Equity Linked Note (ELN): To serve the needs of the clients who prefer investment in short term money market with high yield and who can invest in equity market. At present, KGI provides various types of ELN with maximum term of 270 days, whose investment returns are primarily linked to the performance of the underlying asset. The feature of SN can be customized to fit clients market view. The underlying can be Single Stock, Basket of Stocks, Index and ETF, depends on the type of equity linked product invested.

      In 2009, KGI formed a partnership with reputed domestic banks to issue Structured Products to fulfill need of bank-base clients who need higher return than interest from deposit.

      In 2010, KGI will continue to develop new types of Structured Products that attractive and serve the needs of our value clients.

 

Equity Exchange Traded Fund (Equity ETF)

 

                KGI joined a group led by One Asset Management Limited (97% owned by the Company) and four other leading securities companies as well as a foreign fund advisor that won the right to launch Thailands first equity exchange traded fund (Equity ETF) in the name of ThaiDEX SET50 ETF or TDEX since 2007. KGI acts as Market Maker (MM), providing liquidity in the secondary market and as Participating Dealer (PD), facilitating the creation and redemption of TDEX in the primary market. By the end of 2009, Asset Under Management (AUM) of TDEX was Baht 2,547 million, showing growth of 152% from Baht 1,011 million at inception in August 2007.

                From great success of TDEX in 2007-2008, KGI joined a group led by One Asset Management Limited and five other leading securities companies to launch Thailands third equity ETF in the name of ThaiDEX FTSE SET Large Cap ETF or TFTSE. During the IPO period, July 20-28, 2009, Asset Under Management (AUM) of TFTSE was Baht 166 million or 22 million units.

                In 2010, KGI expects AUM of TDEX and TFTSE to reach Baht 4,000 millions and Baht 200 millions respectively. KGI believes it can achieve such target due to its capabilities, Thai market recovery and increasing popularity of TDEX and TFTSE.