Struggling AFET to expand hours, introduce more products

Business News - Monday December 17, 2007

Bangkok Post

COMMODITIES FUTURES TRADING

Struggling AFET to expand hours, introduce more products

NUNTAWUN POLKUAMDEE

The Agricultural Futures Exchange of Thailand will expand its trading hours and introduce new products to help increase market liquidity in 2008, according to acting president Nitus Patrayotin.

Starting January, trading hours will be extended by 45 minutes to close at 3:45 pm. Price quotations for contracts of ribbed smoked rubber sheets will also be narrowed to five satang from 10 satang now.

Mr Nitus said the third element of the development plan, promoting the products on the AFET, will also come next year, starting with the introduction of contracts for 100% jasmine rice.

Transactions on the AFET have picked up in recent months, with fourth-quarter turnover so far averaging 600 contracts per day compared with just 200 to 300 per day in the first nine months of the year. Still, the exchange is far below its trading target of 1,000 contracts daily.

Mr Nitus said turnover had increased in recent weeks thanks to greater volatility in world rubber prices, oil prices and currency rates. Trade is overwhelmingly focused on ribbed smoked rubber sheet No. 3 contracts (RSS-3).

He said the AFET, founded three years ago, continued to suffer with structural problems, namely the fact that government price guarantees for commodities, particularly rice, undermined the market mechanism for the futures market.

Six products are currently listed on the exchange: RSS-3, 5% white rice, standard Thai rubber 20, premium grade tapioca starch, tapioca chips and latex.

Mr Nitus said AFET had considerable growth potential if the government abandoned its price-support policies.

Activity in tapioca chip futures could rise with global oil prices thanks to its use in ethanol production, he said.

The exchange also faces funding difficulties. The government offered 110 million baht in support to the AFET last year, compared with operating expenses of 150 to 200 million.

Mr Nitus said the AFET had moved to reduce operating costs and back-office operations by joining with the Stock Exchange of Thailand. Online trading was another channel that the AFET would promote to boost turnover in 2008, Mr Nitus added.

''Our main job is to continue with education and training programmes for investors and expand the market,'' he said. ''The commodities market offers considerable benefits to the economy and has growth potential. But we must have support from the government.''

Mr Nitus, previously an executive vice-president at AFET, becomes acting president effective today with the resignation of Napaporn Kurupasutachai. Ms Napaporn left AFET with one year remaining in her term due to health reasons.