The Bank of Thailand (BOT), in coordination with the Securities and Exchange Commission (SEC) and other relevant agencies, is considering guidelines to regulate the use of digital assets as a means of payment for goods and services, to limit risks. Overall, using technology to promote financial innovation, enhancing the efficiency and security of the payment system, and safeguarding the stability of the overall economic and financial system will continue to be prioritized. BOT also published the guidelines on operational risk management of specialized financial institutions. The guidelines define the roles of the Board of Directors and senior management, focus on having an effective risk management system, and address information disclosures. In addition, BOT and the Steering Committee on Commercial Banks’ Preparedness for LIBOR Discontinuation have mutually agreed that financial institutions and market participants should actively transition their legacy contracts from referencing Thai Baht Interest Rate Fixing (THBFIX) to referencing other benchmarks as soon as possible.
BOT announced that, from July 01, 2022, all financial institutions shall cease offering new derivatives referencing THBFIX, such as Interest Rate Swaps (IRS) and Cross Currency Swap (CCS), except for risk management of THBFIX legacy contracts. All financial institutions should gradually reduce notional outstanding of their THBFIX derivatives maturing after 2025 as follows:
- Reduce total outstanding to 50% by mid-2022 and 25% by end-2022 (as compared with the numbers at end-June 2021)
- Reduce outstanding with clients to 30% by end-2022 (as compared with the numbers at end-June 2021)
The BOT and the Committee assess that liquidity in THBFIX derivatives market will gradually decline as the cessation date of THBFIX approaches. Therefore, market participants are strongly encouraged to unwind the existing THBFIX contracts or actively transition to THOR before mid-2022 while there is still enough liquidity in THBFIX derivatives market for the active transition. BOT would also facilitate a price discovery mechanism for the transition as reliable market prices would minimize value transfers. For residual contracts that are unable to transition before the cessation date of THBFIX, contractually robust fallback provisions should be incorporated. Nevertheless, market participants must be aware that Fallback Rate (THBFIX) would be published only until end of 2025 and there are limitations in its use.
- Press Release on Use of Digital Assets
- Notification on Guidelines on Operational Risk Management (in Thai)
- Guidelines on Operational Risk Management (PDF in Thai)
- Press Release on Transition from THBFIX
Keywords: Asia Pacific, Thailand, Banking, Securities, Digital Assets, Operational Risk, Specialized Financial Institutions, LIBOR, THBFIX, Interest Rate Benchmarks, THOR, Benchmark Reforms, Governance, BOT
Previous ArticleBoE Extends UAT Window for BEEDS, Issues Derivatives Clearing Policy
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.