Unofficial Translation DERIVATIVES ACT,

DISCLAIMER: THIS TEXT HAS BEEN PROVIDED FOR EDUCATIONAL/ COMPREHENSION PURPOSES AND CONTAINS NO LEGAL AUTHORITY. THE OFFICE OF THE COUNCIL OF STATE SHALL ASSUME NO RESPONSIBILITY FOR ANY LIABILITIES ARISING FROM THE USE AND/OR REFERENCE OF THIS TEXT. THE ORIGINAL THAI TEXT AS FORMALLY ADOPTED AND PUBLISHED SHALL IN ALL EVENTS REMAIN THE SOLE AUTHORITY HAVING LEGAL FORCE.

Unofficial Translation

DERIVATIVES ACT, B.E. 2546 (2003)1 _______________

Bhumibol Adulyadej, Rex.

Given on the 3rd Day of July B.E. 2546, Being the 58th year of the Present Reign.

His Majesty King Bhumibol Adulyadej is graciously pleased to proclaim

that: Whereas, it is expedient to have a law governing transaction on

derivatives; Whereas, this Act contains certain provisions relating to the restriction

of rights and liberties of the persons which Sections 29 together with Section 35, Section 36, Section 39, Section 48 and Section 50 of the Constitution of the Kingdom of Thailand allow to be done by virtue of provisions of law;

Be it, therefore, enacted an Act by his Majesty the King, by and with the advice and consent of the National Assembly, as follows:

Section 1. This Act shall be called the “Derivatives Act B.E. 2546”. Section 2. This Act shall come into force after the lapse of one

hundred and eighty days from the date of its publication in the Government Gazette. 2 Section 3. In this Act:

1 Translated by Ms. Sukpuck Phongsathit under contract for the Office of the

Council of State of Thailand's Law for ASEAN project.- Initial version- pending review and approval. 2 Published in the Government Gazette Vol. 120, Part 65a, Page 1, dated 10th

July B.E. 2546 (2003)

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“Goods” means any securities, gold, crude oil or any other property as specified in the notification of the Securities and Exchange Commission (“SEC”) with the approval of the Cabinet, excluding any currency. “Variable” means any exchange rate, interest rate, financial index, securities index or any other variables as specified in the notification of the SEC with the approval of the Cabinet. “Derivatives” means a contract having one or any combination of the following characteristics:

(1) a contract in which one party is obliged to deliver goods to the other party ,who make payment for such goods, at a given time in the future in the certain amount and price as specified in the contract;

(2) a contract in which one party receives payment or is obliged to make payment to the other party in the amount which is equivalent to the difference between the price or value of goods or variable as specified in the contract and the price or value of goods or variable prevailing at the given time or period in the future as specified in the contract;

(3) a contract in which one party is entitled to demand the other party to deliver goods or make payment for goods or make payment in the amount which is equivalent to the difference between the price or value of goods or variable as specified in the contract and the price or value of goods or variable prevailing at the given time or period in the future as specified in the contract, or to demand the other party to enter into a contract under sub Section (1) or (2). “Derivatives Business” means the undertaking to provide services as the following;

(1) Being a derivative agent; (2) Being a derivative dealer;

(3) Being a derivative adviser; (4) Being a derivative fund manager; (6) any other businesses concerning derivatives as specified in the

notification of SEC.

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“Derivatives agent” means a person who, in the ordinary course of business, provides services or holds himself out to the general public as being ready to provide services as an agent in derivatives business trading with others, and is licensed or registered under this Act, excluding those derivatives agents with the characteristic as specified in the notification of the SEC.

“Derivatives dealer” means a person who, in the ordinary course of business, holds himself out to the general public as being ready to engage as a counter-party in derivatives trading with any person, who intends to trade in derivatives by offering to enter or entering into such contract, and is licensed or registered under this Act, excluding those persons who offer to trade or trade in derivatives for his own account through the derivatives exchange licensed under this Act or those dealers with the characteristic as specified in the notification of the SEC.

“Derivatives advisor” means a person who, in the ordinary course of business, gives advice or holds himself out to the general public as being ready to give advice to others, whether directly or indirectly, concerning derivatives or advisability of derivatives trading, and is licensed or registered under this Act, excluding those persons giving advices which are solely a part of or in connection with the conduct of business as a derivative agent or a derivative dealer or any advices given in a manner as specified in the notification of SEC.

“Derivatives fund manager” means a person who, in the ordinary course of business, engages in managing funds for others or holds himself out to the general public as being ready to manage funds for others, in order to seek benefit from derivatives, and is licensed or registered under this Act, excluding those derivatives fund managers with the characteristics as specified in the notification of the SEC.

“Derivatives Exchange” means any center or network through which derivatives trading is carried out, in the ordinary course of business, whether by way of matching orders or arranging for counterparts, or by way of providing a trading facility or facilitating for those having intention to trade in derivatives to be able to agree upon or enter into a contract, and is licensed or registered under this Act, excluding any center or network with the characteristics as specified in the notification of the SEC.

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“Derivatives clearing house” means any center or network which provides services for clearing and settlement of obligations under derivatives, in the ordinary course of business, and is licensed or registered under this Act, excluding any center or network with the characteristics as specified in the notification of the SEC.

“To trade in derivatives" means to enter into a derivatives contract. "Derivatives position" means any obligation or right of a person arising

from derivatives trading. "Close out a derivatives position" means to discharge an obligation or

terminate rights under existing derivatives by way of trading in new derivatives which results in an offsetting of the position or by any other means under the rules of a derivatives clearing house.

“Securities” means any securities under the Securities and Exchange Act. “Stock Exchange” means the Stock Exchange of Thailand under the

Securities and Exchange Act. “Securities exchange” means any securities exchange center under

the Securities and Exchange Act. “Securities clearing house” means the securities clearing house under

the Securities and Exchange Act. “Institutional investor” means any investor which is a financial

institution under the Commercial Banking Act, a securities company, a non-life insurance company, a life insurance company, a statutory company, a mutual fund, a private fund, the Government Pension Fund, a provident fund or any other legal entities as specified in the notification of the SEC.

“Competent officer” means any person appointed by the Minister to perform duties under this Act.

“SEC Office” means the Office of the Securities and Exchange Commission under the Securities and Exchange Act.

“Capital Market Supervisory Board”3 means the Capital Market Supervisory Board under the Securities and Exchange Act.”

3 Section 3 The definition “the Capital Market Supervisory Board” is added by Derivatives Act (No. 2) B.E. 2551.

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“SEC” means the Securities and Exchange Commission under the Securities and Exchange Act.

"Minister" means the Minister in charge of this Act. Section 4. This Act shall not apply to the followings: (1) any derivatives of which the obligation for payment is calculated

from any foreign exchange rate or interest rate and such derivatives is conducted outside the derivatives exchange;

(2) any contract to purchase or sell securities with an agreement to sell back or buy back such securities;

(3) any contract or trade as specified by the notification of the SEC.

Section 5. Any derivatives which is entered into by or through a derivatives business operator, a derivatives exchange or a derivatives clearing house shall constitute a legal binding contract and shall create an obligation enforceable under the provisions of law.

Section 6.4 Unless otherwise specified by the provision of this Act,

the SEC, the Capital Market Supervisory Board and the SEC office shall issue a notification to the general public stipulating the period for consideration and making order with respect to the issuance of license, registration and grant of approval under this Act.

Section 7.5 All regulations, rules, notifications, directives or

stipulations issued under this Act by the SEC, the Capital Market Supervisory Board or the SEC Office which are of general application shall come into force upon their publication in the Government Gazette.

4 Section 6 is amended by Derivatives Act (No.2), B.E. 2551. 5 Section 7 is amended by Derivatives Act (No.2), B.E. 2551.

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Section 8. The Minister of Finance shall be in charge of this Act and shall have the power to issue notifications and appoint competent officer to perform duties in accordance with this Act.

Such notification shall come into force upon their publication in the Government Gazette.

CHAPTER 1

SUPERVISION OF DERIVATIVES -----------

Section 9. The SEC shall have the powers and duties to formulate

policies on the promotion and development, as well as supervision of derivatives, derivatives business, derivatives exchange, derivatives clearing house, derivatives regulatory association and the prevention of unfair derivatives trading practices. Such powers and duties shall include:

(1) issuance of rules, regulations, notifications, orders, or directives pursuant to this Act;

(2) determination of fee for the application for license, application for registration, application for approval, issuance of license, registration, granting of approval or other business which are granted the license, registered or approved;

(3) determination of the scope and procedures of the functioning of the subcommittee members and relevant officials under this Act;

(4) determination of rules to be used as a guideline for addressing any problems which may arise from the enforcement of this Act.

Section 10. In the event where it is necessary to maintain the

economic stability, or protect the interest of the people or investors, the SEC shall have the power to impose additional conditions to be complied with by derivatives business operators, derivatives exchange center and derivatives clearing house.

Section 11. The SEC shall have the power to appoint a

subcommittee to perform any matter as assigned.

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The subcommittee under the first paragraph shall comprise a chairman and at least four other qualified subcommittee members with knowledge and expertise relating to the assigned matters.

Section 12. The meeting of subcommittee shall be quorate when

there is no less than half of the total number of subcommittee members present at the meeting.

In the subcommittee’s meeting, if the chairman is not present at the meeting or unable to perform his duty, the subcommittee members present at the meeting shall elect one of them to chair the meeting.

A resolution of the meeting shall be passed by a majority vote. Each subcommittee member is entitled to one vote. In the event of an equality of votes, the chairman of the meeting shall have another vote as the casting vote.

Section 13. The subcommittee members shall be remunerated as

specified by the Minister. Section 14. The SEC shall have the powers and duties to perform

any acts for the implementation of the SEC’s resolution and to perform any other acts in accordance with the provisions of this Act.

The powers and duties of the SEC under this first paragraph shall include:

(1) receipt of administrative fines imposed or fee charged under this Act; (2) issuance of notification or directives pursuant to the provision of

this Act. All fines and fees under this subsection (1) shall belong to the SEC office.

Section 15. To protect the interest of the people or investors, the

SEC office or the person designated by the SEC office shall have the duty to disclose information regarding any derivatives trading, derivatives business operator, derivatives exchange, derivatives clearing house, regulatory association of derivatives business operators or information relating to any offence and penalty imposed on

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the offender under this Act, including any other information obtained in result of performing the duties under this Act, subject to the rules specified in the notification of the Capital Market Supervisory Board.

(“The Capital Market Supervisory Board” is amended and added by section 5 of the Derivatives Act (No.2) B.E. 2551.

CHAPTER 2 DERIVATIVES BUSINESS

-------------------------- PART 1

SUPERVISION OF DERIVATIVES BUSINESS --------------------------

Section 16. The derivatives business operator shall be a limited

company or a public limited company, except for a derivative advisor which shall also be an individual and shall obtain the license from the SEC.

Any derivative business operator which is a legal person under Section 17 and engages in derivative business only with institutional investors shall register with the SEC office, unless the derivative business operator engages in derivative fund manager business with the institutional investors in a mutual fund under the Securities and Exchange Act, such operator shall obtain a license from the SEC in accordance with the first paragraph.

The application for a license or a registration, the issuance of a license and registration shall be in accordance with the rules specified in the notification of the SEC.

Section 17. The derivatives business operator engaging only with

institutional investors under Section 16 paragraph two shall be a legal person in any of the following categories:

(1) a commercial bank under the Commercial Banking Act; (2) a finance company or a credit foncier under the Undertaking of

Finance Business, Securities Business and Credit Foncier Business Act;

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(3) a securities company under the Securities and Exchange Act; or (4) any other legal entity as specified in the notification of the SEC.

Section 18. For the purpose of protecting customers, maintaining

the stability of the finance system or controlling the risks arising from derivatives, the Capital Market Supervisory Board shall have the power to specify in its notification any regulations with which the derivative business operator shall comply.

(“The Capital Market Supervisory Board” is amended and added by section 5 of the Derivatives Act (No.2) B.E. 2551.)

Section 19. The SEC office shall have the power to order the

derivative business operator to submit report or any other documents regarding its derivatives business periodically or from time to time as specified by the SEC office. The SEC office shall also have the power to request the derivative business operator to submit any additional explanation or further elaboration on such report or document.

Section 20. Any derivatives business operator that intends to cease

operation in permitted or registered derivative business shall submit the application for permission to cease such operation to the SEC office or the SEC, as the case may be.

In giving permission, the SEC office or the SEC may impose any conditions with which the applicant shall comply.

PART 2

REGULATIONS FOR LICENSED DERIVATIVES BUSINESS OPERATORS --------------------

Section 21. The provision in this part shall apply to any derivatives

business operator, which is licensed in accordance with section 16.

Section 22. The derivative business operator shall not engage in any other business, unless approved by the SEC office.

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When the SEC office receives the application for approval under the first paragraph, it shall consider such application and inform the derivative business operator of its decision within sixty days from the date of receipt of such application together with all valid and complete documents as specified in the notification of the SEC office.

Upon the lapse of time specified in the second paragraph, if the SEC office does not inform such derivative operator of its decision or does not give any orders otherwise, it shall be deemed that the SEC office has approved such business.

Section 23. In the event where the derivative business operator is

an individual, such individual shall not have any of the following prohibited characteristics:

(1) being a person under the receivership ordered by the court or being a bankrupt;

(2) being an incompetent or quasi-incompetent person; (3) having disreputable background or managing any business in a

manner indicating a lack of professional accountability or due care as specified in the notification of the Capital Market Supervisory Board and in making decision, the SEC office shall take into account the degree of seriousness of such prohibited characteristics;

(4) being a government official or an official in any state agency in charge of supervision of derivative business operator or financial institutions;

(5) being a person not having educational qualification, working experiences or other qualifications as specified in the notification of the Capital Market Supervisory Board6.

Section 24. In the event where the derivatives business operator is

a legal person, the appointment or authorization of any person to be or act as director, manager, or holder of any position as specified in the notification of the

6 “The Capital Market Supervisory Board” is amended and added by section 5 of the Derivatives Act (No.2) B.E. 2551.

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Capital Market Supervisory Board7 shall be approved by the SEC office and such person shall not have any of the prohibited characteristics as prescribed in section 23.

In the event where it is subsequently established that the person acting as a director, manager, or holder of any position under the first paragraph has any of the prohibited characteristics as prescribed in section 23, the SEC office shall have the power to instruct the derivatives business operator to suspend such person from acting in that position and rectify such non-compliance or the SEC office may revoke its approval on such person.

The provision of the first and second paragraphs shall apply, mutatis mutandis, to any person with whom the derivatives business operator enters into an agreement authorizing such person and those who work for such person to have full or partial power of management in its derivatives business.

Section 25. A person can hold or be a beneficiary of more than ten

percent of the shares with voting rights of any derivatives business operator only when approved by SEC office.

The approval under the first paragraph shall be granted only when such person or in the event where such person is a legal person, a director, manager or partner of such legal person do not have the prohibited characteristics as prescribed in Section 23 subsection (3) or any other prohibited characteristics as specified in the notification of the Capital Market Supervisory Board.

In the event where it is subsequently established that the person approved by the SEC office has any of the prohibited characteristics under the second paragraph, the SEC office shall have the power to revoke its approval, unless such prohibited characteristics are subsequently determined by the notification of the Capital Market Supervisory Board. In this case, such approved person shall comply with the notification within the period specified by the SEC office. If, after such period has lapsed and such person remains in non-compliant, the SEC office shall have the power to revoke its approval.


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For the purpose of this section, a beneficiary of shares means any person with direct or indirect power to;

(1) direct or control the exercise of voting rights in a derivatives business operator;

(2) direct or control the acquisition, disposal or creation of encumbrance over shares issued by a derivatives business operator; or

(3) direct or control any other matters as specified in the notification of the Capital Market Supervisory Board8, regardless of whether such power arises from any agreement, understanding, relationship or else, and whether such power arises from the acquisition or holding of shares by such person or by any other persons.

Section 26. In the event where a person, without the approval of

the SEC office in accordance with section 25, holds shares of any derivatives business operator more than ten percent of the shares with voting rights, the derivatives business operator shall neither pay dividend or any other benefits for the shares exceeding the ten percent to such person nor allow such person to exercise the voting rights of the shares exceeding ten percent in any shareholders’ meeting.

Section 27. A derivatives business operator shall prepare the

accounts to truly and currently show the existing results of its operations and financial status in conformity with the accounting standard as specified by laws and any rules as specified in the notification of the SEC.

The provision of the first paragraph shall not apply to a derivatives advisor.

Section 28. A derivatives business operator shall prepare its

financial statement to the SEC office. Such financial statement shall be made for public access at the office of the derivatives business operator and also be published


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at least in one local daily newspaper in accordance with the requirements specified in the notification of the SEC.

The financial statement under the first paragraph shall be prepared in accordance with the requirements specified in the notification of the SEC and shall be audited and opined on by a certified public auditor.

The provision of the first paragraph shall not apply to a derivatives advisor.

Section 29. In the event where the auditor under section 28 finds

that the derivatives business operator produced any documents in support of entries or disclosed information in the financial statement which is inaccurate or incomplete or failed to comply with section 27, the auditor shall disclose his finding and render his opinion as well as clarify significant impacts on the financial statement in the audit report that he will sign.

Section 30. The auditor under section 28 shall be a certified public

auditor approved by the SEC office and shall not be a shareholder, a beneficiary of shares under section 25 paragraph four, a director ,a staff or an employee of the derivative business operator. Such auditor shall also adhere to the ethnics and carry out his audit in accordance with the requirements under the laws governing auditors and additional requirements specified in the notification of SEC.

The approval of the auditor under the first paragraph shall be made in accordance with the requirements specified in the notification of SEC.

PART 3 TREATMENT OF CUSTOMER ASSET

-----------------------

Section 31. The provisions in this part shall apply to derivatives agents licensed under section 16 and where it deems appropriate, the Capital Market

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Supervisory Board9 may issue a notification to extend the applicability of the provisions of this Part to any other categories of derivates business operator.

Section 32. In this Part, (1) “customer” means any person who uses the services provided by

a derivatives business operator; (2) “customer asset” means :

(a) asset which a derivatives business operator obtained or held as performance bond for derivatives trading for the account of a customer; (b) profit or any other benefits of the customer resulted from derivatives trading for the account of the customer; (c) warehouse receipt, bill of lading, or any other instruments which represent entitlement in asset held on trust by a derivatives business operator for its customer with a view to delivery or as a result of acceptance of delivery under derivatives trading for the account of that customer; (d) cash, securities or any other assets which a customer deposited with a derivatives business operator for the purpose of payment for goods to be received under a derivative trading for the account of such customer, or which a derivatives business operator received on behalf of a customer in return for delivery of goods under a derivatives trading for the account of the customer; (e) cash remain from sale of customer’s securities held by a derivatives business operator for the account of such customer as a result of his default pursuant to section 36; (f) any other liquid assets as specified in the notification of the Capital Market Supervisory Board10.

Section 33. A derivatives business operator shall segregate the

customer’s asset from its own and shall prepare and keep accounts of customer’s 9 “The Capital Market Supervisory Board” is amended and added by section 5 of the Derivatives Act (No.2) B.E. 2551. 10 “The Capital Market Supervisory Board” is amended and added by section 5 of the Derivatives Act (No.2) B.E. 2551.

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asset for each customer separately from the account of its own in accordance with the rules specified in the notification of the Capital Market Supervisory Board.

In the event where a derivatives business operator advanced its own asset to secure or perform the obligations in connection with or resulted from derivatives trading for the account of a customer, the derivatives business operator shall prepare and keep accounts of such advances in accordance with the rules specified in the notification of the Capital Market Supervisory Board11.

The item and amount of assets as indicated in the account under the first and second paragraph are presumed to be correct, unless proven otherwise.

Section 34. A derivatives business operator shall not use its

customers’ asset for any purpose other than the followings: (1) a customer’s asset shall only be used for derivatives trading, or for

other purposes in connection with or resulted from derivatives trading of the customer;

(2) where the customer’s asset is money, the derivatives business operator may use such money to seek benefits other than specified in subsection (1), provided that the customer has granted its consent in accordance with the rules specified in the notification of the Capital Market Supervisory Board12. In such event, the allocation of any interests accrued or benefits arisen to the derivatives business operator or the customer or otherwise shall be as mutually agreed by both sides.

Section 35. Where the customer’s asset is securities, the derivatives

business operator may request the customer to transfer such securities into its account to be held in trust for the benefit of the customer.

When the derivatives business operator is required to transfer the securities in the first paragraph to the customer, it may use securities of the same

11 “The Capital Market Supervisory Board” is amended and added by section 5 of the Derivatives Act (No.2) B.E. 2551. 12 “The Capital Market Supervisory Board” is amended and added by section 5 of the Derivatives Act (No.2) B.E. 2551.

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class, series and type issued by the same legal person or mutual fund project in the equivalent amount to such customer.

In returning such securities, the derivative business operator shall also transfer all interests accrued or benefits arising from such securities to the customer unless agreed otherwise.

The provision of the second and third paragraph shall apply mutatis mutandis to the return of securities which the derivatives business operator deposits with another person.

Section 36. Where the customer is in default to perform the

obligations arising from the derivatives trading, the derivatives business operator shall inform the customer to settle such obligation within a reasonable period of time. If the customer fails to do so within such period of time, the derivatives business operator may sell the securities held in trust for the benefit of the customer in the market where such securities are normally traded. If, however, the sale in such market is unable to be completed, the derivatives business operator may sell such securities by any other means which fair price can be achieved.

The proceeds obtained from the sale of such securities shall be used to satisfy the obligations under the first paragraph and reimburse the expenses necessarily incurred incidental to such sale. The remaining proceeds, if any, shall be credited into the account of the customer.

Section 37. In the event where a court orders to accept a

customer’s petition for business reorganization or orders the receivership of a customer in a bankruptcy case, the receiver shall inform the derivatives business operator and the SEC office without delay, in which case, the derivatives business operator shall:

(1) close out the customer’s derivatives position, which remain open on the date on which the court ordered to accept the petition for business reorganization or ordered the receivership in accordance with the rules of the derivatives clearing house;

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(2) enforce the performance of the customer’s obligation from its own asset, regardless of whether such asset is maintained by the derivatives business operator or is placed or deposited by the derivatives business operator with any other persons, provided that, the obligation is in connection with or resulted from derivatives traded before or on the date on which the court ordered to accept the petition for business reorganization or ordered the receivership or is incurred from the closing out of the customer’s derivatives position under subsection (1).

In selling customer’s asset to repay such customer’s debt, if the asset to be sold is securities, the derivatives business operator shall sell such securities in the market where such securities are normally traded. If, however, the sale in such market is unable to be completed, the derivatives business operator shall sell such securities by any other means which fair price can be achieved;

(3) set off the obligation of the customer incurred in connection with and resulted from the derivatives trading for the account of such customer before or on the date on which the court ordered to accept the petition for business reorganization or ordered the receivership or the obligation incurred by the closing out of the customer’s derivatives position under subsection (1), against the obligation of the derivatives business operator, which remain unsettled at the time the court ordered to accept the petition for business reorganization or ordered the receivership, even if the objects thereof are not the same, or the obligations are subject to conditions or terms as to time, or the derivatives business operator becomes entitled to the claim underlying such obligation after the date on which the court ordered to reorganize the business or ordered the receivership.

In the event where the obligation owed by the customer to the derivatives business operator is subject to condition precedent, when the derivatives business operator requests to set off against such obligation, the derivatives business operator shall provide collateral for the amount requested for set off to the administrator of the customer’s asset appointed under the Bankruptcy Act.

Section 38. After the derivative business operator has undertaken

any action under section 37, should there remain any customer’s asset, the

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derivatives business operator shall transfer such asset to the administrator of the customer’s asset appointed under the Bankruptcy Act.

Section 39. In the event where the court issues an order for the

business reorganization of a customer or an order for the receivership of a customer, the provision of section 90/40 paragraph two, section 90/41, section 114 and section 115 of the Bankruptcy Act, B.E. 2483 (1940), as the case may be, shall not apply to the settlement of obligation under derivatives, the acquisition or holding of asset to secure such customer’s obligation under derivatives, or the closing out of such customer’s derivatives position, unless the planner, the plan administrator, or the receiver can prove that the derivatives business operator is aware of the fact that the customer has taken the action or consented to such action with a view to preventing other creditors of the customer from receiving the repayment of indebtedness, either in whole or in part, or that the derivative business operator has failed to comply with business conventions in taking such action.

Section 40. In proceeding under Section 40, if the customer’s asset

is insufficient to cover all indebtedness owed by the customer to the derivatives business operator, the derivatives business operator shall have the right to file a claim for repayment of debt in business reorganization case or in bankruptcy case of the customer. Such claim shall, however, be submitted within the period specified in section 90/26 or section 91 of the Bankruptcy Act, B.E. 2483 (1940), as the case may be.

PART 4

PROTECTION OF CUSTOMER’S ASSET ------------------------

Section 41. The provision of this part shall apply to any derivatives

agent licensed under section 16. Where it is deemed appropriate, the Capital Market Supervisory Board may issue a notification to extend the applicability of the provisions of this part to any other categories of the derivatives business operator.

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Section 42. In this part, (1) “customer” means:

(a) a person who uses the services provided by a derivative business operator and holds a net claim against such derivatives business operator arising out of derivatives trading with such derivatives business operator; or

(b) any person other than a person in paragraph (a) of subsection (1) who holds a net claim against such derivatives business operator arising out of derivatives trading, closing out of derivatives positions, or adjustment in outstanding derivatives position of such person in paragraph (a) of subsection (1).

(2) “asset deemed to be owned by customer” means the following asset, unless otherwise specified in the notification of the Capital Market Supervisory Board:

(a) customer's asset under subsection (1) of section 32 including any interest accrued or benefits arising therefrom;

(b) open derivatives position of the customer; (c) asset segregated from that of the derivatives business operator

under section 33 (d) over-collateralized portion of asset placed by the customer

with a derivatives business operator as collateral for a loan granted for derivative trading;

(e) securities or any other financial instrument held by a derivatives business operator in its own account, which are of the same class, series and type issued by the same legal person or mutual fund project as those owned by the customer, provided that, the amount of which shall be limited to that required for return of such securities or any other financial instrument of the same class, series and type to satisfy the claim of the customer against the derivatives business operator;

(f) any other assets as specified in the notification of the Capital Market Supervisory Board.

Section 43. When a derivatives business operator becomes a

debtor by judgment or a debtor under the receivership ordered by the court, the

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asset deemed to be owned by customers are considered protected and shall not be regarded as assets subject to the seizure or attachment in civil case and shall not be regarded as asset that may be allocated to the creditor in the bankruptcy case.

In the event where the derivatives business operator is under the receivership in according to the first paragraph, the receiver and the SEC office shall have the power to segregate and manage the assets deemed to be owned by the customer in accordance with the rules specified in the notification of the SEC in consultation with the Ministry of Justice. Such power shall also include:

(1) gathering and allocating assets deemed to be owned by customer in order to return them to the customer;

(2) transferring account and assets deemed to be owned by customer to other derivatives operator;

(3) closing out the derivatives position of customer, in the event where the transfer of account and assets to other derivatives business operator cannot be achieved;

(4) compromising, suing, defending the case or taking any other acts to complete the management of the assets deemed to be owned by customer;

In proceeding under the second paragraph, the receiver and the SEC office may authorize any other persons to take such acts on their behalf.

Section 44. In managing assets deemed to be owned by the

customer under section 43, the customer who is not associated with the derivatives business operator in a manner specified in the notification of the Capital Market Supervisory Board shall be entitled to receive the allocated asset prior to others.

Section 45. In the event where the derivatives business operator is

under the receivership ordered by the court and the management of assets deemed to be owned by customer under section 43 is finalized, should any customer has acquired the asset partially, such customer shall have the right to file a claim for repayment of the remaining debt in the bankruptcy case of the derivatives business operator. Such claim shall, however, be submitted within the period specified in section 91 of the Bankruptcy Act, B.E. 2483 (1940).

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Section 46. When a derivatives business operator is ordered by the government or any regulatory agency under any other laws to suspend its business either in whole or in part, such derivatives business operator shall notify the SEC office without delay.

When the event in the first paragraph occurs, the assets deemed to be owned by customers are considered protected and shall not be regarded as assets subject to the restriction of distribution, disposal or transfer in accordance with a lawful order to wholly or partially suspend the business operation of the derivatives business operator.

PART 5 SETTLEMENT OF DISPUTES BY ARBITRATION

---------------------

Section 47. For the purpose of customer protection and providing expeditious and fair settlement of dispute, the customer may request the SEC office to arrange the arbitration for the settlement of dispute in civil case in connection with or resulted from the derivatives business. In making such request, the customer shall give the derivatives business operator a written notice expressing his intent to settle the dispute. When the derivatives business operator obtained such notice, it shall be deemed that both sides agreed to enter into an arbitration agreement to settle the arisen dispute. A dispute submitted to arbitration under the first paragraph shall have capital not exceeding the amount specified in the notification of SEC office.

Section 48. The Arbitration Act shall apply mutatis mutandis to the settlement of disputes under section 47.

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PART 6 MEASURES TO PROTECT CUSTOMER’S ASSET AND SETTMENT SYSTEM FOR

DERIVATIVES -------------------

Section 49. The derivatives business operator shall maintain its

financial status as required by the notification of the SEC. Section 50. Where there is evidence that a derivatives business

operator fails to maintain its financial status as required by the notification of the SEC pursuant to section 49, or such derivatives business operator operates its business in any manner which may cause damages to customer’s asset or to the settlement system for derivatives business operator’s financial status or operation, the office of SEC shall have the power to order such derivatives business operator to:

(1) refrain from trading in derivatives business unless such trading is for the purpose of closing out derivatives position;

(2) transfer the derivatives business position and the customer’s asset to other derivatives business operator;

(3) close out derivatives position of customer if the transfer thereof to other derivatives business operator is unable to be made;

(4) close out derivatives position that the derivatives business operator holds for his own account;

(5) undertake or refrain from any action as deemed appropriate. When the event in the first paragraph occurs and there is an urgent

need to protect or reduce potential damages or if the derivatives business operator fails to comply with the order pursuant to the first paragraph, the SEC office shall have the power to suspend the business operation either in whole or in part and shall be empowered to proceed with subsection (2), subsection (3) and subsection (4).

Section 51. In the event where, the SEC office orders to suspend

operation either in whole or in part of the derivatives business operator under

23


section 50 paragraph two, the SEC office may authorize any derivatives clearing house to proceed with subsection (2), subsection (3) or subsection (4) of section 50 on its behalf.

Section 52. The proceeding of the SEC office pursuant to section 50

or the derivatives clearing house pursuant section 51 shall be binding upon the derivatives business operator as if such derivatives business operator has undertaken such actions by itself. Any expenses incurred thereby shall be paid out of such derivatives business operator’s asset.

Section 53. The action duly taken pursuant to subsection (2),

subsection (3), subsection (4) and subsection (5) of section 50 or section 51 shall be deemed to have a legally binding effect and shall not subject to section 113, section 114 and section 115 of the Bankruptcy Act B.E. 2483 (1940), and section 237, section 349 and section 350 of the Civil and Commercial Code. However, if the action taken is the transfer of derivatives position of customer or customer’s asset to other derivatives business operator, such action shall in no way prejudice the customers’ right under the section 308 paragraph two of the Civil and Commercial Code.

CHAPTER 3

DERIVATIVES EXCHANGE -----------------------

PART 1 SUPERVISION OF DERIVATIVES EXCHANGE

---------------------

Section 54. The derivative exchange shall be a public limited company and shall obtain the license from the SEC office.

The derivatives exchange which provides services only for institutional investor to trade in derivatives for its own account shall be a limited company or a public limited company and shall registered with the SEC office.

24


The application for license, application for registration, the issuance of license and registration shall be in accordance with the rules specified in the notification of SEC.

Section 55. For the purpose of investor protection, maintaining the

stability of the financial system or the control of risks arising from derivatives, the Capital Market Supervisory Board shall have the power to specify in its notification the rules with which the derivatives exchange shall comply.

PART 2

REGULATIONS FOR DERIVATIVES EXCHANGE ------------------------

Section 56. This provision in this part, except for section 70, shall

not apply to a derivatives business exchange under section 54 paragraph two. Section 57. A derivatives exchange shall have: (1) sufficient financial resources for the proper performance of its

operation and for withstanding the risks in connection with the operation of the derivatives exchange;

(2) debt payment system under derivatives provided by a derivatives clearing house which is operated by either a derivatives exchange or any other person ;

(3) measures to promote and maintain the standard in security, credibility and fairness in relation to derivatives trading;

(4) a system to effectively record and distribute information regarding price quotation and derivatives trading

(5) contingency plan in case of emergency which may affect derivatives trading or settlement of obligations under derivatives;

(6) effective management for handling all complaints or disputes arising from derivatives trading in the derivatives exchange or from the use of services provided by the derivatives exchange;

25


(7) regulations for the admission of members which shall take into account of the suitability and status of applicants; and

(8) regulations applicable to members and measures for monitoring members and persons working for members to comply with the rules and code of ethics in undertaking derivatives business.

Section 58. A derivatives exchange shall ensure that its members comply with the rules of the derivatives exchange and agree to be subject to disciplinary actions imposed by the derivatives exchange for ay contravention of or non-compliance with such rules.

The rules under the first paragraph shall provide for procedural due process to members and shall include a procedure to consider appeals filed by members against sanctions imposed by the committee in accordance with the rules specified in the notification of the Capital Market Supervisory Board.

The rules under the second paragraph shall determine the qualification of the committee, appeal procedure and consideration of appeal.

Section 59. In the event where there is a person holding more than five percents of the total number of shares of the derivatives exchange, such derivatives exchange shall neither pay dividend or any other benefits for the portion of shares exceeding five percents to such person nor allow such person to exercise his voting rights for the portion of shares exceeding five percents in any shareholders‘ meeting, unless a waiver thereof shall be given by the SEC.

Section 60. At least two fifths of the board of the directors of the

derivatives exchange center shall be persons capable of performing the duties to protect the interest of members, investors or stakeholders in the derivatives market with appropriate proportion as specified in the notification of the SEC.

Section 61. Other than qualifications and prohibited characteristics

as specified in the Public Limited Companies Act, the director of the derivatives exchange shall not have any of the following prohibited characteristics:

26


(1) having disreputable background or managing any business in a manner indicating a lack of professional accountability or due care as specified in the notification of the SEC;

(2) being a political official; (3) being a government official or an official in any state agency in

charge of the supervision of derivatives exchange or financial institution.

Section 62. Other than the cause of vacating from the office as specified in the Public Limited Companies Act, a director of the derivatives exchange shall be vacated from his office upon:

(1) possession of any prohibited characteristics under section 61; (2) removal by the SEC due to his gross mistake or misconduct in the

performance of his duty.

Section 63. The rules of the derivatives exchange shall enter into force upon approval of the Capital Market Supervisory Board.

In the event where the rules under first paragraph may affect the business operations or interest of members, investor or stakeholders of the derivatives exchange, the derivatives exchange shall arrange a hearing from such persons and submit a report on such hearing to the Capital Market Supervisory Board in support of the consideration for approval on the proposed rules.

The approval under the first paragraph and the hearing of opinions under the second paragraph shall not apply to any rules relating to internal administration of the derivatives exchange center or any other rules as specified in the notification of the Capital Market Supervisory Board.

Section 64. When a derivative exchange proposes rules for the

Capital Market Supervisory Board’s approval, the Capital Market Supervisory Board shall consider such rules and inform the outcome of its consideration within forty five days from the date of the receipt of such proposed rules together with all valid and complete supplementary documents as specified in the notification of the SEC office.

27


The Capital Market Supervisory Board shall not approve rules of the derivatives exchange only in the following cases:

(1) when such rules are inconsistent with the rules specified in the section 57 or insufficient to ensure the fulfillment of the requirements specified in section 57; or

(2) when such rules are not fair and equitable to members, investors or stakeholders of the derivatives exchange.

If, after the period under the first paragraph has lapsed and the Capital Market Supervisory Board does not inform the outcome of its consideration or does not give a notice to amend such rules to the derivatives exchange, it shall be deemed that such rules are approved by the Capital Market Supervisory Board.

Section 65. In case of a change of facts or circumstances, the SEC

shall have the power to order the derivatives exchange to issue additional rules or revoke or amend the existing rules and shall also be empowered to order the derivatives exchange to undertake any other actions as the SEC deems appropriate.

Section 66. Where it is necessary, a derivatives exchange may issue

rules for provisional application, without following the procedures under section 63, however the derivatives exchange shall comply with rules as specified in the notification of the Capital Market Supervisory Board.

In the event where the Capital Market Supervisory Board is of the views that the derivatives exchange undertook any actions in bad faith or without reasonable cause or incompliance with the rules as specified under the first paragraph, the Capital Market Supervisory Board shall have the power to order the derivatives exchange to revoke or amend such rules or undertake any other actions as the Capital Market Supervisory Board deems appropriate.

Section 67. A derivatives may be traded only when the derivatives

exchange has submitted the form and terms of such derivatives to the SEC office and the SEC office has approved its substances.

28


When the SEC office receives an application for approval of the form and terms of derivatives, it shall consider such application and inform the outcome of its consideration within forty five days from the date of receipt of such application together with all valid and complete supplementary documents as specified in the notification of the SEC office. However, if there is a necessity which causes the SEC office unable to complete its consideration within the period so specified, the SEC office may extend such period for not more than thirty days from date of expiration.

The derivatives exchange may revoke or amend the form and terms of the derivatives approved under the first paragraph, in which case, the provisions of the first and second paragraph shall apply mutatis mutandis.

Section 68. In the case where it is subsequently established that

the form or terms of the derivatives approved under section 67 are inconsistent with the current economic circumstances, the SEC office shall have the power to revoke the approval granted.

Section 69. In granting the approval or revoking the approval under

section 67 and section 68, if a derivatives is a contract which the goods underlying such derivatives are bond or treasury bill, or a contract which obliges the parties to make a payment in the amount calculated from foreign exchange rate or interest rate, the SEC office shall consult with the Bank of Thailand before granting or revoking such approval.


financial and economic stability or the stability of trading and debt payment system in derivatives market, the Capital Market Supervisory Board shall have the power to order the derivatives exchange to:

(1) suspend derivatives trading unless such trading is for the purpose of closing out derivatives positions;

(2) instruct the closing out of derivatives positions; (3) limit the trading price range of derivatives;

29


(4) amend or temporarily suspend the application of any rules issued by the derivatives exchange;

(5) undertake or refrain from any action as the Capital Market Supervisory Board deems appropriate.

In proceeding under the first paragraph, if it is necessary for the derivatives exchange to amend or issue additional rules, the derivatives exchange shall propose such rules to the Capital Market Supervisory Board for approval pursuant to section 63 and such rules shall be deemed to be approved by the Capital Market Supervisory Board.

Where it is necessary for the parties to make a payment under derivatives trading in the amount calculated from foreign current rate which may affect the financial or economic stability of the country as well as the stability of the trading and debt payment system in the derivatives market, the Bank of Thailand shall inform the Capital Market Supervisory Board to consider taking any action as specified in the first paragraph.

Section 71. When the derivative exchange orders any disciplinary

sanction on its member, it shall inform the SEC office of such order together with any relating document without delay.

Section 72. In the event where a derivatives business operator

which is a member of any derivatives exchange violates or fails to comply with the rules determined by the derivatives exchange and such action amounts to a violation of or incompliance with the rules specified in the notification of the Capital Market Supervisory Board or the SEC office and the derivatives exchange has already imposed the disciplinary sanction on such member, the Capital Market Supervisory Board or the SEC office may withhold its decision to impose any administrative sanction on members of such derivatives exchange if it is deemed that appropriate sanction has already been imposed on such member

Section 73. In order to protect the interest of the people or

investors, the derivative exchange shall disclose any information relating to

30


derivatives trading, its members or any information regarding the offence and the sanction imposed on its members as well as any other information obtained from the operation of the derivatives exchange, subject to the rules specified in the notification of the Capital Market Supervisory Board.

In the case where a person is of the view that the information disclosed by the derivatives exchange is insufficient, such person may propose his recommendation to the Capital Market Supervisory Board to issue rules imposing the derivatives exchange to disclose additional information.

Section 74. The provision of section 20, section 22, section 27 and

section 28 shall apply mutatis mutandis to the derivatives exchange. The provision of section 29 and section 30 shall apply mutatis

mutandis to the auditor of the derivatives exchange.

CHAPTER 4 DERIVATIVES CLEARING HOUSE

---------------- PART 1

SUPERVISION OF DERIVATIVES CLEARIG HOUSE -----------------

Section 75. The clearing house shall be a limited company or a

public limited company and shall obtain the license from the SEC. The clearing house which provides services only for institutional

investors to repay its own debts shall be a limited company or a public limited company and registered with SEC office.

The application for a license or application for registration and the issuance of a license or the registration shall be in accordance with the rules specified in the notification of SEC.

Section 76. To protect the investors, maintain the financial stability

and the control of systematic risk arising from derivatives, the Capital Market

31


Supervisory Board shall have the power to issue the notification specified the rules with which the derivatives clearing house shall comply.

PART 2

REGULAIONS FOR DERIVATIVES CLEARING HOUSE ------------------------

Section 77. The provision of this part, except for section 79, shall

not apply to the derivatives clearing house under section 75 paragraph 2. Section 78. A derivatives clearing house shall have: (1) sufficient financial resources for the proper performance of its

operation and for withstanding the risk in connection with the operation of the derivatives clearing house;

(2) debt payment system under derivatives to ensure that the obligations under derivatives shall be performed, including a clearing process to deal with any default of payment under derivatives;

(3) contingency plan in case of emergency which may affect the settlement of obligations under derivatives

(4) regulations for the admission of members which shall take into account of the suitability and financial status of applicants;

(5) system to monitor and audit the financial status and derivatives position of members.


financial and economic stability and the stability of the trading and debt payment systems in the derivatives market, the Capital Market Supervisory Board shall have the power to order the derivatives clearing house to:

(1) instruct its members to place additional collateral for the derivatives;

(2) alter the maximum level of the derivatives position which any member or customer of members may hold;

32


(3) close out derivatives position; (4) undertake or refrain from any action as the Capital Market

Supervisory Board deems appropriate. In proceeding under the first paragraph, if the derivatives clearing

house needs to amend or issue additional rules, it shall not be required to propose such rules to the Capital Market Supervisory Board for an approval pursuant to section 63 to which section 89 shall apply mutatis mutandis. In this case, the rules so amended or issued shall be deemed to be approved by the Capital Market Supervisory Board.

Where the parties are obliged under the derivatives trading to make a payment in the amount calculated from foreign exchange rate which may affect the financial and economic stability of the country or the stability of the trading and debt payment system in the derivatives market, the Bank of Thailand may inform the Capital Market Supervisory Board to take any action as specified in the first paragraph.

Section 80. Any obligation either as a counter-party or through

novation in derivatives trading by the derivatives clearing house, the deposit of collateral, settlement of obligations, closing out of the derivatives position, and transfer of the derivatives position which is undertaken in accordance with the derivatives clearing house’s rules as approved by the Capital Market Supervisory Board, shall be legally binding and enforceable.

Section 81. In the event where a derivatives clearing house enter

into a derivatives or interpose as a counterparty to a derivatives, the derivatives clearing house shall, only to its member, be bound to the rights and obligations arising from the derivatives for which it provides settlement services, regardless of whether such members have traded in derivatives for their own accounts or for the account of others.

Section 82. In the event where the business clearing house obtains

or has in its possession asset from its member or its customer as collateral for derivatives trading, asset from derivatives trading of its member or its customer or

33


asset placed with the derivatives clearing house by any member for purpose of maintaining the stability of trading and debt payment system in derivatives market, the derivatives clearing house shall separate such asset from its own and shall prepare and keep accounts of the asset obtained or had in possession for each respective member separately from its own account.

In preparing and keeping the accounts under the first paragraph, if there is also any asset of customers of the members, the derivatives clearing house shall prepare and keep the accounts of such asset separately from the accounts of members’ asset.

Type of asset to be held as collateral for derivatives trading of the member and the customer of the member, safekeeping of assets, preparation and keeping of the accounts of assets under the first and second paragraph shall be in accordance with the rules specified in the notification of the Capital Market Supervisory Board.

The items and amounts of asset as shown in the accounts under the first and second paragraph shall be deemed to be correct, unless proven otherwise.

Section 83. The derivatives clearing house shall not use the assets

obtained or had in possession under section 82 for any purposes other than the followings:

(1) assets of the customers of any member or assets arising from the derivatives trading of the customers of any member shall only be used to secure or settle the obligations relating to or resulted from derivatives trading of the customers of that member or for withdrawal in order to return to the customer of that member;

(2) assets of any member or assets arising from the derivatives trading of any member shall only be used to secure and settle the obligations relating to or resulted from derivatives trading of the member or of the customers of that member;

(3) assets placed with the derivatives clearing house by a member for the stability of trading and debt payment systems in the derivatives market shall only be used to secure and settle the obligations relating to or resulted from derivatives trading of the member or the customers of the member in accordance with the rules of the derivatives clearing house.

34


The provision of subsection (2) of section 34, section 35 and section 36 shall apply, mutatis mutandis, to the assets obtained by or in possession of the derivatives clearing house.

Section 84. When a petition in a bankruptcy case is filed against a

member and the court issues the receivership order, the receiver shall inform the derivatives clearing house and the SEC office of such order without delay and the derivatives clearing house shall:

(1) close out derivatives position, which the member undertakes for his own account and remains open on the date of the receivership order, in accordance with the rules of the derivatives clearing house;

(2) enforce performance of the member’s obligation against the member’s assets obtained by or in possession of the derivatives clearing house under section 82, regardless of whether such asset is maintained by the derivatives clearing house or is placed or deposited by the derivatives clearing house with any other person, for the obligation relating to or resulted from the derivatives trading conducted before or on the date of the receivership order, or the obligation incurred from the closing out of the member’s derivatives position under subsection (1) or the obligation of the member incurred from the closing out of the customer’s derivatives position under section 43.

In selling member’s asset for the repayment of the member’s debt, if the asset is security, the derivatives clearing house shall sell such security in the market where such security is normally traded. If, however, the sale in such market is unable to be completed, the derivatives clearing house shall sell such security by any other means which fair price can be achieved.

(3) set off the obligation owed by the member to the derivatives clearing house incurred relating to or resulted from the derivatives trading conducted before or on the date of the receivership order, or the obligation of the member incurred from the closing out of that member’s derivatives position under subsection (1) or the obligation owed by the member to the derivatives clearing house incurred from the closing of the customer’s derivatives position under section 43, against the obligation of the derivatives clearing house which remains unsettled

35


at the time of the receivership order, even if the objects thereof are not the same, or the obligations are subject to conditions or terms as to time, or the derivatives clearing house becomes entitled to the claim underlying such obligation after the court orders receivership.

In the event where the obligation owed by a member to the derivatives clearing house is subject to conditions precedent, when the derivatives clearing house requests to set off against such obligation, the derivatives clearing house shall provide collateral for the amount requested for set off to the administrator of the member’s asset under the Bankruptcy Act.

Section 85. After the derivatives clearing house has undertaken any

action in accordance with section 84, if there remains any member’s asset, the derivatives clearing house shall deliver such asset to the administrator of the member’s asset under the Bankruptcy Act.

Section 86. In the event where the court orders the receivership of

a member, the provision of the section 114 and section 115 of the Bankruptcy Act, B.E. 2483 (1940) shall not apply to the settlement of obligations under derivatives, the acquisition or holding of asset to secure performance under derivatives, or the closing out of that member’s derivatives position, unless the receiver can prove that the derivatives clearing house which provided services for such member is aware of the fact that such member has taken or consented to such action with a view to preventing other creditors of such member from receiving repayment of indebtedness, either in whole or in part, or that the derivatives clearing house has failed to comply with the business convention in taking such action.

Section 87. In proceeding under section 84, if the member’s asset

obtained by or in possession of the derivatives clearing house under section 82 is insufficient to cover all obligations owed by the member to the derivatives clearing house, the derivatives clearing house shall have the right to file a claim for the repayment of the remaining debt in the bankruptcy case of the member. Such claim

36


shall, however, be submitted within the period specified in section 91 of the Bankruptcy Act, B.E. 2483 (1940).

Section 88. When a bankruptcy petition is filed against the

derivatives clearing house and the court issues the receivership order, or the derivatives clearing house becomes a debtor by judgment, or is ordered to suspend its business operation either in whole or in part by the government or any regulatory agency, for the purposes of protecting the asset of its member and customers of its member, or debt payment system under derivatives, the section 43, section 45 and section 46 shall apply mutatis mutandis to the derivatives clearing house and asset obtained by or in possession of the derivatives clearing house under section 82.

Section 89. The provision of section 20, section 22, section 27,

section 28, section 61, section 62, section 63, section 64, section 65, section 66 and section 73 shall apply mutatis mutandis to the derivatives clearing house.

The provision of section 29 and section 30 shall apply mutatis mutandis to the auditor of the derivatives clearing house.

In the event where the provisions under the first paragraph refer to section 57, it shall be deemed that such provisions refer to section 78. If the derivatives clearing house is a limited company, it shall be deemed that section 61 and section 62 refer to the provisions under Title 22, Partnerships and Companies, of the Civil and Commercial Code.

CHAPTER 5

DERIVATIVES REGULATORY ASSOCIATION ------------------------

Section 90. For the purpose of supervising the derivatives business

operator, the SEC shall have the power to grant approval for an association to be a derivatives regulatory association, if such association has the objectives to promote and supervise the derivatives business operators and the rules of the association are designed to assure that:

37


(1) the criteria for election of its director provides an appropriate representation of all types of its members;

(2) the management system for handling complaints filed by customers of its members or the system for settlement of disputes arising from derivatives business operations either between members or between a member and the customer of a member is efficient;

(3) the measures for monitoring and enforcement of compliance by its members in accordance with the rules of the association and the code of ethnics in undertaking derivatives business is in places;

(4) any other rules is in accordance with the notification of the SEC. The application for approval and the granting of approval shall be in

accordance with the rules specified in the notification of the SEC. Section 91. The provision of the section 71, section 72 and section

73 shall apply mutatis mutandis to the derivatives regulatory association.

CHAPTER 6 UNFAIR PRACTICES IN CONNECTION WITH DERIVATIVES

----------------- PART 1

UNFAIR PRACTICES AFFECTING DERIVATIVES PRICE --------------------

Section 92. No person shall, either by himself or acting in concert

with any other person, trade in derivatives or offer to trade in derivatives, purchase or sell or offer to purchase or sell goods or take any other actions in connection with variable:

(1) for maintaining the price of derivatives traded in a derivatives exchange at a level that is inconsistent with the normal market condition, or for raising or lowering the price of any derivatives traded in a derivatives exchange to the level that is inconsistent with the normal market condition;

38


(2) which has or likely to has the effect of maintaining, raising and lowering the price of derivatives traded in a derivatives exchange at a level that is inconsistent with the normal market condition unless such action is taken in good faith to protect his rightful interest.

Section 93. The following actions or circumstances shall be

deemed to be acting in concert under section 92: (1) opening a joint bank account to make or receive payment incurred

relating to or resulted from derivatives trading, or purchase or sale of goods; (2) placing order to trade in derivatives, or purchase or sell goods, on

behalf of each other; (3) delivering goods underlying derivatives on behalf of each other; (4) making or receiving payment for derivatives trading, or purchase or

sale of goods, on behalf of each other; (5) placing cash or any other assets as collateral for derivatives

trading, or purchase or sale of goods, on behalf of each other; (6) allowing other persons to use his bank account to make or receive

payment incurred relating to or resulted from derivatives trading, or purchase or sale of goods;

(7) allowing other persons to obtain the benefit from or be liable to payment incurred relating to or resulted from derivatives trading, or purchase or sale of goods.

Section 94. No person shall, with a view to unduly seek benefit

from derivatives position, either for his own or for any other person, corner, dump, control or take any other actions, in connection with good underlying any derivatives approved to be traded in a derivatives exchange which results in a significant increase or decrease in the amount of goods to be delivered under such derivatives.

Section 95. No person shall make or disseminate any statement or

make promise which is false or likely to be misleading in substance in connection with derivatives, goods or variable, if at the time of making or disseminating such

39


statement or making promise, such person is aware of or should have been aware of such statement to be in false or likely to be misleading in substance and such act:

(1) has induced or is likely to induce other persons to trade in derivatives at a derivatives exchange; or

(2) has or likely to have the effect of raising, lowering, or maintaining the price of any derivatives traded in a derivatives exchange.

Section 96. No person shall make any prediction regarding

derivatives, goods or variable by distorting the fact or information which is the basis of such prediction, or knowingly using false information as the basis of such prediction or disregarding as to whether the information used is true or false, and such act;

(1) has induced or is likely to induce other persons to trade in derivatives at a derivatives exchange;

(2) has or likely to have the effect of raising, lowering, or maintaining the price of any derivatives traded in a derivatives exchange.

Section 97. No person shall disseminate any statement to the

effect that the price of any derivatives traded in a derivatives exchange will or is likely to rise or fall or be maintained because there has been certain derivatives trading or certain actions relating to such derivatives which are conducted in a manner as specified in section 92, section 95, section 96 whereby such person:

(1) is the one who trades in such derivatives or takes any actions pursuant to section 92, section 95 or section 96; or

(2) has received or will receive any consideration or benefit in connection with the dissemination of such statement.

Section 98. A person who commits an offence as prescribed in

section 92 or section 94 outside the Kingdom shall be punished within the Kingdom. Although, the act of a principal, a supporter or an instigator of such offence has been committed outside the Kingdom, it shall be deemed that the principal, supporter or

40


instigator has committed the offence within the Kingdom. In this regard, the provision of section 10 shall also apply mutatis mutandis to such offence.

PART 2

UNFAIR PRACTICES REGARDING USE OF INTERNAL INFORMATION --------------------

Section 99. No director, subcommittee, representative of a legal

person, agent, employee, staff, advisor, or any person working for a derivatives exchange, derivatives clearing house, derivatives regulatory association, the Security Exchange of Thailand, securities exchange, securities clearing house or any agency entrusted by law to supervise derivatives, goods or variable, who learns of the substantive and non-public information by virtue of his position, shall undertake any of the following action:

(1) trade in derivatives, or offer to trade in derivatives, or purchase or sell or offer to purchase or sell goods relating to such substantive information, for his own benefit or for the benefit of others; or

(2) disclose such substantive information to another person, while he knows or should have known that such person may take advantage of such information for trading in derivatives, or purchasing or selling goods.

The substantive information under the first paragraph means essential information which affects the change in the price of derivatives or goods or the figure of variable, or the decision of investor to trade in derivatives or purchase or sell goods.

Section 100. No person who learns of the substantive information as

a resulted of the disclosure pursuant to section 99 and knows or should have known that such information has been disclosed by the person specified in section 99 and has not yet been disclosed to the public, shall undertake any of the following action:

(1) trade in derivatives or offer to trade in derivatives, or purchase or sell or offer to purchase or sell goods in connection with such substantive information for his own benefit or for the benefit of others; or

41


(2) disclose such substantive information to another person, while he knows or should have known that such person may take advantage of such information for trading in derivatives, or purchasing or selling goods.

CHAPTER 7 SUPERVISION AND CONTROL

----------------------

Section 101. The Minister shall have the powers and duties to overall supervise and control for implementation in accordance with the provisions of this Act.

Section 102. The Minister shall have the power to order the SEC or

the SEC office to clarify any fact, present its opinion and submit any report regarding the matters which are under the supervision of the SEC and the SEC office in accordance with this Act.

CHAPTER 8 COMPETENT OFFICER

-----------------------

Section 103. For the execution of his duties, a competent officer shall have the power to:

(1) enter into the premise of a derivatives business operator, a derivatives exchange, a derivatives clearing house, or the premise where the data of such person is collected or processed, during the hours between sunrise and sunset, or during the business hours of such premise, in order to examine the operation, assets and debts of such person and collect the relevant documents, evidences or information;

(2) enter into a commercial bank or a financial institution during the hours between sunrise and sunset, or during the business hours of such places, in

42


order to inspect accounts, documents or evidences which may be related to the inspection or the execution of this Act;

(3) search any place where there is a reasonable ground to believe that there is a commission of the offences under this Act, during the hours between sunrise and sunset, or during the business hours of such place;

(4) attach documents or evidences relating to a commission of the offences under this Act and for the purpose of inspection or taking legal action which shall not exceed one hundred and eighty days;

(5) order a derivatives business operator, derivatives exchange, derivatives clearing house, or any person who is authorized to collect or process the data of such person including director, staff, employee, and the auditor to testify, deliver or present accounts, documents, seals or other evidences related to the businesses, operations, assets and debts of the abovementioned person;

(6) order any person who trades in derivatives or offers to trade in derivatives with or through a derivatives business operator or a member of a derivatives exchange to testify, deliver or present accounts, documents and other evidences related to derivatives trading or the offer to trade in derivatives;

(7) order any person who may be of use in the execution of the duties of the competent officer to testify, deliver, or present accounts, documents, evidences or any objects related to or necessary for the execution of the duties of the competent officer.

After having entered and inspected under subsection (1) and subsection (2) or undertaken the search under subsection (3), if such inspection or search is completed, the competent officer may continue such inspection or search into the night or beyond the business hours of such place.

In the execution of duties under subsection (1) or subsection (2), the competent officer shall not take any act in the nature of a threat or search under the Criminal Procedure Code. In case of subsection (3), the search warrant is required unless there is a reasonable ground to believe that at the time the search warrant is obtained, the document or evidence may relocated, concealed, destroyed, or deformed, then the search, seizures or attachment of documents or evidences relating to the commission of such offences shall be undertaken without such search

43


warrant. However, the search shall comply with the search procedure under the Criminal Procedure Code and shall not be undertaken after sunset unless such period is business hours of such place.

The exercise of power of the competent officer under the first paragraph shall be carried out against the person who is directly involved in the matter under inspection and in proceeding under subsection (2), subsection (3), subsection (5), subsection (6) and subsection (7) shall require prior approval from the SEC office and in case of subsection (5), subsection (6) or subsection (7), the competent officer shall specify a reasonable period for such person to comply with the order.

Section 104. In execution of the duties of the competent officer,

the persons concerned shall provide reasonable assistance. Section 105. When the authority which has the powers and duties in

accordance with foreign law on derivatives or other foreign law of similar nature makes a request, the SEC office shall have the power to provide assistance as to gathering or inspection of information or necessary evidence for determination whether there has been any action in violations of the law on derivatives or other laws of similar nature of the requesting country. Such assistance shall be subject to the following conditions:

(1) the assistance shall not prejudice the public interest or the preservation of national confidentiality;

(2) the act which is the ground for such assistance shall constitute an offence under this Act;

(3) the requesting foreign authority agrees or consents to provide reciprocal assistance to the SEC office if the SEC office makes a request.

For the purpose of this section, the provision of section 103 shall apply mutatis mutandis.

Section 106. In execution of the duties of the competent officer, he

shall present his identification card to the person concerned.

44


The identification card of the competent officer shall be in the form as specified by the Minister.

Section 107. In execution of his duties under this Act, the

competent officer shall be an official under the Criminal Code. Section 108. Where it is subsequently established that a person has

committed an offence under this Act which may cause damages to the interest of the people and the SEC office has a reasonable ground to believe that the alleged person would relocate or dispose his assets, or any assets in his possession, the SEC office, with the approval of the SEC, shall have the power to order seizure or attachment of such person’s assets, or assets in such person’s possession, or the assets which there is reasonable evidence to believe that they belong to such person. However, the period of seizure or attachment shall not exceed one hundred and eighty days unless an action is brought before the court, then such seizure or attachment order shall remain effective until the court orders otherwise. In case of necessity, it is impossible to bring the case before the court within one hundred and eighty days, the SEC office may request the court having jurisdiction to extend the period of seizure or attachment, however such extension period shall not exceed one hundred and eighty days.

The provision of the Civil Procedure Code shall apply mutatis mutandis to the seizure or attachment under the first paragraph and the competent officer authorized by the SEC office shall proceed with such seizure and attachment.

The seizure and attachment of assets under the first paragraph shall take into account the subsistence allowance for family members of the person whose asset are seized or attached.

Section 109. In the event where the asset seized or attached under

section 108 is of a perishable nature or the storage cost thereof will exceed the value of such asset or the value of such asset will decline if retained for so long, the SEC office or the competent officer authorized by SEC office may sell such asset at an auction or manage such asset in a proper way under the method as specified by

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the SEC office. In this regard, the owner of such asset shall be given the bid invitation.

Cash derived from the auction or management of the property under the first paragraph, after deduction of the cost of storage, cost of disposal and related charges, shall be seized in lieu of such asset.

Section 110. Where it is subsequently established that a person has

committed an offence under this Act which may cause damages to the interest of the people and the SEC office has a reasonable ground to believe that such person will flee from the Kingdom, the SEC office shall have the power to file a motion with the court for the issuance of an order prohibiting such person from leaving the Kingdom, and in case of extreme urgency, the SEC shall have the power to prohibit such person from leaving the Kingdom on a temporary basis for a period not exceeding fifteen days.

CHAPTER 9

SANCTIONS AND STATUTE OF LIMITATIONS -------------------------------

PART 1

ADMINISTRATIVE SANCTION

-----------------------------

Section 111. The administrative sanctions include: (1) probation; (2) public reprimand; (3) administrative fine; (4) restriction of operation; (5) suspension of the operation which has been licensed, registered,

or approved for a restricted period; (6) revocation of license, registration or approval.

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Section 112. The following persons shall have the power to impose administrative sanctions:

(1) the SEC Office, for the administrative sanctions under section 111(1) or (2);

(2) the Administrative Panel, for the administrative sanctions under section 111(1), (2), (3) or (4);

(3) the SEC shall have the power to impose administrative sanctions under section 111 (1), (2), (3), (4), (5) or (6).

In imposing an administrative sanction under section 111, the competent authority in ordering the sanction shall be able to order one or several sanctions and shall have the power to order the sanctioned person to undertake or refrain from undertaking any action in order to rectify or prevent any violation or noncompliance with this Act, rules, orders or conditions prescribed under this Act.

Section 113. In imposing an administrative fine, the administrative

fine shall not amount to more than two million Baht for each act constituting an offence(s).

In cases where the person who is subject to the administrative fine under paragraph one does not pay such administrative fine, the provisions relating to administrative enforcement under the Administrative Procedure Act shall apply mutatis mutandis.

Section 114. Any derivatives business operator who violates or fails

to comply with the rules or order or conditions prescribed under section 10, section 18 or section 19, or violates or fails to comply with section 20 paragraph 1, or the provisions of section 22, section 23, section 24, section 26, section 33, section 34, section 38, or section 46 paragraph 1, shall be subject to administrative sanctions under Section 111.

Section 115. Any derivatives exchange which violates or fails to

comply with the rules or orders or conditions prescribed under section 10, section 55, section 58, section 65, section 66, section 70 or section 73, or violates or fails to

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comply with section 20 paragraph one, section 22 which applies mutatis mutantis by virtue of section 74, section 59, section 60, section 63 or section 71, shall be liable to administrative sanctions under Section 111.

Section 116. Any derivatives clearing house which violates or fails to

comply with the rules or orders or conditions prescribed under section 10 or section 65, section 66 or section 73 which applies mutatis mutandis by virtue of section 89 or section 76 or violates or fails to comply with section 20 paragraph one, section 22 or section 63 which applies mutatis mutandis by virtue of section 89, or section 46 paragraph one which applies mutatis mutandis by virtue of section 88, section 79, section 82, section 83 or section 85, shall be subject to the administrative sanctions under Section 111.

Section 117. Any derivatives regulatory association which violates or

fails to comply with section 71 which applies mutatis mutandis by virtue of section 91, or violates or fails to comply with the rules under section 73 which applies mutatis mutandis by virtue of section 91, shall be subject to the administrative sanctions under Section 111.

Section 118. Any person who does not pay fees or does not pay the

complete amount of fees as specified in section 9 (2) shall be subject to the administrative sanctions under Section 111.

Section 119. In the event where a person who commits an offence

under section 114, section 115, section 116 or section 117 is a legal person, director, manager or person responsible for the operation that such legal person, such person shall be liable for the administrative sanctions under section 111, unless it can be proven that he is not involved in the commission of the offence committed by such legal person.

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Section 120. The SEC Office shall be the collector of facts relating to commission of an offence which is subject to administrative sanctions, and shall have the authority to primarily consider to take action as the followings:

(1) In the case where the category of administrative sanctions to be imposed on the accused falls in the power of the SEC Office, the SEC Office shall consider the sanctions to be imposed on that matter.

(2) In cases where the category of administrative sanctions to be imposed on the accused falls in the power of the Administrative Panel or the SEC, the Office of SEC shall submit the matter to either the Administrative Panel or the SEC Committee, as the case may be, to consider the sanctions to be imposed on that matter.

Section 121. In ordering the administrative sanctions under section

111, the competent authority shall take into consideration the circumstantial factors constituting the action, damage causing by such action as well as the gravity of the sanctions to be imposed on the sanctioned person in accordance with the rules issued by the SEC’s notification.

Section 122. Subject to the Administrative Procedure law, the

deliberation and the issuance of an order to impose administrative sanctions shall be in accordance with the rules issued by the SEC’s notification.

Section 123. There shall be one or several Administrative Panels set

up. Each Panel shall compose of persons appointed by the SEC and of not more than five persons.

The qualification and the procedure to appoint a panelist under paragraph one shall be in accordance with the rules issued by the SEC’s notification.

Section 124. The derivatives business operator, derivatives exchange,

derivatives house and derivatives regulatory association shall have the right to file an appeal against the administrative sanctions ordered by the SEC Office or the

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Administrative Panel to the SEC within fifteen days from the date such order is received, in accordance with the rules issued by the SEC’s notification.

The consideration and the deliberation of appeals under paragraph one shall be in accordance with the rules issued by the SEC’s notification.

The appeal under paragraph one shall in no way hinder the execution of the administrative sanctions ordered by the SEC Office or the Administrative Panel.

PART 2 CRIMINAL SANCTION

------------------------------------

Section 125. Whoever operates business in a manner similar to operating derivatives business without license or registration under section 16, shall be liable to imprisonment for a term of not exceeding three years or to a fine of not exceeding three hundred thousand Baht or to both, and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 126. Any derivatives business operator who is approved to

cease the operation of derivatives business or fails to comply with the conditions prescribed under section 20 paragraph two, shall be liable to a fine of not exceeding one hundred thousand Baht and to a further fine not exceeding ten thousand Baht for each day during the period such violation continues.

In cases where derivatives business operator under paragraph one is a natural person, such person shall be liable to imprisonment for a term of not exceeding one year or to a fine of not exceeding one hundred thousand Baht or to both and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 127. Any Derivatives Exchange which fails to comply with

the conditions specified under section 20 paragraph two, which applies mutatis mutandis by virtue of section 74, shall be liable to a fine of not exceeding one

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hundred thousand Bath and to a further fine not exceeding ten thousand Baht for each day during the period such violation continues.

Section 128. Any derivatives clearing house which fails to comply

with the conditions as specified under section 20 paragraph two, which applies mutatis mutandis by virtue of section 89, shall be liable to a fine of not exceeding one hundred thousand Baht and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 129. Any derivatives business operator who violates or fails

to comply with section 27 and section 28 shall be liable to a fine of not exceeding three hundred thousand Baht and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 130. Any derivatives exchange which violates or fails to

comply with section 27 and section 28, which applies to mutatis mutandis by virtue of section 74, shall be liable to a fine of not exceeding three hundred thousand Baht or to both and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 131. Any derivatives clearing house which violates or fails to

comply with section 27 and section 28 which applies mutatis mutandis by virtue of section 89, shall be liable to a fine of not exceeding three hundred thousand Baht and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 132. Whoever operates business in a manner similar to

derivatives exchange without license or registration under section 54 shall be liable to imprisonment for a term of not exceeding three years or to a fine of not exceeding three hundred thousand Baht or to both and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

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Section 133. Any derivatives exchange which violates or fails to comply with section 67 shall be liable to a fine of not exceeding three hundred thousand Baht or to both and a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 134. Whoever operates business in a manner similar to

derivatives clearing house without license or registration under section 75, shall be liable to imprisonment for a term of not exceeding three years or to a fine of not exceeding three hundred thousand Baht, or to both, and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 135. In cases where a person who commits an offence

under section 126, section 127, section 128, section 129, section 130, section 131, section 133 or section 138 is a legal person, director, manager or a person responsible for operation of that legal person, such person shall be liable to imprisonment for a term of not exceeding one year or to a fine as provided for such offences or to both, unless it can be proven that he is not involved in the commission of the offence committed by such legal person.

Section 136. Whoever violates section 92, section 94, section 95,

section 96 or section 97 shall be liable to imprisonment for a term of not exceeding five years or to a fine of not exceeding two times the benefits received or should have been received by such person because of the violation, whichever is higher, or to both.

Whoever causes another person to commit an offence under section 92, whether by means of instruction, force, threat, employment, aiding or abetting or by any other means, shall be subject to the penalties as specified in paragraph one.

Section 137. Whoever violates section 99 or section 100 shall be

liable to imprisonment for a term of not exceeding five years or to a fine of not exceeding one million Baht or to a fine of not exceeding two times the benefits

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received or should have been received by such person because of the violation, whichever is higher, or to both.

Section 138. Whoever violates or fails to comply with the order to

impose administrative sanction under section 111(4) or (5) shall be liable to imprisonment for a term of not exceeding one year or to a fine of not exceeding one hundred thousand Baht or both and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 139. Whoever obstructs or fails to comply with the order or

fails to give assistance to the competent officer who performs his duty under section 103 shall be liable to imprisonment for a term of not exceeding one year or to a fine not exceeding one hundred thousand Baht or to both.

If the action under paragraph one is a use of violence or threat to use violence, such person shall be liable to imprisonment for a term of not exceeding three years or to a fine of not exceeding three hundred thousand Baht or to both.

Section 140. Whoever removes, damages, destroys or renders

useless any seal or mark which the competent officer has stamped or affixed on any object in the execution of his duty under section 103 as evidence for the seizure or attachment, or the keeping of such object shall be liable to imprisonment for a term of not exceeding three years or to a fine of not exceeding three hundred thousand Baht or to both.

Section 141. Whoever damages, destroys, conceals, takes away or

loses, or renders useless any property or document which the competent officer has seized, attached, kept or ordered to be delivered as evidence under section 103, and regardless of whether or not the competent officer would keep such property or document himself or would order such person or other persons to deliver or to keep it, shall be liable to imprisonment for a term of not exceeding three years or to a fine of not exceeding three hundred thousand Baht or to both.

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Section 142. Whoever gives false testimony to the competent officer which is material in investigation or proceeding under this Act, shall be liable to imprisonment for a term of not exceeding six months or to a fine of not exceeding fifty thousand Baht or to both.

Section 143. Any auditor who violates section 29 or section 30 shall

be liable to imprisonment for a term of not exceeding one year or to a fine of not exceeding one hundred thousand Baht or to both and to a further fine of not exceeding ten thousand Baht for each day during the period such violation continues.

Section 144. The term “customer” under section 145, section 146,

section 147 and section 148 shall have the following meanings: (1) In cases where legal person under the abovementioned Sections is

a derivatives business operator, it shall mean a customer who receives services regarding derivatives from derivatives business operator.

(2) In cases where legal person under the abovementioned Sections is licensed to operate derivatives business under the category of derivatives fund manager who agrees to manage fund for the mutual fund established under the law regarding Securities and Exchange Act, it shall include securities company which establishes and manages such mutual fund.

(3) In cases where legal person under the abovementioned sections is a derivatives clearing house, it shall mean members of the derivatives clearing house who receive service for clearing of obligations under derivatives.

Section 145. Any director, manager, staff, agent or person appointed

to work for a derivatives business operator or derivatives clearing house who commits any of the following acts:

(1) dishonestly deceiving a customer of legal person by assertion of false statement or concealing facts that should be notified about the operation that such legal person is bound to take action for the benefits of the customer of such legal person, and that action lead to the obtainment of the property of the legal

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person’s customer, or the legal person’s customer execute, revoke or destroy a document of entitlement; or

(2) misappropriating property of the legal person’s customer that such legal person had received in the course of operating the business under this Act, dishonestly embezzling such property for himself or a third person; or

(3) dishonestly undertaking or refraining from undertake any actions by virtue of his position which causes damages to customer of such legal person; or

(4) dishonestly breaches his duty which lead to causing damages to the usefulness in the nature of being a property of the legal person’s customer,

shall be liable to imprisonment for a term of not exceeding five years or to a fine of not exceeding one million Baht or to both.

Section 146. In cases where derivatives business operator under the

category of derivative advisor who is a natural person acts under section 145 (1) (3) or (4) to his customer, he shall be liable to imprisonment for a term of not exceeding five years or to a fine of not exceeding one million Baht or to both.

Section 147. Any director, manager, staff, agent or person appointed

to work for any derivatives business operator or derivatives clearing house, who takes away, damages, destroys, causes depreciation in value, or renders useless any property which such legal person has the duty to look after or which is in the possession of such legal person, if committed in order to cause damage to such legal person’s customer, shall be liable to imprisonment for a term of not exceeding five years or to a fine of not exceeding one million Baht or to both.

Section 148. Any director, manager, staff, agent, or person appointed

to work for any derivatives business operator or derivatives clearing house, who commits or permits another to act as follows so as to deceitfully deprive such legal entity’s customer of their rightful benefit:

(1) damaging, destroying, altering, abridging or falsifying account or document of or prepared by such legal person in the course of business under this Act; or

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(2) making false entries or failing to enter any material statement in account or document of or prepared by such legal entity in the course of business under this Act; or

(3) keeping incomplete, incorrect, out-of-date, or inaccurate account; shall be liable to imprisonment for a term of not exceeding five years

or a fine of not exceeding one million Baht or to both. Section 149. Whoever causes a director, manager, staff, agent,

auditor or any person appointed to work for any derivatives business operator or derivatives clearing house to commit an offence under section 143, section 145, section 146, section 147 or section 148, whether by means of instruction, force, threat, employment, solicitation, aiding or abetting, or by any other means, shall be liable to the penalties as provided under such Sections.

Section 150. Whoever does any acts to assist or facilitate a director,

manager, staff, agent, auditor or any person appointed to work for any derivatives business operator or derivatives clearing house to commit an offence under section 143, section 145, section 146, section 147 or section 148, whether such act happens before or during the commission of an offence, shall be liable to the penalties as provided under such sections, but if the person who commits the offence is not aware of such assistance or facilitation, the assisting or facilitating person shall be liable to two-third of the penalties as provided in such sections.

Section 151. In performing the audit work on the account of a

derivatives business operator or a derivatives clearing house, either as the appointed auditor of such legal person or as a person allowed to conduct the audit work of such legal person, if the auditor discovers any suspicious circumstance that any director, manager, staff, agent or person appointed to work for such legal person has committed an offence under section 145, section 147 or section 148, the auditor shall notify the SEC Office of the circumstance of such offence.

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Any auditor who violates or fails to comply with paragraph one shall be liable to imprisonment for a term of not exceeding one year or to a fine of not exceeding one hundred thousand Baht or to both.

Section 152. The SEC Office shall have the power to give a bounty

not exceeding thirty percent of the fine which the wrongdoer pays to the court to the person giving information regarding the commission of offences under section 92, section 94, section 99 and section 100, depending on the materiality of the information in accordance with the rules issued by the SEC’s notification.

The order of the SEC Office is final. Section 153. Whoever who learns of the activity of another person

as a result of performing his duty as prescribed under this Act, or learns of any information from disclosure by any person who has the authority under this Act, and such activity or such information are the authority’s confidential information or should not be disclosed under usual circumstances, if such person disclose to other persons, he shall be liable to imprisonment for a term of not exceeding one year or to a fine not of exceeding one hundred thousand Baht, or to both.

The provision of paragraph one shall not apply to disclosures in the following cases:

(1) disclosure in the execution of his power or the performance of his duty;

(2) disclosure for the purpose of investigation or trial; (3) disclosure relating to the commission of offences under this Act; (4) disclosure for the purpose of rectifying the condition or operation

of a derivatives business operator; (5) disclosure to an auditor of any person who has been granted a

license or has been registered to operate the derivatives business, derivatives exchange or derivatives clearing house;

(6) disclosure to the authority or domestic and international agency which is responsible for the supervision of derivatives, goods, variable or financial institution;

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(7) disclosure to any derivatives exchange, derivatives clearing house, derivatives regulatory association, the Securities Exchange of Thailand, securities trading centre or securities clearing house, either domestic or international, which is responsible for the supervision of derivatives, goods or variable;

(8) disclosure upon written consent of such person.

PART 3 STATUTE OF LIMITATIONS AND SETTLEMENT COMMITTEE

------------------------------------- Section 154. Any offence under this Chapter which is subject to

administrative sanctions or is subject only to the criminal fine, if any administrative sanction has not been imposed or no lawsuit has been brought before the court, or there has been no settlement by the Settlement Committee under section 155, within one year from the date the competent office determines that there is a commission of an offence or within five years from the date of the commission of the offence, shall be barred by statute of limitations.

Section 155. For the offences under section 126, section 127,

section 128, section 129, section 130, section 131, section 133, section 135, section 138, section 139 paragraph one, section 142, section 143 and section 151 paragraph two, which do not severely affect the customer, public, derivatives market, or financial system of the country, the Settlement Committee appointed by the Minister under the Securities and Exchange Act shall have the power to settle such offences in accordance with the rules issued by the SEC’s notification.

When a case has been settled by the Settlement Committee and the alleged person has paid the fine as determined within the period of time specified by the Settlement Committee, the right to bring a criminal claim on the ground of such offence shall be ceased.

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CHAPTER 10 TRANSITONAL PROVISION

-------------------------

Section 156. Whoever operates derivatives business before or on the day this Act enters into force, shall file an application for license or registration under this Act within sixty days from the date this Act enters into force. Once the application for a license or for a registration is filed, such person shall be able to continue derivatives business operation until there is an order to disapprove the license application or the registration application is rejected. In operating derivatives business operation under paragraph one, the applicant shall comply with the provisions governing such business mutatis mutandis. Countersigned by General Chavalit Yongchaiyudh Deputy Prime Minister

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