The new draft ministerial regulation, approved in principle by the Cabinet on 12 May 2026 under the FBA, aims to exempt certain businesses relating to securities and derivatives businesses from restrictions under the FBA.
In terms of the legislative process, the draft is currently under review by the Council of State. Following such review, the draft will be resubmitted to the Cabinet for final approval before being signed by the Minister of Commerce and published in the Royal Gazette to formally come into effect. Here we focus on the securities businesses only.
Background
Historically, foreign business operators were not absolutely prohibited from engaging in activities listed under List 3 of the FBA. Rather, such businesses could still be conducted by foreigners subject to obtaining prior approval. In this regard, List 3 already contained certain exemptions for brokerage and agency businesses relating to securities and derivatives businesses. However, such exemptions were relatively narrow in scope and only covered brokerage and agency activities, without extending to the full range of activities commonly carried out within the securities and derivatives industries.
Subsequently, in 2013, the Ministry of Commerce issued a ministerial regulation granting further exemptions to certain securities and derivatives-related businesses. The underlying rationale was that where a business activity was already licensed or supervised by the SEC, it should not also be subject to overlapping approval requirements under the FBA.
Nevertheless, the combined effect of the exemptions under List 3 and the 2013 ministerial regulation still did not fully cover all activities commonly undertaken by market participants in the capital markets and derivatives industries. As a result, despite already being regulated or permitted under specific capital markets laws, foreign operators are still required to obtain an additional foreign business licence (“FBL”) under the FBA.
New Draft Ministerial Regulation
Accordingly, the new draft ministerial regulation appears intended to close these regulatory gaps by extending the scope of exempted activities to better align with activities already regulated by the SEC, both in relation to securities and derivatives businesses.
Securities-Related Businesses
Although the 2013 ministerial regulation and existing exemptions under List 3 alleviated certain restrictions under the FBA, some business activities still fell outside the scope of such exemptions in practice. In particular, this includes margin lending businesses and repurchase agreement (“Repo”) transactions.
Margin Lending / Margining
With respect to margin lending, the Securities and Exchange Act B.E. 2535 (1992) (the “SEC Act”) already contemplates that securities companies are prohibited from engaging in certain activities except where such activities are expressly permitted under the SEC Act or relevant SEC notifications. In particular, paragraph two of Section 98(8) expressly permits the lending of money for securities trading purposes (i.e., margin lending).
However, notwithstanding that foreign securities companies may already hold securities business licences issued by the SEC, certain foreign securities operators have historically still been required to obtain an FBL in order to conduct margin lending activities, despite such activities being inherently connected with, and constituting an integral part of, securities business operations.
Repurchase Agreements (Repo)
Repo transactions similarly represent another activity already contemplated under the securities regulatory framework. The SEC Act permits securities companies to engage in related businesses pursuant to rules prescribed by the Capital Market Supervisory Board (“CMSB”)1, and the CMSB has already issued relevant rules governing Repo transactions, including the conditions and requirements applicable to such activities.
Accordingly, Thai securities companies that have already obtained the requisite approvals from the SEC and complied with the applicable regulatory requirements are not required to obtain any additional approval under the FBA. Foreign operators, however, remain subject to such approval requirements.
The new draft ministerial regulation therefore seeks to address this gap by expressly extending exemptions to cover activities ancillary to securities businesses, including margin lending and Repo transactions, which are already supervised under the SEC regulatory regime and form part of the broader securities business ecosystem.
Derivatives-Related Businesses
A similar issue also arises in relation to derivatives businesses. Although the Derivatives Act B.E. 2546 (2003) (the “Derivatives Act”) already contains its own regulatory framework and exemptions, foreign business operators could nevertheless still face restrictions under the FBA. The new draft ministerial regulation therefore appears intended to address such overlap.
Broadly, there are two principal categories of derivatives-related activities that were already either exempted from, or not subject to, regulation under the Derivatives Act, but where foreign operators historically still faced potential FBA licensing issues.
Transactions Falling Outside the Definition of “Derivatives”
The first category concerns transactions relating to products or underlying variables that do not fall within the statutory definition of “derivatives” under the Derivatives Act.2
Where such transactions are already outside the scope of the Derivatives Act itself, it may reasonably be questioned why foreign operators should still be required to obtain an additional licence under the FBA. In practice, activities of this nature are already subject to a degree of oversight or consideration by the SEC as the specialised sectoral regulator.
Exempt OTC Derivatives and Repo Transactions
The second category concerns transactions that are already expressly exempted from regulation under the Derivatives Act itself (i.e., Section 4), particularly certain over-the-counter derivatives (“OTC Derivatives”) referencing foreign exchange rates or interest rates and Repo transactions3.
Under the Derivatives Act, such two activities are generally not subject to licensing or regulatory supervision under the derivatives regulatory regime. Accordingly, Thai business operators may conduct such activities without triggering FBA concerns.
However, in the case of foreign business operators, there remained uncertainty as to why an additional FBA approval should still be required, despite such activities being far more closely connected to the SEC’s specialised regulatory oversight than to the Ministry of Commerce’s general foreign business regulatory framework.
The new draft ministerial regulation therefore reflects a broader policy objective of reducing overlapping regulation by recognising that where an activity is already subject to consideration, approval or supervision by a specialised regulator such as the SEC, foreign operators should not also be required to undergo an additional approval process under the FBA.
Key Takeaways
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This draft ministerial regulation does not fundamentally introduce new exemptions for business activities. Rather, it liberalises and clarifies activities that, in principle, should already have been covered under existing securities and derivatives regulatory frameworks and exemptions.
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The underlying rationale behind the draft regulation is that securities firms and derivatives business operators, whether Thai or foreign, should not be subject to duplicative supervision by another regulator, namely the Ministry of Commerce, where such businesses are already licensed and supervised by the SEC.
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Upon becoming effective, the draft ministerial regulation is expected to unlock the potential of foreign securities firms to operate on a more level playing field with Thai securities firms, particularly in relation to ancillary and related business activities that are integral to modern securities business operations.
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More broadly, the draft regulation appears to reflect a policy shift toward recognising the SEC as the principal regulator for capital markets-related activities, while reducing overlapping regulatory approval regimes.
References
Draft Ministerial Regulation Prescribing Businesses Exempt from Foreign Business Licence Requirements for Foreigners, B.E. [unofficial translation of Thai title: ร่าง กฎกระทรวง กำหนดธุรกิจที่ไม่ต้องขออนุญาตในการประกอบธุรกิจของคนต่างด้าว พ.ศ.] (as approved by the Cabinet on 12 May 2026)
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