The Thais that bind

The Bank of Thailand relaxed its regulations covering the use of derivatives towards the end of 2009. While retail investors are already allowed to buy structured notes and deposits linked to some foreign variables, the relaxation of rules has provided alternative investment channels for institutional buyers. Chris Wright takes a look at the effect this is having on hedging and investment in the country

A few years ago, Thailand was unpopular with foreign derivatives bankers. As the Thai baht went through a period of increasing volatility, regulators became more and more restrictive regarding the sale of derivatives, telling banks to submit lists of products they wanted to sell for approval.

But Thailand’s stringency on derivatives paid off when markets turned nasty. “In the two years or so before the global financial crisis, every new structure you wanted to bring out, you had to take it to