New one baht-weight gold contract could spur trade

       The futures industry club will propose a new one baht-weight (15.16 gramme)gold futures contract to help attract retail investors interested in the gold market.
       Kampanart Lohachareonvanich, the chairman of the Association of Securities Companies, said that reducing the nominal value of gold futures contracts would help reduce the entry costs for investors and increase trading liquidity on the Thailand Futures Exchange.
       The current size of gold futures contracts traded on the TFEX is 50 bahtweight, a size set quite high compared with other derivatives markets worldwide.The contract size was set high in part to placate local gold retailers, who were concerned that the launch of gold futures earlier this year would draw investors away from the physical market in favour of derivatives.
       Mr Kampanart noted that in India,contract sizes were only eight grammes,or little more than half of one bahtweight of gold.
       He noted that India's futures market also offered currency futures for US dollars and rupees.
       The TFEX and the Securities and Exchange Commission also want to introduce currency futures in the local market.But plans have been delayed amid concerns by the Bank of Thailand that such derivatives could be abused to speculate against the baht.
       "India is not concerned about speculation because it limits currency futures trading to domestic investors only," Mr Kampanart said."The SEC is considering using the same principle for the Thai market and will propose a plan to the central bank."
       He said currency futures would be useful for Thailand given the economy's heavy reliance on international trade.Futures contracts would be a key tool for importers and exporters to hedge against currency risk.