The Thai Securities and Exchange Commission on Friday announced the launch of 22 new mutual funds to support the Southeast Asian nation's environmental, social and governance (ESG) goals, with managers of the products aiming to draw investment of around 10 billion baht ($284 million) by year-end.

The move comes as demand grows for financial products geared toward helping economies curb their greenhouse gas emissions, with Thailand pushing to become a regional leader in sustainability.

The launch follows the SEC approving new criteria for Thailand ESG, or TESG, funds on Dec. 1, less than a month after the introduction of such products was proposed by the Federation of Thai Capital Market Organizations (FETCO). Funds must invest in Thai bonds or the listed stock of companies that meet requirements for emissions disclosures and reduction targets, or those with outstanding environmental sustainability performance.

Global net inflows into ESG funds grew steadily each year since 2018, before plunging 76% last year amid tighter monetary conditions. But they still remained positive in 2022 and 2023.

"The ESG trend is getting stronger and stronger," said FETCO Chairman Kobsak Pootrakool. "Funds around the world have ESG ratings and specific criteria under which they can invest. It's also part of our commitment to net-zero as a country, and the banking sector will see trillions of baht flowing to the energy and supply chain transition."

Investors in the funds can deduct up to 100,000 baht from their tax bill on investment amounts not exceeding 30% of their income. ESG investments held for at least eight years will be exempt from capital gains tax.

"People are looking for tax-deductible options during this time of year," said Chavinda Hanratanakool, chair of the Association of Investment Management Companies. "This kind of fund with tax benefits will encourage Thais to start saving again."

Sixteen securities companies, including Krungthai Bank, Siam Commercial Bank and Krungsri Bank, will manage the first set of 22 TESG funds.

SEC Secretary-General Pornanong Budsaratragoon said the key indicator for TESG funds will be the number of accounts opened by young investors, rather than baht amounts.

"The people who are interested in investing in these kinds of products are willing to receive lower yields but want to be part of doing good," Pornanong said. She added that 100,000 baht may seem low for a tax deduction, but "for the younger generation, it's the right amount for them to save and invest."

Thailand committed in 2020 to becoming carbon neutral by 2050 and reaching net-zero greenhouse gas emissions by 2065. The SEC in 2021 revised rules for listed companies to disclose ESG and climate-risk information in line with global standards. A 2022 analysis by the body found ESG disclosures among Thailand's largest listed companies emphasized social impact, followed by governance standards and then environmental impact.

The Association for Financial Markets in Europe (AFME) has issued a response to the European Securities and Markets Authority’s (ESMA) consultation on shortening settlement cycles in the EU.

AFME states that it fully supports the notion that any decision to shorten settlement cycles in the EU should be based on proper cost-benefit analysis. AFME believes that the potential broader market impacts on trading and competitiveness in EU markets must be considered.

AFME continues to argue that any move to T+1 must be effected in a way which mitigates possible risk and does not damage existing levels of efficiency. It further argues that a coordinated approach across Europe, including EEA countries, Switzerland and the UK is required.

The association says that the North American adoption of T+1 in May 2024 is a chance to assess and incorporate ‘lessons learned’ before making a decision in Europe. However, it states that adopting T+1 in Europe may pose differing challenges.

Pete Tomlinson, director of post trade at AFME, says: “Moving to a T+1 settlement cycle will be a complex and demanding undertaking for the entire industry, so it is important that feedback is carefully considered before next steps are decided.

“If a decision to move to T+1 is made, it will be necessary to define an appropriate timetable that generates industry momentum and provides clarity to market participants.”

The EU Sustainable Finance Disclosure Regulation (SFDR) improves sustainable finance transparency, yet its adoption as a de facto ESG labelling regime by market participants has strayed from its original purpose, posing challenges, according to the European Fund and Asset Management Association (Efama).

Recommending solutions, Efama suggested that the European Commission's current review must focus on making SFDR provide clearer, more meaningful information for retail investors, promoting transition finance and aligning with other relevant legislation.

Urgent corporate-level sustainable changes require a well-functioning regulatory framework, enabling sustainable investors to contribute more efficiently to economic and technological transitions, shared Efama.The body recommended implementing a categorisation system for financial products based on sustainability intentions, incorporating objective criteria, clear product descriptions, outlined ESG strategies and specified credible key performance indicators.

Integrate transition finance into SFDR to encourage investments supporting companies in transitioning to sustainable business models, beyond solely focusing on already sustainable projects or firms, it suggested.

Other recommendations included introducing a standard disclosure template for all financial products with sustainability claims to enhance accessibility for retail investors by presenting information clearly and uniformly.

The proposal also highlighted the need for ensuring SFDR changes align with investor sustainability preferences in MiFID and IDD.

Efama stated: "For any product categories to be effective in practice, they must be understandable to retail investors. It is therefore crucial to align any changes in SFDR with the investor sustainability preferences under MiFID and IDD.

"Finally, the proposal called for aligning entity-level sustainability reporting within SFDR with the Corporate Sustainability Reporting Directive to reduce unnecessary duplication, cut costs and focus on providing information that genuinely aids decision-making.

Anyve Arakelijan, regulatory policy advisor at Efama, commented: “The transformation of SFDR Articles 8 and 9 from their original role as disclosures into de-facto labels highlights the market's growing need for a well-defined categorisation system.

At the same time, we also see merit in building upon the market's existing familiarity with SFDR concepts, such as PAIs, when this could further complement the product categorisation regime.”

Market regulator Securities and Exchange Board of India (Sebi) on Friday released a consultation paper on introduction of optional T+0 settlement cycle and instant settlement cycle and has sought comments.

Sebi proposed implementation of instant trade settlement in two phases.

In phase 1, the regulator has proposed an optional T+0 settlement cycle for trades till 1:30 pm, with settlement of funds and securities to be completed on the same day by 4:30 pm.

In phase 2, an optional immediate trade-by-trade settlement for funds and securities may be carried out. In the second phase, trading will be carried out till 3.30 pm, the consultation paper said. After omplementation of phase 2, phase 1 (optional T+0 settlement) will be discontinued, the paper said.

Earlier this month, Sebi chief Madhabi Puri Buch said the capital markets regulator is ready to introduce same-day settlement of trades on the stock exchanges by March 2024.

Speaking at the Global Economic Policy Forum 2023 organised by the Confederation of Indian Industry (CII), Buch said, "We are ready to introduce T+0 (T plus zero) settlement trade by the end of the current fiscal".

The regulator, which has already reduced the settlement timelines to as short as one day after the transaction, is now looking to shorten the same further.

The Sebi chief talked about the T+1 regime that has been implemented in the market. Earlier this year, the country's stock markets transitioned from T+2 to T+1 settlement, settling trades on the following business day.

"It takes two things to make this happen. First is technology and second is co-creation. We are now moving to T+0 which will happen before the end of this financial year and one year from there we will have instantaneous settlement, which is optional. When we do this, risk in the system comes down," Buch said.

"The two reasons why we have been able to bring T+1 to the people are stellar technology - the technology and market stack in India are unparalleled and have been acknowledged as one of the best in the world. Second being the co-creation with the institution and creating a methodology of regulations with them," she said.