Thailand proposes clearer rules for mutual funds facing liquidity stress

Two tools are in focus when a fund cannot operate normally

A side pocket separates assets that are in default, likely to default, illiquid or not reasonably saleable from the fund's regular net asset value calculation. Eligible unitholders retain rights to recover value from those assets later, while the rest of the portfolio can be managed without treating the impaired asset as if it were normally liquid. Under the draft, asset management companies would gain an additional repayment option. In qualifying cases, eligible unitholders could receive units of the original mutual fund as well as cash, provided the fund scheme clearly explains matters such as entitlement and the treatment of fractional units.

The SEC also wants more detailed controls over costs charged to a side pocket. Only expenses that are necessary, appropriate and directly related to managing the segregated assets would be permitted, with the types and allocation of those expenses disclosed in fund documents. The draft further addresses valuation, disposal of the assets and pro-rata repayment.

Suspension of dealing covers a different problem: a fund temporarily stops accepting or processing subscriptions and redemptions when the prescribed circumstances arise. This can protect the orderly handling of a liquidity event, but it does not remove the underlying risk or guarantee that investors will avoid losses.

For practical context, see Thailand economy and finance. This development also connects with Thailand SEC proposes new capital rules for digital asset firms.

Disclosure would become more explicit during a suspension

The proposed rules place more emphasis on what an asset management company must tell investors and the regulator when dealing is suspended. Investors with affected subscription or redemption orders would receive notice, while broader disclosure would be required where applicable. The company would also have to report the reasons for the suspension and its action plan to the SEC.

A suspension lasting more than one business day would trigger further requirements before the fund starts accepting orders again. The draft calls for advance notification to unitholders and investors, together with reporting to the SEC on the relevant circumstances and the fund's investment position.

For a unitholder, the practical benefit is greater visibility into what happens during a liquidity problem. The proposal is designed to clarify how rights are preserved, which costs may be charged to a troubled-asset pool and what information should be available when access to subscriptions or redemptions is restricted.

**The consultation remains open until 16 October**

The September draft follows an earlier consultation on the policy principles held in April–June 2026. The SEC says most respondents supported those principles, after which the regulator prepared the more detailed draft now under review.

Investors therefore should not treat the September document as a new rule already applying to every mutual fund. Existing fund terms and current regulations remain the relevant reference until the consultation process is completed and any final notification is formally adopted. The final text may differ from the draft now being discussed.