Given the increasing availability of innovative financial products and much improved risk management techniques by commercial banks in Thailand, the Bank of Thailand has gradually relaxed our regulations in this area. At the moment, importers and exporters who wish to hedge this foreign exchange risk for a traderelated transaction can choose from forward contracts, plain-vanilla options or even certain structured products to suit their needs and preferred level of sophistication. My final point concerns the role of the futures market as an insurance mechanism. As mentioned previously, agricultural products tend to exhibit highly volatile prices causing farmers to suffer from this risk of violent price fluctuation. The government has stepped in to provide relief in the form of government price support scheme. At present, the government is running commodity price  2  BIS Review 14/2006  stabilisation schemes in four products namely paddy rice, corn feed and tapioca. These price support schemes provide an insurance for farmers against adverse price movement- in the form of selling put options to the farmers. The schemes have grown to become a substitute for the futures marketeliminating the very incentive for farmers, traders and producers to participate in the futures market. This is particularly the case when the guaranteed buying prices from the government are set at relatively high level compared to market-determined prices. I mentioned before that the average daily turnover in the AFET now is around 400 contracts. However, the majority of the trading is heavily concentrated in the ribbed smoked rubber sheet no.
I personally feel that it is imperative for a country to have a well-developed futures market. They enable growers, traders and end-users to benefit from improved riskmanagement practices. For the price discovery mechanism to be well-functioning, the futures market needs to command respectable volume and liquidity - the achievement of which is a goal that I feel we should set for ourselves. To sum up, the future of futures promises to be exciting and challenging. For TFEX, I hope that it gets off to a very successful start. For AFET, I am seeing a lot of potentials for it to be a futures market with sustainable growth and efficacy, enhancing the efficiency in the agricultural market. To realise its vision statements is only possible with full and complete cooperation from all of us. Again, I would urge the board of directors of AFET to take a lead and push for the much-needed change. Thank you. BIS Review 14/2006  3