A Study of the Brokerage Business in Thailand

Thailand’s brokerage industry is under sustained pressure from declining trading volumes, prolonged margin compression, rising operating costs, and rapid shifts in investor behavior. These challenges occur within a broader capital‑market context marked by weakened investor confidence, a limited pipeline of high‑quality issuers, and an underdeveloped private capital ecosystem. As a result, many brokerage firms, particularly mid‑sized and smaller players, are struggling to invest in technology, product innovation, governance, and investor engagement at the required scale to remain competitive.

This paper agrees with the direction to encourage mergers and acquisitions (M&A) and consolidation within the brokerage industry. The current level of fragmentation, operating within a finite profit pool, has constrained profitability and inhibited reinvestment across much of the sector. Consolidation can therefore play an important role in strengthening balance sheets, improving operational efficiency, and enabling investment in scale‑dependent capabilities. However, the priority is not to have fewer brokers, but high-quality brokers.

However, consolidation alone will not deliver a competitive or resilient capital market. Two additional considerations are critical.

First, market restructuring must deliberately preserve and strengthen smaller, specialized, and digital brokers, rather than allowing consolidation to result in a homogenous landscape of large firms. International experience suggests that capital‑market efficiency is maximized through a barbell structure, in which a small number of well‑capitalized intermediaries anchor market stability and liquidity, while niche and digital players compete in clearly defined segments such as distribution, advisory, product innovation, and technology‑enabled access. To achieve this outcome, consolidation must be guided, not forced, through regulatory design that rewards scale only where it is economically and systemically necessary, while keeping entry and participation viable for lower‑risk, specialized activities.

Second, brokerage consolidation must be accompanied by broader efforts to build the overall capital‑market ecosystem. Weak investor participation, declining trust, and shallow issuer pipeline cannot be resolved through intermediary restructuring alone. Without parallel improvements in issuer quality, enforcement effectiveness, financial literacy, and private capital formation, consolidation risks redistributing a stagnant profit pool rather than expanding the market itself.

Therefore, this paper advocates a dual-track strategy - promoting a coordinated and complementary set of actions by both regulators (top-down) and brokers (bottom-up) to drive meaningful change in the industry.

By 2030, successful implementation of this approach would result in a smaller but more capable brokerage ecosystem, operating within a deeper and more trusted capital market. A balanced mix of scaled intermediaries and specialized players, supported by stronger investor confidence and a healthier issuer pipeline, would position Thailand’s capital market to better finance domestic growth while remaining attractive to global capital. Achieving this outcome will require sustained, coordinated action across market structure, regulation, and market‑building initiatives rather than reliance on consolidation alone.