2.3 Business Characteristics of each Service

(1) Business Characteristics

The characteristics of each of the Company’s business are classified as
follows:

Securities Broker Business

Market share value of the Company for the past 3 years from 2006 to 2008
are shown in the table below:

Table of Market Share Value

  --------------------------------- ------------ ------------ ------------
  Securities Trading Volume         2006         2007         2008

  SET (Million Baht)                3,983,676    4,271,819    3,981,230

  US (Million Baht)                 79,273       69,890       59,718

  US Market share (%)               0.99%        0.82%        0.75%
  --------------------------------- ------------ ------------ ------------

Source: SET Market Analysis and Reporting Tool (Setsmart)

New Securities Customer Policy

It is the Company’s policy to welcome all types of customer both retail
and institutional which consists of domestics as well as foreigners. At
present, however, most of our customers are retail customers and we have
set up the screening of new customers policy according to the rules and
regulations of the SEC and the SET while focusing on minimizing the
Company‘s risk. In addition, the Company also has the policy not to open
an account or to do any business with the customer or its ultimate
beneficial owner or its ultimate controlling person who violate or
co-operate in the violation of the Anti-Money Laundering Act including
those customers who refuse to supply significant information or
documents so that the Company is not able to identify their true
identity. This is to prevent the Company from being the channel of money
laundering or to unknowingly give the financial support to the terrorist
which is in compliance to the SEC’s notification and to comply to the
Anti-Money Laundering Act.

In addition, in the year 2008, the Company had additionally set up
Company’s rule regarding the procedure in opening securities accounts of
the customers particularly on the inspection of the important documents
submitted for new accounts opening application such as the duplicate
copy of ID card or passport or other ID documentations, the copy of bank
passbook or other financial documents. In order to prevent the forge of
documents submitted for new account opening, the original copy of the
said documents should also be presented to the Company’s Investor
Contact or other staff who goes for account opening for comparison to
ensure that the duplicate copies which the customers has signed in
verification of true copy are not fraud and that the customer opening
the account is the same person appeared in the documents. This is to
comply with the Know Your Customer and Customer Due Diligence rule which
was guided by the Association of Securities Companies.

Moreover, in case of the new customer who wishes to trade through
internet system but provides no reference from any individual or any
company that is known to the Company, initially, such customer needs to
trade on Cash Balance system which limited the trading line at the
amount of cash deposited in order to assess the settlement and trading
behavior of such customer.

Loan for Securities Trading Policy

Since 26 June, 2002, the Company has provided loan to customers in form
of Credit Balance under Credit Balance Financing project. The amount of
initial margin rate has been set up in relation to the securities types
which have different degrees of risk in which will be announced
occasionally as appropriate. The Company will set up the list of
securities which are qualified to be put as collaterals. Followings are
the policies to be considered before granting Credit Balance to
customers:

1. Marketing staff should know their customers in person so that they
can evaluate the investment objectives, financial position or
limitations as well as the basic investment knowledge of their customers
clearly.

2. Determine appropriate maximum limit of credit line of each customer
under a certain period of time. The Credit Balance Line and the credit
line for stock borrowings for short sale should be approved under one
maximum total credit line for the same customers.

3. Disclose the relationships between marketing staff and the customers
or between the Company and the customers to notify the Company’s
compliance to the Code of Ethics like that of a professional company,
and which is considered to be a provision in the Compliance manual to be
strictly obeyed.

4. Approved authority of the credit line is dependant on the Executive
Board.

5. The marketing staff have to certify that the person who makes the
buying and selling decision is the eligible person and not a nominee and
that the payment should be settled by that particular person. The
Company is therefore, forbidden to approve any credit line to the
nominee of other persons intentionally or unintentionally.

6. In opening a securities trading account, the customers have to make
deposit in cash first before trading can be made at the amount not less
than the initial margin regulated by the Stock Exchange of Thailand (at
present it is 50%).

7. The Company is forbidden to approve for any margin on securities
trading to the customers exceeding their purchasing limit during a
certain period.

8. Purchases exceeding the purchasing limit can be allowed only if the
customers increase their collaterals amount, either by cash or
securities, to the amount not less than the initial margin of the
exceeded volume purchased before purchasing can be done.

9. The Company will set up the marginable list of securities (including
those right offering shares of the listed companies), initial margin
rate, maintenance margin rate and the minimum requirement rate for each
securities in writing at least once a month.

10. In case the customers’ equity falls below that of the Maintenance
Margin, written notice will be sent to inform them to fill in the
collateral on the next working day so that the customers’ equity is not
lower than the Maintenance Margin.

11. In case the equity of any customer has decreased to be equivalent to
or lower than the Maintenance Margin, the Risk Management Dept. is
responsible in monitoring and informing the Investor Contact to ask the
customer to place more collaterals and to force sell on the next working
day so that the equity of the customer rises to over the Maintenance
Margin. On the settlement due date, if the equity of the customer is
equal to or lower than the minimum requirement value again, the Risk
Management Dept. has to force sell until the equity is higher than the
Maintenance Margin. Moreover, the Risk management Dept. has to control
the margin loan for any securities concentrated above 85% level of MAX X
(the concentration level of securities set by the Company) by increasing
the level of the former Maintenance Margin from which force selling is
exercised at 25% to 30% for the customers’ account that has the stock
values in MAX X total from 80% of the aggregate stock values of the
customers in order to be able to make faster force selling.

12. Interest on margin loan should be charged to the customers and the
Company will also pay interest to the customers calculated on
collaterals remaining in their margin loan account base on the daily
outstanding amount under the agreed rate. The settlement of interest
will be done by adjusting the margin level of each customer at least
once a month.

13. Report on the outstanding balance and monthly interest settlement on
margin loan account will be sent to inform the customers at least once a
month.

Moreover, the risk control criteria of the loan for securities trading
concentrating on only a particular security was set up by the Risk
Management Committee and which the Risk Control Dept. will be
responsible for the monitoring of such risk.

Securities Trading Credit Line Approval Policy

The Company has set up the securities trading credit line approval
authority for new customers and the review of the credit line (which
already includes all types of accounts for each customer), the net
settlement approval (per client), the changing of order (per
transaction) and the transferring of error into the Company’s portfolio
(per transaction) by appointing the authorized signers as showed in
Table No. 1 which was reviewed and updated effective 9 July, 2007. And
updated the short sell approval line effective 7 August, 2007 as showed
in Table No. 2 below :

Table 1

[]

Table 2 The Approval Line for Short Sell Transactions

Marketing staff should get approval for their customers’ short sell
transactions from the authorized signers showed in the table below :

+-----------------+----------+---------+---------+---------+---------+
| Position        | not      | not     | not     | not     | ex      |
|                 | e        | ex      | ex      | ex      | ceeding |
|                 | xceeding | ceeding | ceeding | ceeding | 20 MN   |
|                 | 5 MN     | 10      | 15 MN   | 20 MN   |         |
|                 |          |         |         |         |         |
|                 |          | MN      |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Manager /       |         | *       | *       | *       | *       |
|                 |          |         |         |         |         |
| Assistant Vice  |          |         |         |         |         |
| President       |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Vice President  |         | *       | *       | *       | *       |
| /               |          |         |         |         |         |
|                 |          |         |         |         |         |
| Senior Vice     |          |         |         |         |         |
| President       |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Executive Vice  |         |        | *       | *       | *       |
| President /     |          |         |         |         |         |
|                 |          |         |         |         |         |
| First Executive |          |         |         |         |         |
| Vice President  |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Senior          |         |        |        | *       | Co-a    |
| Executive Vice  |          |         |         |         | pproval |
| President       |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Executive       |         |        |        |        |         |
| Director -      |          |         |         |         |         |
|                 |          |         |         |         |         |
| Thai Marketing  |          |         |         |         |         |
| / Managing      |          |         |         |         |         |
|                 |          |         |         |         |         |
| Director        |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+
| Remark         |          |         |         |         |         |
| means the trans |          |         |         |         |         |
| action can be a |          |         |         |         |         |
| pproved by the  |          |         |         |         |         |
| Department Head |          |         |         |         |         |
|                 |          |         |         |         |         |
| * means the     |          |         |         |         |         |
| Department Head |          |         |         |         |         |
| can only        |          |         |         |         |         |
| acknowledge but |          |         |         |         |         |
| cannot approve  |          |         |         |         |         |
| the transaction |          |         |         |         |         |
+-----------------+----------+---------+---------+---------+---------+

Settlement Control Policy

The Company has set up a strictly control policy over the customers’
settlement in order to comply with the rules and regulations of SET as
follows:

Payment for securities purchased should be settled on time. Late payment
or cheque default cases will be followed up by the Company’s marketing
officer in order to urge the customers to make payment either by cash or
by depositing into the Company’s account and to warn them to be more
careful in the future. Late payment or late submission of share
certificates will subject to a fine. And if the late payment of any
customer happens 3 times in a year, then the account will be considered
for closing. The Risk Control Dept. will be the one who proposes the
default on settlement cases for prior approval by the Risk Management
Committee.

Securities Dealing

The Company runs Securities Dealing business and the Executive Committee
was assigned to establish a policy and control the Company’s investment.
The Company has invested in securities for both equity and debt
instruments of the securities listed in the Stock Exchange of Thailand,
securities listed in the Market for Alternative Investment (MAI),
securities registered in the Thai Bond Market Association (ThaiBMA) and
non-registered securities such as the Bill of Exchange which was aval or
guaranteed payment by commercial banks. However, due to the fluctuation
of the stock market, economic situation and instability of politics, the
Company has carefully rationalized in its investment. In addition, the
Company has not focused in equity instruments since 2005. For the
securities dealing of debt instruments, the Company has expanded the
volume of such business which has been a type of business that could
earn more profits other than the main income from brokerage fees.

Unit Trust Selling Agent

The Company is a unit trust selling agent for 14 asset management
companies in order to provide services for the investors who would like
to invest in unit trust so that they could have various alternatives of
such investment. Besides, this business could meet the investors’
requirements and be another channel of investment for the customers.

Investment Banking Business

In 2008, the Company provided financial advisory service to
A.P.F.Holdings Co., Ltd. to serve its intention to acquire assets and
increase returns for its investment under the name of “Project
Evergreen” and received a fee of 16.85 million baht and the advisory
services on setting up of Accounting system under the name of “Project
Accent” and received a fee of 2.32 million baht. The Company also
provided source of fund advisory service for Group Lease Pcl. and
received a fee of 0.05 million baht.

Derivatives Business

As of 13 August, 2008, the Company obtained Derivatives license from the
SEC and applied for TFEX membership as well as TCH and had started the
service since September, 2008. The underlying assets offered are SET50
Index Futures, SET50 Index Options and Stock Futures of PTT, PTTEP and
ADVANC. The Company offers both trading through conventional offline and
online internet system.

In addition, TFEX is going to start Gold Futures trading in Feb, 09.
Gold Futures is one of the underlying assets which investors could trade
both upward and downward trends. With the prominent character that
allows to either long or short with leverage, the gold price movement
which might possibly move in a different direction with the equity price
movement makes Gold Futures an interesting alternative investment tool
to making profit and hedging of the portfolio risk. It is easy and
convenient for the investor to trade Gold Futures through electronic
system of TFEX and having TCH as settlement guarantor and the SEC as a
regulator governing the TFEX and its members, the investors can
guarantee that the trading is done transparently.

(2) Market Outlook and Competition

Thai Stock Market in 2008

Contrary to the preceding bullish year, Year 2008 was seen as one of the
most volatile years in the Thai stock market history. After moving
steadily firmer to retest its yearly high at 886.5pt on 22 May 08, SETI
consecutively fell in the second half of the year to retest its yearly
low at 380.05pt, posting 57% plunge from its yearly high, on 26 Nov 08.
However, SETI saw modest rebound in December climbing back to end at
449.96pt, or 48% lower than the preceding year, thereby contracting
market capitalization proportionately.

Such bearish market sentiment was attributable to both negative global
and local factors as follows:

1) Severe financial crisis that had triggered systemic insolvency of
financial institutions in US and Euro area subsequently resulted in
global economic slowdown and sharp deterioration of market sentiment in
the second half of the year.

2) Crude oil prices that nosedived from US$147 to US$32 also posted
negative impact on energy stocks, of which its sector weighting was
highest and more than one-third of the Thai stock market.

3) Market sentiment was also hurt by political unrest due to protracted
anti-government mass protest led by PAD since late May that had occupied
the government house and subsequently laid siege Suvarnnabhumi
international airport for a few days early Dec 08.

[]

Thai Stock Market Outlook in 2009

In the big picture, we expect that year 2009, in particular the first
half, would remain a quite volatile for the Thai stock market given the
backdrop that more and more countries around the world would officially
slipping into technical recession.

However, impacts to the Thai economy this time would be quite different
from what had seen after 1997 crisis. At that time, Thailand was
severely impacted by similar problems resulting from economic bubbles
that most advanced economies have been facing right now.

Given the fact that exports were accounting for more than 60% GDP,
Thailand would hardly escape from repercussion of waning demand due to
global recession. However, plunging oil and capital goods imports would
help more or less insulate the Thai economy from such external shocks.
Current account balance as percentage of GDP is expected to reverse from
-0.1% in 2008 to 0.9% in 2009, according to the latest NESDB forecast.

In our view, if the world economy sees signs of recovery in the second
half of 2009, as most economists expect, investor confidence would
likely make a comeback then. Low interest rates, stable politics, and a
resumption of the mega-projects that the government would also help
attract fund flows back to the market.

However, due mainly to market volatility in the first half, average
daily market turnover would likely to be thinner to Bt13b in 2009 from
Bt16b in 2008.

Competition in Securities Business

In Nov 2006, SEC approved the blueprint for the liberalization of
securities business licensing within five years, giving lead time for
securities firms to prepare themselves for international competition.

Starting from Jan 2012, SEC will accept unlimited applications for new
securities companies, providing that the applicants meet the
requirements for each category of licenses being sought for. License fee
for full services and boutique services are set at Bt20m and Bt5m,
respectively.

Furthermore, SEC will replace current “multiple licenses” with “single
license” that will allow license holders to engage in a full range of
securities business. Applicants who seek to engage in a specific
category of securities businesses, e.g. debt, derivatives, and asset
management, will also be able to apply for “boutique services” license.
However, only full services providers are allowed to do stock broking
business.

To allow lead time for adjustments, SEC Board also approved a temporary
extension of the current minimum brokerage fee for another three years
and set at timeframe for the liberalization of brokerage fees within
five years, as follows:

-   During the first three years, from Jan 2007 to Dec 2009, current
    minimum stock brokerage fee of 25 basis points will apply.

-   During the next two years, from Jan 2010 to Dec 2011, stock
    brokerage fee will be based on a sliding scale where fee will be
    lower as trading volume increases. Once trading volume reaches a
    certain level, the fee will become negotiable.

-   From Jan 2012 onwards, securities brokerage fees will be fully
    negotiable.

-   Notwithstanding the aforesaid brokerage fee liberalization, starting
    Jan 2007, the minimum internet trading fee shall be set at 60% of
    normal stock brokerage fee or a minimum of 15 basis points.

  -------------------------- --------------------------- -----------------
  Average Daily Turnover     Increment value in each     Brokerage fee (%)
  (Bt)                       step (Bt)                   

  X<1,000,000                1,000,000                   > 0.25

  1,000,000<X<10,000,000     9,000,000                   > 0.22

  10,000,000<X<20,000,000    10,000,000                  > 0.18

  X>20,000,000               >20,000,000                 Negotiable
  -------------------------- --------------------------- -----------------

To fulfill Thai capital market with full services and comply with
international standard, SEC has set up Thailand Futures Exchange (TFEX)
in 2006 to provide new financial instruments for investor to well-manage
their risks and add more products into the market such as SET50I ETF,
SET 50I Futures and SET50I Options, Gold Futures, Stock Futures, and
etc.

In view of this, we expect that:

-   Price competition among securities firms in the next few years will
    become fiercer again. In response to this, securities firms must
    diversify their revenues sources other than conventional brokerage
    commission.

-   More financial instruments with increasing varieties and complexity,
    e.g. futures, options, ETF and so forth, would be available in the
    Thai capital market thereby creating new opportunities for traders
    and new risk management tools for investors.

-   Starting from Jan 2012, providers of full services and boutique
    services must have a minimum paid-up capital of Bt500m and Bt100m,
    respectively. However, many stock brokers still have paid-up capital
    less than the aforementioned. Ones with paid-up capital less than
    the threshold must either recapitalize or merge with others to meet
    this new rule.

  ----------- ---------------- ----------- ------- ---------------- ------------
  Brokers                                                           
  Ranking by                                                        
  Market                                                            
  Share in                                                          
  2007-2008                                                         

  2007                                     2008                     

  Rank        Broker           %           Rank    Broker           %

  1           KIMENG           8.10        1       KIMENG           8.18

  2           ASP              5.74        2       PHATRA           5.96

  3           PHATRA           5.63        3       ASP              5.38

  4           CS               5.23        4       CS               4.81

  5           SCBS             5.04        5       ZMICO            4.60

  6           UBS              4.70        6       BFITSEC          4.04

  7           KGI              4.18        7       TNS              3.98

  8           BLS              3.68        8       BLS              3.97

  9           BFITSEC          3.51        9       UBS              3.86

  10          AYS              3.50        10      AYS              3.81

  11          TNS              3.49        11      KGI              3.75

  12          ZMICO            3.05        12      SCBS             3.64

  13          CLSA             3.04        13      PST              3.17

  14          TSC              3.01        14      MACQ             2.85

  15          DBSV             2.84        15      CNS              2.67

  16          JPM              2.79        16      TSC              2.62

  17          MACQ             2.67        17      JPM              2.49

  18          ASL              2.47        18      CLSA             2.48

  19          CNS              2.45        19      ACLS             2.36

  20          PST              2.39        20      ASL              2.31

  21          ACLS             2.34        21      TRINITY          2.23

  22          UOBKHST          2.12        22      DBSV             2.14

  23          TRINITY          2.11        23      FINANSA          1.72

  24          FINANSA          1.71        24      UOBKHST          1.67

  25          SICSEC           1.53        25      SICSEC           1.50

  26          BTSEC            1.50        26      KS               1.47

  27          KKS              1.36        27      AIRA             1.43

  28          GLOBLEX          1.35        28      FES              1.43

  29          FES              1.30        29      GLOBLEX          1.40

  30          KS               1.06        30      KKS              1.31

  31          IVG              1.03        31      SCIBS            1.07

  32          AIRA             0.94        32      KTBS             1.06

  33          SYRUS            0.89        33      SYRUS            0.98

  34          SCIBS            0.86        34      BTSEC            0.91

  35          US               0.82        35      IVG              0.87

  36          KTBS             0.73        36      MERCHANT         0.77

  37          MERCHANT         0.64        37      US               0.75

  38          CIMB-GK          0.22        38      CIMB-GK          0.34
  ----------- ---------------- ----------- ------- ---------------- ------------

Source: Stock Exchange of Thailand

Competition in Investment Banking Business

Competition in the Investment Banking business and the securities
underwriting business will become fiercer in the future as several
securities companies especially medium to small companies start to focus
more on these businesses. As such the Company will be very selective in
the areas where we offer our services and the clients which we service.

Regarding target customers, the Company focuses both on listed customers
in the stock exchange and companies in general which want to mobilize
funds from both equity and money market. We aim to win new underwriting
deals and at the same time focus on customers who may need financial
advisory services for other non-securities businesses such as financial
restructuring and merges and acquisitions.

(3) Procurement of Products or Services

Sources of Capital

For the past 3 years the Company had engaged mostly in short term loan
from local financial institution as well as the shareholders’ equity as
the source of capital. The capital was utilized on investment in debt
instrument and loan for securities trading and the rest was used as
working capital. The loan from other financial institution, if any,
would be short term . The sources of capital policy is to choose the
source which is more suitable in relation to the business activities and
its objectives and which will not affect the ratio between total
liabilities and shareholders’ equity as well as the NCR ratio.

Securities Trading Loan Policy

In 2008, the Company had allowed securities trading loan under the
Credit Balance system. Towards year end, the total Credit Balance line
was 5,153 million baht with the total outstanding balance of 538 million
baht. The Company exercises the greatest care when extending credit
under the Credit Balance system.

The Maintenance of Net Capital Rule

The Company will maintain its Net Capital Rule (NCR) to be up to the
Securities & Exchange Commission’s standard on a daily basis. The types
of assets and the capital of the Company will be evaluated everyday in
order to control the Company’s NCR to be in line with the standard rate
and in a timely manner. The NCR as of FY2008 year end was 94.90% of
general liabilities.