Relaxed day trading regulations to debut Jan. 6
By Kathryn Chiu, The China Post
January 3, 2014, 12:02 am TWN
TAIPEI, Taiwan -- Next Monday Taiwan will relax its ban on day trading, a measure which allows investors to buy and sell a stock on the same day, and is expected to boost turnover by 5-10 percent.
As the third and last run of financial regulators' measures to boost market turnover, Taiwan Stock Exchange Corporation (TWSE) President Michael Lin (林火燈) on Thursday said that the bourse will allow investors to conduct day trading with more flexibility starting from Jan. 6, overturning current rules that allow day trading for only margin trading and short selling.
Speaking during a news conference held at the TWSE yesterday, Lin revealed to local media that simulative day trading has been conducted between terminals of Taiwan Stock Exchange and those of securities companies for some time, adding that the flexibility will help boost turnover the ratio on the TWSE.
The turnover ratio is a ratio of total trading volume to market capitalization, which is positively related to turnover. The ratio of Taiwan's share market stood at only 83 percent in 2013, which is even lower than that of 85 percent in 2012.
Lin went on to say that after the measure is put into practice, the Financial Supervisory Commission is expected to score a successful touchdown by pushing up the daily turnover by 5-10 percent.
Securities Shares Up to Hail Relaxation of Day Trading
From Jan. 6, the stocks opened to day trading will be large-cap stocks in the Financial Times Stock Exchange (FTSE) TWSE Taiwan 50 Index FTSE TWSE mid-Cap 100 Index.
Concord Securities analyst Kerry Huang told the Central News Agency that with a new measure allowing more flexibility for investors to conduct day trading, turnover is expected to keep growing.
The local market could become even more active as more and more foreign institutional investors return to the trading floor after the New Year holiday, Huang added.
On the back of the new measures, Ta Ching Securities (大慶證券) gained 3.14 percent to close at NT$16.40, Ta Chan Securities (大展證券) rose 1.73 percent to end at NT$20.55, and Capital Securities (群益證券) added 1.36 percent to close at NT$11.20.
The 150 stocks eligible for the new day trading rule include Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電), United Microelectronics Corporation (UMC, 聯電), Formosa Plastics Corp. (台塑), Evergreen Marine Corp. (長榮海運) and Gourmet Master Co. (85度C), according to TWSE's website.