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May 28, 2017

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TSA pushes to lift even more day trading restrictions

TAIPEI, Taiwan -- The Taiwan Securities Association yesterday provided some advice to regulators on expanding the scope of the recently lifted restrictions on day-trading transactions.

Securities brokerage companies urged regulators to establish two-way transaction processing for market orders by allowing sell-first-buy-later day trades in addition to the current buy-first-sell-later mechanisms.

According to brokerage companies, although lifting the restrictions on Jan. 6 was successful in expanding average daily trading volumes above the NT$100-billion benchmark, the limitations of the current mechanism often compels investors to sell holdings as the closing bell approaches.

Day trading currently extends to composites of the FTSE TWSE indices, including the Taiwan 50, the Taiwan Mid-Cap 100 and the over-the-counter Gre-Tai 50. Securities brokerage companies yesterday urged regulators to first allow for two-way day-trading mechanisms before extending the lifting of restrictions on day trading to 1,200 stocks listed on the TWSE and Gre-Tai Securities Market, as is currently under consideration.

Brokerage Firms Appeal for High Rollers

The association urged regulators to repeal clauses that impose the capital gains tax on heavyweight traders who exceed NT$1 billion in trading volume, subjecting them to tax obligations of one one-thousandth of transactions.

According to the association, the NT$1 billion is among the leading factors hampering regulators' efforts to promote growth in market activity, as the heavyweight traders remain tentative about the notion of reentering the Taiwan market in force. A number of heavyweight traders have remarked that at their pace of activity, they may easily exceed the NT$1 billion ceiling in two or three months.

In addition, the association also appealed for the blanket revocation of the capital gains tax. According to a Taipei-based heavyweight trader, investors are already bearing the burdens of the securities transaction tax, which is rated at three one-thousandths of transactions, and that coupled with the levying of an additional two one-thousandths of transactions on stock market profits to pad the second generation health care plan, investors should not be obligated to pay the capital gains tax.

In response, the Financial Supervisory Commission acknowledged the appeals of brokerage companies, stating that a decision will be rendered in three month's time. However, FSC added, debates over the capital gains tax remains the domain of the Ministry of Finance.

Meanwhile, investors have reaped profits of about NT$24.69 million via day trading as of Feb. 14, said the TWSE.

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