Exchange expected to lift trading ban

The bourse is waiting for the government's approval to raise the daily cap for price movements to 10 percent from 7 percent, which may happen this year, he said in an interview with Bloomberg Television.

“It can be implemented anytime,” Schive, 62, said. “From the Taiwan Stock Exchange's point of view, we are ready.”

Taiwan, which has Asia's fourth-largest emerging stock market, is advancing its ambition of becoming an international fund-raising center while widening options for local investors. The benchmark Taiex index rose 0.8 percent at the close, the second-best performer among Asian stock measures Tuesday.

“It will improve liquidity in the market,” Monika Yang, who helps oversee US$2 billion at Hamon Asset Management Ltd. in Hong Kong, said by phone Tuesday. “The best scenario would be to have no trading limit at all, but an improvement from 7 percent would be better than the current situation.”

The FTSE Group didn't upgrade Taiwan to a developed market in its review last year, saying the island must overcome obstacles including a freer currency and changes to stock lending rules. The Taiex has fallen 6.1 percent this year, the seventh-worst among 93 measures tracked by Bloomberg.

The higher daily limit may help draw more investors as Taiwan and China seek to permit trading of each others' shares for the first time. The two are planning a joint trading platform as ties improve 60 years after a civil war.

Taiwan-China relations have warmed since President Ma Ying-jeou took office in May 2008 and dropped the pro-independence stance of his predecessor, Chen Shui-bian. Closer ties with Taiwan's biggest trading partner may help Ma hasten a recovery in the export-dependent economy as it exited the deepest recession on record in the fourth quarter.

China, whose stock market is more than four times bigger, also has a 10 percent trading limit for shares.

Taiwan's financial regulator asked for measures such as mechanisms to halt trading to help make the transition for the new trading limit, Sean Chen, chairman of the Financial Supervisory Commission, told legislators Monday.

Schive said the Taiwan bourse will introduce measures to make trading more “transparent” and a so-called uptick rule, requiring short sales to be entered at a price higher than the previous trade.

“We have to adapt to the uptick measures which are quite popular elsewhere,” he said. “When those measures are ready, that's about the time the government will say go.”

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