Print

Mail

wiki links

FSC changes mind again about daily stock ceilings

Financial regulators have apparently made another about-face on changing the ceiling on daily stock trades, as local press reports cited one policymaker as saying that no concrete timeframe has yet be decided upon.

The change was originally set to happen next month.

The Financial Supervisory Commission decided to relax the trading band from 7 percent to 15 percent, starting from the beginning of next year, for the trading of foreign currency-denominated futures products, commission spokesman Lin Chung-cheng (林忠正) told two major Chinese-language business dailies over the weekend.

NO CLEAR TIMETABLE

"We plan to phase in the relaxation mechanism ... but have no clear timetable for widening the stock trading band for the moment," Lin was quoted as saying.

In an attempt to internationalize the local stock markets, stock and financial regulators agreed last January to ease trading restrictions, including the 7 percent daily limit on stock price movements.

At the time, the regulators agreed on a September time frame to phase out the rule that prevents locally traded stocks from rising or falling by more than 7 percent per day.

The commission, however, backtracked on the plan in April, after Premier Frank Hsieh (謝長廷) urged it to reevaluate the schedule.

Hsieh's caution followed criticism from the business community, which was concerned that the change might have a volatile impact on trading.

In June, Taiwan Stock Exchange chairman Wu Nai-jen (吳乃仁) said the new daily trading ceiling would be implemented in October.

INVESTOR CONCERNS

The delay in relaxing the daily trading limit comes as the British FTSE Group is preparing to review Taiwan's market status next month.

Investors have voiced concern that the government's hesitation could give the British reveiwers a negative impression and that in turn could affect a possible FTSE Group reweighting.

This isn't the first time the commission has flipflopped on policy decisions.

In August last year, it gave in to business community pressure and said only two independent members are needed on a company's board of directors, instead of a quarter of the board members it planned to require.

In May, the commission also shelved a proposal to split the single stock-trading session into two, again in the face of strong opposition from the business community to the proposed change.

However, the FSC is pressing ahead with other plans, including its program for an offshore bourse. It said it would start trading next year with the less complicated financial products of bonds and US dollar futures.

OFF-SHORE BOURSE

The commission decided to exclude China-based Taiwanese companies from initial trading on the offshore stock market because the public is still concerned about possibly accelerating the capital outflow to China, Lin said.

Overseas Taiwanese businesses with which have half of their output value outside the country will be welcome to make their initial or secondary public offerings on the bourse, he said.

The idea of an additional offshore bourse was devised as a tool to attract China-based Taiwanese companies.

Many of these companies have been making their initial public offerings in Hong Kong, Shanghai and elsewhere because of the government's strict requirements for listing on the local bourses, officials have said.

HOLD-UPS

The FSC was due to unveil its blueprint for the offshore bourse in June but disagreements with the Mainland Affairs Council and with the Ministry of Finance forced the delay.

Investors would need to pay a 0.3 percent tax on trading shares on the offshore bourse, the commission said.

The capital gains are categorized as overseas income and thus are tax-free for retail investors, but taxable for corporate investors, it said.
This story has been viewed 1619 times.