The nation’s warrant turnover may grow threefold this year on last year once the legislature approves a transaction tax cut and financial authorities allow day trading, the Taiwan Securities Association (TSA, 證券公會) said yesterday.
A warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed-exercise price until the expiry date.
Warrant trading averaged NT$1.66 billion (US$5.5 million) per day last year, rising 55.91 percent from 2012, while the number of participants increased 15.76 percent to 95,147, indicating the investment tool is gaining rapid popularity, TSA chairman Chien Hung-wen (簡鴻文) said.
“The goal is achievable if the tax cut clears the legislature, and regulators extend day trading to warrants,” Chien said at a media briefing.
The lawmaking body is expected to end the current session today.
Last month, the Finance Committee approved the bill to slash the warrant transaction tax from 0.3 percent to 0.1 percent in the hope of boosting warrant trading and easing the risk associated with hedging burdens on securities houses.
A threefold turnover would make Taiwan the world’s third or fourth-largest warrant market, up from the eighth place ranking for the past three consecutive years, Chien said.
Hong Kong has outperformed all bourses in terms of warrant trading volume, thanks to the absence of a transaction tax, Chien said, as the Special Chinese Administrative Region aims to retain its status as a global financial center.
Deutsche Boerse and Swiss Exchange ranked second and third respectively, based on trading volume for the first 11 months of last year, according to TSA statistics.
The association is also pushing for the extension of daily trading to warrants — now limited to shares in 200 large-cap listed companies.
TSA Corp chairman Lee Sush-der (李述德) said he has no objection to day trading, buying and selling stocks within the same trading day, but that the Financial Supervisory Commission has the final say on the matter.
Warrant transactions accounted for 1.72 percent of the overall equity market turnover last year, compared with 1.12 percent in 2012.
The figures suggest an entrenched preference among local investors for stock trading in the spot market.
Separately, the Taiwan Future Exchange (TAIFEX) said yesterday that it is seeking to invigorate the market by introducing more diversified and global instruments.