Mon, Feb 18, 2019 - Page 15 News List

Odd-lot trading to benefit retail investors: FSC

GREATER VOLUME:Odd-lot trades in after-hours trading during the first 11 months of last year made up 0.1 percent of the total TWSE trading volume

By Kao Shih-ching  /  Staff reporter

Odd-lot intraday trading can benefit individual investors, the Financial Supervisory Commission (FSC) said on Thursday last week, adding that it agreed in principle with the Taiwan Securities Association’s (券商公會) proposal to implement it.

In 2016, some securities brokerages expressed misgivings about adopting the mechanism, so the commission is asking the securities association to ensure that everyone is on the same page, Securities and Futures Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) told a news conference.

“If all agencies are in agreement, we will begin preparations to incorporate the mechanism,” Tsai said.

Odd-lot trading means that investors could purchase any number of shares lower than the standard unit of trading, or 1,000 shares, thus lowering the threshold at which investors could buy high-priced stocks, Tsai said.

The commission supports odd-lot trading, because it would boost daily turnover and give retail investors more choices, she said.

The mechanism would be adopted next year at the earliest, as the Taiwan Stock Exchange (TWSE) must first focus on launching the trade-by-trade mechanism, Tsai said.

Asked if odd-lot trading would apply to all stocks or only high-priced ones, Tsai said that the TWSE and the association must discuss that further.

Although not allowed in day trading, odd-lot trades are permitted in after-hours trading, she said, adding that the cumulative volume of odd-lot trades in the first 11 months of last year accounted for 0.1 percent of the total trading volume.

In 2016, some brokerages were concerned that investors and brokers might confuse the two systems, or worse, submit incorrect orders, Tsai said.

They also said the mechanism would increase operational costs, she added.

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