Fri, Mar 01, 2019 - Page 12 News List

Lawmaker mixed on FSC’s proposal for odd-lot trading

By Kao Shih-ching  /  Staff reporter

Democratic Progressive Party Legislator Shih Yi-fang (施義芳) on Wednesday gave a mixed review to the Financial Supervisory Commission’s (FSC) proposal to allow odd-lot trading from next year, saying such a change would cause confusion among investors accustomed to the standard 1,000-share system.

Taiwan is the only nation that requires purchases to be made in standard units of 1,000 shares, making it difficult for retail investors to buy high-priced stocks, Shih told a question-and-answer session at the Legislative Yuan in Taipei.

Odd-lot trading, which allows purchases of any number of shares, has been permitted in after-hours trading, but contributed a miniscule NT$4.58 billion (US$148.8 million) in turnover in the first 10 months of last year, Shih said.

Still, odd-lot trading could boost participation among investors under the age of 40, who mostly have smaller portfolios compared with older investors, Shih said.

The younger generation account for half of the turnover on the Taiwan Stock Exchange and would be eager to expand their activity if odd-lot trading is introduced to match their preferences, he said.

Pointing to shares of smartphone camera lens maker Largan Precision Co (大立光), which closed at NT$4,360 on Wednesday, Shih said that while buying 1,000 of the company’s shares for NT$4.36 million would simply be out of the question for a lot of younger investors, many could purchase a single share.

If the commission adopts odd-lot, intraday trading, more retail investors would participate, boosting daily turnover, Shih said.

However, he said that he has misgivings about the commission’s proposal to have odd-lot and standard trading operating separately.

“It is hard to imagine a bourse that allow investors to use separate information systems for market orders,” he said.

“No other exchange in the world operates in this manner,” he said.

Rather than having two systems, Shih urged the commission to do away with the 1,000-share system and allow investors to chose how many shares they want to trade.

FSC Chairman Wellington Koo (顧立雄) said that given the exchange’s focus on launching a trade-by-trade mechanism next year, he is worried that investors might find it difficult to adapt to another big change such as abolishing the standard unit.

The commission would continue discussing the matter with the exchange and the Taiwan Securities Association, Koo said.

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