The Financial Supervisory Commission (FSC) yesterday announced three market-boosting measures — including allowing day trading — to give investors and proprietary traders more flexibility in making stock investments.
FSC Chairman William Tseng (曾銘宗) made the announcement after the TAIEX closed up 0.62 percent at 8,088.37 yesterday on turnover of NT$80 billion (US$2.67 billion).
“The commission will introduce three measures to help boost the market and provide investors with more risk diversification tools,” Tseng said.
The commission will allow day trading — buying and selling stocks within the same trading day — of the 200 stocks targeted by major exchange traded funds, he said.
The proposed easing may go into effect on Jan. 6 after related agencies and securities houses have adjusted their computer trading systems, the commission said.
It will consider further easing of day trading limits if the initial opening proves to be harmless, said Tseng, a former deputy minister of finance who oversaw the state-owned National Stabilization Fund (國安基金).
Securities companies may require day traders to pose bail funds and set the amount as they see fit to strengthen risk control, the commission said.
The TAIEX has rallied 3.4 percent in the past week, but trading volume has remained sluggish at less than NT$100 billion since July 23, as plans by the US Federal Reserve to wind down quantitative easing has weakened risk appetite.
The commission also plans to lift the short-selling ban on all listed stocks traded on margin even when they lose value, the commission said. At present, investors can only conduct margin trading on 150 stocks.
The deregulation, scheduled to take effect on Sept. 23, will not apply to stocks that closed down by the daily 7 percent limit in the previous session, it said.
‧ Day trading of the 200 stocks targeted by major exchange traded funds.
‧ Lifting the short-selling ban on all listed stocks traded on margin.
‧ Proprietary dealers will have a six-month respite to trade securities that close up or down by their daily limit.
In addition, proprietary dealers will be given a six-month respite to trade securities that close up or down by their daily limit to give them more flexibility, the commission said. The respite will start on Monday and last through March 8 next year.
The Taiwan Securities Association (證券公會) welcomed the measures, saying that they may help boost the market’s trading volume by 10 percent. Currently, only 30 to 35 percent of investors engage in margin trading, meaning up to 70 percent are barred from or have no need for the strategy, the association said.