The Financial Supervisory Commission (FSC) yesterday unveiled a slew of stimulus measures to boost the nation’s equity market, including the expansion of the daily stock trading limit from 7 percent to 10 percent.
The commission expects the expansion of the daily trading band to help increase the stock market’s liquidity and boost the market’s trading momentum.
The new trading rule is to take effect on Aug. 3. It will be the first relaxation of the trading rule since the limit was raised from 5 percent to 7 percent 25 years ago.
Photo: Wang Meng-lun, Taipei Times
“As local investors have become more mature and realize the importance of risk management, we think it is time to relax the daily stock trading limit in line with global trends,” commission Chairman William Tseng (曾銘宗) told a news conference in Taipei.
In other Asian stock markets, Hong Kong and Singapore have no trading limits, China has a 10 percent limit, Malaysia and Thailand cap daily trading at 30 percent and South Korea is planning to raise its daily limit to 30 percent in the first half of this year.
The number of stocks that investors can buy and sell within a day will also be increased in June, the commission said, without providing further details.
The commission intends to adopt supplementary measures to improve investors’ risk control, including raising their margin ratio in the stock market from 120 percent to 130 percent a month before the expansion of the daily stock trading limit takes effect.
Local brokerage houses will be encouraged to provide information about the changes to investors.
Asked whether it was appropriate to raise the daily trading limit on the nation’s equity market — a thin market where more than 60 percent of trading volume comes from individual investors — Tseng said the change would make Taiwan’s stock market fairer by boosting the boundary to limit trading of a single stock.
The move to raise the daily stock trading limit is part of the commission’s eight-point stimulus plan that envisions 15 measures being adopted over the course of this year in a bid to increase the nation’s equity market trading by 10 percent.
Other notable measures include a decision to allow brokerage houses to borrow securities loans from investors, which is to take effect in December, and a crowdfunding platform to be unveiled in June.
As for the capital gains tax for stock investments, implementation of which has been suspended for three years, the commission has asked Academia Sinica to research suitable transaction costs.
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