The Taiwan Stock Exchange Corp (證交所) said it may change the way closing share prices are calculated, to prevent stock price manipulation by fund managers trying to boost the value of their stock portfolios.
At present, after the close of exchange trading the last transacted price of a share is used as the closing price. End-of-day orders can push the stock out of its earlier traded range, affecting the price of some derivatives or distorting the value of funds that use end-of-day or end-of-month prices to value their stock holdings.
To stop that manipulation, the exchange may now calculate the average traded price of shares over a fixed period of time before the end of trade when setting a closing price, Vice President Chen Ming-tai (陳明泰) said.
``It would make it fairer for fund managers by removing managers' ability to increase their funds' net worth in the last minute of trading,'' said Gary Tsai, who helps manage NT$3.6 billion (US$104.6 million) in Taiwan stocks at ING CHB Securities & Investment Trust Ltd.
Taiwan's main TAIEX has fallen 43 percent in the past year as slowing economic growth and political squabbling eroded investor confidence. That has crimped trading volume, creating the opportunity to manipulate stock prices in the last minutes of trading, investors said.
The exchange expects to decide whether to approve the plan by the end of the year, Chen said. The plan was earlier reported by Chinese language newspapers, which said a feasibility plan may be completed by September.
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