Stock woes bring calls for reform

In an effort to revive the ailing stock market, securities company representatives proposed reform measures yesterday via the stock exchange.

In a conference held yesterday, Lin Jong-hsiung (林鐘雄), chairman of Taiwan Stock Exchange Corp (證券交易所), met with executives from 10 integrated securities companies. This is the first formal meeting between Lin and securities company executives since taking the job earlier this month.

In the conference, securities company executives made a total of eleven proposals to the Chen Shui-bian's (陳水扁) administration.

Executives proposed that the securities transaction tax rate should be temporarily lowered and resumed after the market stabilizes.

However, according to market watchers the administration is unlikely to accept that particular tax cut measure.

Other proposals include broadening the daily range for stock price movement step by step. Currently the daily limit is both 7 percent on the up and down side.

The executives also suggested the administration further deregulate the business scope for the securities industry following the passage of the Financial Holding Company Law (金融控股公司法) earlier this week.

In addition, it was also suggested that the stock exchange officials review the regulations of delisting companies.

Market watchers say this is a response to the record level of listed companies' delisting in recent months.

Executives also suggested that regulators could allow securities advisory companies to conduct futures trading as part of their discretionary managed accounts (代客操作) businesses. Also the qualifications necessary for securities companies to conduct business of discretionary managed account could be further deregulated.

Executives also suggested incentives be provided for designing new financial products in order to promote more new products in the market. Executives also believe the finance ministry should review taxes issue on warrants.

On the trading rules of the TAISDAQ, executives proposed that rules governing margin trading could be relaxed, and buy-and-sell trading at the same day (當日沖銷) could be deregulated for over-the-counter stocks.

Finally, it was suggested that the regulation of capital-increase of securities companies could be loosened.

Officials at the stock exchange said they would consolidate the proposals by securities company executives as soon as possible and relay these proposals to the administration. In the past, most such proposals by securities company executives would go through the Securities Brokers Association (券商公會) and seldom came through the stock exchange itself, market watchers said.

However, since the new stock exchange chairman has been closely connected to President Chen, yesterday's conference was deemed as an informal proposal to the DPP administration by the securities industry, instead of proposing through the Ministry of Finance or the Securities and Futures Commission.

Whether the administration will accept such proposals remains to be seen, market watchers said.