After conducting a feasibility study on the extension of stock trading hours, the Taiwan Stock Exchange (TSE) has concluded a longer trading session would benefit the securities market.
Many securities companies had once opposed extending trading hours, but their stance appears to have changed now, the TSE study indicates.
The issue of extending trading hours has been under discussion since 1995, after the Securities and Futures Commission (
But at the time, there was little support for an extended session, as local investors and securities companies were accustomed to the present three-hour session.
According to a survey of 198 securities companies conducted earlier this year by the Association of Securities Brokers (
Roughly 43 percent of the nation's securities companies support a trading hours extension, as that would bring the Taiwan stock market in line with international trends. At the same time, 33 percent wish to keep the market's present trading hours, and another 21 percent support fixed-price "after-hours" trading.
The survey also found that roughly 13.1 percent of all securities companies support extending trading hours to 1:30pm, Monday to Friday, with the market closed on Saturdays.
Another 11.9 percent favor two trading sessions held between 9am and 12am and 1:30pm and 3:30pm. There would also be no Saturday trade under this scenario.
There are different opinions on whether Saturday trade should be kept, but on a whole, the majority of securities firms support extending trading hours.
As part of its feasibility study, the TSE collected information on stocks markets around the world.
According to the study, extending trading hours could help the Taiwan stock market become a more internationally recognized market place.
There are also a number of other advantages. For example, local investors could have more time in the day to react to breaking major news or events that occur domestically or internationally.
It could also increase the market's trading volume, which would in turn benefit the operating earnings of brokers. In addition, the longer hours would help foreign investors overcome time differences between Taiwan and their respective nations. That in turn could attract more foreign investment.
The TSE also analyzed the differences between holding one continuous session and breaking up trade between two sessions.
But the results only centered on the effects on lunch hours for investors and brokerage staff, and whether investors might not be able to concentrate on their trading if hours were extended.
According to a TSE executive, other issues -- such as the the daily up or down 7 percent movement restriction -- must be addressed by the appropriate regulatory agencies.
The TSE's feasibility study has now been turned over to the SFC for that agency's review, the exchange executive said.
"In order to connect trading hours with the European market, the trading hours of the Taiwan Stock Exchange should be extended to around 4 pm in the afternoon, when the London market opens," said a senior executive of a foreign securities firm, who declined to be identified. "If Taiwan really wants to be an international-recognized trading place, it has to provide enough trading hours for foreign players to participate."
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