The Taiwan Stock Exchange (TWSE, 台灣證交所) said yesterday that issuers of Taiwan depositary receipts (TDRs) must fully disclose any trading suspensions imposed in the markets in which their primary trading takes place.
As long as these issuers provide full disclosure, they will not necessarily be requested to suspend trading on the local bourse in the event that they are suspended elsewhere.
The TWSE said the demand for full disclosure was aimed at protecting investors in the local market amid concern that insufficient information disclosure by TDR issuers could hurt them.
The TWSE said its board of directors met a day earlier to revise the rules governing stock market trading activity by approving the move not to request immediate trading suspension after trade of a TDR issuer is halted in the primary market, based on the degree of information disclosure.
The exchange said that because the current rules impose a heavy penalty on failure to disclose sufficient information, TDR issuers would be prompted to follow the rules.
Under the rules, a listed company faces a fine of up to NT$5 million (US$164,695) for poor information disclosure, while more serious violations will lead to a halt in trading on the local bourse.
The TWSE cited Hong Kong-listed New Focus Auto Tech Holdings Ltd (新焦點汽車) as an example of an unnecessary demand for simultaneous trading suspension.
Earlier this month, New Focus avoided suspension of its TDR trading on the local bourse after trade of its shares in Hong Kong was suspended because it had filed in advance a notice to the TWSE to fully disclose sensitive information about its earnings outlook related to the Hong Kong suspension.
However, poor information disclosure sparked an outcry among Taiwanese investors in mid-August when TDRs issued by Hong Kong-listed Kith Holdings Ltd (僑威控股), a China-based packaging product maker, continued to be traded for two days in Taiwan, even after trading of the company’s shares was suspended on the Hong Kong Exchange.
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