The Taiwan Stock Exchange Corp (TWSE) yesterday said it is considering an overhaul of regulations for trading units and other mechanisms in a bid to attract more investors, but more time is required to finalize its decision.
Among neighboring markets, Taiwan is the only market where stocks are traded in units of 1,000 shares, compared with Singapore, Shanghai, Shenzhen, Malaysia and Indonesia, where the trading unit is set at 100 shares, the TWSE said.
In the US, stocks are also traded in lots of 100 at the New York Stock Exchange and the NASDAQ, the TWSE said, adding that bourses in Germany, London, Australia and South Korea are conducted in increments of one stock.
In Japan, more than 70 percent of listed companies have elected to trade their shares in lots of 100, while Japanese regulators are planning to set the trading unit at 100 shares across the board in October 2018, the TWSE said.
Lowering the minimum trading unit would encourage investment from young professionals and help pad the TAIEX’s daily turnover, the TWSE said.
The stock exchange said that as Taiwan’s market closes at 1:30pm, investors are unable to access after-hours pricing movement information for instruments such as exchange traded funds (ETF), which can track foreign stocks.
From 2010 to the first half of last year, retail investors aged from 41 to 60 contributed 58.1 percent of market turnover, while participation among investors aged 20 to 30 was 4.5 percent, TWSE data showed.
The data also showed that investors aged 51 to 60 were the most active traders, contributing 30.7 percent of turnover during the period.
Viable long-term investment players such as Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday closed up 0.56 percent at NT$179.5, meaning that investors would have to pay NT$179,500 to purchase a 1,000-share lot, an amount beyond the reach of many younger investors.
“Lowering the minimum trading unit might not always produce the desired effect in boosting daily trading volume,” TWSE chairman Shih Jun-ji (施俊吉) told reporters yesterday.
“Investors might take advantage of a lower trading unit and opt to build their positions slower,” Shih said.
Prior to the change, an investor would be required to commit NT$9,000 to purchase 1,000 shares of a NT$9 stock, but with the availability of the 100 share unit, the same investor might only commit NT$900 for 10 shares, he said.
“Taiwan’s investors are also bound to familiar habits, and a change in trading units might cause confusion, leading to trading violations,” Shih said.
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