Taiwan Stock Exchange Eases Rules To Boost Market Liquidity
Taiwan's stock exchange is loosening several trading regulations after recent market volatility and criticism that existing restrictions have hurt market liquidity. The changes include shorter restriction periods, faster trade matching intervals and looser standards for high-priced stocks.
TWSE Loosens Trading Rules to Boost Market Efficiency
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REPORTER:
The Taiwan Stock Exchange has announced that it is loosening some of its regulations in response to recent market volatility.
Du Hui-juan (VICE PRESIDENT, TAIWAN STOCK EXCHANGE):
When securities experience unusual price swings it's important to remind investors of the risks involved. We have not estimated the impact on trading volume. Trading volume ultimately depends on market fundamentals along with global political and economic developments.
The changes come in response to criticism from lawmakers that the current system acts as a so-called “liquidity killer”. New rules include shorter restriction periods and faster match intervals, which analysts believe will reduce impacts on restricted stocks and improve market liquidity. The Stock Exchange will also loosen standards to reduce interference in high-priced stock trading. The new system will be implemented from August 10.
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TWSE Introduces New Rules to Improve Trading Efficiency
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REPORTER:
In response to the stock market’s recent volatility, the Taiwan Stock Exchange announced that it is loosening its handling regulations.
Du Hui-juan (TWSE VICE PRESIDENT):
When securities experience unusual price swings, investors can be reminded to pay attention to trading risks. We have not estimated the impact on trading volume. Trading volume ultimately depends on market fundamentals, along with global political and economic developments.
The changes come in response to criticism from lawmakers that the restriction system acts as a "liquidity killer." Key changes include shorter restriction periods, with securities subject to a first-time or repeat restriction order cut from 10 to 5 trading days. Other changes include faster match intervals, with matches occurring approximately every 2 minutes. Analysts say they believe that shorter restriction periods and faster match intervals will reduce the trading impact on restricted stocks and improve market liquidity.
Lastly, to address concerns that normal volatility in high-priced stocks is triggering frequent flags, TWSE loosened its standards to reduce interference in high-priced stock trading. The new system will be implemented from August 10.
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