TWSE Press Release
Starting from June 1, 2015, Price Fluctuation Limit will be relaxed to 10%, Whilst the Range for Day Trading will be Increased
Publish Date︰2015/06/02 14:22
Press release content: So as to respect the market, be more in line with international standards, and create greater efficiency in the market, price fluctuation limit has been relaxed from 7% to 10%, starting on June 1, 2015. On May 2, the collateral maintenance ratio for each margin account was adjusted from 120% to 130%. A more relaxed price fluctuation limit will serve as to accelerate stock price reaction and increase market efficiency. Furthermore, it will decrease the chances of reaching the price limit and discouraging investors chasing the market. The related measures are divided into three major categories; appropriate adjustment of price fluctuation limit, strengthening risk control, and maintaining market stability. The appropriate adjustment of price fluctuation limit includes the synchronized adjustment of all products. The price fluctuation limit of odd-lot trading and block trading has been adjusted from 7% to 10%. The standard purchasing price price-ceiling for the securities finance industry has been increased from 7%~15% to 10%~20%. Strengthening risk control includes adjusting the range for day trading from 120% to 130%. The securities lending collateral for securities firms has been increased from 114% to 120%. When securities firms and other institutions in the securities finance industry conduct securities lending, the initial margin and maintenance margin for investors will be 140% and 120%, respectively. Professional institutional investors can agree on a rate with the securities firms and are not restricted to the rate limit. The maintenance margin for T+5 type securities borrowing and lending was adjusted from 100%~125% to 100%~130%. The maintenance margin for the six-month type of securities borrowing and lending has increased from 120% to 130%.
The supporting measures for the relaxed price fluctuation limit can be found on the Taiwan Stock Exchange’s (TWSE) relaxed fluctuation limits area. (http://www.twse.com.tw/ch/announcement/official_result.php?DEC_DATE=104%2F05%2F25&DEC_DATE1=104%2F05%2F26&KIND=ALL&hs_file=all&sub=%ACd%B8%DF)
Starting in April 2015, TWSE has been an intense advocate in the support of measures to relax price fluctuation limits. TWSE has held 5 guidance meetings for professionals in the securities industry across the north, centre, south, and east of Taiwan. There were approximately 715 participants in attendance. Furthermore, six investment seminars were held across the north, centre, and south to strengthen advocacy towards investors where there were approximately 800 participants in attendance. The subsequent webpro click rate was 1300. Additionally, posters and brochures were printed out and distributed to securities firms. Securities firms should assist by inputting excerpts from related content to bank statements, correspondence letters, and webpages. They should also input notices into the voice and electronic order entry system to remind investors.
Furthermore, starting April 2015, TWSE has been tracing the collateral maintenance ratio for margin accounts on a weekly basis. TWSE also traces the securities firms and adjusts the manufacturer info system twice a week. 82 securities firms were able to comply with the relaxed fluctuation limit of 10% on June 1. TWSE conducted measurements of the whole market on May 31, 2015.
Starting from June 1, 2015, excluding stocks that comprise the Taiwan 50, Taiwan Mid-Cap 100, and TPEx 50 indices, day trading will be permitted in stock warrants (includes stock warrants issued by A-grade issuers) and exchange-traded funds (ETFs). Taking the overall operation and publication process of stock warrants into account, day trading will take effect one working day after the execution of the transaction objects. Day trading for ETFs can start on the listing day. Furthermore, the transaction objects of day trading will be permitted for centralized trading. It is estimated that the current number of 150 stocks of transaction objects will be increased to 246 stocks, whilst 29 ETFs will be able to conduct day trading. The transaction objects of day trading, as well as related measures and statistics, are available on the day trading area of the Taiwan Stock Exchange Corporation’s official website.
(Objects and Statistics：http://www.twse.com.tw/ch/trading/exchange/TWTB4U/TWTB4U.php)