TWSE Introduces 3 Major Adjustments for Taiwan Stock Market, Tick Size for High-Priced Stocks to Be Reduced to NT$1 Next Year

(CNA, Taipei, July 8) The Taiwan stock market has become the fourth largest in the world by market capitalization. The Taiwan Stock Exchange (TWSE) is actively promoting the integration of the Taiwan stock market with international markets and has internally evaluated three major adjustments. These include advancing the opening time for odd-lot trading from the current 9:10 AM to 9:00 AM, shortening the interval for odd-lot order matching during trading hours from 5 seconds to 1 second, and uniformly changing the tick size for high-priced stocks (stocks priced above NT$1,000) to NT$1. These new regulations are expected to be implemented sequentially from the end of this year to mid-next year.

Securities firms have expressed optimism about these adjustments, with the primary concern currently being system load. A chairman of a securities company stated privately that the average daily trading volume of the Taiwan stock market has exceeded NT$1 trillion this year, a significant increase from the past. The new regulations will lead to a further increase in the number of transactions for high-priced stocks and odd-lot trades, posing a new challenge to system load and requiring time for stress testing.

TWSE officials indicated that while block trading in the Taiwan stock market opens at 9:00 AM, odd-lot trading does not have its first match until 9:10 AM. Furthermore, the current odd-lot trading matches every 5 seconds, leading many investors to complain about price discrepancies and lower transaction efficiency in odd-lot trading.

The TWSE stated that its current reform direction is to minimize the trading restrictions between odd-lot trading and regular block trading. Firstly, the opening time for odd-lot trading will be advanced from the current 9:10 AM to 9:00 AM, aligning it with regular block trading. This is expected to be implemented before the end of this year.

Secondly, the interval for odd-lot order matching during trading hours will be shortened from 5 seconds to 1 second, tentatively scheduled for implementation in July next year. The TWSE stated that this move will help improve the liquidity of odd-lot trading during market hours. However, to protect small investors, odd-lot trading will still maintain the "call auction" mode, unlike the "continuous matching" used for block trading, to prevent excessive market volatility that could result from a switch to continuous matching.

Additionally, considering that the Taiwan stock market currently has over 50 stocks priced above NT$1,000, each tick for these high-priced stocks represents NT$5. In the future, the tick size for both block and odd-lot trades of stocks priced above NT$1,000 will be uniformly reduced to NT$1, aiming to allow investors to trade at more precise intraday prices and reduce bid-ask spreads. These adjustments are also tentatively scheduled to be implemented starting July next year. (Editor: Chang Liang-chih) 1150708

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