Taipei, Nov. 27, 2012 (CENS)--The Financial Supervisory Commission (FSC) is planning to allow stock investors to engage in intraday trading by buying stocks first before selling them on the same day, starting by the end of the year at the earliest, announced the FSC yesterday (Nov. 26).
The policy, which will be listed as a key measure of the “program for vitalizing the stock market” being drafted by the FSC, is another major effort of the government to vitalize the stock market, following the increase of the ceiling for intraday trading via margin trading and short sales.
Wu Tang-chieh, vice FSC chairman, noted yesterday that the FSC has asked the Taiwan Stock Exchange (TSE) to formulate corresponding measures to cut rate of investors defaulting on intraday trading.
Wu noted that although intraday trading can boost stock trading volume, it may increase the default rate for trading, as investors may be unable to sell their purchased stocks before the end of the same trading session. Therefore, the TSE has to formulate corresponding measures prodding securities firms to strengthen risk management and evaluate the credit standing of investors, so as to lower the default rate.
Chi Shive, chairman of TSE, pointed out that allowing investors to undertake intraday trading via purchasing stocks first before selling them on the same day can greatly vitalize the stock market and boost the investment willingness of investors, since it spares investors the need to pay fees for stock borrowing.
Hsu Jen-shou, president of the TSE, agreed that the intraday trading, which is in practice in many countries, will greatly vitalize the market, since investors can engage in such a kind of trading directly without the need of credit trading.
The FSC, though, pointed out that it is only planning to open intraday trading via purchasing stocks first before selling them on the same day, but not selling stocks first before buying them back, the latter of which involves even more complicated factors.
(by Philip Liu)