Taipei, July 14 (CNA)
Taiwan will soon launch a mechanism that will allow halts in trading of individual securities for the first time ever to improve information disclosure and protect investors, the Taiwan Stock Exchange (TWSE) said Tuesday.
The new trading halt mechanism will be carried out on the main stock exchange and the over-the-counter market beginning on Jan. 15, 2016.
According to the exchange, whenever a listed company is set to announce material information which could influence its share price, it can apply to the TWSE for approval of a temporary halt in trading.
The new mechanism means that investors will not be shut out from any material information and will be protected from buying or selling shares in the dark due to imbalances in information disclosure.
The TWSE said the new trading halt mechanism was planned after the exchange took into account the practices of foreign exchanges, such as Singapore, Hong Kong and the tech-heavy Nasdaq.
It expects the move to help Taiwan's equity markets narrow their gap with international counterparts.
The exchange said that whenever a listed company has material information such as a capital reduction, a suspension in operations, a merger or acquisition, a new technology development, or a stock split or stock swap, it will be able seek a suspension in trading of its shares until the important information is disclosed.
The exchange said that before a listed company issues a profit warning, it will also be able to seek a trading halt until the information is released. In addition, if a media report conveys information that could affect a listed company's share price, the company can apply for a trading halt until the firm releases a disclaimer or confirms the report, the TWSE said.
The TWSE said it will ask a stock to halt trading when the company is unable to clarify a media report that has affected its share price.
The exchange said halts in trading could last for one to three days before the affected listed company discloses the necessary information, putting all investors on the same playing field.
Because Taiwan's equity market trades for only four and half hours a day, the trading halt mechanism will only be implemented before a new trading day starts and not while a trading session is in progress, the TWSE said.
A listed company will be able to apply for a trading halt a day before the next trading session or at 7:30 a.m. before the trading day begins, the exchange said.
The TWSE said any listed company that fails to follow the new trading rules will face a fine of up to NT$5 million (US$161,290).
(By Frances Huang)
Taipei, July 14 (CNA)