TAIPEI (Taiwan News) — The Taiwan Stock Exchange is proposing changes to its daily operations as the exchange’s rising valuation has elevated its global standing, with officials seeking to align trading practices more closely with international markets.
However, the most anticipated reform, extending the daily trading session from 1:30 p.m. to 3:30 p.m., is "not a priority," Financial Supervisory Commission Chair Peng Jin-lung (彭金龍) said Wednesday at a meeting of the legislature’s Finance Committee, per FTV.
Instead, the proposed changes focus on smaller operational adjustments, including moving the opening time for odd-lot share trading from 9:10 a.m. to 9 a.m. to coincide with the market opening. Odd-lot or fractional share trading allows investors to purchase fewer than the standard 1,000-share trading unit, making high-priced stocks more accessible to individual investors, according to UDN.
Another proposed reform would reduce the minimum price movement, or tick size, for stocks priced above NT$1,000 (US$31), including both full shares and fractional shares. The current NT$5 minimum increment would be lowered to NT$1. Tick size affects the spread between bid and ask prices. Smaller increments can narrow spreads, reducing transaction costs for investors and allowing more precise pricing.
At the same time, the intraday matching interval for fractional-share trading would be shortened from the current five seconds to one second.
The proposed changes are viewed as one of the most significant institutional reforms for Taiwan’s stock market in recent years. Supporters say reducing tick sizes for high-priced stocks would improve price discovery, increase market efficiency, and encourage trading.
However, the proposals have sparked debate among market participants. Opponents argue that smaller price increments for mega-cap stocks such as TSMC could lead to less volatile price movements, reducing short-term arbitrage opportunities tied to major market indexes and lowering day traders' profit margins.
Supporters counter that NT$1 tick increments would create more transparent pricing and reduce transaction costs. Securities firms could benefit from increased brokerage activity, but the expected rise in high-frequency, tick-by-tick trading would also require greater bandwidth and hardware upgrades for back-office systems.
The reforms affecting high-priced stocks, including a reduced tick size and one-second matching for fractional-share trades, are expected to take effect next July if approved. The first phase, changing fractional-share trading hours to begin at 9 a.m., is scheduled to start on Dec. 7.
During Wednesday’s legislative hearing, DPP Legislators Kuo Kuo-wen (郭國文) and Lee Kun-cheng (李坤城) questioned TWSE Chair Sherman Lin (林修銘) on whether the exchange was prepared to launch odd-lot trading simultaneously with the market opening. Lin said the adjustment would be implemented before the end of the year, per UDN.
The FSC said the proposed tick-size adjustment and one-second matching system remain proposals submitted by the TWSE and still require regulatory approval, further consultations, and the establishment of supporting measures.
Currently, more than 50 stocks listed on the TWSE are priced above NT$1,000. The proposed changes are expected to allow investors to trade at more accurate intraday prices and reduce bid-ask spreads, per CNA.
