Taiwan stock exchanges revise 'disposal stock' rules from August 10

Taiwan's stock market is set to introduce revised regulations for "disposal stocks" starting August 10, aiming to better manage market volatility and investor risk. The Taiwan Stock Exchange (TWSE) and Taipei Exchange (TPEx) announced the changes, which have been developed over the past six months in response to recent market fluctuations and the effectiveness of existing rules.

A key adjustment is the reduction of the "disposal period" for stocks that trigger scrutiny. For stocks flagged for the first or second time, this period will be shortened from 10 to 5 business days. If such stocks also exhibit a high proportion of day-trading activity during their disposal period, the period will be adjusted from 12 to 7 business days.

Furthermore, the trading call frequency for these stocks will be accelerated. Instead of the current intervals of 5 or 20 minutes, trading will now be called every 2 minutes. This aims to provide more immediate price discovery and potentially curb excessive speculative trading.

The exchanges also clarified their approach to margin calls, emphasizing that they use a "whole account margin ratio" to manage investor credit risk. This calculation considers all listed and OTC stocks, as well as margin trading and short selling positions for an individual client. The exchanges cautioned that relying solely on partial information, such as "margin ratio for margin trading," could lead to investor misunderstandings.

Additional revisions include modifying the "price difference standard for 6 business days" for stocks exceeding NT$1,000, and establishing a regular review mechanism, with a semi-annual review of the regulations. These measures reflect a proactive approach to adapting the market framework to evolving domestic and international conditions.