The Taiwan Stock Exchange Corporation says it is waiting for the market to reach consensus before implementing a plan to reduce the size of lots.
The plan calls for a transition from 1000-share lots to 100-share lots. During a press conference on Monday, stock exchange chairman Shih Jun-ji said that the plan could encourage investors to buy higher-priced stocks. But at the same time, Shih said, it also runs the risk of disrupting the order of the stock market.
“I think that in Korea they ended up with a decrease in transactions after they allowed smaller trades. That’s because if a stock is worth NT$9 per share, and you have to buy at least 1000 shares at a time, it amounts to a purchase of NT$ 9,000. If we decide that you only need to buy 100 shares at NT$900, that actually reduces the trade volume. So reducing the amount doesn’t necessary yield positive outcomes. ”