Taiwan Stock Exchange Plans to Reform Odd Lot Trading System and Extend Trading Hours

The Taiwan Stock Exchange is working on optimizing its odd-lot trading mechanism and plans to extend the regular trading hours to attract more market demand and enhance valuation levels.

The chairman of the exchange, Lin Xiuming, said in an interview with Bloomberg that several odd-lot trading reform measures are currently under study, including advancing the odd-lot trading start time by 10 minutes to 9:00 AM, to open同步 with the whole share market, and also considering further shortening the current 5-second matching interval. Lin Xiuming stated that the goal is to complete the odd-lot trading reform by the end of the year.

Odd-lot trading refers to the buying and selling of stocks that are less than one standard trading unit (1000 shares in Taiwan), which is widely used among retail investors in Taiwan. Lin Xiuming emphasized that individual investors play an important role in Taiwan's market and their interests must be safeguarded.

Year-to-date gain exceeds 50%, Taiwan stocks rank in the top five globally

The backdrop of the reform is that Taiwan's stock market is at a historical high. The cumulative gain of Taiwan stocks this year is about 50%, making it one of the best-performing major markets globally, mainly benefiting from the sustained fervor of AI-related transactions and a massive influx of retail funds. This month, Taiwan's stock market capitalization has surpassed that of India, becoming the world's fifth-largest stock market.

Despite the impressive gains, Lin Xiuming believes that the technology stock-dominated Taiwan market is still undervalued relative to similar global markets. The current forward price-to-earnings ratio of the Taiwan Weighted Index is about 20 times, while that of the NASDAQ-100 Index is about 25 times.

Lin Xiuming specifically pointed out Taiwan's unique advantage of having a complete semiconductor supply chain. He said that what Taiwan "sells is not just a single company, but the entire supply chain," and foreign capital should recognize the value of this "supply chain premium."

Extending trading hours will take time

In addition to the odd-lot reform, the exchange is also discussing with brokers the extension of regular trading hours. Currently, the Taiwan stock trading hours are from 9:00 AM to 1:30 PM, only 4.5 hours, which is relatively short among the global major markets.

Lin Xiuming did not disclose a specific timetable but admitted that the process of extending trading hours is relatively complicated and may require a longer preparation period. Worldwide, extending trading hours has become a trend, with South Korea's main exchange planning to extend trading hours from the current 6.5 hours to 12 hours per day this year.

The exchange is also urging listed companies to strengthen investor communication, clearly articulate their medium and long-term strategies, in order to facilitate the release of valuations.