(ETFs), which offer instant diversification in a U.S.-traded security. With net assets of over $2.3 billion, as of mid-2016, the iShares MSCI Taiwan Index ETF (NYSE: EWT) is the most popular option for investors looking for exposure to Taiwan's growing economy.
, but the largest company accounts for over 20% of the fund's holdings, while information technology companies, in general, account for over 57% of the portfolio. As a result, investors may want to exercise caution when purchasing the ETF due to somewhat limited diversification.
(ADRs), which are U.S.-traded securities in foreign companies. Some popular ADRs trading in the United States include:
, or TAIEX, Index is capitalization-weighted index of all listed common shares traded on the Taiwan Stock Exchange. The index has a base value of 100 based on its 1966 level. The index is also known as the TSEC Index.
Trading Principles
Trading hours:Regular trading session: 9:00 a.m. - 1:30 p.m.; orders can be entered from 8:30 a.m.
After-hours fixed price trading session: 2:00 - 2:30 p.m.
Odd-lot trading session: 1:40 - 2:30 p.m.
Auction trading session: 3:00 - 4:00 p.m.
Tender offer trading session: 3:00 - 4:00 p.m.
Trading units:Orders may be in one trading unit or multiples of trading units. One trading unit is 1,000 shares for stocks, warrants, domestic ETFs and ETNs. Some listed securities, such as cross-listed ETFs and foreign stocks, are not limited to 1,000 shares for one trading unit and are, instead, subject to the issuer's choice. Orders below one trading unit must trade as odd-lot orders.
Daily price fluctuation limit:To maintain market stability, the daily price fluctuation limit on stocks, beneficiary certificates, Taiwan Depository Receipts (TDRs), convertible bonds, domestic ETFs and ETNs is set at 10% of the market opening auction reference price. For TWSE-listed bonds, the limit is set at 5%. There are some exceptions not under the 10% daily price fluctuation limit. These include the first five trading-days of newly listed stocks, cross-listed ETFs, and ETFs whose constituents include foreign stocks, ETNs comprising foreign securities, foreign or government bonds.
Matching system principles:Orders are matched and executed based on the principles of price and time priority. If any quotes are placed at the same price, order execution will be determined according to the principle of time priority. Orders are matched by call auction and warrants are executed through continuous trading. The execution price shall be determined based on the following principles:
The price that enables the largest number of orders to be executed is selected. All bids higher than and asks lower than the execution price must be satisfied in full;
Of the bids and the asks at the execution price, at least one side must be satisfied in full;
If two or more prices conform to the preceding two principles, the price closest to the most recent execution price in the current trading session shall be selected.Given that the closing price of securities is widely used by market participants as a benchmark for portfolio valuation as well as index calculation, the system accumulates orders for five minutes (from 1:25 - 1:30 p.m.) before the closing call auction and the closing price will be decided.
Market-wide continuous trading will be implemented from March 23, 2020. Execution prices of continuous trading shall be determined by each buy order or sell order that is entered based on the following principles:
When the price of a buy order entered is higher than or equal to the minimum price of a sell order previously entered, orders shall be satisfied from the lowest to the highest price of a sell order, in that order, until orders are all satisfied or until the price of the buy order currently entered is lower than the price of the unsatisfied sell order.
When the price of a sell order entered is lower than or equal to the maximum price of a buy order previously entered, orders shall be satisfied from the highest to the lowest price of a buy order, in that order, until orders are all satisfied or until the price of the sell order currently entered is higher than the price of the unsatisfied buy order.
Intra-day volatility interruption:In order to limit extreme price fluctuation, intra-day volatility interruption is in place. Whenever the trading system detects that the potential execution price of a specific stock will fall out of a specified range (+/-3.5%) of the last traded price, matching for that stock is postponed for two to three minutes. Market participants are informed of this postponement, allowing investors to reconsider existing orders and enter new orders, providing measures for instant price stabilization.
However, volatility interruption is not applicable in the following situations: from 9:00 a.m. to the first executed trade; from 1:20 - 1:30 p.m.; for stocks whose auction reference price at market opening is below TWD1; securities for which extended matching intervals have been implemented under the bylaws or rules of the TWSE; for call (put) warrants and warrant certificates; or, for IPO securities during their first five trading days when they are not subject to daily price fluctuation limits.
After market-wide continuous trading is implemented, intraday volatility interruption measures will be adjusted as follows: Whenever the potential execution price of a specific stock exceeds the limit range (+/-3.5%) as compared to the reference price of the preceding match, matching for that stock is postponed for two minutes - the suspended stock will resume trading with a call auction, then return to continuous trading.
Real-time trading information disclosure:Information on the prices and volume of the five highest unexecuted bid quotes and five lowest unexecuted ask quotes are disclosed on a real-time basis, allowing market participants to make an informed decision when placing orders. This information can be accessed at:
https://mis.twse.com.tw/stock/fibest.jsp?stock=1101
Information disclosure before market opening and closing:
Starting on June 29, 2015, the TWSE has disclosed simulated transaction prices, trading volume, and the five best bid/ask prices and volume for investors' reference before market opening (8:30 - 9:00 a.m.) and the closing session (1:25 - 1:30 p.m.).
Furthermore, a volatility interruption system has been adopted before market opening and closing. If in the last one minute before market opening (8:59 - 9:00 a.m.) or closing (1:29 - 1:30 p.m.), there is a volatile change exceeding 3.5% of a securities reference price by the order-matching system, in the market opening or closing there will be a two-minute temporary suspension for those individual stocks. During such suspension, investors can still continue to add to, cancel or revise orders.
Reference Article
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