Taipei-- A move to cut the transaction tax for day trading in the local equity market has boosted trading volume in a better-than-expected way, Financial Supervisory Commission (FSC) Chairman Lee Ruey-tsang (???) said Wednesday.
Lee said that after the tax cut became effective on April 28, the average combined daily turnover on the local main board and the over-the-counter market (OTC) rose to NT$133.78 billion (US$4.46 billion) on April 28 and May 2 from an average of NT$116.84 billion seen during the April 1-27 period.
The local bourse was closed for a three-day Labor Day holiday after April 28 and trading resumed on May 2.
The Legislative Yuan passed a bill in late March to cut the transaction tax for day trading to 0.15 percent from the previous 0.3 percent for one year. The tax cut is aimed at boosting trading volume on the equity market by attracting more investors.
Day trading allows traders to buy first and sell later or sell first and buy later in a single session. Since June 2014, the FSC, the top financial regulator in Taiwan, has expanded the range of day trading at an accelerated pace.
According to the Taiwan Stock Exchange (TWSE), aggregate turnover in the local equity market for 2016 totaled about NT$18.9 trillion, marking the third consecutive year in which the annual trading volume had moved lower. The 2016 figure is the lowest level in 15 years, the TWSE data shows.
Lee said that the average daily turnover in the first two sessions after the tax cut took effect rose almost 14.5 percent from April 1-27, higher than the FSC had expected.
Moreover, in the two sessions, day trading accounted for 15.4 percent of the total turnover in the main board on April 28 and May 2, higher than an earlier estimate of 15 percent previously made by the FSC, Lee said.
He said that the 15.4 percent ratio was even higher than an average of 11.91 percent during the April 1-27 period on the main board.
As for the OTC market, day trading made up 23.81 percent on April 28 and May 2, up from 18.32 percent seen during the April 1-27 period, Lee said. The latest ratio also beat an earlier forecast of 22.5 percent by the FSC, Lee added.
Source: Focus Taiwan News Channel