Boosting Liquidity: Taiwan’s Innovation Board Stocks to be Included in Credit Transactions
Opening the Gates for Increased Liquidity
In a strategic move aimed at enhancing the liquidity of stocks listed on Taiwan’s Innovation Board, the Financial Supervisory Commission (FSC) has detailed plans to include these stocks in credit transactions. Set to come into effect from January 1 next year, this development would facilitate margin trading and securities borrowing and lending, providing a significant boost to the six stocks currently listed on the Innovation Board, including Taiwan Tiger Airlines.
Innovation Board’s Current Landscape
According to the most recent data from the Taiwan Stock Exchange, six companies find their home on the Innovation Board. These include Jing Innovation Technology-KY, Hengde Energy, Yunbao Energy, Yitian Cool Chess, Walking and Looking, and Taiwan Tiger Airlines. As the end of the year approaches, several other companies operating in sectors such as digital cloud, green energy and environmental protection, biotechnology and medical, and semiconductors are expected to apply for a listing on the Innovation Board, signaling a potentially robust expansion of this platform.
Amendments to Boost Trading
The proposed changes primarily entail amendments to Articles 2 and 8 of the “Securities Eligible for Margin Trading and Short Selling” standards. The main points of the amendments are twofold. Firstly, the common stocks listed on the Innovation Board will be included in the credit transaction targets, applying the same standards of review as those used for listed stocks engaged in margin trading and short selling. Secondly, once a stock on the Innovation Board is listed, its eligibility for margin trading and short selling will persist, barring scenarios of excessive equity concentration.
Implications for the Innovation Board
Gao Jingping, the Deputy Director of the Securities and Futures Bureau, has underscored the potential benefits of these changes. Allowing stocks on the Innovation Board to be eligible for margin trading and short selling can enhance their liquidity, improve the operational flexibility of investors, optimize the fundraising environment of the Innovation Board, and attract more start-ups to list. As a result, this could catalyze a surge in market trading volumes, providing a significant boost to the overall stock market.
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