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Investors wary of new trading system: TWSE

By Kao Shih-ching / Taipei Times Staff reporter

Despite the launch of a new continuous trading system yesterday, most local investors remained cautious and placed conventional day-only limit orders, the Taiwan Stock Exchange (TWSE) said.

Day-only limit orders made up 96.31 percent of the 13.41 million orders placed on the exchange yesterday, while five new types of orders only constituted 3.69 percent, TWSE data showed.

Of the five new types of orders placed, immediate or cancel limit orders ranked first at 3.33 percent, followed by day-only market orders at 0.3 percent, fill-or-kill limit orders at 0.03 percent and immediate-or-cancel market orders at 0.03 percent, while no one placed a fill-or-kill market order, the data showed.

“It was no surprise that most traders stuck to the day-only limit orders, as individual traders account for 60 percent of overall trading. They were not expected to use the new order types on the first day of the new trading system,” a TWSE official surnamed Chen (陳) told the Taipei Times by telephone.

The TAIEX plunged again yesterday, and most Asian equity markets also declined, which rattled local market sentiment, Chen said.

The benchmark index fell 3.73 percent to close at 8,890.03 points, below its 10-year moving average of 9,910 points. Turnover totaled NT$146.85 billion (US$4.83 billion), down 40 percent from NT$237 billion the previous session.

Foreign investors sold a net NT$15.85 billion of local shares, down from NT$21.9 billion the previous session.

All six types of orders could be grouped into limit orders and market orders, with the former allowing investors to set a price ceiling or a price floor, and the latter allowing investors to trade stocks at the market’s best available price, Chen said.

Limit orders accounted for 99.67 percent of the total yesterday, compared with market orders at 0.33 percent, stock exchange data showed.

“As most retail investors have an expected price before transacting, they prefer limit orders, which allow them to seek a specific price or better. The only risk is that it does not guarantee an execution if the price does not reach their target,” Chen said.


Read the full news post:Taipei Times