Here is a snapshot of the framework of Taiwan domestic financial market. It includes 3 markets, Foreign exchange market, Capital market,& Currency market. For enterprises, there are two ways to finance their capital. One way is called indirect finance , which is to get loans from banks. The other way is direct finance. For short-term demand, they may issue bills or notes from the currency market. For long-term demand, they could issue stocks as well as bonds. Why is it called direct finance ? Because the money issuers get money directly from the investors . In Taiwan, most stocks are traded in the exchange system supervised by TSEC. Part of stocks and all bonds are traded in the over-the-counter market, supervised by GTSM. TSEC and GTSM both are under the supervision of the Securities & Futures Bureau. Now I’d like to move on to next slide to have a look at GTSM.
Trading and settlement processes are regulated by the KRX business regulation approved by the FSC The slide shows the overall stock trading process at KRX. The investors submit orders to the securities companies, then the securities companies which act as brokers, place orders to the Exchange(#1~2) This is the order driven market (where buy & sell orders compete for the best price). Next, the Exchange executes trading in accordance to trading rules price priority and time priority.(#3) After trading execution, the Exchange sends Market trading information to the info vendors, as well as to the Exchange’s Market Watch division(#4) Almost simultaneously, each investors’ trading execution result is sent to the investors through the securities companies to confirm the trading(#5~6). After the trading confirmation, the netted trading data is sent to the KSD for settlement(#7) meaning clearing & settlement Settlement between securities companies & securities and krx is proceeded after trading confirmation
This part of the presentation is about trading systems KRX trading hours consist of three sessions first, pre-hours session, which runs from 7:30 to 8:30, second, regular session, which runs from 9:00 to 15:00 (lunch break was abolished in 2000) third, after-hours session, which runs from 15:10 to 18:00. --which is divided into 2 session (closing price & single price) The Stock price is determined either by call auction when Opening/closing and resumption after halt or by continuous auction in regular session. Trading units are 10 shares, but the trading unit for a stock priced over 50,000 krw, …..for the convenience of investors… is 1 share.(in kosdaq the trading lot is 1 share) * In foreign exchanges, 1000 shares in Singapore, Taiwan, Japan 100 shares in Shanghai, normally 2000 shares in HongKong Trading units are different according to the stock price in 뉴질랜드 , 홍콩
Tick size is the smallest, minimum unit of quotation. Tick size depends on the stock price For example, if the stock price is more than 10,000won and less than 50,000 won the tick size (quotation price unit) is 50won. Tick size to stock price ratio is roughly from 0.1% to 0.5%. (in kosdaq if stock price is over 50,000won, the tick size is 100won-that is to say the maximum tick size is 100 won)
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