Intraday trading of odd lots is different from the previous restriction that odd lots can only be traded after hours. It provides more flexible transaction opportunities in terms of buying and selling time and bidding methods. The Taiwan Stock Exchange (hereinafter referred to as the Stock Exchange) pointed out that intraday odd-lot trading is a key tool for the securities market to achieve inclusive financial policy goals. Therefore, starting from December 19, 2022, the matching interval for intraday odd-lot trading will be shortened from the current 3 minute to 1 minute. Starting from November 27, 2020, the intraday trial quotation information disclosure interval will be shortened from the current 10 seconds to 5 seconds, and the simulated transaction price, transaction quantity, and the best 5 reported transaction prices, declaration of transaction quantity and other information is closed until 13:30.
On December 2, 2024, the matching time for intraday odd-lot transactions was shortened from 1 minute to 5 seconds, which is more conducive to petty bourgeoisie to participate in investment with a low threshold, improve market efficiency and implement inclusive finance. Half an hour after the opening of trading on the 2nd, TSMC's odd-lot trading volume exceeded 240,000 shares. Compared with the previous opening day of Taiwan's stock market, after the new odd-lot trading system came into effect, TSMC's odd-lot trading volume surged by 108,000 shares in a single day.
If you want to participate in odd lot trading, but you still don't know the difference between odd lots and ordinary stocks, how to subscribe and bid, and how much handling fee you need to pay...? Don't worry, through the following 5 questions, stock beginners can also understand odd lot intraday trading at once:
1. What is an odd lot? How is it different from ordinary stocks?
In Taiwan's stock market, stocks are usually bought and sold in units of "lots". One stock is equal to 1,000 shares. If you buy 3 stocks at a time, it is equivalent to buying 3,000 shares. "Odd lots" means that when funds are limited, you can choose to buy "fractional shares" and use less funds to enter the stock market. If the number of shares traded is less than 1,000 shares, ranging from 1 share to 999 shares, it is called an odd lot.
If the closing price of TSMC stock is 338 yuan, it is equivalent to 338,000 yuan for one stock and 1,000 shares. But if you only want to buy 1 share for 338 yuan, you can also become a TSMC shareholder. After that, if you every little makes, you will have the opportunity to accumulate 1 TSMC stock. Therefore, odd-lot investment is suitable for office workers who are confident in stock selection but have relatively small capital.
2. How to buy odd lot? Trading hours? What is the difference between intraday odd lot trading and after-hours odd lot trading?
Odd Lot Intraday Trading
Investors in odd-lot "intraday trading" can buy and sell from 9:00 to 13:30, and the first matching will be carried out from 9:10, and the matching time will be until 13:20. Currently, the matching is done every 1 minute by call auction. method (the matching time is expected to be shortened to 5 seconds by the end of 2024). Calculated using a trading time of 4 hours and 10 minutes, there will be approximately 250 matching opportunities. The order of buying and selling transactions is based on price, and if the prices are the same, time priority is used. (The first match will be sorted randomly by computer).
In addition, in order to avoid placing wrong orders manually, only electronic orders can be placed. Unless the entruster is a professional institutional investor, "non-electronic" entrustment method can be adopted. Pending orders cannot be bought with market orders, and can only be traded with limit orders (ROD, Rest of Day, valid orders of the day), and they are only valid during the day. Unfilled orders will not be retained until the original after-hours period. Odd lot trading.
As a final reminder, odd lots cannot be used for margin trading or same-day offset of current stocks. You can buy odd lots on the same day (T day) and sell them again on T+1 day at the earliest.
Odd Lot After-hours Trading
There are three main ways to place orders in after-hours trading: online trading, voice trading or calling a salesperson to place an order. The trading period is limited to 13:40 ~ 14:30 (the "call auction matching" is unified at 14:30 to complete the transaction), which means that there is only one opportunity to match the transaction a day. It does not mean that you can complete the transaction first by placing the order first. Put all the orders together, prioritize price, and complete the matching in one go. (Randomly sorted by computer for the same price)
After placing the order, sufficient settlement amount and handling fee must be transferred to the account. In Taiwan, the "T+2 settlement" system is adopted for buying and selling stocks and odd lots, which means that after the stocks are purchased on the same day, the money will not be deducted from the bank account until 10 am on the second business day. For example, after an order is placed on 12/23, the money will not be deducted until 10 a.m. on 12/25. If the account balance is insufficient, "default settlement" will occur, and if the situation is serious, it may affect your credit.
3. Can't buy odd lots? How to bid for odd shares? How can I improve my chances of closing a deal?
Since the trading volume of odd lots is relatively small, the trading volume of non-popular stocks may even be zero, and the transaction may not be successfully completed on the day when the order is placed. If the transaction is not successfully completed on the same day, the order must be placed again the next day. It is also possible to place an order to buy 500 shares, of which 200 shares are traded and the other 300 shares are not bought, which is a "partial transaction" situation.
If you want to increase the probability of transaction, you must consider the "price priority principle", that is, "pay a higher price to obtain priority transaction opportunities." On odd lot bids, the following 3 suggestions are provided:
1. General situation
Using the closing price of the stock as the buying price will usually not make you expensive, but the quantity purchased will not be particularly large.
2. Buy popular stocks
Industry leading stocks such as Chunghwa Telecom, TSMC, or financial stocks with stable annual interest distribution, because there are a large number of orders from buyers and sellers, if it is after-hours trading, you can set "buy at the upper limit" or "sell at the lower limit" ", in the end the system will still close the deal at the matched middle price. (Note: Taiwan stocks have a daily price limit of 10%. That means if the opening price today is 100 yuan, the upper limit price is 100 x 1.1 = 110 yuan, and the lower limit price is 100 x 0.9 = 90 yuan, the stock's price on that day is only It may fall between 90 and 110 yuan).
3. Buy relatively unpopular stocks
You can bid at a price that is 1 to 2% less than the closing price, and you have the opportunity to get a bargain, but the purchase volume is usually not large.
If you still don't know how to bid, you can also observe the closing price and odd lot transaction price of the stock in the past three days as a reference for bidding. Go to the "Taiwan Stock Exchange" website, click "Basic Market Report" in the upper right corner, and then select "After-hours Odd Lot Disclosure" in "Other Transactions" to query the odd lot transaction price and number of transactions of a specific stock. .
4. What is the handling fee for odd lot trading? Is securities transaction tax required?
Whether it is intraday trading or after-hours trading, the "handling fee" for buying and selling odd lots is the same as buying and selling ordinary stocks, which is 0.1425% of the buying or selling amount. Each brokerage will give different discounts. For example, in order to encourage the Internet When placing an order, the brokerage firm will provide discounts ranging from 30% to 40% off for online orders.
Suppose you buy 500 shares at a price of 100 yuan per share. If the brokerage offers a 50% discount, the handling fee will be 100 x 500 x 0.001425 x 0.5 = 35.625 yuan (unconditionally rounded off to 35 yuan), and the stock price itself will be 100 x 500 = 50,000 yuan, and the final total settlement payment is 50,035 yuan.
Since the amount of odd-lot transactions may be small, most brokerages have set a minimum single handling fee of 20 yuan. Therefore, after conversion, it is recommended that the transaction amount of odd shares should be at least 28,500 yuan. When the purchase transaction price is 28,500 yuan and the brokerage fee is 50% off, the converted handling fee will be slightly more than 20 yuan.
If the transaction amount on that day is only 1,000 yuan, you still have to pay a minimum handling fee of 20 yuan, which means that you actually pay a 2% handling fee. Although the amount may not seem like much, in the long run it will lead to excessive transaction costs.
In addition, whether it is intraday trading or after-hours trading, currently selling odd lots is the same as selling stocks normally. The government will impose a "securities transaction tax", and the tax rate will be 3% per thousand. If the selling price is 120 yuan per share and 500 shares, the securities tax at this time is 120 x 500 x 0.003=180 yuan.
In the future, whether the securities tax on odd-lot transactions be halved compared to the same-day offset tax reduction, in order to encourage petty bourgeoisie to invest and deposit shares, and increase trading volume, Huang Tianmu, chairman of the Financial Supervisory Commission, said in October 2020, " "This is not our decision," but we can study it and see if there are incentives to make up for it, and then recommend the stock exchange to halve it.
5. What preparations should be made when buying odd lots for the first time? Make sure you have a securities trading account!
For online trading, you need to open a Taiwan stock securities trading account first, and then place orders through the web page or mobile app.
It is recommended to choose a large securities firm when opening an account. Common large securities firms in Taiwan include Yuanta Securities, KGI Securities, Fubon Securities, Capital Securities, etc. Brokerages are equivalent to the middlemen when investors buy stocks. They ensure that the transaction can proceed smoothly and charge handling fees. The discounts on handling fees vary and can be compared among multiple parties.
When opening an account, you must bring both documents and seals to the counter. Most of the securities companies have designated banks to cooperate with. If you do not have such a bank account, you can also open an account together. After opening an account, you can download the broker's market-reading software or app, select "odd lot" to place an order, set the buying or selling price, and then wait for the system to match. If you choose voice trading or call a salesperson to place an order, the former requires you to enter the stock code and the number of shares bought and sold over the phone, while the latter requires you to directly ask the salesperson to place an order for you.
SinoPac Securities reminds investors that when participating in intraday odd-lot transactions, they must pay attention to three key points: trading unit, price difference between whole shares and odd-lots, and underlying trading volume; in addition, intraday odd-lot transactions can only be placed electronically. Orders can only be placed using valid intraday limit orders on the day, and cannot be used for margin trading or same-day offset.
