STUDY ON THE LEGALIZATION THE UNLISTED STOCK MARKET

• Main Authors: HUI-CHEN YAO, 姚慧貞
• Other Authors: MIN-JUH HWANG
• Format: Others
• Language: zh-TW
• Published: 2001
• Online Access: http://ndltd.ncl.edu.tw/handle/21895013271766606499

碩士 === 國立臺北大學 === 企業管理學系碩士在職專班 === 89 === In the efforts to provide to an open secondary market for unlisted negotiable securities, many advanced nations include in their over-the-counter market a trading system for unlisted stocks. The stock exchanges in Taiwan include a centralized trading market for the transaction of stocks listed in Taiwan Stock Exchange (TSE), and an over-the-counter market for the transaction of stocks listed in ROC Over-the-Counter Securities Exchange (ROSE). But there is no legal market for the trading of negotiable securities (commonly stocks) issued by unlisted companies. In actuality, the longstanding needs for buying and selling unlisted stocks have brought about the existence of underground brokers, putting this type of trading activities in the gray area of the laws and regulations. With more and more players in the unlisted stock market, controversies and frauds arise. More recent incidents include the trading of counterfeit stocks, dispute over trading of fixed line telephone company stocks in the form of a note, default trade, and other trading frauds. To address this problem, the Securities & Futures Commission proposed in its work report submitted to the Executive Yuan on September 2000, identifying the legalization of trading of unlisted stocks one of its focus tasks in the near future. It is indicative of the pressing nature of the issues concerning the legislation of unlisted stock trading and underground brokers taking on this kind trade.. This study attempts to offer a framework for the trading of unlisted stocks that is conducive to the establishment of a legal open market. This study adopts an explorative approach, comparing and analyzing the stock markets of the US, UK and Japan where the capital market is mature, exploring the market maker system and the development of ECN, and lastly, proposing an unlisted stock market system that takes into account the actual situations in Taiwan. The paper proceeds with literature review and empirical investigation. The former covers securities regulations, research reports, journal articles, dissertations, news reports and web information. The latter entails visiting unlisted stock brokers to grasp the actual working of the market. In reference to the success experiences in the foreign markets and our own situations, as well as reference materials provided in literature, this paper proposes the construction of an unlisted stock market system in the following directions: 1. Assigning a dedicated supervisory agency. 2.Lowering the listing requirements and shortening the listing application process. 3.Respecting the division of labor and the formation of self- regulatory mechanism. 4.Establishing a recommending broker system. 5.Co-existence of order-driven and quote-driven pricing systems. 6.Emphasizing fair trade and market supervision. 7.Creating an open information system. 8.Opening the trading of not publicly issued stocks to brokerage firms using the ECN system. This study reckons that the issues of illicit brokerage operation and providing incentives to other market participants should also be addressed in the establishment of an unlisted stock market system in order to augment the benefits of such a system.