The Financial Supervisory Commission (FSC) is to conduct a full inspection of the 22 securities firms that offer high-speed trading services to see if they treat clients fairly, FSC Chairman Thomas Huang (黃天牧) said yesterday.
The announcement comes in the wake of Concord Securities Co (康和證券) being fined NT$600,000 (US$20,759) by the Taipei Exchange last month for providing high-speed trading to only two of its big clients, ignoring 15 other clients who have applied for the service.
As high-speed trading services cost securities companies more, it is understandable that they would focus on providing the service to big investors who are able to contribute higher fee income, Securities and Futures Bureau Chief Secretary Kao Ching-ping (高晶萍) told a news conference in New Taipei City.
Photo: Peter Lo, Taipei Times
However, after securities companies have set a threshold to decide who can use the service, they should treat all customers who meet the threshold equally, Kao said.
Known as Co-Location service, securities companies can rent servers at the Taiwan Stock Exchange’s information center in New Taipei City’s Banciao District (板橋), where its matching engine and trading information systems are also placed, Kao said.
As all machines inside the information center are connected directly via a high-speed local area network, which has lower latency than a wide area network, users are able to complete their transactions faster by milliseconds than those which do not, Kao said.
At a meeting of the legislature’s Finance Committee, Democratic Progressive Party Legislator Kao Chia-yu (高嘉瑜) asked the commission to investigate if Concord had, as reported, placed a device in the information center to enable its big customers to conduct day trading faster than others.
The commission should clarify if and how Concord managed to put a device in the center, and whether the deals made by Concord’s big clients were fair, she said.
The commission is waiting for Concord’s explanation, Huang said.
It is unclear whether Concord had put any other device in the center, the commission said.
All securities firms are allowed to rent the Co-Location trading service, and so far there are 22 securities companies using the service, it said.
The commission would carry out an inspection to see if any of the 22 are using the service improperly, it said.
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