Taiwan’s Financial Supervisory Commission said it has instructed the Taiwan Stock Exchange to prepare an official margin trading information dashboard after a dispute over market data during July’s sharp stock-market volatility.
Speaking on Aug. 4, Securities and Futures Bureau Deputy Director-General Huang Chung-hao said capital market supervision is built on three principles: safety, transparency, and fairness. Important information will not be hidden, he said, adding that the market has “disclosure, not concealment.”
According to the FSC, the planned dashboard will include margin loan balances, whole-account maintenance ratios, and the proportion of short selling through securities lending. The regulator said it is pushing for official statistics to be available before the end of the third quarter this year.
The issue surfaced after the Taiwan stock market saw heavy swings in July. Margin maintenance ratios became a closely watched gauge of deleveraging pressure, but figures published by private information platforms did not match official numbers. Some of those platforms later stopped updating the data, which triggered accusations that the information had been “covered up.”
Different calculation methods produced sharply different ratios
Huang said the FSC fully respects data published by private information platforms. The dispute, though, came down to methodology.
A margin maintenance ratio is generally calculated by dividing the market value of pledged shares by borrowed funds. Lower readings point to heavier price declines and a shorter distance to forced liquidation by brokers. The problem is that different providers count different items when defining both the value of pledged stock and the amount of debt.
On July 27, the day Taiwan stocks fell sharply, investment forums circulated a maintenance ratio reading of 143%. A day later, on July 28, the TWSE unusually issued a clarification saying the whole-market whole-account collateral maintenance ratio was actually about 175%. For the same market over roughly the same period, the gap reached 32 percentage points.
- TWSE: about 175%, using a broker whole-account basis, offsetting margin financing and short positions, and including collateral and margin tied to short selling.
- XQ platform: about 163%, including ETFs in stock market value, counting only listed margin financing and excluding short positions and OTC stocks.
- CMoney: about 143%, based on the market value of margin-financed shares divided by margin balances, looking only at long margin positions and excluding short-sale collateral.
- MacroMicro: about 140.38%, with a method similar to CMoney.
The difference mattered because it straddled two key thresholds. The broker margin-call line is 130%, while the initial maintenance ratio for 60% margin financing is 166.7%. A 143% reading suggests the market is only 13 percentage points away from margin calls. A 175% reading, by contrast, still sits above the initial ratio.
The TWSE later added another set of figures, saying that from July 27 to July 28, margin calls and forced liquidations accounted for less than 0.1% and 0.03% of daily trading volume, respectively. As of the afternoon of July 28, the net default amount was about NT$2 million, and the defaults were not concentrated among younger investors.
Platform suspensions intensified the dispute
The controversy widened on July 29. CMoney said that day it would stop providing data on margin maintenance ratios, securities-financing maintenance ratios, and whole-account maintenance ratios. Historical data would also be taken down over time. MacroMicro stopped updating on the same day.
With those indicators disappearing while the market was under stress, accusations of data concealment gained traction. At the same time, the market did not wait for an official dashboard. According to a report cited in the source material, some platforms that were not named in the dispute continued publishing similar readings under labels such as “margin risk value,” while some brokers were willing to provide data but denied where it came from.
Banks will also begin reporting data tied to “four loans on one person”
On the same day, Taiwan’s Banking Bureau announced another measure aimed at leverage from a different angle. Deputy Director-General Wang Yun-chung said banks have been required to add a new disclosure item for personal revolving finance loan reporting. The reporting will cover four categories: wealth-management mortgages, personal credit loans, stock-pledge financing, and other revolving loans. September data could be reported as early as October.
The market has referred to this as “four loans on one person,” meaning the same borrower carries several different forms of debt while entering the stock market. As of May this year, outstanding balances in those categories totaled about NT$25.2 trillion. That was up NT$2.16 trillion in the first five months of the year and about NT$3.4 trillion over the past year.
The FSC said it had already approached seven to eight banks with faster growth in consumer finance lending at the end of July, asking them to explain their revolving finance loan business and risk-control mechanisms.
In regulatory terms, the Securities and Futures Bureau oversees margin financing extended by brokers. The Banking Bureau is now filling in the path that goes around brokers through bank borrowing. The source article noted that when BlockTempo reported in June on a wave of borrowing to buy stocks in Taiwan, that route had not yet been subject to any reporting requirement.
Both regulatory timelines come after the July volatility
The two measures disclosed on Aug. 4 share a similar schedule. The official dashboard is being pushed for launch by the end of the third quarter, while the new bank reporting could start with September data filed in October. That means the July market shock had already passed before the new disclosure and reporting mechanisms were set to come online.
Key questions
A margin maintenance ratio is the market value of pledged shares divided by the financing amount, and it is used to measure leverage pressure. If the ratio falls below 130%, the investor receives a margin call from the broker. If the shortfall is not covered, forced selling can follow. For 60% margin financing, the initial maintenance ratio is 166.7%.
Different figures appeared in the Taiwan market because different providers used different formulas. The TWSE used a whole-account basis with offsetting between margin financing and short positions, producing a reading of about 175% on July 27. Platforms such as CMoney counted only long margin positions, producing a figure of about 143%. The FSC said the official dashboard is being prepared with a target of going live before the end of the third quarter.