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【TEJ Dictionary】QFIIs/SITEs/ Prop desk traders (3)

‧ Understand the calculation methods of the Prop desk traders’ shareholding ratio

🔸Preface🔸

In the last two articles, we introduced that Prop desk traders are the investment department of a securities company. They use their own capital to invest in the stock market and cannot engage in credit transactions. Comparing QFIIs and SITEs, Prop desk traders have low capital levels and short operation cycles, and usually prefer more active stocks, such as popular stocks or theme stocks. Most of these stocks have small equity and have large fluctuations, and the probability of making profits is relatively high.

🔸Highlights of this article🔸

📍 Calculation methods of Prop desk traders’ shareholding ratio

✨Prop desk traders’ shareholding ratio✨

The formula for Prop desk traders’ shareholding ratio is as follows:

Individual stock: Prop desk traders’ shareholdings/Outstanding shares

Industry: Prop desk traders’ holding market value/Total holding market value

The problem that users often encounter is the calculation of the number of stocks held by the Prop desk traders. Here, we will take readers to use our TEJ Pro database to verify it. First, we can see that the algorithm for the number of stocks held by the Prop desk traders is as follows:

Estimate the number of treasury stocks and stocks bought and sold every day by the Prop desk traders. The number of treasury stocks before March 2008 is provided by TWSE. However, after March 2008, the TWSE ceases to provide monthly stock quantity. Therefore, we are currently using the weekly trading in and out to estimate the number of treasury stocks at the end of the month. We will use financial statements for correction every six months.

It can be seen from the description that the number of stocks held by Prop desk traders is estimated from the monthly inventory and the buying and selling of the Prop desk traders. Take TSMC (2330) as an example, From the figure below, we can see that on July 30, 2020, the number of stocks held by the Prop desk traders is 1,658, but on July 31, it becomes 0.

Users often have questions when they see the numbers. This is because at the end of the month, we will calibrate the number of stocks of Dealer Holding (Monthly)-ALL database. As shown in the figure below, it can be seen that on 2020/7, the number of stocks is 0.

Therefore, on 2020/7/31, the number of stocks held by Prop desk traders will be calibrated to 0, and starting from 8/1, the number of stocks will be calculated from 0 plus the daily change in buying and selling.

As you can see from the figure above, on 8/3 there is a number of transactions 327, the number of Prop desk traders shareholdings will be 0+327 = 327.

Next is the part of the adjustment based on the financial report every six months. We can see that the number of stocks held by the Prop desk traders is 3,629 on June 29, 2020, and the number of stocks held by 6/30 should be 3629+503 = 4132, but the number is 5,643, as shown in the figure below:

This is because the number will be adjusted according to financial report every six month. The number will be 5,643.

Here is how to check the Prop desk traders’ shareholdings in the financial report. Take Yuanta Securities (000980) as an example, you can go to MOPS for inquiries.

1️⃣ Click basic information — Electronic books — Financial report.

2️⃣ Enter Jih Sun securities code 000116 and year 109.

3️⃣ Click on the electronic file of the IFRS individual financial report for 2020Q2.

4️⃣ You can find that Yuanta have 1,021 shareholdings of TSMC.

Finally, we can add up the number of TSMC shareholdings by each Prop desk trader in 2020Q2, and we can get the number of 5,643. If you are interested, you can go to other securities firms to sum up the number of shares to verify.

Once we have the number of shares held by the Prop desk traders, we can calculate the shareholding ratio. The calculation method of shareholding ratio in 7/30 is 1658/25930380 = 0.01% and in 7/31 is 0/25930380 = 0%

🔸Conclusion🔸

In this article, we introduce the calculation method of Prop desk traders’ shareholding ratio. We have completely introduced the algorithms of the respective shareholding ratios of the three major legal institutions through these three articles. Investors can use these data to understand the changes in the stock market when doing bargaining chip analysis. We hope that every reader can have a deeper understanding through our articles. You can also read other articles of our Medium.

【Application(6)】Warren E. Buffett’s Value Investing

Finally, you can also follow our IG: tej87681088, or go to the official website of TEJ. We provide rich content such as bi-weekly newsletters and TEJ API financial notes.

If you like this article, please give us more support and encouragement💪. If you have any questions, you can leave a message or send an email to us. We will reply to you as soon as possible, thank you👍👍.

🔸Related link🔸

⭐️ TEJ official website

⭐️ TEJ E Journal

⭐️ TEJ Instagram: tej87681088

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TEJ 台灣經濟新報

TEJ 台灣經濟新報

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TEJ 為台灣本土第一大財經資訊公司,成立於 1990 年,提供金融市場基本分析所需資訊,以及信用風險、法遵科技、資產評價、量化分析及 ESG 等解決方案及顧問服務。鑒於財務金融領域日趨多元與複雜,TEJ 結合實務與學術界的精英人才,致力於開發機器學習、人工智慧 AI 及自然語言處理 NLP 等新技術,持續提供創新服務