Taiwan Futures Exchange

Taiwan Futures Exchange

The Taiwan Futures Exchange (TAIFEX) was established in 1998. It offers futures and options on major Taiwan stock indices, government bond futures, equity options and 30-day CP interest rate futures.

The development of Taiwan's futures market may be divided into two stages. In the first stage, foreign futures were allowed for trading; the second stage marked the creation of a domestic futures market. The "Foreign Futures Trading Law" was enacted in June 1992 to provide a legal basis for investors to trade at foreign futures markets. The "Futures Trading Law" was enacted in March 1997, which replaced the "Foreign Futures Trading Law" and established the legal guidelines for the domestic futures market. This paved the way for the establishment of Taiwan Futures Exchange (TAIFEX) in September of the same year.

TAIFEX launched its first product: the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) futures on July 21 1998. On its first anniversary, TAIFEX introduced two more products: the Taiwan Stock Exchange Electronic Sector Index futures and the Taiwan Stock Exchange Finance Sector Index futures. In 2001, TAIFEX launched two new products: the Mini-TAIEX futures and the TAIEX options on April 9 and December 24, respectively. The debut of TAIFEX options diversifies our product lines, offering more hedging vehicles for investors.

TAIFEX introduced the first non-index related products, – Equity Options – which adopt physical settlement, on January 20 2003. Taiwan 50 Index Futures was introduced on June 30, 2003. The Government Bond Futures, TAIFEX's first interest rate futures products, was introduced on January 2 2004. It was followed by the launch of 30-Day Commercial Paper Interest Rate Futures on May 31, in the same year. The listing of these interest rate products was an important milestone for futures market as it broadened TAIFEX product scope beyond the stock market. To fulfill market needs, TAIFEX launched Electronic Sector Index Options and Finance Sector Index Options on March 28 2005.

To attract international investors, TAIFEX introduced three US dollar-denominated products on March 27 2006, which are MSCI Taiwan Index Futures, MSCI Taiwan Index Options and Taiwan's first commodity contract- Gold Futures. MSCI Taiwan Reuters code .TAMSCI, Bloomberg TAMSCI. MSCI Taiwan futures are also traded in Singapore (SGX) in USD. Each contract is worth $US 100 per point and trade serial months. The MSCI index currently has 110 stocks (July 2007).

The Gold Futures contract is designed as cash settlement with the final settlement price based on the London Gold AM Fixing as released by London Gold Market Fixing Limited. To further stimulate the growth of foreign participation in Taiwan's futures market, TAIFEX concurrently introduced non-hedging purpose trading and omnibus accounts together with the launch of new products.

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