FSC summit seeks to link TAIFEX to international firms

By Ted Chen, The China Post

TAIPEI, Taiwan — The Financial Supervisory Commission (FSC) yesterday invited representatives from 20 futures brokerage firms to take part in a conference to improve communication between the regulator and the financial sector, while providing a progress report on efforts to introduce the trading of derivatives of international futures exchanges to Taiwan’s investing public.

The FSC stated that negotiations are in progress with Eurex, and that following the inking of a finalized agreement in the future, the Taiwan Futures Exchange (TAIFEX) will be authorized to oversee collaboration of derivatives trading, clearing the way to have Taiwan-based derivative instrument listed on the Eurex during after-hours trading sessions. A Letter of Intent was signed in February in Taipei by Dr. Tony Fan, Chairman TAIFEX, and Andreas Preuss, CEO Eurex. According to the FSC, derivatives of Taiwan’s futures contracts and options will be repacked into derivatives instruments with a daily expiration to facilitate the needs of traders’ activities in after-market hours — representing a move designed to increase trading volume on the TAIFEX. In addition to Europe, the FSC is also seeking avenues to allow the listing of Taiwan-based derivative instruments on China’s futures exchange. However, whether these derivatives will be denominated in yuan remains to be determined, said the FSC. The regulator stated that its next move is to appeal Eurex’s decision to allow the listing of repacked European derivatives on the TAIFEX.

Concurrently, the FSC will continue monitoring developments in the Singaporean markets, following its deal to allow the listing of China-based derivative instruments on its futures exchange.

During the conference, futures brokerage firms urged the regulator in relaxing regulatory measures restricting the investments needs of mainland Chinese tourists. The FSC replied that regulations need to be further scrutinized to determine viability.

Meanwhile, the FSC urged counterparts across the strait to announce a list of Chinese exchanges where trading is authorized for qualified domestic institutional investors from Taiwan operating in China. The FSC stated that regulatory approval for the trading of both equities and futures contracts is ideal, as more hedging measures are made available to the investing public, while stimulating growth in trading volume.