Taiwan to allow single stock futures

Taiwan’s financial regulator is set to allow futures trading in individual stocks listed on the Taiwan stock exchange as part of a push to make the country a more sophisticated international financial centre.

“The goal is to offer more options to investors and make the Taiwan market more diverse,” said an official at the Financial Supervisory Commission, its top financial regulator. Taiwan, whose stock market was one of the region’s star performers in the first half of this year, has looked to expand the regional presence of its stock market in recent months. The stock exchange has aggressively pursued listings by Taiwanese companies that had moved to mainland China, and recently co-operated with Hong Kong to cross-list exchange-traded funds.

Its push to expand, however, comes as its regional peers are also trying to become bigger financial centres. The Hong Kong government has become increasingly active as it attempts to boost the territory’s status as the region’s leading international financial centre. It hopes to challenge Malaysia as the main Asian centre for Islamic finance and plans to entrench its position as the gateway for investment into and out of China.

Shanghai, Hong Kong’s biggest rival on the mainland, intends to allow foreign companies to list on its stock exchange next year as part of its plan to turn the city into a global financial centre by 2020.

Taiwan has in the past found it difficult – relative to its regional peers – to attract international investors because of its rocky relationship with China and also because tight regulation by the Financial Supervisory Commission has meant a relative paucity of financial products. Since Ma Ying-jeou’s election as president last year, the commission has, however, gradually moved towards liberalisation.

The addition of individual stock futures to the exchange, which also includes individual stock options, is expected to help boost trading volumes, which have fallen after the financial crisis.

The Commission has in principle approved futures trading in an initial batch of 35 stocks, and is now awaiting the setting up of back-end computer systems to operate the trading before giving its final approval, the official said.

While it has not yet been determined which stocks will be part of the initial batch, they would likely include highly-traded blue chips such as Taiwan Semiconductor Manufacturing Company, the world's biggest contract manufacturer, or AU Optronics, the world's third-biggest flat panel maker.

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