TWSE Welcomed The First Leveraged ETF And Inverse ETF In Greater China
The Taiwan Stock Exchange (“TWSE”) on 31 October welcomed the debut of the “Yuanta Daily Taiwan 50 Bull 2x ETF” and “Yuanta Daily Taiwan 50 Bear -1x ETF”, the first leveraged and inverse Exchange Traded Funds (ETFs) available in the Greater China region.
The new products add further variety to Taiwan’s growing ETF landscape. TWSE is currently home to 23 ETFs, including 7 ETFs which track offshore benchmark indices for markets including Hong Kong, Shanghai and Shenzhen. The combined traded value of ETFs on TWSE reached NT$55.7bln in September 2014, up 110% compared to the same period last year.
TWSE is continuing to work closely with both domestic and offshore issuers to facilitate the timely introduction of more alternative financial products – including leveraged, inverse, and commodity ETFs and indices – in order to attract more liquidity and investors to the Taiwan market.
To facilitate the trading of leveraged and inverse ETFs, TWSE has adopted the following trading measures:
- Daily Price Limit: The upper and lower price limit will be adjusted in-line with the leveraged multiple of the corresponding leveraged and inverse ETF e.g. if the leverage is 2x, the daily price limit will be 14%. ETFs that track offshore indices are not subject to existing daily price limits.
- Liquidity provider: The revamped liquidity provider program took effect in September 1, 2014 and mandated that there must be at least one liquidity provider per ETF.
- Market transparency: Investors can access TWSE’s new MIS system for the latest information on the NAV, estimated premium and discount, etc. of a leveraged and inverse ETF
- No capital gain tax for foreign investors
Mr. Lee Sush-der, Chairman of TWSE said, “We are delighted to be introducing the first leveraged and inverse ETFs in the Greater China region just months after the Financial Supervisory Commission unveiled its regulations governing the sector. This event represents a huge advance in Taiwan’s ETF and alternative investments market. We look forward to supporting the future debut of more innovative products that can meet the evolving needs of investors.”