Taiwan Stock Exchange Corporation (TWSE) and Japan Exchange Group, Inc. (JPX) will formally link their capital markets with the listing of the “Fubon TOPIX Leveraged 2X Index ETF” and the “Fubon TOPIX Inverse -1X Index ETF” on the Taiwan Stock Exchange on 10 September 2015. Fubon Asset Management will issue both ETFs.
TWSE and Osaka Exchange (OSE), a subsidiary of JPX and the operator of the largest derivatives market in Japan, have also entered into an agreement that will allow OSE to list futures contract on Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX).
Mr. Sush-Der Lee, Chairman of TWSE, said, “TWSE is proactively building alliances with international exchanges in line with the Financial Supervisory Commission’s (FSC) mission of encouraging the Taiwan financial sector to explore new markets in Asia. The cross-listing of financial products with JPX is a significant milestone for closer regional cooperation. Both TWSE and JPX will continue to expand cooperation, particularly in the areas of cross-listing and market promotion. TWSE is also actively looking for more opportunities to enter into cooperation schemes with other stock exchanges in Asia in the future.”
Mr. Akira Kiyota, Group CEO of JPX, said, "We are very pleased to be looking at the upcoming listing of TOPIX-related ETFs on TWSE and to have concluded the license agreement regarding TAIEX. We look forward to further deepening the ties between the Taiwanese and Japanese capital markets as partners in Asia."
The Tokyo Stock Price Index (TOPIX) contains over 1,800 stocks and is calculated based on all common stocks listed on the Tokyo Stock Exchange (TSE) First Section. It is a major indicator used to evaluate overall trends in the Japanese stock market. The two newly listed TOPIX-related ETFs are based on the “TOPIX Leveraged 2X Index ETF” and the “TOPIX Inverse -1X Index ETF” currently managed by TSE. These ETFs will attempt to replicate two times the daily movement of the TOPIX index and an inverse of the daily movement of the TOPIX index respectively. The two products will be TWSE’s first ETFs that track the Japanese stock market, providing investors with an excellent channel to access this market.
With the listing of new ETFs and ETF trading volumes on the rise in Taiwan, the introduction of the TOPIX leveraged/inverse ETFs by Fubon Asset Management will add further momentum to the market, while also expanding international links to Taiwan’s securities market and boosting its competitiveness. The new ETFs also comply with the Financial Import Substitution Program currently being promoted by the FSC.
The Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX) covers almost all stocks listed on TWSE and is the overall benchmark for the Taiwan capital market. TAIEX futures are currently expected to debut on OSE in mid-2016 and will become the first equity index futures tracking the TAIEX index outside of Taiwan. This will enhance the international exposure of TAIEX while also providing an investment channel for Japanese investors to trade the Taiwan stock market.
The Taiwan and Japan capital markets have a history of close interaction following the signing of a Memorandum of Understanding in 2000. In addition to holding regular meetings in each other’s markets, both sides have jointly held a variety of activities, including developing plans for the cross-listing and market promotion of financial products. It is hoped that the deepening relationship and cooperation between the Taiwan and Japan markets will provide more diversified products to investors in the future.
