Taiwan Bourse Chief Seeks Global Trading Links

Taiwan’s stock exchange is seeking to create a cross-border stock trading platform with Singapore by this year to boost overseas access to the island’s listed shares, Chairman Lee Sush-der said in an interview.

“Opening access to our shares can benefit us with an active market and dynamic economy,” he said yesterday in his office in Taiwan’s tallest building, Taipei 101. Fundraising in the market stood at NT$654.8 billion ($21.6 billion) in 2013, Lee said, which allowed companies “to enhance research, expand capacity and eventually bolster the economy.”

The trading platform, for which the Taiwan bourse and Singapore Exchange Ltd. are discussing technical issues such as settlement rules, would lower costs for investors, Lee said. Taiwanese investors in Singapore stocks currently must buy through both local brokerages and securities firms based in the city-state. Overseas trading through the current mechanism amounted to at least NT$800 billion last year, he said.

“The cross-border platform can provide more choices and help reduce costs for investors, particularly for individuals,” Lee said.

Taiwan’s Taiex index fell 0.2 percent to 8,956.92 at the close, after earlier rising to a two-year high. The benchmark index advanced 12 percent in 2013. The economy grew at 2.11 percent in the same period, with private consumption rising 1.77 percent, according to government data. Foreigners, which have been net buyers over the past 22 trading days, hold about 35 percent of domestic equities.

Formosa Index

“Easier access to overseas markets will benefit local brokerages, while foreign investors may be attracted to the domestic market that is poised to gain more ground,” said Tu Jin-lung, chairman of KGI Securities Investment Advisory Co.

Efforts to establish a cross-border trading platform coincide with another internationalization push by the exchange, the introduction of an index comprised by all companies listed on the main board and on the GreTai Securities Market exchange, which has a market capitalization of NT$2.68 trillion compared with the NT$25.5 trillion of the Taiwan Stock Exchange.

Sub-indexes and other related products are being planned for this gauge, called the Formosa Index, to be introduced on May 5, Lee said. The benchmark will start trading at a level based on prices at the end of 2013.

“It will provide a whole picture of the local equities market,” Lee said.

Asean Link

Taiwan’s bourse is also in talks with its Shanghai counterpart to sign a cooperation pact as a prelude to a potential cross-strait link. Hong Kong and China announced a plan on April 10 allowing purchases of Hong Kong-listed shares via the Shanghai stock exchange and the purchase of Shanghai-listed shares through Hong Kong, furthering China’s pledge to reduce capital controls. Hong Kong Exchanges & Clearing Ltd. surged the most in five years on April 11.

“The links may start with Singapore and hopefully extend to Asean and Shanghai,” Lee said.

Bursa Malaysia, Singapore Exchange and the Stock Exchange of Thailand led the formation of a platform offering cross-border stock transactions in Southeast Asia called the Asean Trading Link.

Taiwan also has a separate futures exchange. TAIFEX, as the derivatives market is called, is linked with Germany’s Deutsche Boerse AG, which operates both the Frankfurt stock exchange and the Eurex derivatives market.

Taiwan and mainland China have been separately governed since Nationalist forces fled to the island during a civil war over six decades ago. The feasibility of an index consisting of Taiwan, China and Hong Kong shares is being studied in Taiwan, Lee said.

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