Taiwan looks to launch commodity ETFs

30 December 2013   Category: News, Asia, China   By Asia Asset Management

The Taiwan Stock Exchange, Securities Investment Trust & Consulting Association (SITCA), and the Taiwan Securities Association (TSC) are mulling plans to launch commodity ETFs in the first half of 2014.

According to a report in the China Times, TSE president Michael Lin stated that the authorities intend to diversify current offerings to include gold and oil ETFs so as to boost market liquidity. ETFs currently account for between 1.3% and 5% of transaction volumes on the exchange.
 
Daily ETF volumes may be as high as 10% with the availability of commodity ETFs. To complement the product development, they are also studying the feasibility of inverse and leveraged ETFs, products that have gained traction in markets such as Korea and Japan. Inverse and leveraged ETFs, however, are still not available in Hong Kong, Asia’s third largest ETF market by daily turnover.
 
Up to the end of November, a total of 21 cross-border and domestic ETFs have been listed on the Taiwan bourse with total AUM of NT$139.7 billion (US$4.65 billion). Total turnover was NT$263.7 billion for the first eleven months.

Separately, Mr. Lin noted that the Financial Supervisory Commission (FSC) has granted approval of RQFII ETF, which is expected to launch in the first half next year. The ETFs will be launched in the form of dual counter model, meaning the products will be denominated in RMB and NT$.