Taiwan’s active exchange-traded funds, expected to be launched in early 2025, will be structured such that portfolio holdings have to be fully disclosed.
The Financial Supervisory Commission (FSC), which outlined the design of the funds in a statement on July 31, noted that in general, global active ETFs have a completely transparent, semi-transparent or non-transparent structure depending on the extent of disclosure of portfolio holdings.
A semi-transparent structure means only a certain proportion of the holdings is disclosed. There is no disclosure at all in a non-transparent structure.
The FSC consulted industry players earlier this year and says some of them had suggested a semi-transparent design disclosing 70% of portfolio holdings. They were concerned that full disclosure may lead to ETF managers copying the portfolio holdings of rivals.
“But the FSC has decided to use the fully transparent design. We believe this is the safest model,” the FSC says.
The regulator downplayed concerns about duplication of holdings, explaining that the public can easily monitor daily trading and portfolio changes of active ETFs if they are fully transparent.
The FSC will require underlying assets of active ETFs to be a mix of stocks, bonds and futures.
The ETFs will be classified as Taiwan equity funds, foreign equity funds, and bond funds.
The FSC has previously disclosed that 15 of Taiwan’s 68 asset managers have expressed interest in launching active ETFs, including two foreign firms.
The regulator expects the active ETF market to reach as much as NT$200 billion (US$6.09 billion) in 2026.
