The Taiwan Stock Exchange (TWSE) has given the green light for the listing of the first leveraged and inverse futures exchange-traded funds (ETFs) by year-end, thereby bolstering the development of Taiwan’s ETF landscape.
The TWSE said the liberalisation of leveraged and inverse futures ETFs complements the recent amendments to the “Regulations Governing Futures Trust Funds” issued by the Financial Supervisory Commission on May 16 that eases restrictions on fundraising and investment of futures trust funds.
The bourse believes that the launch of leveraged and inverse futures ETFs would provide more investment options to the trust funds.
Despite a broad representation of existing futures indices tracking commodities, raw materials, interest rates and agricultural products, the TWSE expects local ETF sponsors to prioritise the rolling out of gold and oil leveraged and inverse futures ETFs due to their experience in commodities ETFs.
Taiwan’s largest ETF sponsor, Yuanta Securities Investment Trust Company, launched the first commodity-linked ETF – the Yuanta S&P GSCI Gold ER ETF – on April 14 last year. It subsequently launched the territory’s first oil futures ETF – the Yuanta S&P GSCI Crude Oil ER Futures ETF – in September 2015.
Michael Lin, president of the TWSE, had previously noted that ETF trading value had grown considerably since the first leveraged and inverse ETFs were introduced in October 2014. Total ETF trading value rose to US$30 billion in 2H2015 from $10.35 billion in the corresponding period of 2014.
Susan Chan, head of iShares, Asia Pacific, opines that although the market share of leveraged and inverse ETFs is growing rapidly in Asia – particularly in Japan, Korea and Taiwan – its size is still relatively small compared to the overall ETF market. The products are designed to improve trading velocity and market liquidity.
