鍦嬮殯鐗堟湡璨ㄧ祼绠楀埗搴 io by dsgerye234

VIEWS: 3 PAGES: 32

									 Policies and Regulations
                of
       Non-Hedge Trading
               and
USD/TWD Denominated Products




                               1
Contents

n Brief on TAIFEX
n Foreign Futures Enterprises Application Procedure
n Status quo and proposed Changes
n ID system
n Omnibus account
n Trading and settlement of omnibus account
n Position limits for overseas Chinese and foreign
  investors
n Account Structure and Forex Regulation


                                                      2
Brief on TAIFEX
n The development of Taiwan Futures Market
n Market structure
n Clearing procedure
n TAIFEX products
n Market updates




                                             3
The development of Taiwan Futures
Market
n   1997.03    Futures Trading Law was promulgated
n   1997.9.9   The Taiwan Futures Exchange (TAIFEX) was established
n   1998.7.21  1st equity futures contract (TAIEX Futures) was launched
n   2001.12.24 1st options contract (TAIEX Options) was launched
n   2002.11    Futures Advisory business was opened
n   2003.12    Managed Futures business was opened
n   2004.1.2   1st bond futures contract Gov. Bond Futures was
n              launched
n   2004.5.31 30-day CP Interest Rate Futures was launched
n   2004.10.14 Award the " Derivatives Exchange of the Year 2004" by
n              Asia Risk
n   2005.3.28 Electronic Sector & Finance Sector Index Options were
n              launched



                                                                          4
        Market Structure
        Financial Supervisory Commission               / Securities & Futures Bureau

                                           TAIFEX




                                                                                                 CNFA (Chinese National
Settlement Banks    Individual Clearing Member    General Clearing Member     Settlement Banks




                                                                                                  Futures Association)
                            FCM                       FCM
                                                                   FCM

 Fund transfer     CPO                                      CPO         CPO    Fund transfer
                                     IB          IB



CTA                                     Customers

                                                                                                                          5
Clearing procedures
      FSC/SFB                                           Position
                                                        Management
                                    TAIFEX
                                                         Settlement/Clearing

                          Trading report   Deal-done report
  Discretionary
  operation

             Submit                   FCMs         Settlement
                                                                Clearing Member
             tickets to                            request


CTA    CPO          IB    Margin deposit   Deal-done report
                                / orders



                                  Customers

                                                                                  6
TAIFEX Products
Futures
n TAIEX Futures
n TE Futures                                Equity
                                            Index
n TF Futures
                                           Futures
n Mini-TAIEX Futures
n TSEC Taiwan 50 Futures

n Government Bond Futures                  Interest
n Commercial Paper Interest Rate Futures     Rate
                                           Futures

Options
n TAIEX Options
n Finance Sector Index Options
n Electronic Sector Index Options
n Equity Options
                                                      7
Market Growth




                8
  The number of trading accounts
Total trading accounts is up to 1,100,257, including 1,094,344 of individual and
5,913 of institutional investors.




                                                                                   9
Trading behavior




                   10
  Worldwide Ranking
Year          Market      World            Growth               Ave. Daily
             Turnover    Ranking            Rate               Trading Vol.

1998         277,909        57                 -                   2,223
                            57
1999         1,077,672      47            287.8%                   4,522
                            47
2000         1,926,789      44            78.79%                   7,110
                            44
2001         4,351,390      38
                            38            125.84%                 19,252

2002         7,944,254      35            82.60%                  32,033

2003        31,874,934      26            301.23%                128,067
2004        59,146,376                    85.56%                237,144
                            20
2005        48,005,840                    162.33%                346,220
Jan.~Jul.                  18
                                   Data Resource: Futures Industry Association   11
TAIEX Options (TXO)                                                                       5
The world' s top 10 index options-TXO ranked No. 5 in the
  category.


                                                                          Trading Volume
Rank                 Contract                       Exchange
                                                                               of 2004
 1     KOSPI 200 Index Options                         Kofex              2,512,125,963

 2     Dow Jones Euro STOXX 50 Index Options           Eurex                70,938,301

 3     CAC 40 Index Options                           Euronext              63,152,339

 4     SPX S&P 500 Index Options                       CBOE                 49,472,117

 5     TAIEX Index Options                            TAIFEX                43,824,511

 6     DAX Index Options                               Eurex                42,081,067

 7     TA 25 Index Options                     Tel-Aviv Stock Exchange      36,792,551

 8     FTSE 100 Index Options                         Euronext              17,866,310

 9     AEX Index Options                              Euronext              17,093,573

 10    Nikkei 225 Index Options                        Osaka                16,560,874

                                                            Data: Trade Data Global Service.   12
Derivatives Exchange of the Year 2004

TAIFEX awarded by Asia Risk on Oct 14, 2004

   nThe best practices and innovation
   in
      derivatives and risk management
   in
      Asia-Pacific.
   nInnovative and well-infrastructure in
      derivatives market, commodity as
   well
      as information of the year.



                                              13
Foreign Futures Enterprises Application
Procedure

n Overview of Establishment Criteria for Futures
  Enterprises (p.14-1)
   n FCM
   n Concurrent futures business operator
   n IB
n Flowchart of Application for Establishment of
  FCMs (p.14-2)




                                                   14
Status Quo
n Legal basis
   n Regulations Governing Investment in Securities by Overseas Chinese
      and Foreign Nationals (Article 4-2)
   n Guidelines for Futures Trading by Overseas Chinese and Foreign
      Nationals
n Trading purpose
   n Only for the purpose of hedging a position on domestic securities.
   n Only hedge account is allowed to be opened.
n Investment limits and restrictions
   n Long hedge: The aggregate market value of long positions on futures
      and options shall not be more than the combined holding of NTD cash
      and cash equivalent.
   n Short hedge: The aggregate market value of short positions on futures
      and options shall not be more than the total market value of securities
      holdings.
   n Investment limit: The aggregate amount of the initial margins required
      for futures contract, premiums required for buying of options,
      combined with the investment in money market instruments shall not
      be more than 30% of inwardly remitted funds.
                                                                                15
Proposed Changes
n Legal basis
   n Futures Trading Law.

n Trading purpose
   n Trading purpose is not restricted.

n Investment limits and restrictions
   n Position limit: According to rules governing position limits
     for various products.
   n Foreign institutional investors (the same as local institutional
     investors) may apply for exemption of position limit.
   n Fund regulation: Margin deposit/withdrawal in US Dollar
     only.
   n Offshore Funds shall be separated into two different
     accounts for securities and futures markets, respectively.
                                                                        16
Proposed Change-cont.
n Side-effect after change:
   n Foreign investors may trade futures products for
     non-hedge purpose through an direct account or an
     omnibus account.
   n The benefiaries: overseas Chinese and foreign
     investors (including corporations and individuals).




                                                           17
Proposed methodology for non-
hedging trading by foreign investors
 The omnibus account agreement
 should indicate the,  party who
  is obliged to file details
  of positions held by                                 TAIFEX
  individual clients



       FCM3                                        FCM2                                           FCM1



   Foreign FCM 2                    Foreign FCM 1           Foreign investor                   Foreign investor
   (Omnibus acct 2)
   (                               (Omnibus acct 1)             (Direct acct B)                (Direct acct A)




     Foreign investor               Foreign investor
     (individual acct)             (individual acct)
                                                                                                 and
                                                                                  Foreign FCM、 foreign
                                                                                  Investors shall obtain
                                                                                  an ID before opening an account
                                                                                   through the custodian banks.




                                                                                                                    18
Proposed targets of futures market relief




                                            19
ID System
n Single ID:
  Single ID system will apply to foreign investors who trade in the
  futures market. A foreign investor that has already had an ID
  issued by Taiwan Stock Exchange Corporation (TSEC) for
  investment in domestic securities can use the same ID for futures
  trading and vice versa.

n Every foreign investor must obtain an ID before trading futures.


n The ID may be applied through a local FCM or securities firm for
   onshore foreign investors, and through a custodian bank for
   offshore foreign investors. 。


                                                                      20
Qualifications of a foreign investor to
open a futures trading account
n Direct account
   n The requirements are the same as the prevailing regulations.
n Omnibus account— eligible offshore foreign FCM
   n A clearing member of a foreign futures exchange sanctioned
     by Taiwan’s regulatory authority.
   n Its home office or branch in Taiwan is free of disciplinary
     action imposed by securities or futures authorities or self-
     regulatory organization to suspend its securities or futures
     brokerage practice in the past year.
   n Free of incident of violating futures or securities trading
     agreement signed with the futures exchanges in home country
     or Taiwan in the past three years.



                                                                    21
Restrictions on account opening

n Direct account
   nForeign investors may open more than one futures
    account with a local FCM, or with several local
    FCMs.
n Omnibus account
  n An offshore foreign FCM may open more than one
    omnibus account with a local FCM; an offshore
    foreign FCM may also open an omnibus account
    with different local FCMs on account of its trading
    strategy or clientele attributes.
  n Only TAIFEX clearing member may accept the
    opening of omnibus account by foreign FCMs.
                                                          22
 Procedure for opening direct account
Step1:obtain an ID




Step2:overseas Chinese and foreign investors account
opening procedure




                                                       23
Procedure for opening omnibus
account




                                24
 Trading and settlement of omnibus
 account




n Foreign FCMs are not required to disclose trading information and
  identities of individual clients behind the omnibus account to local
  FCMs. The omnibus account can be treated and processed as a single
  account for trading and settlement purpose.
n Trading: Local FCM will treat each omnibus account as a trader and
  place orders by each the omnibus account.
n Individual clients under an omnibus account may apply for position
  offset, designated options combination for strategic purpose, and
  designated position offset to reduce margin payment.                   25
Position limit of direct account

n Position limit is regulated according to the prevailing ID
  system.
n Position limits are the same as those for local individuals
  and corporations.
n Exemption of position limit
   n Institutional investors may apply for exemption of
     position limit.
   n The extent of relaxation will be regulated by rules to be
     prescribed.
n Actions in case of over-limit: Same as those for local
  investors where the FCM will be notified to stop accepting
  new orders from the account.

                                                                 26
Position limit of omnibus account

n Position limit
   n Omnibus account is not subject to position limit.
   n Individual clients under the omnibus account will
     be assigned an ID and subject to position limits for
     regular accounts.




                                                            27
 Account Structure and Forex Regulation

n Margin account
   n   TAIFEX, clearing members, FCM and local traders open both a NTD
       margin account and a USD margin account, while offshore foreign investors
       only need to open a foreign currency account.
n Margin payment

【Overseas Chinese and foreign investors】
   n   Deposit and withdraw margin in USD only.
n Forex regulation
   n   Pursuant to Regulations Governing Foreign Exchange and Rules for
       Declaring Receipt, Payment and Transaction of Foreign Exchange.




                                                                                   28
Margin System




                29
               【FIG.1】 Margin and Trading Flow Process for Overseas Chinese and foreign investors

                   Futures margin
                                                                          Daily Trading position                Settlement position
                     ( USD )

                                                                            Client’s position
                       Client
                                                                                FCM places
                                                                                order
                         VISIO CORPORATION




                                   $
                                                                                 (buy/sell)
                    Deposit margin


                      FCM’s                                                     Check immediately
                    margin account                                             whether margin           No       Reject order
                                                                                deposit is sufficient

                     Clearing member’s                                               足
                    margin account
                                                                           TAIFEX matches trade
                      TAIFEX                                          Automatic offset of long/short
                    Margin account                                    positions in the same account (netting)


                                                 Member
                                                  FCM
                             VISIO CORPORATION




                                        $        Margin short                   Mark-to-market

                       USD margin call
                                                 Member                              足
                                                  FCM
                             VISIO CORPORATION

                                                   Margin                       Daily account settlement
                                        $         equity short
                      Deposit margin



                                                 Member
                                                                                                                  Settlement upon expiry
                                                  FCM
                                                                                                                 Gain/loss of open
                             VISIO CORPORATION




                                        $                        Settlement upon expiry
                                                                                                                 positions
                   Payment upon expiry                                                                          (Settlement netting)
                  Loss : Remit in funds
                  Gain : Remit out funds


【 Description】
   Overseas Chinese and foreign investors pay margin in USD for trading of US-denominated products.
                                                                                                                                           30
                              【Fig. 3 】 Futures Margin Payment Scheme



                                                                  NTD and USD
                                                                Denominated commodities




 TAIFEX                            USD futures margin account                              NTD   futures margin account


                                              USD                                                     NTD


Clearing member                    USD futures margin account                              NTD futures margin account


                                              USD                                                     NTD


  FCM                              USD futures margin account                              NTD    futures margin account



                             USD                                USD                  NTD


 Investor

                             Offshore                      Local and onshore                     Local and onshore
                              foreign                      Foreign investors                     Foreign investors
                             investor


            【Description     】
             A. Principles
                 1. Offshore foreign investors will deposit and withdraw margins for USD and NTD denominated
                    commodities in USD.
                 2. Local and onshore investors will deposit margins for USD-denominated commodities in USD, or in NTD
                    through a FCM who will exchange it into USD ; local and onshore foreign investors will pay margin in
                   NTD for NTD denominated commodities.

             B. Advantages
                To engage in futures trading, offshore foreign investors will remit the funds in and out in USD, which
                helps lower the risk of NTD exchange rate fluctuation and does not impact the foreign exchange market.

                                                                                                                           31
Contact Us
Visit Our web site at : WWW.TAIFEX.COM.TW
 Trading:
                           E-mail: wlchou@taifex.com.tw
         Wen-Lin Chou
                           TEL:886-2-23695678 ext.126
                           E-mail: annie@taifex.com.tw
             Annie Hsu
                           TEL:886-2-23695678 ext.118

                           E-mail: maggie@taifex.com.tw
       Maggie M.Y. Chien
                           TEL:886-2-23695678 ext.116
 Clearing:

             Jean Yang
                           TEL:886-2-23695678 ext.170

                           E-mail: simonc@taifex.com.tw
             Simon Chen
                           TEL:886-2-23695678 ext.171

 Business Development:
                           E-mail: yjp@taifex.com.tw
              Ben Yen
                           TEL:886-2-23695678 ext.240
                           E-mail: ritatsai@taifex.com.tw
              Rita Tsai
                           TEL:886-2-23695678 ext.249

                                                            32

								
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