Letter to the Shareholders by nabikovk


									   1           Letter to the Shareholders

 Dear shareholders,
      It has been 11 years since TAIFEX was established in
 1997. The principles upon which we were founded have
 remained our guideposts over the years. The works to build a
 world-class exchange characterized by fairness, safety, effi-
 ciency, professionalism, and innovation continued in 2008.
 TAIFEX has thus turned in a sterling report card despite the
 global financial crisis.
      TAIFEX’ s total trading volume in 2008 came to 136,719,777
 contracts, marking a historic high and an increase of 18.73%
 over the previous year. Along with the surge in trading volume,
 shareholders’ returns improved further with pre-tax earnings of
 NT$1,877,639,597 and net income of NT$1,421,107,824
 recorded for the year. The pre-tax earnings per share and net
 income per share came to NT$8 and NT$6 respectively, making
 TAIFEX the most profitable entity among exchange and deposi-
 tory organizations in Taiwan.

Mr. Andy Yeh                                          Mr. Steve C. Wang
 Chairman                                                 President
             Let t er t o th e S h a re h o ld e rs

    It is not a coincidence that TAIFEX has delivered a ster-           The volume of TAIFEX futures equivalent traded in 2008
ling report card. Over the course of 2008, a series of new         was 1.31 times the volume of MSCI Taiwan Index Futures
measures were introduced and new products were launched.           traded on SGX (Note: The Mini-TAIEX Futures (MTX) has
They include: (1) the launch of NT Dollar Gold Futures on 28       been included in the computation of TAIEX futures equiva-
January; (2) the disclosure of information on market activities    lent, at a conversion ratio of 4 MTX to 1 TX). In terms of trad-
                                                                   ing value, the TAIFEX futures market was 2.05 times that of
of major institutional trader groups in April; (3) the adjust-
                                                                   MSCI Taiwan Index Futures in Singapore. We believe that
ment of margin ratios in June; and (4) the implementation of
                                                                   the competition landscape has thus changed fundamentally.
multi-currency margining. In the 4th Quarter of 2008, new
                                                                   Coupled with the home market advantage which we have
measures were rolled out at an even quicker pace: (1) the
                                                                   regained, we expect the competitiveness and global pres-
introduction of institutional hedge accounts; (2) an increased     ence of the Taiwan futures market will continue to scale new
frequency of clearing margin withdrawals in October; (3)           highs.
implementation of SPAN margining to end-customers; (4) ac-              Meeting the needs of our customers has been our key
ceptance of stocks and bonds as margin collateral ;(5) the         consideration. In this respect, the NT Dollar Gold Futures
adjustment of final settlement price calculation methodology       (TGF) contract which was launched in January 2008, has
and final settlement day for stock index futures and options       been designed with its unit of measurement most familiar to
in November; and (6) implementation a TCP/IP futures trad-         local investors in Taiwan, i.e, the Taiwan tael (one tael =
ing order routing network in December.                             37.5 grams). With the successful launch of TGF, we have
    The new measures and new products have put our                 subsequently launched NT Dollar Gold Options (TGO) on 19
                                                                   January 2009.
futures market on a more solid footing. Despite the global
                                                                        The aggregate TGF trading volume in 2008 came to
financial crisis in 2008, the trading volume on TAIFEX still hit
                                                                   5,314,069 contracts, or 3.89% of the total volume traded on
a new high, with a growth rate surpassing the global average
                                                                   TAIFEX. In the very first year of its launch, TGF became the
of 13.24%.
                                                                   fourth most actively traded gold futures contract in the world,
    In 2008, TAIFEX’ s average daily trading volume was            indicating that it has been widely accepted by local traders in
549,075 contracts, an increase of 17.78% from 466,197 con-         Taiwan.
tracts in 2007. Trading in the Mini-TAIEX Futures rose the              In the area of international cooperation, TAIFEX in 2008
fastest, up 205% year-on-year, followed by the TAIEX Fu-           signed MOUs with the Warsaw Stock Exchange (WSE), the
tures at 67%. The trading activities on Finance Sector Index       OMX Nordic Exchange (OMX AB), and the Johannesburg
Futures and Electronic Sector Index Futures have also              Stock Exchange (JSE).
increased, with a growth of 41% and 35% respectively.                   In addition, TAIFEX actively took part in international
    The various new measures have injected added liquidity         conferences and events, including these organized by the US
into the Taiwan futures market and tilted the competition          Futures Industry Association (FIA), FIA Asia, the Association
                                                                   of Futures Markets (AFM), the International Options Markets
landscape. Indeed, the year 2008 marked an important mile-
                                                                   Association (IOMA), the World Federation of Exchanges
stone in TAIFEX’ s history, in particular, with respect to the
                                                                   (WFE), and the Swiss Futures and Options Association
competition with SGX which has lasted for more than 10
                                                                   (SFOA). We also sponsored activities in some of such con-
                                                                   ferences and events so as to enhance the image and profile
                                                                   of the Taiwan futures market.
              Let t er t o th e S h a re h o ld e rs

     To keep abreast of developments beyond our shores,            to promote better understanding of the Taiwan futures market
TAIFEX in 2008 sent a total of seven delegations to visit the      on the part of both traders and the general public, we pub-
United States, the United Kingdom, France, Germany, Italy,         lished Taifex Quarterly, TAIFEX Newsletter, and the Journal
Japan, South Korea, India, Singapore, Australia, China,            of Futures and Options, which were distributed to futures
Hong Kong, and Russia, where they visited 39 exchanges             firms, colleges, universities, and libraries.
and related organizations. Useful information was gathered              The development of TAIFEX can be divided into three
and cooperative ties have been strengthened.                       distinctive five-year periods. The first five years were the
     Taiwan's futures market continued its process of engag-       startup period, the second five years were the growth period,
ing the international participants. Having been granted the        and in 2008 we entered into a reformation period
Part 30 exemption and 5 No-Action Letters previously, we                The purpose of the many new measures introduced in
followed up to obtain a No-Action Letter from the Commodity        2008 is to lay a solid foundation for the Taiwan futures
Futures Trading Commission(CFTC) on the Non-Finance                market. Next year, our focus will be on the follow-up of the
Non-Electronics Sub-Index Futures. In addition, the applica-       various initiatives implemented this year, in order to ensure
tion for no-action letter on GreTai Securities Market Stock        that their full benefits will be realized. Focuses will also be
Index Futures is pending for CFTC approval. With the ex-           on enhancing the risk management function of the market
emption from CFTC, qualified members of TAIFEX may offer           and expanding the institutional participation base. We will
their services to investors in the United States, which in turn    also continue to explore new products and new measures so
helps to increase the participation of foreign traders in the      as to improve the breath and depth of our market. We would
Taiwan futures market.                                             like to express our sincere gratitude to the competent au-
     Marketing efforts have also been an important focus. A        thorities for their guidance, to our members and market par-
total of 34 workshops have been held to acquaint some 7,000        ticipants in the futures industry for their support, and to all of
attendees with our plans, prior to their implementation. Pro-      our colleagues for their hard work over the past year. With
fessional development was another important focus last year.       the continued support of our shareholders, we look forward
We offered training courses in Hong Kong for "selected do-         to another great year in 2009.
mestic institutional traders" and conducted an "Introductory
Training Course for Futures Dealers," a series of courses on
the "Basics of Futures Trading" for traders employed at
domestic0institutions,0and0a0"Futures0Professional Devel-
opment Course." These courses attracted a total attendance
of over 3,300.
     Also, in order to forge closer ties with the futures indus-
try, TAIFEX held a "Panel Discussion for FCM Senior Man-
agement" and "Panel Discussion for Managing Directors of
FCMs," where industry professionals exchanged views.
                                                                            Andy Yeh
Where appropriate, such views were incorporated into plans
for further market promotion and development. And in order
                                                                         Steve C. Wang

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