Taiwan Index Plus and Taiwan Futures Exchange cooperate in developing Taiwan strategic indices

2019/09/16 11:00

Taiwan Index Plus Corporation (“TIP”), a wholly-owned subsidiary of Taiwan Stock Exchange (“TWSE”), and Taiwan Futures Exchange (“TAIFEX”) announced to sign the index cooperation agreement on September 12, marking a joint partnership of developing Taiwan Strategy Series Indices that consist of stocks, futures and options contracts in the Taiwan stock and derivatives markets. The new indices are planned to launch in December 2019.

The Taiwan Strategy Series Indices mainly include four types of indices. The first type will be calculated by using futures strategies which combine futures (e.g. TAIEX Futures) or options (e.g. TAIEX Options) contracts with different delivery months to capture long-term accumulated returns, such as the Futures index. The second is strategic-type of index which blend equity index and futures or options contracts to replicate the index performance while adding return enhancement through holding futures or options positions, such as the Covered Call index. The third type is an index of indices which combined the above-mentioned indices, such as the Market Neutral index, a strategy integrates offsetting long/short positions on equity and futures indices, seeking to pursue consistent positive returns regardless markets rise or fall. The fourth type includes the leveraged or inverse indices derived from the above mentioned three types of indices. 

In December, TIP and TAIFEX plan to launch three strategic indices, including the TAIEX Futures index, Covered Call index and Market Neutral index, composed of securities with cross-asset classes listed on the Taiwan financial market. These indices are to be used as underlying of ETF, ETN, warrants or OTC products as easily accessible investment vehicles for institutional or individual investors to enhance investment return or implement hedging strategies, making innovative derivative strategies available through index investing.

TWSE, TIP and TAIFEX consolidate their advantages and resources to fulfill cross-market cooperation to further diversify index products, increase liquidities on both stock and derivatives markets, and facilitate a well-developed ecosystem for the Taiwan financial market.