Taiwan Futures Exchange (TAIFEX) was exempted by the Financial Services Agency of Japan (JFSA), for New Taiwan Dollar Interest Rate Swap (TWD IRS) clearing service on October 13, 2023. This recognition officially took effect on the same day.
The recognition highlights that Taiwan's OTC clearing system is aligned with international standards and trends, as envisioned in the Financial Supervisory Commission's (FSC) capital market blueprint. TAIFEX aims to create a fair, efficient, innovative, open, diverse, and internationalized capital market, attracting foreign investment, strengthening Taiwan's international competitiveness and market position, and increasing international visibility.
The collaboration between the FSC and the JFSA, based on the framework of the Multilateral Cooperation and Exchange of Information (MMOU) under the International Organization of Securities Commissions Asia-Pacific Regional Committee (IOSCO APRC), establishes a financial supervisory cooperation relationship for cross-border clearing institutions. This relationship is beneficial for both parties in strengthening cross-border regulatory cooperation and information exchange, ensuring sound financial market risk management and regulatory compliance.
Japanese financial institutions play a crucial role as key participants in Taiwan's derivatives market, making substantial contribution to market liquidity and stability. Under the requirements of the Japanese Financial Instruments and Exchange Act and related supplementary regulations, foreign clearing organizations seeking to offer clearing services to Japanese financial institutions must obtain a license issued by the JFSA or an exemption for specific products they intend to service. TAIFEX's attainment of the JFSA's recognition is expected to facilitate compliance by Japanese financial institutions with regulatory requirements, increase their willingness to participate in Taiwan's central clearing market and potentially stimulating further activities in the derivatives trading market.
TAIFEX is dedicated to analyzing international organizations and the systems of major foreign clearing institutions to develop a clearing system that aligns with international standards. It adheres to the Principles for Financial Market Infrastructures (PFMI), conducts quantitative information disclosure, enhances risk management frameworks, increases market transparency, and aligns with international practices. The goal is to create an environment conducive to the participation of domestic and foreign institutions. TAIFEX's ongoing efforts have received recognition from foreign financial regulatory authorities. This was evidenced by the acquisition of U.S. CFTC No-Action Relief on September 15, 2022, enabling U.S. financial institutions to participate in Taiwan's OTC central clearing market (with an extension of the No-Action Relief granted again on September 13, 2023). Furthermore, on December 16, 2022, TAIFEX was recognized as a TC-CCP by the European Securities and Markets Authority (ESMA), broadening and deepening the engagement of European operators. Additionally, TAIFEX is actively seeking recognition as a qualified central counterparty in countries such as the United Kingdom and Canada, with the potential to attract more foreign institutions to participate in Taiwan's market, further enhancing its international competitiveness and visibility.
