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To reduce systematic risks, strengthen the resilience of the financial system and gradually promote the central clearing of the massive OTC derivatives market, Taiwan Futures Exchange (TAIFEX) launched the OTC derivatives clearing business on July 25th and held an opening ceremony at the Grand Hotel Taipei.
The Premier of the Executive Yuan, Su Tseng-chang, the Minister without Portfolio and Spokesperson of the Executive Yuan, Lo Ping-cheng, the Chairperson of the Financial Supervisory Commission, Huang Tien-mu, the Deputy Governor of the Central Bank of the Republic of China, Yen Tzung-ta, representatives from foreign organizations stationed in Taiwan, including the American Institute in Taiwan, the British Office Taipei, and the Canadian Trade Office in Taipei, the American Chamber of Commerce in Taiwan, the European Chamber Of Commerce Taiwan and other high-profile professionals and executives from the financial industry jointly attended to witness the milestone moment of the Taiwan futures market.
In his speech, Premier Su thanked Chairperson Huang of the Financial Supervisory Commission, Chairman Wu of the Taiwan Futures Exchange, and related colleagues for their dedication. To establish an efficient, secured and competitive OTC derivatives clearing mechanism in Taiwan, it is necessary to build a legal foundation and complete measures to be in line with international standards. During the pandemic, under the leadership of President Tsai, Taiwan's economic growth reached an 11-year high. We need to work together to make Taiwan better.
Chairman Huang indicated that the OTC derivatives clearing mechanism is safer, more efficient and more competitive for the market participants. The 2008 financial crisis was caused by international financial institutions’ investment in complex derivative financial products, which triggered systematic risk. As a result, the supervisory authorities of various countries committed to the establishment of OTC derivatives central clearing mechanism to increase the transparency of funding between institutions, improve the safety of the market, reduce the derivatives transaction risks and promote the development of the financial market. From the perspective of financial institutions, the mechanism can reduce the cost of risk management and lower capital requirements, effectively improving the safety, efficiency and competitiveness of the Taiwan capital market.
Wu Tzu-hsin, Chairman of TAIFEX, said that in order to control the key technologies of the core system of Taiwan's financial market, TAIFEX did not choose to buy a system and decided to develop it independently by integrating 15 modules to build the OTC clearing system on its own. Despite all the difficulties we faced, we overcame them, successfully launched the clearing system, and opened a new page in the Taiwan OTC derivatives market under the witness of Premier Su. Starting today, the massive OTC derivatives transactions will be cleared domestically in phases that can help to reduce operating costs for financial institutions, eliminate systemic risks, and strengthen the resilience of the financial system. In addition, TAIFEX has also been seeking the accreditation of Qualifying Central Counterparty (QCCP) from the United States, the European Union, the United Kingdom, and Canada, to attract foreign capital to participate in the Taiwan futures market and enhance its international competitiveness.
After the opening remarks, Premier Su, Minister without Portfolio and Spokesperson of the Executive Yuan, Lo Ping-cheng, Chairperson of the Financial Supervisory Commission, Huang Tien-mu, Securities and Futures Bureau Director Chang Chen-shan, Deputy Governor of the Central Bank of the Republic of China, Yen Tzung-ta, Chinese National Futures Association Chairman Chen Pei-chun, Taiwan Securities Association Chairman Ho Minghong, Bankers Association of the ROC Secretary General Wang Tsong-ming, and representatives from foreign organizations stationed in Taiwan, together with Chairman Wu of TAIFEX, jointly launched the opening ceremony, announcing the official opening of TAIFEX OTC derivatives central clearing business.
On the first day of the launch of the OTC derivatives clearing business, there are 11 banks registered as clearing members. As of 2:00 pm, nine of them submitted TWD IRS for central clearing with a total notional value of over NT$16 billion, opening a new page for the central clearing of OTC derivatives in Taiwan.
While building the financial infrastructure, TAIFEX has also been actively involved in charitable and public welfare activities to fulfill its corporate social responsibility. Witnessed by Premier Su, a charity donation was made on the same day, in an effort to build a more inclusive society and achieve the goal of sustainable development.
