In the first half of 2020, the Taiwan Futures Exchange (TAIFEX) recorded an all-time high half-year volume of 173.7 million contracts with a rise of 36% year-over-year (YoY), reaching a record average daily volume (ADV) of 1.5 million contracts. Amidst market volatility, this was largely driven by the popularity of its core products, including the world’s sixth most traded equity index option in the period ranked by the Futures Industry Association – TAIEX Options (TXO), of which increased 22.7% YoY to 879,598 contracts, a historical-high ADV. Two other flagships, TAIEX Futures (TX) and Mini-TAIEX Futures (MTX), grew 40.7% to 215,076 contracts and 102.9% to 271,595 contracts in ADVs YoY, respectively.
Rising foreign investor participation and the increase in after-hours trading were the two other factors leading to the growth. In the period, foreign institutional investors accounted for 26.3% of TAIFEX’s total trading volume, up from 21.3% in the first half of 2019. With an increase of 79.2% YoY, an average of 393,627 contracts were traded overnight in this period, representing 26.3% of the market’s total ADV, up from 19.7% of the same period last year.
Foreign equity index products also delivered impressive performance. As one of the most liquid offshore venues trading US index futures worldwide, the Exchange saw a combined average of 19,624 contracts traded daily in the period for its products based on three most widely- tracked US stock indices – DJIA Futures, S&P 500 Futures, and Nasdaq-100 Futures, among which the ADVs of the first two were up 67.7% and 101.5% YoY.
TAIFEX persisted in making uninterrupted progress during the period, including the launch of two equity index futures products – FTSE4Good TIP Taiwan ESG Index Futures and TIP Taiwan Market Biotechnology and Medical Care Index Futures, the introduction of real-time market data feed, and the expansion of the range of Dynamic Price Banding Mechanism from equity index futures to its FX and ETF futures. In addition, continuing its path of international cooperation, the Exchange partnered with Bursa Malaysia Derivatives Berhad with the signing of a Memorandum of Understanding.
In coming months, the pandemic is likely to continue and highlight the need for integrity and resilience of derivatives markets. Later in the year, in response to growing demand for hedging exposures in global equity markets, TAIFEX plans to introduce a new offshore index futures product, while remains committed to providing a safe and efficient trading environment for market participants to manage their risks, particularly during the time of uncertainty.
