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The Taiwan Stock Exchange (TWSE) and the Korea Exchange (KRX) will sign a Memorandum of Understanding (MoU) on 11 December 2015. Under the terms of the MoU, both sides agree to work together to expand their ETF markets, jointly compile indices, conduct market promotion activities and engage in bilateral visits to share experiences. The MoU will also help create closer ties and links between the Taiwanese and Korean capital markets.
Given the economic rise of Asia, regional cooperation between capital markets has been gaining more significance. The signing of this MoU will be a new milestone for cooperation between the Taiwanese and Korean capital markets.
Mr. Sush-der Lee, Chairman of the TWSE, said, “The TWSE has been proactive in building cooperative alliances with overseas bourses in line with the increasing trend of cross-border collaboration between global stock exchanges. This is also in line with the Financial Import Substitution Program, which has been launched by the Financial Supervisory Commission (FSC), as well as its efforts to encourage the further internationalization of the Taiwan capital market. By focusing on indices and ETFs, this partnership will take advantage of the flourishing investment trend of global indexing. ETFs that track the Korean equity market will soon be available in Taiwan, and similarly, we expect ETFs that track the Taiwanese equity market will be launched on the Korean market in the future.”
Mr. Choi Kyungsoo, Chairman and CEO of KRX, said, “Taiwan and　Korea are both ‘Asian Tiger’ economies. Not only do both markets share similar social, economic and cultural development experiences, the industrial structure of both markets also resembles each other. Both societies are well-known for their IT talents and high-tech industries, with each capital market being made up by well-educated and active investors and sharing similar trading hours. These are great foundations for cooperation. We believe that the signing of the MoU between the two bourses can give rise to new opportunities to grow the ETF markets in Taiwan and in Korea.”
Taiwan has been active in expanding the range of innovative ETF products available on its market and is continuing to develop many types of ETFs to meet investors’ diversifying needs for asset allocation and trading strategies. The TWSE’s ETF market has been growing at a fast pace, with total trading value exceeding NT$1.47 trillion between January and November 2015, equivalent to 7.13% of total trading value compared to just 1.88% in 2014. The TWSE has also recently launched a number of diverse ETFs that track international markets.
Korean ETF market has steadily grown and matured since its debut in 2002. Last October, the Korean financial authorities announced a ‘Development Plan for the ETF Market’ based on the deregulation of the listing and management of ETFs in order to further vitalize the ETF market. Currently, over 200 ETFs are listed on KRX with the total size of the market recently reaching a record high of KRW21 trillion, sixty times the size of the market in 2002.
The MoU will build on an earlier Memorandum of Understanding on cooperation and exchange signed by the TWSE and KRX in 2000, with the new MoU allowing both sides to explore more opportunities to deepen their partnership in anticipation of reaching broader and deeper cooperation. As both exchanges start to license ETF products, jointly compile indices and organize more exchange visits, the TWSE and KRX expect that investors will soon be able to access more diversified investment products and better services, bringing mutual prosperity to the Taiwanese and Korean capital markets.
