The Taiwan stock market, with its fully automated trading systems and book entry mechanisms, is known as one of the most active exchanges in the Asia-Pacific region. At the end of June 2015, the total market capitalization of the 862 companies listed on the Taiwan Stock Exchange (TWSE) amounted to US$879 billion. The ratio of Taiwan market capitalization to GDP was 167.19% in 2014. The total accumulated trading value from January to June in 2015 was approximately US$325.9 billion, which represents a market turnover rate of 36.90% and a Taiwan market P/E ratio at 14.56.
In order to enhance the core competitiveness of the Taiwan securities market and to accelerate liberalization and internationalization, the authorities launched the “Market Uplift Plan” on Feburary 3, 2015. Exchange-traded funds (ETFs) linking China and Japan securities markets are already online, and ETFs connecting with New York and other global securities markets will be available in the future, meeting investors’ needs for diversified investments and international asset allocations.
‧Competitive Edge
The Taiwan securities market has substantially boosted Taiwan’s economic growth, with more than half of the listed companies belonging to the dynamic and innovative electronics sector.
Taiwan’s small to medium-sized enterprises are known for their innovative operational strategies, a strong work ethic and excellent cost control. Taiwanese companies have created their unique edge through optimized production processes, unparalleled manufacturing efficiency, integrated services, and innovative spirit.
Taiwan has an export-driven economy that has decades of experience in working with international companies, placing the island in a decisive position in the increasing integration of the Asia-Pacific region.
Offshore overseas Chinese and foreign investors need to appoint a domestic agent representative (custodian bank) to apply to TWSE for registration. The domestic agent representative may apply to a securities brokerage firm to open an account and trade securities with the relevant documents only after completing registration.
(1) Company establishment certificate issued by the local government such as a company license; if there is no company license, the following documents may serve as a substitute:
I. Articles of Incorporation of which the governing authority has a record.
II. Qualification certificate issued by the tax bureau of the country where it is located.
(2) Other organizations established according to law, such as government investment institutions, non-profit organizations, foundations, and academic organizations: The certificate or the letter from the governing authority approving their establishment should be presented; if there is no such certificate or letter, the following documents may be substituted:
I. Articles of Incorporation of which the governing authority has a record.
II. The regulations or rules enacted as the basis for the establishment of the applicant.
II. A qualification certificate issued by the tax bureau of the country where it is established..
2. Funds: a Company Fund, Trust Fund, Partnership Fund, Pension Fund, Mutual Fund, Unit Trust, and Funds of other types
(1) The certificate or the letter from the local governing authority approving its establishment should be presented. If there is no such certificate or letter, the following documents may serve as a substitute:
I. The record published on the website of the local governing authority showing that the fund has completed its establishment registration.
II. Documents such as an offering prospectus, trust contract, or memorandum for private placement that can serve to show that the local governing authority has accepted the filing or has created a record.
(2) In the case that an applicant for registration is a sub-fund, and is unable to provide documents as provided in point (1), it shall substitute the following documents:
I. Document in compliance with point (1) for the parent fund.
II. Documents specifying the legal or regulatory basis of the establishment of the sub-fund, and sufficient proof of the relationship between the parent fund and the sub-fund.
‧Trading and Settlement
Trading orders may be placed through the following methods:
1. Trading through non-electronic media:
The principal or its agent or authorized person can place orders in person or via telephone, in writing, or by telegraph.
2. Trading through electronic media:
The principal or its agent or authorized person can use voice mail, the Internet, a dedicated line, closed private network, or other electronic means approved by TWSE to place a trading order.
The trading of securities, order confirmation, and execution report between a securities broker and a principal shall be conducted in accordance with the following provisions:
1. Trading through non-electronic media:
The execution report may be given by email, telephone, facsimile, text message, voice message, or the Internet.
2. Trading through electronic media:
The transmission of the brokerage order for purchase/sale of securities, order confirmation, execution report, and other electronic documents between a securities broker and the principal who uses an electronic trading method other than voice menu system must carry the electronic signature issued by the brokerage institution for identification and confirmation; however, this restriction shall not apply in the following circumstances:
(1) The order confirmation and execution report are conducted by telephone, facsimile, text message, voice menu system, or the Internet.
(2) The conditions for exemption are met under the Operational Guidelines for the Implementation of Direct Market Access by Futures Brokers.
The Taiwan Stock Exchange (TWSE) is the clearinghouse for all trades executed in its market. A 2-tiered settlement infrastructure is adopted. First, local clients must complete the settlement of funds and securities with the executing brokers; foreign clients must instruct their domestic agent representative (custodian bank) to complete settlement with the executing brokers. Afterwards, all brokers need to complete the settlement of funds and securities with TWSE.
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