- Listing of Securities
- Corporate Governance
- Trading of Securities
- Clearing and Settlement
- Information Services and Safety
- Market Surveillance
- TWSE Securities Borrowing and Lending System
- Internationalization of Securities Market
- Monitoring of Securities Firms
- Investors Service
- Securities Information
- Rules and Regulations Directory
Listing of SecuritiesUpdate Date：2017/8
In order to qualify for an initial public offering on the Taiwan Stock Exchange (TWSE), domestic public companies or foreign issuers that have not listed their shares on any other stock exchange have to meet certain financial and operational criteria. The IPO filing process begins when the company submits an IPO filing application to the TWSE, where the application is reviewed by the relevant internal committee before being sent to the Securities Listing Review Committee for consideration. If approved, the application will then need to be ratified by the TWSE Board of Directors, which enables the TWSE and the applicant company to enter into an official listing contract. It is then filed and recorded with the Financial Supervisory Commission (FSC). Applications for a secondary listing filed by foreign listed companies are submitted to the Foreign Listing Department and reviewed by the relevant internal committee. After the TWSE and the foreign applicant company enter into an official listing contract, it is filed with the FSC.
Once listed, the company must comply with listing requirements such as the payment of listing fees and the filing of quarterly audited financial reports.
The TWSE promotes good corporate governance among its listed company community. The TWSE supervises and regulates their financial and operational status on a routine basis, carries out exception management, requires appropriate disclosure of material information, and verifies the filing documents.
At the same time, the TWSE has focused on expanding its listed product offering by providing investors with a growing array of investment and hedging tools. Listing applications of call warrants began to be accepted in September 1997 and put warrants in January 2003. The TWSE launched its first index-based Exchange-Traded Product (ETP), namely an Exchange Traded Fund (ETF), on June 30, 2003, followed by ETF warrants in July 2004, then REITs in March 2005. Offshore ETFs were introduced in August 2009. In September 2011, the TWSE pioneered the first QFII ETFs investing directly in China A shares. The year 2014 saw the introduction of Taiwan’s first leveraged and inverse ETFs in October. The amended Regulations Governing Futures Trust Enterprises (passed in May 2014) allowed futures trust enterprises to start raising funds for the launch of futures-based gold commodity ETFs at the beginning of 2015. In 2016, the dual currency ETF trading mechanism was launched in August; during the same year, the FSC revised rules allowing futures trust enterprises to issue leveraged and inverse futures ETFs, leading to the launch of three crude oil and gold leveraged and inverse futures ETFs by the end of the year. TWSE-listed securities currently include stocks, certificates carrying rights to convert bonds into shares, convertible bonds, beneficial certificates, call (put) warrants, ETFs, Taiwan Depository Receipts (TDRs) and beneficiary securities（REITs）.
Corporate GovernanceUpdate Date：2017/8
Taiwan has been educating public companies on the importance of corporate governance since 1998. The Executive Yuan formed the "Corporate Governance Reform Task Force" on January 7, 2003 to study various issues of corporate governance for drafting the " Corporate Governance Policy Doctrine and Action Plans ", which then became the basis of promoting corporate governance. Under those action plans, Taiwan’s government has promoted and implemented various policies, including significant amendments made in 2005 to the Company Act regarding shareholder proposal rights, board candidate nominations, and e-voting, as well as amendments made in 2006 to the Securities Exchange Act relating to independent directors and the composition of audit committees. The Financial Supervisory Commission launched the Corporate Governance Roadmap in 2013, which proposes thirteen substantive measures to achieve the following five goals: cultivating corporate governance culture, promoting shareholder activism, enhancing board functions, disclosing material corporate governance information and improving regulatory practices.
In tandem with the launch of the CG Roadmap, the Corporate Governance Center was established at the TWSE in October 2013 to standardize corporate governance measures in Taiwan. Beginning in 2014, the Center began the annual Corporate Governance Evaluation System which aims to enhance the corporate governance practices of listed companies. The Center also launched its official website (http://cgc.twse.com.tw) in English and Mandarin as well as its first e-newsletter, featuring an integrated information resource platform for all matters related to corporate governance and corporate social responsibility (CSR) in Taiwan and globally. Starting in 2015, the Center included the Information Disclosure and Transparency Ranking System into the annual Corporate Governance Evaluation System, and mandates companies fitting certain criteria to submit a Corporate Social Responsibility Report as part of their annual material information disclosure. In 2016, the TWSE established the Stewardship Principles for Institutional Investors, which encourages them to abide by the commitments of the Principles and continue to monitor investee companies. The TWSE continues to amend relevant corporate governance regulations, conduct promotional and educational events, and strengthen international ties.
Trading of SecuritiesUpdate Date：2017/8
When the TWSE was first established, trading in the centralized market place was carried out on an open trading floor. However, to meet the changing needs of the market environment, the trading system has progressed through several phases. In August 1985, the open trading floor was gradually replaced with a computer-aided trading system (CATS), which was eventually upgraded from May to November 1993 to a fully automated securities trading (FAST) system, which has heightened the trading capacity and efficiency of the stock market.
The trading hours of the centralized market trading session are as follows:
|Trading Sessions||Order Placing Hours||Trading Hours|
|1. Regular Trading||8:30-13:30||9:00-13:30|
|2. After-hour Fixed Price Trading||14:00-14:30||14:30|
|3. Odd-lot Trading||13:40-14:30||14:30|
|4. Block Trading||Non-paired Trade||09:00-17:00||09:00-17:00|
|6. Tender Offer||15:00-16:00||After 16:00|
Investors can place orders in person, by phone or internet. Orders are entered via terminals on securities firms’ premises into TWSE’s main computer and are processed and executed by the trading system using a price-time priority precedence hierarchy. In special cases, listed stocks may be traded through negotiation, auction, tender or other means.
With the exception of warrants, trades of all securities are generated by call auction. The TWSE conducts “intra-day volatility interruptions” to prevent over-volatility of stock prices. Whenever the trading system detects that the potential execution price of the security will fall out of a specified range (+/-3.5%) of the last traded price, the security matching is postponed for 2-3 minutes. As for warrants, orders are matched on a continuous basis during an intraday regular trading session. At the opening and closing of the trading session, warrant orders are still matched by call auction. The TWSE discloses the five best bid and ask prices/volume of unexecuted orders after the matching (including call auction or continuous trading method) on a real-time basis.
In addition, investors can trade through an omnibus trading account. Once the transaction is made, securities firms submit a Post Allocation Transaction Statement to TWSE, after which the trades are settled individually in each investor’s sub-account.
Clearing and SettlementUpdate Date：2017/8
According to the Securities and Exchange Act, Operating Rules of the Taiwan Stock Exchange, and Criteria Governing Handling of Stock Affairs by Public Companies, the TWSE acts as a clearinghouse for all the trades executed in the market. All securities firms have to fulfill settlement obligations to the TWSE, which acts as the Central Counter Party (CCP) and gives settlement guarantees to all the trades in the market.
The TWSE implements a same-day clearing method and employs a multilateral net settlement to calculate the net amounts of shares and funds receivables and payables between securities firms and the TWSE. The settlement cycle is T+2.
The TWSE adopts a Daily Net Settlement System (DNS), through which settlement obligations of securities firms have to be fulfilled on settlement day and cannot be deferred to the next business day. A securities shortfall can be covered by applying to use the TWSE’s Settlement Coverage Securities Borrowing System, which requires a collateral deposit and a borrowing fee from the borrowing securities firm. If a sufficient amount of securities cannot be borrowed to cover the shortfall, the buying securities firm will get due bills issued by the TWSE as temporary coverage and the selling securities firm has to purchase shares for the buying securities firm within the settlement cycle.
Settlement of securities in the form of book-entry is operated by the Taiwan Depository and Clearing Corporation (TDCC), the Central Securities Depository (CSD) in Taiwan, and entrusted by the TWSE. Settlement of funds in NTD is conducted through the Electronic Interbank Funds Transfer and Settlement System (CIFS) of the Central Bank, which acts as the settlement bank of the securities market. Settlement in foreign currencies is conducted through Cathay United Commercial Bank.
When a securities firm defaults, another securities firm will be designated by the TWSE to complete settlement on behalf of the defaulted firm and to liquidate the defaulted positions in the market. Losses and expenses incurred will be initially covered by the Joint Settlement Clearing Fund (JSCF) contributed to by the defaulting securities firm, then the First Special Clearing Fund (SCF) contributed to by the TWSE, followed by the Second SCF and the JSCF contributed to by the other securities firms, shared jointly pro rata. Afterwards, the TWSE shall pursue the recovery of funds from the defaulting securities firm. If the firm fails to make the deposit within the time limit, the TWSE will halt its market trading.
Information Services and SafetyUpdate Date：2017/8
As Taiwan’s premiere trading venue for securities, the TWSE is responsible for upholding the integrity of the markets, safeguarding investor rights, and enhancing service quality, and is thus committed to the safety, accuracy, and efficiency of all information and communication safety mechanisms. A regional back-up site and remote back-up site were established to guard against any possible system failure. The quality and efficiency of the TWSE information services has been duly recognized. The TWSE was certified to the ISO9001 Quality Management System standards in the years 1998, 2004, 2011 and 2012. Additionally, the TWSE’s information service systems have earned certifications in ISO 27001/BS7799 Information Security Management System, ISO 20000 Service Management, and BS 10012 Personal Information Management System.
Market SurveillanceUpdate Date：2017/8
A healthy and orderly market should uphold investors’ rights and privileges and prevent against incidents of manipulation and insider trading. In accordance with the Taiwan Stock Exchange Corporation Rules Governing Implementation of the Stock Market Surveillance System and the Taiwan Stock Exchange Corporation Directions for Announcement or Notice of Attention to Trading Information and Dispositions, the TWSE discloses material information regarding irregular trading activity to investors in real time to raise the awareness of the investors and enhance the integrity of the markets.
TWSE Securities Borrowing and Lending SystemUpdate Date：2017/8
On June 30, 2003, the TWSE instituted its Securities Borrowing and Lending System (SBL), which established the TWSE as the Central Counter Party (CCP) of local and foreign institutional investors engaged in securities lending activities. Lenders primarily include trust enterprises, insurance companies and certain qualified foreign institutional investors, while borrowers include securities firm lending accounts, securities broker-dealers, and certain qualified foreign institutional investors. These institutions apply to the TWSE to undertake securities lending transactions that are either fixed-rate, competitive bid, or negotiated trades. In this way, lenders can profit from their securities lending activity and at the same time meet trading, hedging, arbitrage, and settlement needs of borrowers, all of which help to increase the efficiency and liquidity of market transactions. More information about SBL can be found on the TWSE website at http://www.twse.com.tw/en/products/SBL/SBL_edu.
Internationalization of Securities MarketUpdate Date：2017/8
Faced with ever growing competition from global securities worldwide, the TWSE has systematically promoted and strengthened global ties, expanded areas of international cooperation, enhanced the Taiwan securities market to assure international standards, and advanced Taiwan’s global image and standing. The TWSE has entered into Memorandums of Understanding with more than 30 foreign stock exchanges, and has pursued and developed bilateral agreements with stock exchanges in the US, Japan, Korea, and Malaysia. In terms of cooperation, the TWSE has worked with various partners to expand the network between exchanges through cross listing ETFs and other products, co-compiling indices, cooperating on marketing respective products, and engaging in exchange visits and staff training.
The TWSE has also strengthened connections with international securities organizations, such as the World Federation of Exchanges (WFE), Asian and Oceanian Stock Exchanges Federation (AOSEF), and International Organization of Securities Commissions (IOSCO). Taiwan’s international standing and visibility has been greatly enhanced through the TWSE’s participation in these organizations, especially through our key positions and right of discourse. Furthermore, the TWSE shares our capital market experience through the exchange of information in working groups, thereby offering the operational direction guidance of other exchanges.
Furthermore, the TWSE holds roadshows every year as part of its efforts to augment the internationalization of Taiwan’s securities market and synergize capital market, traveling to global and Asia Pacific financial centers to develop new markets and promote Taiwan as an investment destination. These events update foreign investors on Taiwan’s securities market and offer them investment opportunities available in our vibrant market. In addition, the TWSE organizes conferences and forums at which international scholars and experts speak to investment houses and financial institutions on current worldwide market trends and developments.
In order to stay abreast of global indexing investment trends, the TWSE has signed cooperation agreements with foreign institutions, such as FTSE International Limited (FTSE), Research Affiliates LLC (RA), and S&P Dow Jones Indices (S&PDJI), to co-compile indices with global standards and market needs to licensed index users to launch index-based products.
The TWSE, in cooperation with FTSE, has launched eight tradable indices since 2002, including the FTSE TWSE Taiwan 50 Index, the FTSE TWSE Taiwan Mid-Cap 100 Index, the FTSE TWSE Taiwan Technology Index, the FTSE TWSE Taiwan Dividend+ Index, the FTSE TWSE Taiwan Eight Industries Index, the FTSE TWSE RAFI Taiwan 50 Index, the FTSE TWSE RAFI Taiwan 100 Index and the FTSE TWSE Taiwan Shariah Index.
To promote corporate social responsible investments, the TWSE cooperated with Research Affiliates, LLC (RA) starting in 2010, adopting RA fundamental index methodology to co-compile the TWSE RA Taiwan Employment Creation 99 Index and the TWSE RAFI® Taiwan High Compensation 100 Index.
In 2014, the TWSE cooperated with S&PDJI to launch the S&P/TWSE Taiwan Low Volatility High Dividend, combining two well-known investing themes—“low volatility” and “high dividend”. Starting in 2015, the TWSE began to produce a series of self-compiled indices in support of government policies and to meet market needs, including the TWSE Corporate Governance 100 Index, the TAIEX Leveraged and Inverse indices and the Electronics Leveraged and Inverse indices. As a result, the TWSE’s index series covers multi-type indices, including market capitalization weighted indices, industry-based indices, fundamentally weighted indices and themed indices.
In light of the rapid development of indexing investment worldwide, the TWSE established the 100% owned subsidiary, Taiwan Index Plus Corporation (TIP). Since its official operation on March 14, 2016, TIP is entrusted by the TWSE to maintain, promote and license TWSE’s existing indices. The professional index company can effectively and rapidly respond to meet demands and enhance quality of index services.
Monitoring of Securities FirmsUpdate Date：2017/8
According to the Securities and Exchange Law, the establishment of a securities firm and its branches has to be approved and licensed in advance by the competent authority. Prior to participating in the market, a securities firm must sign a contract with TWSE then make a prorated deposit into a settlement and clearing fund. The securities firm is responsible for its employees in both sales representation and ethical behavior when conducting centralized market business.
To enhance their financial structure and risk management, all securities firms must meet capital adequacy ratio requirements in order to stay in business. The TWSE regularly sends inspectors to check the securities brokers and dealers on-site to verify that their business operations and financial status meet all these requirements. In addition, the TWSE maintains a whistleblower system that helps scrutinize the operational risk of securities firms. This system also provides for a risk control database for margin trading in order to strengthen the risk management of securities firms.
For the purpose of simplifying and reducing paperwork for trading participants, the TWSE established a unified reporting system in 1999 that enables securities brokers to file all TWSE-required reports through a single electronic user interface. The TWSE also allowed securities broker to establish the Application Programming Interface (API) as well as Direct Market Access (DMA) so securities broker can make full use of the most advanced technology. Furthermore, the TWSE has relaxed restrictions on securities firms’ branch and office locations, facilities and personnel so as to enhance efficiency, reduce operational cost, and meet the needs of the market.
Investors ServiceUpdate Date：2017/8
The TWSE develops various innovative services for our investors. To manage the internet era of exploding and rapidly changing information, the TWSE furthers its effort in providing diversified online service platforms. Investors can now access all TWSE sites, including our official website, Market Observation Post System, Market Information System, Data eShop, WebPro 3.0 Video Broadcast, Investor Education, the TWSE Facebook Fan Page, and more, to obtain timely information and investment know-how from anywhere in the world.
To enhance the general public’s financial knowledge, the TWSE has organized diverse lively events along with promotional activities in recent years. These events are aimed at people from all walks of life so as to find ways to connect financial knowledge to the investing public. Currently, our financial literacy campaign, outreach and promotion are focused on two major areas: schools and communities. Financial literacy activities on campus include: college/university financial lectures, investment workshops for teachers, financial management workshops for teenagers, and a campus securities investment competition. For the general public, the TWSE has set up the Virtual Investor’s Library to provide answers to online enquiries on how to open securities accounts and other transaction information. Available also are prizes, games, educational comics and videos of securities investment, which makes learning more engaging and active.
The Virtual Investor’s Library makes possible 24/7 service for investors. Users are given easy access to specialized web pages such as Investor Personal Data Inquiry System, Financial Statements of All Listed Companies, Warrant Statistics, Data eShop, ETFs, Monthly Financial Reports of All Securities Brokers and Dealers, the TWSE Facebook Page and Publications/Brochures/Pamphlets. The TWSE can also be reached at Contact Us/Suggestion Box where all enquiries and statements will be responded to swiftly. The TWSE makes special effort to provide the best service to all of our investors and hopes that with every step we take, the securities market will be ever more accessible to the general public.
Securities InformationUpdate Date：2017/8
To enhance the fairness and efficiency of securities trading, the TWSE uses various channels such as websites and publications to give investors easy access to securities information.
The TWSE’s website ( http://www.twse.com.tw/en/ ) carries official announcements concerning securities listing and trading, as well as other securities information for investors’ reference. Investors on the move may access these apps through their mobile or smart devices. In addition, the TWSE’s home page provides links to the following websites:
- Market Information System (http://mis.twse.com.tw/stock/index.jsp?lang=en_us):
This website provides real-time trading information about the market and individual stocks, including Market Summary, Sector Group Quotes, Five Best Bids and Asks, Category Zone, Block Trade, Odd Lot Trade, SBL Inquiry and Market Announcements.
- Market Observation Post System (http://mops.twse.com.tw):
This website provides financial and operational information about listed companies, including material information, company profiles, operational summaries, changes in the make-up of board of directors and supervisors, financial statements, announcements, derivative securities, corporate governance, e-books, funds, annual reports and information on shareholders’ meetings.
- WebPro 3.0 Video Broadcast (http://webpro.twse.com.tw):
This website serves as a platform which focuses on the sharing of high-quality video content in the securities and futures market. It aims to enhance market transparency and bridge the link between other video and social media platforms. Three live channels are available, providing live broadcasts of investor conferences, earnings releases, press conferences of market sensitive information, listing ceremonies, investor educational activities, and other information. With advancements in technology, the TWSE seeks to provide a better and more secure viewing experience, as well as updating the latest content for essential video information on the securities market.
- Investor Education (http://investoredu.twse.com.tw/):
This website comprises information in a number of categories, including Beginner Investing, Investment Risk, Digital Box and Investment Q&A. The content focuses on educational resources to equip investors with better investment knowledge as well as risk management concepts and examples. Various mediums such as video clips and e-books are available that give investors a better understanding of the products that the TWSE offers and how to trade these financial instruments.
- Corporate Governance Center Website (http://cgc.twse.com.tw/):
This website is the TWSE’s one-stop service window to all things related to corporate governance and corporate social responsibility among TWSE’s listed company community, including Taiwan’s related rules and regulations, evaluation metrics and published results, latest news, promotional events, publications, and database of statistics. The integration of CG-related information makes this website the most important platform for online queries into Taiwan’s corporate governance and corporate social responsibility.
- Data e Shop (http://dataeshop.twse.com.tw/):
This website provides data vendors and investors with on-line subscriptions to data services, including end-of-day market statistics, index constituents and historical trading data, which can conveniently be viewed or downloaded in a variety of formats.
To provide investors with versatile reference data, the TWSE publishes a Stock Chart of Taiwan Stock Exchange Capitalization Weighted Stock Index and Trading Volume & Value at the beginning of each year (in Mandarin only, and is sent to securities firms’ places of business). In addition, the TWSE also puts out the following periodicals, which are also available on TWSE’s website:
- Taiwan Stock Exchange Bimonthly Review;
- Taiwan Stock Exchange Statistical Data;
- Highlights of TWSE Listed Securities;
- Status of Securities Listed on Taiwan Stock Exchange;
- Taiwan Stock Exchange Annual Report (published in Mandarin and English);
- Fact Book
To inform and educate investors, the TWSE has compiled a series of booklets. Investors can access these on TWSE’s website (http://www.twse.com.tw/en/ ).
To bring the public closer to the stock market, the TWSE set up an Information Center in 2008. The Center provides the following information:
- Market data displays such as trading graphs, international stock market data, foreign exchange rates, and trade data displays;
- Multimedia information such as those introducing TWSE operations, services and promotional videos; and
- Live broadcasts of ceremonies and speeches (which can be accessed through WebPro 3.0 Video Broadcast).
Rules and Regulations DirectoryUpdate Date：2017/8
Introduced in 2014, the Rules and Regulations Directory allows the public to search and access rules and regulations regarding listing, trading, and supervision in Taiwan’s securities market. Users can search by keyword, category, or news release for easy access to content. Amendments and historical versions of the rules and regulations are also provided for comparison and research purposes.