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TAIFEX strengthens retail trading push with new mini-contracts

The rise of retailers in the world’s major markets is good to watch. The so-called “GameStop phenomenon” suddenly showed that small investors, whether young or old, can participate too actively in the markets and even help shape them thanks to the low entry barriers provided by low-fee and easy-to-use brokers and platforms.

However, little that attention was focused on Asia, where a similar trend was underway, particularly in the derivatives space. On the Taiwan Futures Exchange (TAIFEX), active retail exposure combined with strong institutional stakes, each accounting for about half of the exchange’s trading volume, are the reasons for the exchange’s outstanding performance in 2021.

The proportion of retailers is even higher at 57% during TAIFEX’s night trading session, especially when trading the exchange’s most popular stock index futures product I Mini-TAIEX-Futures (MTX) at almost 60%. With 28% of the new futures trading accounts opened in Taiwan in the first nine months of 2021 are in their twenties, younger retail investors are also increasingly keen to get involved and are demanding more accessible products for the market.

Presentation of the new mini financial futures from TAIFEX

With retail investor demand showing no signs of slowing down, TAIFEX has committed to introducing more smaller contracts to serve this customer segment. At the beginning of the year, TAIFEX changed the listing criteria of its Mini Single Stock Futures (SSF) and lowered the price threshold for suitable stocks. This brought with it a wider range of mini SSFs, including global blue chip Taiwanese like TSMC.

Major industries within the Taiwanese economy will be the focus of new product development. Following the successful launch of the Mini Electronics Sector Future in June 2021, which includes all large companies in the country’s most critical industry, TAIFEX is turning its attention to the sector with the second largest market capitalization I the financial sector. With many financial firms experiencing strong growth in recent years that drove the price level of the TAIEX Financial and Insurance Index higher, the contract size of TAIFEX’s existing Financial Sector Index Futures (TF) rose to around $ 58,000, a large one Threshold for small traders.

With the upcoming launch of Mini Finance Sector Futures (ZFF) on December 6, 2021, TAIFEX aims to provide investors of all sizes with a more accessible tool for trading and hedging Taiwan’s financial and banking sectors. The new ZFF features a small-size contract with a contract value of around USD 14,500, a quarter the size of the TF contract.

Complementing the larger TF contract, the reduced size of the ZFF not only lowers the barrier for investors to get involved in Taiwan’s financial sector and express their views, it also provides more workable risk management alternatives for a range of market participants – from institutions to new and experienced Retailers – to navigate Taiwan’s liquid financial markets with improved efficiency and precision in trade execution.

Introducing mini-contracts is just one way the exchange is responding to the needs of the market. On the way to a new annual trade record in 2021, TAIFEX will continue to monitor local and global market trends to expand its product lineup, lower barriers to entry for hedging, and make more risk management strategies available to Taiwan’s futures markets.


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