The Taiwan Monthly

Market & ETP Overview

TWSE energizes securities firms to enliven ETN market jointly to meet diverse investment needs

In keeping with the growing demand for index investing, the Taiwan Stock Exchange (the “TWSE”) has formulated incentive mechanisms for securities firms and permitted issuance of ETNs with futures and options strategies, aiming to enliven and expand the ETN market, launched three years ago. The goal is to augment the domestic market for index-linked investment products, which is now dominated by ETFs, with a near 20-year history.

ETNs were first listed in Taiwan on April 30, 2019, and currently there are 18 ETNs available on the TWSE, with a total issuance value of NT$23 billion. In order to empower ETN product innovation and stimulate the market in response to the regulator's capital market roadmap, the TWSE has implemented measures to boost ETN issuance, promotion, and trading via financial incentives for the securities firms. Concurrently, securities firms are now permitted to issue ETNs tracking indices that adopt futures and options strategies, according to the regulations on the listing and trading of such products publicized by the TWSE on Jan. 24 this year.

In fact, the TWSE has spared no effort in driving the development of the ETN market in recent years, including holding of ETN competitions among securities firms, launch of investors reward programs, and promotion of investor education via short films, comics, and other media, so as to disseminate ETN knowledge and bolster the market growth. Statistics show that daily ETN trading value on the TWSE soared 145% in 2021, with the number of people trading ETNs quadrupling. In addition, the TWSE has listed various ETNs focused on distinctive themes or sectors such as electric vehicles, ESG, dividends, IC design, and green energy, offering more and more diverse investment opportunities.

Issued by securities firms, ETNs are debt securities that pay out the returns of the underlying indices at maturity, and trade on exchanges like stocks. Typically, ETNs feature low investment threshold, convenient trading, and transparent fees. ETN issuers are responsible for market making to ensure stable liquidity on the secondary market. For more information on ETN products, features, and investment risks, please refer to the ETN section on the TWSE website https://www.twse.com.tw/zh/page/ETN/summary.html.

For further information, please contact Ms. Tsai at 1206@twse.com.tw.