The Taiwan Monthly

Message from Chairman

Inaugural address by TWSE chairman Sherman Lin

It is with a profound sense of responsibility that I accept the helm as the newly appointed chairman of the Taiwan Stock Exchange Corporation (the “TWSE”). As the main platform for trading and fundraising in Taiwan’s capital market, the TWSE plays a critical role in promoting the country’s economic growth, as well as the development of the nation’s industries and financial markets. Under the former leadership, the TWSE had undertaken several major reforms in recent years. This laid a solid foundation, which allowed Taiwan’s securities market to weather the global political and economic uncertainties to outperform other markets.

 

There are some recent reports that have focused on the dramatic fluctuation of Taiwan shares; yet, as the TAIEX index is dominated by tech stocks, it is bound to be affected in the short term by geopolitical factors. As of the end of June of this year, the TAIEX performance remains relatively steady in comparison with other international indices. Investors will be drawn back by the strong fundamentals and long-term stable investment value of Taiwan’s stock market. In the future, we look to optimize the trading system and develop innovative products, establish an even friendlier fundraising and trading environment, continue to attract domestic and foreign capital, and boost investor confidence. The TWSE will continue to closely follow the developments of international exchanges and promote Taiwan’s capital market on the global stage through the spirit of openness, innovation, and cooperation. Our seven main areas of focus are as follows:

1. Refine fundraising platform for startups

The TWSE established the Taiwan Innovation Board (“TIB”) in the third quarter of 2021 to offer new fundraising channels and provide investors with new investment opportunities and exposure. TIB encourages businesses with key technologies and innovative capabilities or business models to raise funds on the capital market. Listing standards focus on market capitalization to better reflect the reality and needs of new ventures. We look forward to our first listing in the near future. The TWSE will continue to welcome external feedback and conduct analysis, review, and amendment of listing mechanisms on a rolling basis. By expanding qualified investor participation, the TWSE aims to facilitate the entry of startups into the capital market and allow more investors to reap the benefits in the development of new ventures.

2. Optimize trading mechanisms

To position our trading system with worldwide practices and to synergize trading, the TWSE has implemented a number of new measures in recent years, including continuous trading, intraday odd lot trading, and the market-making system, resulting in a marked uptick in market momentum and new investor participation. To address the challenge of sustaining market impetus, the TWSE will update the market-making system and related incentives based on the rollout of the new mechanisms, the experiences of international markets, and feedback from market stakeholders. In addition, in our dedication to meet market needs and boost overall market liquidity, the TWSE is studying the feasibility of shorter matching cycles for intraday odd lot trading to enhance trading success and efficiency.

3. Promote capital market sustainability

With increasing awareness and priority placed on sustainability in the global arena, the TWSE in recent years has conducted annual Corporate Governance Evaluations, required listed companies to prepare and file sustainability reports, and implemented stewardship principles for institutional investors. Furthermore, Taiwan’s securities market has delivered an outstanding performance according to international rating institutes and sustainability emerging markets indices. To strengthen the development of Taiwan’s ESG ecosystem and improve the quality of information disclosure by listed companies, the TWSE plans to establish an ESG information disclosure platform that would compile disclosed information, encourage compliance, and guide companies to embrace sustainable practices. In step with the Financial Supervisory Commission’s (the “FSC”) “Transition Strategies of Sustainable Development for Securities and Futures Sectors,” the TWSE works in tangent with the supervisory authority to enable securities firms to establish sustainable values and corporate culture. The TWSE also plans to launch ESG-related indices and products to meet the sustainable investment needs.

4. Develop diverse products

Driven by international trends and investor demand, the TWSE has launched thematic ETFs providing exposure to semiconductors, 5G, electric vehicles, high dividends, and sustainability, contributing to the tremendous growth of ETF assets under management. The TWSE shall continue to diversify index products, expand its ETF offerings, and provide a comprehensive ecosystem of financial instruments with suitable exposure to global targets in keeping with international trends and market needs.

With respect to REITs, although they were first launched in 2005, the number of listed REITs has not grown significantly over the years. The FSC has allowed REITs to be issued under a fund structure, and the TWSE is working in conjunction with the supervisory agency’s policy to develop related listing and trading mechanisms to promote REIT products and boost market activity.

5. Utilize digital technology and enhance cyber security resilience

In this age of digital transformation, the stock exchange must also evolve and enhance its operations and mindset. The TWSE pursues digital advances while maintaining a solid foundation of information security, incorporating digital processes and approaches into our company culture. To minimize manual operations and augment supervision efficiency, the TWSE has expanded the application of RPA (robotic process automation) in the supervision of listed companies and introduced AI, big data, and other emerging technologies.

The TWSE and agencies related to the securities and futures industry established the Securities and Futures Computer Emergency Response Team to offer industry members with coordinated support in response to security incidents, provide investors with an efficient and secure trading environment, and enhance the cyber security of the entire securities market.

6. Strengthen international connections and visibility

The TWSE has worked proactively to build rapport with the exchanges of Korea, Japan, Malaysia, Hong Kong, Vietnam, and Singapore. It is on this cooperative bedrock that the TWSE works with regional and global exchanges to bolster market ties and develop cross-border opportunities. Concurrently, the TWSE continues its active participation in global organizations and hosting international events so as to advance the international recognition and influence of our securities market. To engage with global capital, the TWSE has held a number of in-person and online capital introduction events that provide improved services to international institutional investors, leading the way in establishing communications between prominent domestic enterprises and this investor group, plus globally boosting the visibility of Taiwanese companies.

7. Advance investor education and training

In recent years, the total number of investors with trading accounts has shot up along with investor interest and participation in the market, most significantly among younger investors. To enable new investors to navigate the complexities of investing, attain accurate investment and wealth management knowledge, develop awareness of related risks, and protect themselves against investment fraud, the TWSE has worked tirelessly to promote investor education and information regarding risk management. The educational material is aimed at different audiences through various themes, activities, online multimedia platforms, with new web content and videos updated constantly. The TWSE goal is that a diversity of educational offerings can have a broader range of appeal to investors of all ages, so they gain a solid understanding of the risks involvement in investing and manage their portfolio choices to achieve their financial goals.

 

Looking to the future and under the guidance of our supervisory authority, all of us here at the TWSE are devoted to serving market participants. We continue to welcome external feedback and work closely with peripheral agencies of the securities industry. Together, we will enhance our capital market for this new era of sustainability and boost our international visibility and competitiveness.