TAIFEX launches two types of yuan futures contracts

[cirr]

TAIFEX launches two types of yuan futures contracts

By Ted Chen / Staff reporter

Tue, Jul 21, 2015


Financial Supervisory Commission Chairman William Tseng, center, and Taiwan Futures Exchange (TAIFEX) chairman Liu Lien-yu, third from right, yesterday take part in a ceremony in Taipei to mark the launch of the first yuan futures contracts on the TAIFEX. Photo: CNA


Taiwan yesterday launched its first yuan futures contracts on the Taiwan Futures Exchange (TAIFEX) in the government’s latest efforts to make Taiwan a regional offshore trading hub of the Chinese currency.

“The launch of the new yuan currency futures contracts will leverage Taiwan’s advantages over other major offshore renminbi clearing centers such as Hong Kong and London,” Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) told an investor conference in Taipei.

These advantages include the considerable inflow of yuan earned by the vast number of Taiwanese businesses operating in China, which has propelled domestic yuan deposits to more than 338.2 billion yuan (US$54.4 billion), and the sizeable circulation of other yuan-denominated products such as Formosa bonds and insurance policies, Tseng said.

TAIFEX chairman Liu Len-yu (劉連煜) said that the two futures contracts are the first foreign exchange products to be listed since the exchange’s founding in 1998.

The contracts are listed as the RTF and the RHF.

The RTF has a contract size of US$20,000 and settlement prices based on the US dollar to yuan spot rate (CNT) set by the Taipei Foreign Exchange Market Development Foundation.

It is designed for domestic retail investors more familiar with the CNT rate.

The RHF has a contract size of US$100,000, and settlement prices based on the US dollar and yuan fixing by the Treasury Markets Association of Hong Kong (CNH) and is meant for institutional investors who are more accustomed to the association’s rate.

“Investors will find that the price spread of these contracts will be very similar to listings on Bloomberg, and much more favorable than what they can obtain from local banks,” said Harry Yen (顏輝煌), director-general of the central bank’s Department of Foreign Exchange.

It is hoped that a more complete product offering will provide traders with more investment and hedging opportunities, and most importantly, an avenue for yuan reflow, Liu said.

Trading of the futures will be facilitated by eight market makers, including four domestic futures proprietary merchants, two domestic banks and the Taipei branches of Bank of China (中國銀行) and China Construction Bank (中國工商銀行), which are acting in the capacity of institutional investors.

TAIFEX launches two types of yuan futures contracts - Taipei Times

@TaiShang

 

[TaiShang]

TAIFEX launches two types of yuan futures contracts

By Ted Chen / Staff reporter

Tue, Jul 21, 2015


Financial Supervisory Commission Chairman William Tseng, center, and Taiwan Futures Exchange (TAIFEX) chairman Liu Lien-yu, third from right, yesterday take part in a ceremony in Taipei to mark the launch of the first yuan futures contracts on the TAIFEX. Photo: CNA


Taiwan yesterday launched its first yuan futures contracts on the Taiwan Futures Exchange (TAIFEX) in the government’s latest efforts to make Taiwan a regional offshore trading hub of the Chinese currency.

“The launch of the new yuan currency futures contracts will leverage Taiwan’s advantages over other major offshore renminbi clearing centers such as Hong Kong and London,” Financial Supervisory Commission (FSC) Chairman William Tseng (曾銘宗) told an investor conference in Taipei.

These advantages include the considerable inflow of yuan earned by the vast number of Taiwanese businesses operating in China, which has propelled domestic yuan deposits to more than 338.2 billion yuan (US$54.4 billion), and the sizeable circulation of other yuan-denominated products such as Formosa bonds and insurance policies, Tseng said.

TAIFEX chairman Liu Len-yu (劉連煜) said that the two futures contracts are the first foreign exchange products to be listed since the exchange’s founding in 1998.

The contracts are listed as the RTF and the RHF.

The RTF has a contract size of US$20,000 and settlement prices based on the US dollar to yuan spot rate (CNT) set by the Taipei Foreign Exchange Market Development Foundation.

It is designed for domestic retail investors more familiar with the CNT rate.

The RHF has a contract size of US$100,000, and settlement prices based on the US dollar and yuan fixing by the Treasury Markets Association of Hong Kong (CNH) and is meant for institutional investors who are more accustomed to the association’s rate.

“Investors will find that the price spread of these contracts will be very similar to listings on Bloomberg, and much more favorable than what they can obtain from local banks,” said Harry Yen (顏輝煌), director-general of the central bank’s Department of Foreign Exchange.

It is hoped that a more complete product offering will provide traders with more investment and hedging opportunities, and most importantly, an avenue for yuan reflow, Liu said.

Trading of the futures will be facilitated by eight market makers, including four domestic futures proprietary merchants, two domestic banks and the Taipei branches of Bank of China (中國銀行) and China Construction Bank (中國工商銀行), which are acting in the capacity of institutional investors.

TAIFEX launches two types of yuan futures contracts - Taipei Times

@TaiShang

Another step in Taiwan-Mainland integration.

It is not by chance that Mainland allows a huge trade deficit with Taiwan.

Now travel between Taiwan and the Mainland is just like any other two cities in China; hence, anticipate the integration to grow only bigger.

@TheTruth , @bobsm

 

[bobsm]

Another step in Taiwan-Mainland integration.

It is not by chance that Mainland allows a huge trade deficit with Taiwan.

Now travel between Taiwan and the Mainland is just like any other two cities in China; hence, anticipate the integration to grow only bigger.

@TheTruth , @bobsm

I concur. This is indeed great news for Taiwan and the Mainland integration. I'm just surprise there isn't any protest by those brainwashed students.

 

[cirr]

CTBC to partner state-run firms in China market

FUJIAN MOVE:CTBC said the joint venture is to be registered in the Fujian Free Trade Zone, with operations set to begin in the first half of next year

By Ted Chen / Staff reporter

Thu, Jul 30, 2015

CTBC Financial Holding Co (中信金控) yesterday said that its board of directors had approved a plan to form an 800 million yuan (US$128.8 million) joint venture with Chinese state-run companies in a bid to tap into China’s securities market.

CTBC is set to hold a 49 percent stake in what is likely be the first cross-strait joint venture aimed at establishing a full-service securities firm, the firm said at a media briefing.

The stake is likely to cost 392 million yuan in capital contribution, with the remainder of shares to be controlled by two subsidiaries run by the Fujian Provincial Government, the company said.

The new venture, which has yet to be given a name, was granted an operating license registered in the Fujian Free Trade Zone, CTBC said, adding that the license allows for future expansion beyond Fujian Province.

In contrast, the efforts of other Taiwanese brokerage companies to enter the Chinese market have been stymied by disputes over the cross-strait service trade agreement, which has yet to clear the legislature.

“The new venture is to be managed in the spirit of a 50-50 partnership between CTBC and companies in Fujian Province,” CTBC president Daniel Wu (吳一揆) said while fielding questions over the firm’s 49 percent stake in the venture.

Other Taiwanese brokerages are seeking 51 percent stakes in cross-strait joint ventures.

He added that CTBC plans to send about 10 brokerage managers to oversee the new company in Fujian.

“The number of listed companies, daily turnover and prospective retail investors in China are at least five times higher than in Taiwan,” Wu said.

The venture is expected to begin operations in the first half of next year, and would become profitable before 2019, with a formal filing to Taiwan regulators to be submitted toward the end of next month, Wu said.

“The market for brokerage services in China is anticipated to grow at an annual compound rate of 15 percent,” he said.

Full-service securities firms may provide brokerage services for China’s A-shares, operate as dealers and offer investment banking services.

CTBC to partner state-run firms in China market - Taipei Times