SGX: SGX to Introduce SGX FTSE Taiwan index Futures on 20th July
- • Round-the-clock exposure to the fast-growing Taiwan stock market, while achieving low tracking error against other Major Taiwan Indexes
- • Covering nearly 80% of Taiwan's listed companies by market capitalization, the underlying FTSE Taiwan Index is broad-based and most diversified index with low concentration in TSMC and Technology Sector
- • Available for trading during onshore and Singapore holidays, allowing investors to manage their risks in a timely manner
- • U.S. CFTC Certification expected by 24th July
Singapore Exchange (SGX) is introducing a futures contract on the FTSE Taiwan RIC Capped Index (“FTSE Taiwan”) to enable global investors to gain exposure to a broad representation of large and mid-capitalisation Taiwan stocks, while meeting fund managers' diversification objectives. The SGX FTSE Taiwan Index futures contract will be launched on 20th July. SGX expects to receive certification from the Commodity Futures Trading Commission for the offer and sale of the contract in the U.S. on 24th July, thus ensuring broad distribution to institutional investors. SGX will be waiving exchange clearing fees from launch until the end of 2020.
The Taiwan economy is the seventh largest in Asia and occupies a key position in the global industrial and technology value chain. The broad-based and diversified FTSE Taiwan index with a capping methodology covers nearly 80% of Taiwan's listed companies by market capitalisation, and are highly correlated to other major Taiwan benchmark indices. The capping methodology also results in the index weight of TSMC constituent stock and the largest sector, Technology, to be more aligned with that of the domestic TAIEX Index. As a result, the FTSE Taiwan Index offers more than 99% correlation against the TAIEX Index, with a monthly returns tracking error of 2% annualised.
The SGX FTSE Taiwan Index futures contract will be an effective and cost-efficient way to invest and hedge Taiwan stock market exposure, with trading hours spanning the Asian, European and U.S. time zones. SGX has received support of several market makers and liquidity providers, who are committed to ensure clients have good liquidity at tight bid/offer spreads upon product launch.
For more information about SGX FTSE Taiwan Index Futures, please visit https://www.sgx.com/derivatives/products/twnfc.
 The FTSE Global RIC Capped Indexes are designed to limit concentration in any single security to help investors meet the Regulated Investment Company (RIC) concentration requirements for U.S.-registered funds. The index constituents are capped quarterly so that the weight of any single constituent is no more than 20% of the index, while the sum of the weights of all constituents individually representing more than 4.5% of the index will not exceed 48% of the total.