Taiwan Futures Exchange Gets International Boost with Eurex Shareholding

The main derivatives Exchange in Taiwan, the Taiwan Futures Exchange (TAIFEX) has started its internationalization process with Eurex exchange becoming a shareholder. The news comes as Yuanta Financial Holdings, one of Taiwan's largest companies and a prominent shareholder in the exchange sold its stake to the European bourse.

Yuanta Financial Holdings made an announcement disclosing the sale of its stake to the German exchange. In the notification it states that it will sell 12.92 million shares to Eurex Zurich AG. The sale of the shares is expected to value over $42 million (USD).

The purchase will be confirmed after regulatory approval is given, according to the notification: “The transaction should be settled only after the Buyer obtains the approval from the ROC Investment Commission, MOEA granted for the acquisition of the Shares and meet all other related regulations.”

Eurex has been working with TAIFEX in various partnership projects during 2013, the two exchanges signed a cooperation agreement to launch after-hours TAIFEX products.

The TAIFEX has been a strong player in developing Taiwan's capital and financial markets through derivatives products, the exchange was launched in 1998 and offers a wide range of financial instruments, including; futures and options on major Taiwan stock indices, government bond futures, equity options and 30-day CP interest rate futures.

Yuanta Financial Holdings, a listed company is headquartered in Taipei, the country's capital city. It has over 9,000 employees and recorded a net profit of NT$6.9 billion (Taiwan Dollar) in 2013. The firm is owned by Rudy Ma, one of Taiwan's richest people according to Forbes Taiwan Rich List.

Yuanta Financial Holding along with several banks and brokers comprise the main shareholders of TIFEX. According to the exchange's annual report there are two representatives who sit on the supervisory board form Yuanta Futures (the brokerage division of Yuanta Financial Holdings), Ted M. Ho and Maurice Lu.

The exchange only permits a maximum shareholding of 5%, as per details on its website: “The equity of the Taiwan Futures Exchange Corporation is equally split among four industries: securities, futures, banking, and securities/futures-related institutions. Pursuant to the Futures Trading Act, each shareholder may hold no more than 5% of TAIFEX’s outstanding shares unless given explicit FSC approval to do so. Since the Articles of Incorporation limit the shareholders to enterprises in the above four industries, any transfer of shares is restricted to the same.”

Yuanta Financial Holdings acquired Polaris Securities (Polaris MF Global Futures Co.) in 2011, it is believed that in order to reduce its stake that exceeds 5% in TAIFEX it carried out the transaction with Eurex.

Yuanta Futures’ Hong Kong division is regulated with the Securities and Futures Commissioner of Hong Kong, according to its website it provides a range of products including FX trading. The firm offers GAIN Capital's Forex TRADER PRO platform and is believed to be an introducing broker/white label partner of the US-listed firm.

Yuanta Financial Holdings share price closed at NT$17.15 on Friday the 27th of December.

Last month, Taiwan broker-dealer KGI Securities entered into a strategic M&A deal with Singapore-based Ong First, thus highlighting the growing importance of Taiwan as a leading Asian economy.