Taiwan Stock Exchange

Taiwan Stock Exchange

Taiwan, despite being a small island, has a thriving business climate. In this article, you’ll find the essential and most important facts about Taiwan Stock Exchange, shaping both Taiwan’s economy and global market trends. We’ll unveil how it operates and connects with investors worldwide.

The TWSE, established in 1961, embraced technological advancements by moving to an electronic clearing and settlement system in 1976 and adopting semi-automated trading processes in 1988. This forward-thinking approach to technology, along with strategic planning, enabled the TWSE to become a member of respected international associations such as the World Federation of Exchanges and the International Organization of Securities Commissions.

Taiwan's Financial Engine
Taiwan Stock Exchange

Table of contents:

Key Takeaways

  • The Taiwan Stock Exchange (TWSE) was established in 1961 as the first regulated securities exchange in Taiwan and now serves as a dynamic hub for capital and securities trading, including stocks, bonds, ETFs, and warrants.
  • Technological innovation has been a cornerstone of TWSE’s development, with the exchange adopting electronic and automated trading systems since 1976 and continuous efforts to maintain a competitive edge in the global financial market.
  • The TWSE plays an essential role in Taiwan’s economy by fostering economic growth. Its market capitalization was USD 1.59 trillion in 2023, ranking it 17th globally among primary stock exchanges.

What is the Taiwan Stock Exchange?

The Taiwan Stock Exchange is a financial marketplace where stocks, bonds, and other securities are bought and sold, facilitating investment and capital formation in Taiwan.

The TWSE serves as a dynamic trading hub, where an array of securities, such as stocks, bonds, ETFs, and warrants, are traded. This platform enables companies to gather funds and allocate them among investors to augment wealth.

Beyond functioning as a marketplace for trading activities, the TWSE also operates as a barometer reflecting Taiwan’s financial health by tracking economic trends.

Taiwan Stock Exchange building at night with city lights

How did the Taiwan Stock Exchange start?

The Taiwan Stock Exchange (TWSE) started in 1961 as the “Taiwan Securities Exchange” to facilitate securities trading in Taiwan’s financial market. Established in 1961, and commencing operations in 1962, the Taiwan Stock Exchange (TWSE) opened a new chapter in Taiwan’s financial narrative. Right from its beginnings, it demonstrated a pioneering approach by adopting electronic clearing and settlement systems as early as 1976—a testament to its dedication towards technological progress and enhancing operational effectiveness.

As it expanded its capabilities and influence, the TWSE made significant strides in regional finance. Noteworthy milestones include becoming:

  • an inaugural member of the Asian and Oceanian Stock Exchanges Federation in 1982,
  • initiating semi-automated trading by launching the Computer-Assisted Trading System in 1988,
  • becoming part of the World Federation of Exchanges membership roll in 1989.
Historical image of the early days of Taiwan Stock Exchange

When was the Taiwan Stock Exchange founded?

The Taiwan Stock Exchange was founded in 1961. Formally established on October 23, 1961, and initiating trading activities in February 1962, the TWSE marked a historic moment for Taiwan by introducing its regulated securities exchange.

Having grown to become an essential component of Taiwan’s financial system, the TWSE now operates from Taipei’s landmark and famous building, Taipei 101. It functions as a vibrant hub for trading securities in the region.

Who owns the Taiwan Stock Exchange?

The Taiwan Stock Exchange is owned by the Taiwan Stock Exchange Corporation (TSEC). The Taiwan Stock Exchange Corporation (TWSE) is a privately held company that operates under the oversight of a governance board with 15 directors and 3 supervisors. The securities authority nominates at least one-third of these members to ensure public interest representation.

Although specific details regarding its key individual shareholders remain private, the TWSE demonstrates its dedication to fair and equitable management through the varied composition of its governing body.

How does the Taiwan Stock Exchange work?

The Taiwan Stock Exchange (TWSE) works as a centralized marketplace where stocks of publicly listed companies are bought and sold. Investors can trade securities electronically through brokerage firms. The TWSE facilitates price discovery and liquidity by matching buy and sell orders through its trading system.

The TWSE also serves as a vital conduit through which corporations access funding needed for business growth. It has established what is known as The Taiwan Innovation Board (TIB), representing an innovative new platform that lends support specifically tailored towards enterprises with minimal capital resources or those experiencing losses resulting from necessary investments into their businesses.

What is the purpose of the Taiwan Stock Exchange?

The purpose of the Taiwan Stock Exchange is to facilitate the trading of securities, such as stocks and bonds, and to provide a platform for companies to raise capital through public offerings.

The TWSE serves multiple functions within Taiwan’s financial sector. It provides a platform for the trading of various securities including stocks, bonds, ETFs, and warrants, which promotes efficient capital circulation. It is an essential channel for companies seeking to procure funds for growth and expansion—activities that bolster Taiwan’s economic progress.

It also has several responsibilities pivotal to market operations.

  • Maintaining the integrity of the marketplace and protecting investors
  • Overseeing adherence to listing criteria
  • Implementing regulations and standards to assure fair and transparent transactions on the exchange
  • Advancing Taiwan’s reputation in international finance
  • Striving toward broadening and globalizing Taiwan’s securities market

Through these multifaceted duties, the TWSE drives forward Taiwanese economic advancement and concurrently ensures investor interests are well-defended.

Who created the Taiwan Stock Exchange?

The Taiwan Stock Exchange was created by the government of Taiwan. On October 23, 1961, the establishment of the Taiwan Stock Exchange Corporation (TWSE) signified an important development in Taiwan’s economy. In compliance with the regulations set forth by the Securities and Exchange Law and Company Law of the Republic of China (ROC), it came into being under the regulation of the Financial Supervisory Commission’s Securities and Futures Bureau.

A governing body consisting of fifteen directors, along with three supervisors, managed TWSE operations. Of these members, six directors plus one supervisor were government appointees from various backgrounds, including:

  • academicians
  • legal practitioners
  • industry experts
  • president of TWSE

This composition ensured diverse perspectives capable of effectively tailoring strategies across different sectors.

What are the trading hours on the Taiwan Stock Exchange?

The trading hours on the Taiwan Stock Exchange typically run from 9:00 AM to 1:30 PM local time, Monday through Friday. Trading activities on the TWSE are conducted every weekday from 9:00 am to 1:30 pm, in accordance with Taipei Standard Time.

The exchange does not break for lunch and provides a continuous trading period of four hours and thirty minutes daily. There are extended opportunities for trading through early morning sessions starting at 8:30 am until the official opening at 9:00 am, as well as late afternoon sessions running from market close at 2:00 pm until half an hour later.

To accommodate investors with various schedules and strategies, the TWSE has also integrated Intraday Volatility Interruption measures and options for After-Hour Fixed-Price Trading within its operational framework. This facilitates a robust system supporting regular hours and additional timeframes for trading needs.

What are the biggest crashes on the Taiwan Stock Exchange?

The biggest crashes on the Taiwan Stock Exchange include the 1987 Black Monday crash, the 1997 Asian Financial Crisis, and the 2008 Global Financial Crisis.

The Taiwanese stock market experienced a dramatic crash on the TWSE after an extraordinary surge in the 1980s, when stock prices soared twelvefold over four years. This downturn resulted in the Taiex plummeting from its pinnacle to under 3,000 points—a roughly 75% decline that deeply affected various aspects of society in Taiwan, including investment behavior and mental health (!).

This significant market event did not lead to broader economic consequences for Taiwan. The country’s economy’s ability to weather such a financial storm is largely credited to the robustness of its banking sector and prudent financial measures such as mandating substantial down-payments on mortgages.

Does the Taiwan Stock Exchange have holidays?

Yes, the Taiwan Stock Exchange has holidays. Like other major international stock exchanges, the TWSE suspends trading activities on several recognized holidays. In 2024, the exchange will be shuttered for fifteen such occasions, which encompass:

  • Republic Day
  • Chinese New Year
  • Peace Day
  • Children’s Day
  • Qingming Festival
  • Labor Day
  • Dragon Boat Festival
  • Mid-Autumn Festival
  • National Day

When these holidays coincide with weekends or non-working days, the TWSE adjusts its schedule to observe these special dates at an alternate time. This ensures that trading activities harmonize with Taiwan’s cultural and public festivities.

What was the first company traded on the Taiwan Stock Exchange?

Taiwan Cement Company was the 1st company traded on the Taiwan Stock Exchange in February 1962.

What is the history of Taiwan Stock Exchange?

The Taiwan Stock Exchange (TWSE) was established in 1961 as the “Taiwan Stock Exchange Corporation” to provide a centralized securities trading market in Taiwan.

Initially, it operated as an informal over-the-counter market. In 1962, it officially commenced operations in Taipei. Over the years, it underwent several structural and regulatory changes to enhance transparency and efficiency. 1994 the TWSE introduced an electronic trading system, modernizing its operations. It has since become one of the key financial markets in Asia, facilitating the trading of stocks, bonds, and other financial instruments.

What are the top sectors represented on the Taiwan Stock Exchange?

The top sectors represented on the Taiwan Stock Exchange include technology, electronics, financial services, and manufacturing. The TWSE presents an array of sectors, offering a dynamic representation of Taiwan’s economic structure. The Electronic Technology sector notably stands out on the exchange due to Taiwan’s esteemed position in this domain worldwide. Financials such as banking and insurance hold substantial positions within the exchange.

Key industries like Producer Manufacturing and Process Industries are also well-represented sectors, which underscores the wide spectrum of industries that drive Taiwan’s vibrant economy forward.

How does the Taiwan Stock Exchange compare to other major stock exchanges globally in terms of market capitalization?

In terms of market capitalization, the Taiwan Stock Exchange (TWSE) ranks among the top global exchanges, typically landing within the top 20 exchanges worldwide.

As of 2023, the Taiwan Stock Exchange (TWSE) stands at the 17th position in global rankings, with a market capitalization totaling USD 1.59 trillion. This situates it above the Australian Securities Exchange yet slightly below the Korea Exchange regarding their respective market caps.

Not only does this valuation underscore the magnitude of TWSE as an exchange, but it also highlights its significant role within the international financial landscape.

Can foreign investors easily participate in trading on the Taiwan Stock Exchange?

Foreign investors can easily participate in trading on the Taiwan Stock Exchange. Foreign participants are indeed encouraged to engage in trading on the TWSE. However, investors and traders must obtain an “Investor ID” and a “Tax ID,” which are prerequisites for setting up a trading account with a securities brokerage within the locale. Following registration, these international investors have access to an array of investment options that include not only stocks but also ETFs, government bonds, and corporate bonds, among others.

To provide foreign traders with seamless transactions, several safeguards, such as Direct Market Access (DMA) and Securities Borrowing and Lending (SBL) systems, have been put in place by the TWSE. This exchange has instituted a clearinghouse framework specifically for handling trade settlements effectively while assuming ultimate settlement responsibility within the market. These mechanisms work with TWSE’s dedication to maintaining information transparency and preserving market integrity — factors contributing significantly to its appeal amongst global investor circles seeking opportunities on the TWSE platform.

What role does the Taiwan Stock Exchange play in Taiwan’s economy?

The Taiwan Stock Exchange plays a vital role in Taiwan’s economy by serving as a platform for companies to raise capital, facilitate investment, and contribute to overall economic growth and development.

The Taiwan Stock Exchange (TWSE) is a pivotal element of the Taiwanese economy, vital in driving economic growth by providing a robust platform for companies to secure funding for expansion. Notable aspects regarding the TWSE include:

  • Close to 50% of firms on the exchange operate within the electronics sector, significantly contributing to industrial advancement in Taiwan.
  • The exchange profoundly influences small and medium-sized enterprises (SMEs), which comprise more than 98% of all businesses in Taiwan.
  • Through aiding SMEs in securing investment and capital, especially during times when global economies face downturns, TWSE plays an instrumental role in ensuring economic stability.

How has the Taiwan Stock Exchange evolved technologically over the years?

The Taiwan Stock Exchange has evolved technologically over the years through advancements such as electronic trading systems, algorithmic trading, real-time data dissemination, and improved connectivity, enhancing efficiency and accessibility for market participants.

The TWSE remains competitive with major global indices, including those like FTSE, for example. Embracing this forward-thinking approach, the TWSE revealed a renewed corporate identity in 2023 under its Global Trailblazing Initiatives—reflecting both its dedication to technological progress and aspirations for international prominence. To enhance investor engagement with trading trends and up-to-date ETF data, it introduced “ETFortune,” an ETF integration information platform.

To show commitment to fostering innovation through technology is the launch of the Taiwan Innovation Board (TIB), devised specifically to support pioneering companies to facilitate capital for growth.

Are there any unique features or trading practices specific to the Taiwan Stock Exchange?

Yes, there are unique features and trading practices specific to the Taiwan Stock Exchange, such as its focus on technology stocks and the use of T+2 settlement for trades.

The Taipei Stock Exchange (TWSE) showcases its distinct trading characteristics by implementing a cap on daily price swings. As of June 1, 2015, the latest change, this limit was increased to permit up to a 10% deviation. This measure and the concurrent adjustment in the account collateral maintenance ratio relevant for margin transactions indicate TWSE’s distinctive strategies to improve market effectiveness and robustness.

TWSE has instituted an “intraday volatility interruption” system. Under this protocol, order matching for any stock is deferred if the prospective execution price strays beyond +/-3.5% from the weighted average price established over the last five minutes.

Another feature that sets TWSE apart is regulations tailored specifically towards odd-lot trading. Here, trades involving less than 1,000 shares are categorized as such orders. Advancements have been made through adopting a cutting-edge trading infrastructure that allows continuous dealings while minimizing order match intervals from three to one minute, thereby fostering heightened levels of efficiency and transparency within operations.

Collectively these particularities underscore TWSE’s dedication to cultivating an adaptable and proficient marketplace conducive to investors’ engagement.

What are some notable companies listed on the Taiwan Stock Exchange?

Some notable companies listed on the Taiwan Stock Exchange include Taiwan Semiconductor Manufacturing Company (TSMC), Hon Hai Precision Industry Co. (Foxconn), and MediaTek Inc. Other significant TWSE-listed companies are:

  • The globally-renowned Taiwan Semiconductor Manufacturing Company (TSMC), which stands as the preeminent semiconductor manufacturer and is also the largest entity on the TWSE roster.
  • Hon Hai Precision Industry or Foxconn, an eminent electronics contract manufacturing conglomerate with multinational operations.
  • Cathay Financial Holding is at the forefront of banking and financial services within Taiwan.
  • MediaTek Inc. is distinguished for its design and distribution of chipsets in the competitive semiconductor industry.
Taiwan Stock Exchange trading floor with traders and screens

How does the Taiwan Stock Exchange contribute to Taiwan’s reputation as a global financial hub?

The Taiwan Stock Exchange contributes significantly to Taiwan’s reputation as a global financial hub by providing a platform for companies to raise capital, facilitating investment opportunities, and promoting transparency and stability in the financial market.

With the creation of the Taiwan Innovation Board (TIB), which helps startups and cutting-edge industries raise capital, TWSE strengthens Taiwan’s international prominence.

By instituting strategies to improve education around financial risks for emerging retail investors, TWSE ensures that these individuals are knowledgeable contributors to Taiwan’s capital market. This educational commitment aids in maintaining a robust investor community while enhancing both stability and reputation.

Are there any recent regulatory changes or developments affecting the Taiwan Stock Exchange?

No significant developments regarding recent regulatory changes affecting the Taiwan Stock Exchange have been reported. However, it is always advisable to check for the latest news and updates from reliable sources regarding any recent changes.

Recently, the Taiwan Stock Exchange (TWSE) has implemented several regulatory changes and enhancements. These include revisions to various guidelines that impact securities listings and adjustments to the operational regulations and internal control standards for securities firms. These alterations became effective immediately in 2023.

Following the release of second-quarter financial reports by primary listed companies on TWSE in 2023, updates have been made to which stocks are eligible for margin buying and short selling. Such ongoing modifications underscore TWSE’s dedication to maintaining an evolving regulatory framework to promote a strong and transparent market environment.

What are some key initiatives or future plans for growth and innovation by the Taiwan Stock Exchange?

Some key initiatives for growth and innovation by the Taiwan Stock Exchange include fostering tech-driven trading platforms, promoting “green” finance, and enhancing collaboration with international exchanges to attract more investors.

The TWSE has set several significant plans and strategic directions to bolster advancement and inventiveness. This encompasses the introduction of an upgraded trading mechanism that ensures ongoing trades, as well as reducing the matching period from three minutes down to one minute to amplify efficiency in transactions and clarity within the market operations.

There is an initiative underway by TWSE aimed at appealing to younger investors through establishing facilities for intraday odd-lot trading that would expand involvement in the market.

Taiwan’s authority has instituted the Taiwan Innovation Board (TIB), a platform designed specifically for firms possessing essential proprietary technologies and innovative prowess. The objective here is to allow these companies easier access to equity markets—an effort expected to stimulate economic ventures and enhance opportunities for these enterprises regarding market-based financing solutions.

Are there any cultural or historical landmarks associated with the Taiwan Stock Exchange’s location?

Some cultural and historical landmarks associated with the Taiwan Stock Exchange’s location include the North Gate (Cheng’en Gate), which is a remnant of Taipei’s old city walls, and the nearby Zhongshan Hall, a historic building that once served as the Taipei City Hall and now hosts cultural events and performances.

The TWSE is situated within the iconic Taipei 101, a towering skyscraper that stands as a hallmark of Taiwan’s capital city, Taipei. This edifice is not merely an architectural wonder but also represents Taiwan’s rapid economic growth and advanced technological achievements. Combining time-honored Asian motifs with contemporary building methods, Taipei 101 captures Taiwan’s distinctive fusion of historical richness and current innovation.

What are some interesting facts about the architecture or design of the Taiwan Stock Exchange building?

Some interesting facts about the architecture or design of the Taiwan Stock Exchange building include:

  1. Modernist Design: The building showcases a sleek and contemporary architectural style, reflecting Taiwan’s progressive outlook in the financial world.
  2. Glass Curtain Wall: A prominent feature is its extensive use of glass, particularly in its curtain wall design. This allows natural light to permeate the interior spaces while providing a sense of transparency.
  3. Symbolic Geometry: The building’s shape and layout often incorporate symbolic geometrical elements, such as curves and straight lines, representing concepts like growth, stability, and efficiency in the financial sector.
  4. Green Building Features: In line with sustainability efforts, the Taiwan Stock Exchange building incorporates various eco-friendly features, such as energy-efficient lighting systems and green spaces, to minimize its environmental impact.
  5. Iconic Landmark: As one of Taiwan’s most significant financial institutions, the building is a recognizable landmark in Taipei’s skyline, symbolizing the country’s economic strength and development.

Located in the iconic Taipei 101, a structure famed for its contemporary architectural and design excellence, the TWSE proudly resides. The conceptualization of Taipei 101 draws inspiration from the qualities of bamboo, representing strength, resilience, and sophistication—traits that resonate with those embodied by the TWSE itself. Designed to include eight sections which flare outward as they ascend and supported by sturdy columns, these elements incorporate the culturally prosperous numeral “8” prominent within traditional Chinese beliefs.

Taipei 101’s radiant yellow beacon shines after dusk as a symbol of Taiwan’s freedom and economic emergence.

What is the main stock exchange in Asia?

Major stock exchanges located in Asia are:

As of January 2024, the Tokyo Stock Exchange has reasserted its dominance as the dominant exchange by market capitalization among all Asian exchanges.

The stature and sway of a given stock exchange tend to reflect its nation’s economic vigor and financial power. Thus, the Tokyo Stock Exchange is positioned as an instrumental entity on the worldwide financial stage.

How big is the Taiwan Stock Exchange?

The Taiwan Stock Exchange (TWSE) is one of the largest stock exchanges in Asia. The leading 30 firms on the TWSE made up over half—specifically, 58.52%—of this total market value, with an impressive combined capitalization reaching about 25.90 trillion NTD.

Entering into the year 2023 saw as many as 966 companies call TWSE their trading home, representing an extensive array of industry sectors and commercial fields across its platform.

How many stock exchanges are there in Taiwan?

There is only one stock exchange in Taiwan—the Taiwan Stock Exchange (TWSE), a prominent stock exchange where securities are traded.

Established in 1961, the TWSE is the primary platform for trading equities, bonds, and other financial instruments in Taiwan’s capital market. It plays a crucial role in facilitating the buying and selling of securities, providing investors with opportunities to participate in the country’s economy and companies. evelopment.

What are the 10 biggest companies on the Taiwan Stock Exchange?

Top Titans on Taiwan Stock Exchange

The ten largest companies on the Taiwan Stock Exchange, currently, are TSMC, Taiwan Semiconductor Manufacturing Company, Hon Hai Precision Industry (Foxconn), MediaTek Inc., Formosa Plastics Corporation, Cathay Financial Holding Co., Ltd., Formosa Chemicals & Fibre Corporation, Formosa Petrochemical Corporation, Fubon Financial Holding Co., Ltd., Nan Ya Plastics Corporation, and Taiwan Mobile Co., Ltd.

Are there any foreign companies listed on the Taiwan Stock Exchange?

Yes, there are foreign companies listed on the Taiwan Stock Exchange.

Some foreign companies listed on the Taiwan Stock Exchange include:

Samsung Electronics Co., Ltd.
Sony Corporation
Toyota Motor Corporation
Volkswagen AG
Hon Hai Precision Industry Co., Ltd. (Foxconn)

What is the average daily trading volume on the Taiwan Stock Exchange?

In 2022, trading activity on the Taiwan Stock Exchange (TWSE) was robust, with an average of 3,344 million shares traded daily. The value of this frequent trading averaged approximately 227,970 million New Taiwan Dollars (NTD) daily. These statistics underscore the energetic and fluid market conditions prevalent within TWSE and highlight its important role in the international financial trade.

How many companies in percent listed on the Taiwan Stock Exchange are classified as small and medium-sized enterprises (SMEs)?

Approximately 90% of companies on the Taiwan Stock Exchange are classified as small and medium-sized enterprises (SMEs).

What is the abbreviation for the Taipei Stock Exchange?

The abbreviation for the Taipei Stock Exchange is TSE.

Summary

Since its establishment in 1961, the Taiwan Stock Exchange (TWSE) has grown into a formidable force within international finance. Key aspects of its function include serving as a vital exchange for trading diverse securities, offering firms an avenue to secure funding, and maintaining market integrity. It is integral to Taiwan’s economic progression and recognition as a major financial center.

Frequently Asked Questions

What is the difference between Taipei Exchange and Taiwan Stock Exchange?

The primary distinction between the Taiwan Stock Exchange and Taipei Exchange lies in their respective focuses: the latter is a platform where shares of companies are traded using its trade matching system, while the former is set up to manage over-the-counter (OTC) market and bond trading.

How can I buy stock in the Taiwan stock exchange?

One cost-effective strategy for those interested in the Taiwan stock exchange is investing in a broad market index using Exchange-Traded Funds (ETFs). For broader exposure, investors can also explore indices that focus on the Asia-Pacific area or emerging markets.

On another note, foreign traders looking to enter the trading sphere within Taiwan must first secure an “Investor ID” by registering with the Taiwan Stock Exchange (TWSE), after which they can set up a trading account through a Taiwanese securities firm.

What is the main stock exchange in Taiwan?

Established in 1961, the Taiwan Stock Exchange (TWSE) is the primary exchange for stock trading in Taiwan. It began operating on February 9, 1962 and continues to be the main stock exchange within the region.

What is Taiwan index called?

The TAIEX, also known as the Taiwan Stock Exchange Corporation (TWSE), is an index that measures the aggregate performance of all common shares listed on the stock exchange in Taiwan. This capitalization-weighted index is benchmarked with a base value of 100, reflecting its status back in 1966.

How does the Taiwan Stock Exchange operate?

The Taiwan Stock Exchange operates with an intricate and effective trading mechanism that guarantees significant trading volume and liquidity. This exchange also allows companies to secure funds necessary for growing their operations.

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