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Taiwan Futures Exchange to launch FLEX Options, expand 'kill switch' in 2023

TAIFEX executed 384 million contracts in 2022 despite flailing stock market

TAIFEX Chairman Wu Tzu-hsin.

TAIFEX Chairman Wu Tzu-hsin. (Taiwan News photo)

TAIPEI (Taiwan News) — The Taiwan Futures Exchange (TAIFEX) reported another good year on Monday (Jan. 9) and announced a plan to launch flexible exchange options to keep its growth momentum as well as to make the "kill switch" applicable to brokers, in addition to futures dealers, to avoid future trading debacles.

In Monday's press conference, TAIFEX Chairman Wu Tzu-hsin (吳自心) said the exchange executed 384 million contracts in 2022, representing a 2% drop from the previous record year despite a struggling stock market. He expected another positive year in 2023 as more new services are introduced.

"Looking at the new year, we are set to launch flexible exchange options (FLEX Options) that have non-standard customizable contract terms like expiration date and size, allowing buyers and sellers to offset positions better and to lower trading costs," he added.

For price stabilization, the exchange is slated to make the "kill switch" mechanism applicable to brokers, which could be used to shut down trading before software glitches get out of control and wreak havoc on markets.

TAIFEX Senior Executie Vice President Yang Chao-shun (楊朝舜) said that the futures trading volume remained high in 2022 despite inflation and the rate peak that year. Also, Russia's invasion of Ukraine last February disrupted the global supply chain and rocked capital markets, creating strong demands to hedge risk.

In addition to the development of the new services, the exchange this year will continue to improve risk management for after-hours trading sessions and strengthen disclosure of ESG information relevant to the products traded on the exchange.