TAIPEI (Taiwan News) — The Taiwan Futures Exchange (TAIFEX) announced on Monday (July 25) the launch of an over-the-counter derivative clearing service after being licensed to become the country's first qualifying central counterparty.
The new service was intended to improve the security, efficiency, and competitiveness of the local financial market, said the Financial Supervisory Commission Chairman Huang Tien-mu (黃天牧) at the exchange's launching ceremony on Monday (July 25).
In early June, TAIFEX was licensed to operate as a qualifying central counterparty (QCCP) for over-the-counter (OTC) derivatives by the country's financial regulator. After the launch, financial institutions can clear the derivatives contracts with TAIFEX and a risk-weight of 2% is applicable, leaving a lower required minimum capital for the financial institutions compared to trading with the non-qualifying central counterparties.
The lower minimum capital requirement allows asset utilization for financial institutions and improves their competitiveness.
Not long ago, TAIFEX became a member of the International Swaps and Derivatives Association to help foster a safe and efficient derivatives market and to facilitate effective risk management for all users. The exchange is seeking to be recognized as a QCCP for its OTC derivatives clearing services in the U.S., U.K., and EU after getting licensed by Taiwan and Australia.
