Taiwan Stock Exchange

The Taiwan Stock Exchange (TWSE; Chinese: 臺灣證券交易所) is the principal stock exchange in Taiwan. It is operated by the Taiwan Stock Exchange Corporation and is headquartered in Taipei. The exchange provides a centralized market for the trading and listing of securities and performs functions including listing, trading, clearing, settlement, market surveillance and investor protection.

History

The Taiwan Stock Exchange was established on 23 October 1961 and began operations on 9 February 1962. It was established to provide an organized securities market and support the development of Taiwan's capital market.

The exchange initially operated through an open outcry trading system. Its trading infrastructure was progressively computerized, with a computer-aided trading system introduced in 1985 and a fully automated securities trading system implemented in 1993.

Continuous trading was introduced in 2020 as part of the modernization of the exchange's trading infrastructure.

Market structure

The TWSE operates the centralized securities market in Taiwan. Securities listed on the exchange include:

• common stocks;
• exchange-traded funds (ETFs);
• exchange-traded notes (ETNs);
• depositary receipts;
• warrants; and
• other securities permitted under Taiwan's securities regulations.

The exchange provides a platform through which companies can raise capital and investors can trade listed securities.

A simplified representation is:

$\mathrm{C}\mathrm{o}\mathrm{m}\mathrm{p}\mathrm{a}\mathrm{n}\mathrm{i}\mathrm{e}\mathrm{s}\to \mathrm{L}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{i}\mathrm{n}\mathrm{g}\to \mathrm{T}\mathrm{W}\mathrm{S}\mathrm{E}\to \mathrm{I}\mathrm{n}\mathrm{v}\mathrm{e}\mathrm{s}\mathrm{t}\mathrm{o}\mathrm{r}\mathrm{s}$

Functions

The principal functions of the Taiwan Stock Exchange include:

• reviewing and approving securities listings;
• providing a centralized trading platform;
• maintaining orderly securities markets;
• providing market information;
• supervising listed companies;
• conducting market surveillance;
• supporting clearing and settlement operations;
• promoting investor protection; and
• supporting the development of Taiwan's capital market.

The exchange also establishes and administers rules governing listed securities and market participants.

Trading system

The TWSE uses an electronic trading system for securities transactions. The exchange has progressively moved from traditional floor trading to increasingly automated systems.

The regular trading session operates from 9:00 a.m. to 1:30 p.m. local time on trading days. The exchange also operates intraday odd-lot and after-hours trading sessions.

A simplified trading process is:

$\mathrm{O}\mathrm{r}\mathrm{d}\mathrm{e}\mathrm{r}\to \mathrm{M}\mathrm{a}\mathrm{t}\mathrm{c}\mathrm{h}\mathrm{i}\mathrm{n}\mathrm{g}\to \mathrm{T}\mathrm{r}\mathrm{a}\mathrm{d}\mathrm{e}\to \mathrm{C}\mathrm{l}\mathrm{e}\mathrm{a}\mathrm{r}\mathrm{i}\mathrm{n}\mathrm{g}\to \mathrm{S}\mathrm{e}\mathrm{t}\mathrm{t}\mathrm{l}\mathrm{e}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}$

Market indices

The principal benchmark index of the Taiwan Stock Exchange is the Taiwan Stock Exchange Capitalization Weighted Stock Index (TAIEX).

TAIEX is a market capitalization-weighted index that tracks the performance of stocks listed on the TWSE.

Other indices associated with the exchange include:

• FTSE TWSE Taiwan 50 Index;
• TWSE CG 100 Index;
• sector indices; and
• various specialized market indices.

A simplified relationship is:

$\mathrm{T}\mathrm{W}\mathrm{S}\mathrm{E}\mathrm{L}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{e}\mathrm{d}\mathrm{S}\mathrm{t}\mathrm{o}\mathrm{c}\mathrm{k}\mathrm{s}\to \mathrm{M}\mathrm{a}\mathrm{r}\mathrm{k}\mathrm{e}\mathrm{t}\mathrm{I}\mathrm{n}\mathrm{d}\mathrm{i}\mathrm{c}\mathrm{e}\mathrm{s}\to \mathrm{M}\mathrm{a}\mathrm{r}\mathrm{k}\mathrm{e}\mathrm{t}\mathrm{P}\mathrm{e}\mathrm{r}\mathrm{f}\mathrm{o}\mathrm{r}\mathrm{m}\mathrm{a}\mathrm{n}\mathrm{c}\mathrm{e}$

Listed companies

Companies listed on the TWSE represent a broad range of industries, including:

• semiconductor and electronics;
• financial services;
• manufacturing;
• transportation;
• shipping;
• telecommunications;
• consumer goods;
• biotechnology;
• information technology; and
• other industries.

Taiwan's large semiconductor and electronics companies constitute an important component of the exchange's market capitalization.

Semiconductor industry

The TWSE has a significant role in Taiwan's semiconductor ecosystem because many major semiconductor and electronics companies are publicly listed on the exchange.

The concentration of large technology companies means that developments in global semiconductor demand, artificial intelligence, electronics manufacturing and technology investment can have a substantial influence on the overall performance of the TWSE-listed market.

A simplified transmission mechanism is:

$\mathrm{G}\mathrm{l}\mathrm{o}\mathrm{b}\mathrm{a}\mathrm{l}\mathrm{T}\mathrm{e}\mathrm{c}\mathrm{h}\mathrm{n}\mathrm{o}\mathrm{l}\mathrm{o}\mathrm{g}\mathrm{y}\mathrm{D}\mathrm{e}\mathrm{m}\mathrm{a}\mathrm{n}\mathrm{d}\to \mathrm{T}\mathrm{a}\mathrm{i}\mathrm{w}\mathrm{a}\mathrm{n}\mathrm{S}\mathrm{e}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{d}\mathrm{u}\mathrm{c}\mathrm{t}\mathrm{o}\mathrm{r}\mathrm{I}\mathrm{n}\mathrm{d}\mathrm{u}\mathrm{s}\mathrm{t}\mathrm{r}\mathrm{y}\to \mathrm{L}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{e}\mathrm{d}\mathrm{C}\mathrm{o}\mathrm{m}\mathrm{p}\mathrm{a}\mathrm{n}\mathrm{i}\mathrm{e}\mathrm{s}\to \mathrm{T}\mathrm{W}\mathrm{S}\mathrm{E}$

International investment

The TWSE is accessible to domestic and international investors subject to Taiwan's securities regulations.

Foreign institutional investors, foreign corporations and other eligible international investors participate in the Taiwan securities market.

International participation provides a channel through which global capital can enter Taiwan's listed equity market.

A simplified representation is:

$\mathrm{G}\mathrm{l}\mathrm{o}\mathrm{b}\mathrm{a}\mathrm{l}\mathrm{C}\mathrm{a}\mathrm{p}\mathrm{i}\mathrm{t}\mathrm{a}\mathrm{l}\to \mathrm{F}\mathrm{o}\mathrm{r}\mathrm{e}\mathrm{i}\mathrm{g}\mathrm{n}\mathrm{I}\mathrm{n}\mathrm{v}\mathrm{e}\mathrm{s}\mathrm{t}\mathrm{o}\mathrm{r}\mathrm{s}\to \mathrm{T}\mathrm{W}\mathrm{S}\mathrm{E}\to \mathrm{T}\mathrm{a}\mathrm{i}\mathrm{w}\mathrm{a}\mathrm{n}\mathrm{e}\mathrm{s}\mathrm{e}\mathrm{C}\mathrm{o}\mathrm{m}\mathrm{p}\mathrm{a}\mathrm{n}\mathrm{i}\mathrm{e}\mathrm{s}$

Market infrastructure

The TWSE operates as part of a broader financial-market infrastructure in Taiwan. Its activities interact with institutions responsible for securities clearing, settlement, custody, market information and financial regulation.

The exchange's ecosystem can be represented as:

$\mathrm{L}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{i}\mathrm{n}\mathrm{g}\to \mathrm{T}\mathrm{r}\mathrm{a}\mathrm{d}\mathrm{i}\mathrm{n}\mathrm{g}\to \mathrm{C}\mathrm{l}\mathrm{e}\mathrm{a}\mathrm{r}\mathrm{i}\mathrm{n}\mathrm{g}\to \mathrm{S}\mathrm{e}\mathrm{t}\mathrm{t}\mathrm{l}\mathrm{e}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}\to \mathrm{C}\mathrm{u}\mathrm{s}\mathrm{t}\mathrm{o}\mathrm{d}\mathrm{y}$

Market surveillance mechanisms are used to identify unusual trading activities and support orderly market operations.

Regulation

The Taiwan Stock Exchange operates within Taiwan's securities regulatory framework. The Financial Supervisory Commission is the principal financial regulatory authority responsible for supervising Taiwan's financial markets.

The TWSE establishes and administers rules governing listed securities and market operations within the applicable regulatory framework.

Economic significance

The Taiwan Stock Exchange is an important component of Taiwan's capital-market infrastructure. It provides listed companies with access to equity capital and provides investors with a regulated marketplace for securities trading.

Its importance is particularly pronounced in relation to Taiwan's technology-oriented economy, where large publicly traded semiconductor and electronics companies account for significant portions of the listed market.

The relationship can be summarized as:

$\mathrm{C}\mathrm{a}\mathrm{p}\mathrm{i}\mathrm{t}\mathrm{a}\mathrm{l}\mathrm{F}\mathrm{o}\mathrm{r}\mathrm{m}\mathrm{a}\mathrm{t}\mathrm{i}\mathrm{o}\mathrm{n}\to \mathrm{L}\mathrm{i}\mathrm{s}\mathrm{t}\mathrm{e}\mathrm{d}\mathrm{C}\mathrm{o}\mathrm{m}\mathrm{p}\mathrm{a}\mathrm{n}\mathrm{i}\mathrm{e}\mathrm{s}\to \mathrm{T}\mathrm{W}\mathrm{S}\mathrm{E}\to \mathrm{I}\mathrm{n}\mathrm{v}\mathrm{e}\mathrm{s}\mathrm{t}\mathrm{m}\mathrm{e}\mathrm{n}\mathrm{t}\to \mathrm{E}\mathrm{c}\mathrm{o}\mathrm{n}\mathrm{o}\mathrm{m}\mathrm{i}\mathrm{c}\mathrm{A}\mathrm{c}\mathrm{t}\mathrm{i}\mathrm{v}\mathrm{i}\mathrm{t}\mathrm{y}$

The performance of the TWSE should not, however, be treated as identical to the performance of the Taiwanese economy, since stock prices incorporate expectations about future earnings, interest rates, valuations, capital flows and other financial factors.

Headquarters

The Taiwan Stock Exchange is headquartered in Taipei, Taiwan. Its offices are located in the Xinyi District and include facilities associated with the Taipei 101 complex.

See also

• Taiwan Stock Exchange Capitalization Weighted Stock Index
• Taiwan
• Taiwan Innovation Board
• Taipei Exchange
• Financial Supervisory Commission
• Taiwan Depository & Clearing Corporation
• Stock exchange
• Stock market
• Capital market
• Semiconductor industry in Taiwan

External links

• Taiwan Stock Exchange
• TWSE Market Information