A total of 33 single-stock futures (SSF) on financial firms, electronics companies and traditional industries were listed for the first time on the Taiwan Futures Exchange (TAIFEX) yesterday.
TAIFEX is the world’s 23rd futures exchange to trade SSFs, which is also the 21st financial product offered by the exchange since it began trading futures on Taiwanese stock indices in 1998.
“The listing of SSFs marks a significant step in the domestic futures market,” Taiwan Futures Exchange Corp chairman Joseph Tsai (蔡慶年) told a launch ceremony.
HEDGING
“SSFs will serve as a more precise hedge instrument for individual stocks,” Tsai said.
Single-stock futures are futures contracts for an underlying stock, which can be traded on margin instead of the underlying stock, thereby offering higher leverage.
Also speaking at yesterday’s ceremony, Taiwan Securities Association (券商公會) chairman Hwang Min-juh (黃敏助) said that the global transaction volume of SSFs grew 59.9 percent year-on-year in 2008 to more than 1.15 billion contracts, outstripping a 13.2 percent growth in the world’s futures market.
“SSFs are based on individual stocks rather than the entire stock index, so they can reduce tracking errors caused by using stock index futures as well as enhance the effects of a hedge,” Hwang said.
The number of underlying stocks will be adjusted on a quarterly basis based on market demand and the principle of fairness, TAIFEX president Steve Wang (王中愷) said.
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