Among the eleven products traded on TAIFEX, TAIEX Options (TXO) remained the most actively traded product with annual trading volume of 80,096,506 contracts, accounting for 86.44% of total annual trading volume of TAIFEX. The annual trading volume of TXO experienced a significant growth of 82.77% as compared with 2004. In terms of growth on annual trading volume, Single Stock Options (STO) enjoyed the highest growth rate of 148.5% with annual trading volume growing to 1,018,917 contracts in 2005 from 410,026 contracts in 2004. (Please see Table 1 for trading volume information of all products on TAIFEX)
As of December 31, 2005, total number of trading accounts reached 1,132,346 as compared with 1,021,699 accounts on December 31, 2004, representing a growth of 10.77%. As to the structure of market participants, institutional participants accounted for 51.19% of total annual trading volume in 2005, compared with 33.98% in 2004. This is the first time the annual trading volume of institutional participants surpassed that of individual investors in the history of TAIFEX. (Please see Table 2 for structure of market participants)
On March 28, 2005, TAIFEX launched two new products, Electronic Sector Index Options (TEO) and Finance Sector Index Options (TFO). These two new products provide investors with more flexibility to participate in the two most active and important sectors in Taiwan equity market. The total trading volume of these two contracts in 2005 were 680,026 contracts and 756,570 contracts, respectively.
On December 30th, 2005, the Executive Yuan approved the tax rates amendments for all futures and options. The new tax rates became effective on January 1st, 2006 and would significantly reduce the transaction cost for investors. With this new tax incentive, TAIFEX expects a further growth on trading volume in the future.
2005 was a fruitful year for TAIFEX. In order to enhance the depth of the market and further increase the participation of institutional investors, TAIFEX has taken several initiatives to access the international market. In 2004, TAIFEX received a No-Action Letter issued by the Commodity Futures Trading Commission (CFTC) of the United States for its TAIEX Futures (TX), Mini TAIEX Futures (MTX). In 2005, TAIFEX received another No-Action Letter from CFTC for its Electronic Sector Index Futures (TE) and the Finance Sector Index Futures (TF). Currently, the application for Part 30 exemption is underway. In addition, TAIFEX is planning to allow non-hedging purpose trading and omnibus account for foreign participants.
As of product development, TAIFEX will launch International board products, including US dollar denominated gold futures and other stock index futures and options in 2006. Looking ahead, we will continue our commitments to develop new products, enhance the efficiency of the trading and clearing platforms, uphold market security and stability, and take measures that will make the market more convenient and appealing to all the participants. Our goal is to build a highly efficient, safe and diversified futures market in line with the market needs and international trends