Taiwan Stock Exchange: Transformation in motion

The pandemic has brought many changes to the way we work. In your view, what changes are here to stay that will shape the workplace of the future? 

Although the pandemic has severely curtailed international travel, it has also revolutionised workplace communications through the rise of video conferencing and remote working technologies. The way we work has now transcended the limitations of fixed locations, giving rise to greater flexibility and innovation. For market participants, the pandemic has accelerated the adoption of digital transactions, which was already a growing trend, driven by the widespread use of mobile digital devices. Meanwhile, in response to the reshuffling of global industry caused by disruptions in the supply chain, corporations are now building resilience into their distribution channels.

For capital market operators, changes in trading habits mean that information security and data protection are now more of a priority than ever before. Securities exchanges must continue striving to create convenient yet secure trading environments. Furthermore, they should nurture startups by providing flexible listing criteria and adjustments to supervisory regulations to harness the power of the capital market as they undergo the listing process, and support listed companies through periods of transition and upheaval. Restrictions on regional movement present an opportunity for exchanges to reassess their evaluation and monitoring practices as well as the use of digital surveillance to maintain a consistent and high level of quality.

What do you see as the biggest challenges and opportunities for your exchange in the year ahead? 

Environmental, social and governance (ESG) issues represent both the greatest opportunity and the greatest challenge for the TWSE. In recent years, as ESG investing and sustainable finance have rapidly reshaped global financial markets, more and more institutional investors have pledged to incorporate ESG factors into their investment processes. This momentum, along with public opinion and the expectations placed on corporations, is driving listed companies to rapidly improve their business models and expand their ESG disclosures.

The TWSE and our regulatory authority have long advocated the importance of sustainable governance; as a result, many Taiwanese companies are now well-versed in ESG practices, with Taiwan’s ESG ranking being among the highest in Asia and across global emerging markets. We have every confidence that, by staying on top of ESG investment trends, we will continue to elevate Taiwan’s stock market to ever greater heights.

Looking ahead to the future, it is crucial that we introduce ESG information disclosure and evaluation standards that are in line with international best practices. The TWSE will continue to monitor developments in international ESG standards, guiding Taiwanese companies and issuers alike to align themselves with the most up-to-date conventions and provide global investors with a transparent and reliable market.

What was your most memorable moment this year as a leader?

During the initial coronavirus outbreak in early 2020, securities exchanges the world over were sorely tested by spiking levels of volatility and trading volume. While Taiwan was initially able to keep COVID-19 under control, the TWSE still took the precaution of conducting a full-scale review of our pandemic prevention measures and Business Continuity Plan, in order to safeguard uninterrupted market operations under any foreseeable market conditions. Thus, when local cases briefly surged in May 2021, we were able to swiftly deploy contingency measures and maintain the continuity of key market services.

With more than half our personnel engaged in work-from-home or off-site work during this period, our organisation still maintained an outstandingly high level of operational efficiency and effective communication. The TWSE also successfully converted many of our internal processes to electronic means, resulting in lasting improvements to efficiency and accuracy.

In addition, we would like to thank the WFE for sharing valuable insights on best practices and other measures in response to the COVID-19 crisis. Thanks to the ongoing interaction between member countries over the last year, we have been able to enhance vital measures, which allowed us to stay informed of the pandemic’s impact on listed companies, disclose information in a timely fashion, and stabilise investor confidence.

Lastly, to strengthen industry awareness of cyber security issues and enhance emergency response capabilities, the TWSE now jointly enforces cyber security measures with securities and futures agencies. Bolstered by the government’s success in keeping the pandemic at bay, our comprehensive and strategic deployment of contingency measures over 2021 has made Taiwan’s capital market stronger than ever.

What are the three key industry themes you will be focused on in 2022?

Supporting innovative industries and the real economy

The TWSE has always been dedicated to supporting innovative companies and boosting the development of the real economy. The pandemic period has seen many startups seek to raise funding from capital markets. To enable these firms to have better access to financing channels, we established the Taiwan Innovation Board in mid-2021. As we head into 2022, the TWSE remains committed to satisfying the demands of an ever-evolving market, while simultaneously nurturing tomorrow’s rising stars.

Enhance financial risk education for new retail investors

Since 2020, our listed companies have reported strong revenues, and new measures such as continuous trading, intraday odd lot trading and market-making mechanisms have pushed market capitalisation and trading volume to record highs. This has attracted a great number of new retail investors, most significantly among the younger population. However, unlike many other markets, individuals have always made up a considerable percentage of our total investor base. As a result, the TWSE was already prepared to guide these new investors with extensive information regarding product types, trading mechanisms and financial education in general. With a new generation of investors joining the market, we aim to continue strengthening their financial knowledge and risk awareness, while taking every precaution to monitor market behaviour and prevent fraud or misconduct.

Continue to advocate for ESG and sustainable finance

The stock exchange plays a crucial role in the sustainable finance ecosystem, and thus has a duty to exert its influence and guide market participants to make contributions to global sustainable development. We work closely with a wide range of market participants to further this goal. The TWSE encourages intermediaries to issue green financial products and sustainable investment products, we urge institutional investors to embrace responsible investment, and we guide companies to prioritise sustainable transition and ESG disclosure. The TWSE will also continue to promote strong ESG values among our investors and companies to eliminate corporate or product greenwashing, along with fraudulent or false claims of sustainability.

Tell us one thing that will change in 2022 and one thing that won’t?

Although the pandemic has altered the ways in which exchanges interact with one another, what remains unchanged is the necessity for interconnectedness and collaboration. After all, we need to explore potential opportunities offered by the new normal, as exchanges seek to furnish companies and investors with a more complete and diverse portfolio of services through inter-market cooperation. The pandemic-induced restrictions on physical gatherings have helped us to evaluate and rethink existing partnerships, and to pursue the development of new content and modes of collaboration.

In the past two years, the TWSE has reached out to build fresh connections, as well as maintained close ties with neighbouring exchanges through video conferences and regular correspondence. Looking forward to 2022, we will continue to engage with our industry peers in active dialogue, explore opportunities for significant cooperation, and work towards effecting meaningful and positive change for Taiwan and partnering markets.