Newly appointed Chairman & CEO Sherman H. M. Lin brings back-office experience to the Taiwan Stock Exchange, the front office of Taiwan’s financial market. He shares his previous experience in digital transformation and how he intends to reshape the company culture to better service investor needs and enhance a sustainable investment ecosystem.
What is your vision for the securities exchange industry?
Capital markets bridge the gap between those with fundraising needs and those with capital. They serve as the engine for the development of the real economy and provide opportunities for investors to share in the fruits of corporate growth. To facilitate this, we all aim to maintain market stability, advance information transparency, optimise the trading system and offer innovative products to evolve a more user-friendly environment for market participants, thereby providing a sound investment ecosystem.
Although recent geopolitical uncertainties and worldwide inflation have agitated capital markets around the world, our goal to work towards the shared prosperity of humanity through the establishment of a sustainable investment ecosystem remains unchanged. I envision that our industry shall continue to pursue responsible growth, synergise the real economy and make meaningful contributions to a better, sustainable future.
How have your past experiences equipped you to lead the TWSE?
Prior to my TWSE appointment, I was the chairman and CEO of the Taiwan Depository & Clearing Corporation (the “TDCC”), where I served for nearly 20 years. The pandemic has brought great changes to the financial-services industry, and has accelerated the digital transformation of industries around the world. In keeping with the world’s rapidly changing technologies, I strove to enhance TDCC’s operational efficiency through digital transformation and financial innovation.
As to the digital transformation, the TDCC created the e-voting platform, which allows investors to vote and attend shareholders’ meetings electronically. The e-PASSBOOK App, launched in 2017, empowers users to stay on top of all of their assets in one place. In addition, the TDCC uses big data analysis to better understand investors’ asset compilation needs.
The TDCC also advanced financial innovation to benefit investors and companies. FundRich Securities, a TDCC subsidiary focusing on asset allocation for retirement, provides a one-stop shop for investors to assess their risk level, investment needs and effectively diversify their portfolio through various mutual funds. For companies seeking to understand and improve their ESG ratings, TDCC’s “Investor Relations Platform” works in tandem with international ESG institutions to provide scoring information, enabling listed companies to access a global ESG database, understand the intention of ESG ratings and improve their sustainable development.
The capital market only thrives with the joint participation of all market participants. My move from TDCC, the back office of Taiwan’s financial market, to the TWSE comes with a solemn sense of responsibility. I hold unwavering confidence that I am up to the challenge, and that my past insight will allow me to create a company culture of bold initiative and daring innovation. With the support of emerging technologies, we will offer new digital financial services and pioneer Taiwan’s capital markets momentum.
What are some of the key reform measures that you will pursue?
A stock exchange’s foremost mission is to establish a friendly fundraising and trading environment. While global markets may ebb and flow, we must continue to mobilise domestic and foreign capital while championing investor confidence. Drawing on the spirit of transparency and innovation, we are focused on the following five reform measures:
Refine the fundraising platform for startups: We aim to facilitate the entry of startups into the capital market, and allow more investors to reap the benefits of new ventures. To this end, the TWSE established the Taiwan Innovation Board in the third quarter of 2021. Its listing standards focus on market capitalisation rather than profitability, and listing mechanisms will be refined as needed to bolster startups in their fundraising efforts.
Optimise trading mechanisms: In recent years, the TWSE has launched several new trading measures, such as continuous trading, which has significantly boosted market momentum and intraday odd lot trading and proven extremely popular with young traders with limited funds. Another new measure, the market-making mechanism, improves trading volumes for quality stocks with low liquidity. We will closely follow the rollout of these new measures to pivot as necessary to further enhance overall market liquidity.
Promote capital market sustainability: Global awareness of sustainability is here to stay. Over the past few years, the TWSE has conducted yearly Corporate Governance Evaluations, required listed companies to prepare sustainability reports, and implemented stewardship principles for institutional investors. The TWSE's efforts in leading the market towards sustainability have contributed to Taiwan’s outstanding performance in global ESG standings. From this day forward, the TWSE plans to cement a comprehensive ESG ecosystem, which includes an ESG information disclosure platform, rigorous implementation of ESG evaluations, the launch of a full range of ESG products, encouraging participation in the “Taiwan Alliance for Net Zero Emission” and supporting listed companies to achieve carbon footprint verification. This move allows Taiwan’s capital markets to embrace ESG as a competitive advantage in the global landscape.
Enhance technology and cyber security resilience: As technological advancements progress and accelerate, the stock exchange must also evolve and optimise its digital toolkit to enhance operational efficiency and information security. The TWSE must incorporate FinTech into our company culture and adopt SupTech applications in monitoring dynamic market conditions. The TWSE will also further enhance the cyber security of the entire capital market through working closely with market participants.
Advance investor education: Since the pandemic, the number of retail investors has shot up. However, this has also given rise to many instances of financial fraud and scams. The TWSE combats this by offering a variety of online educational content, such as manga and videos, geared at young investors. The TWSE even holds college campus events to ensure that young investors are well-informed. In addition, we continue to provide educational material for audiences of all types through various themes, activities and multimedia platforms to enable investors to gain a more comprehensive understanding of investment, wealth management and related risks.
Do you have any thoughts for other exchanges?
No stock exchange can afford to go it alone, especially given the uncertain outlook for geopolitical and economic conditions. The TWSE commends the WFE reaching out to facilitate the spread of ideas and best practices, which sets a benchmark for exchanges facing difficulties and challenges. The WFE supports exchanges showing fortitude as they maintain market stability, bolster investor confidence and pursue a shared prosperity for all market participants.
The TWSE seeks to create a stronger rapport with member exchanges. By emphasising a well-rounded understanding of each other’s capital markets, the TWSE looks forward to establishing sound working relationships to explore mutually advantageous initiatives or cross-border business opportunities. This will enrich our capital markets and nurture a global backdrop of fellowship in which we all can flourish.
It is my profound wish to meet with the WFE and its membership in the near future, and I wish you and your loved ones health, happiness and harmony!
The views, thoughts and opinions contained in this Focus article belong solely to the author and do not necessarily reflect the WFE’s policy position on the issue, or the WFE’s views or opinions.