The Taiwan OTC Exchange (TWO) is an alternative securities exchange in Taiwan, with lower listing criteria than the Taiwan Stock Exchange (TWSE). It was established with the support of the Taiwan Securities Association, the TWSE Corporation, and the Taiwan Depository & Clearing Corporation.
Basics
The Taiwan OTC Exchange, often referred to as TWO plays a vital role in Taiwan's financial market as an alternative securities exchange. It distinguishes itself from the TWSE by offering lower listing criteria, making it an attractive option for companies aiming to embark on their public listing journey.
TWO's inception was made possible through the generous initial funding provided by key financial institutions in Taiwan, including the Taiwan Securities Association, the TWSE Corporation, and the Taiwan Depository & Clearing Corporation.
The Evolution of the Taipei Exchange (TPEx)
The Taipei Exchange, known as TPEx, was initially established as the Gre Tai Securities Market (GTSM) in November 1994. Located in Taipei City's Zhongzheng District, TPEx has grown to be a prominent player in Taiwan's over-the-counter (OTC) bond trading market. In February 2015, it rebranded as the Taipei Exchange.
A year after its inception, TPEx introduced a weighted average stock index. This index closely monitors the performance of all stocks listed on TWO for more than a month. TPEx facilitates trading in various financial instruments, including stocks, bonds (government, convertible, and international), and derivatives.
TPEx aligns its objectives with government economic policies and actively supports local enterprises in Taiwan. To achieve these goals, it develops innovative financial products, drives market turnover, and fosters collaborations with other capital markets. Notably, TPEx extends its financial products and trading services to the international market, contributing to Taiwan's economic growth.
A Brief History
OTC securities trading in Taiwan traces its roots back to February 1988 when the Taipei Securities Dealers Association, the precursor to the Taiwan Securities Association, managed it. Recognizing the need for a more robust capital market with enhanced OTC trading capabilities, the Ministry of Finance (MOF) established an OTC center as a non-profit entity in 1993. This marked a pivotal moment in the development of Taiwan's OTC market.
On November 1, 1994, TPEx officially came into existence under the purview of the Securities and Exchange Act, effectively taking over the responsibilities of OTC trading. This transition marked a significant step towards establishing TPEx as a key player in Taiwan's financial landscape.
TPEx Today
TPEx has evolved over the years into a versatile platform that fosters the growth of emerging industries, high-tech enterprises, creative ventures, small and medium-sized enterprises (SMEs), and micro-enterprises. By offering a platform for public listing and capital raising, TPEx has become a hub for companies seeking growth opportunities. As of the year 2020, TPEx boasts an impressive roster of 782 listed companies, contributing to the vibrancy of Taiwan's OTC market.
Conclusion
The Taiwan OTC Exchange, also known as the Taipei Exchange, has become a vital component of Taiwan's financial ecosystem. With lower listing criteria and support from key financial institutions, TWO offers an attractive avenue for companies to enter the public market, ultimately contributing to economic growth. TPEx's journey, from its establishment in 1994 to its present-day status, underscores its significance in fostering emerging industries and providing a platform for public listing and capital raising. Its extensive trading hours and a substantial number of listed companies in 2020 further highlight its relevance in Taiwan's financial landscape.