The Financial Supervisory Commission of Taiwan has authorized local asset managers to launch leveraged and inverse exchange traded funds (ETFs) in the country, according to Asia Asset Management.
The approval comes in response to the growing demand for exotic ETFs.
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The launch of the new types of ETFs will make the country’s ETF market more comprehensive.
The Taiwan Stock Exchange (TSE) expects that the introduction of leveraged and inverse ETFs will increase the trading volume of these products from the current level of 1% to 5% total turnover over next two to three years.
According to FSC, exotic ETFs have been expanding overseas in recent years, as they allow investors to gain returns that cap the underlying index.
Julian Tsung-Sheng Liu, president and CEO of Yuanta Securities Investment Trust Company, said: "With the high exposure of leverage and inversed ETFs, the products will only be limited to sophisticated investors.
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By GlobalData"Yuanta has done a lot of preparatory tasks on investor education and product designs in anticipation the exotic ETFs approval will be granted in the second half this year," he added.
