J.P. Morgan wins Taifex settlement mandate

J.P. Morgan's treasury services team expands into Taiwan futures and options settlement.
J.P. Morgan is set to start providing settlement services for futures and options transactions in Taiwan after winning approval from the local futures exchange Taifex.

Through J.P. Morgan's secure host-to-host platform, users will be able to process settlements for Taifex's range of futures and options contracts, which cover Taiwan's major stock indices, government bonds, equities, interest rates and commodities.

"This agreement also represents an important step for our expansion plans in Taiwan," says Simon Jones, Asia-Pacific head of J.P. Morgan's treasury services arm. "We are looking to strengthen our position in-country by providing settlement, clearing and cash management solutions to local futures houses in Taiwan."

Deutsche Bank is the only other foreign bank to provide settlement services to Taifex. This latest approval is part of an effort to attract more foreign investors to the Taiwanese futures market û an initiative that started in 2006 when J.P. Morgan became the exchange's first foreign clearing member.

The market has been growing ever since. In 2008, the exchange traded 136.7 million contracts, up almost 19% from the 115.1 million traded in 2007. Full-year figures are not yet available for all of the region's exchanges in 2008, but Taifex was the sixth-biggest futures and options market in Asia at the end of the first half, and 23rd in the world, according to the Futures Industry Association.

Trading is dominated by options on the Taiwan Stock Exchange Capitalisation Weighted Stock Index, or Taiex, but the exchange has made strides in broadening the range of products it offers, including the addition of local-currency gold options scheduled for launch on January 19. This follows the success of the gold futures launched a year earlier, which traded 5.3 million contracts during 2008.
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