Taipei Exchange

Exchange Trade Funds（ETFs）

ETFs are offered and issued by domestic securities investment trust firms, and traded on Taipei Exchange under the Regulations Governing Securities Investment Trust Funds. Depending on the fund's investment strategy, ETFs can be divided into two categories: "passive" and "active". Passive ETFs aim to track, simulate, and replicate the performance of the underlying index, allowing investors to participate in the performance of the index. Active ETFs are not based on indices. Instead, they seek to achieve stated investment objectives by investing in a portfolio of stocks, bonds, and other assets. Fund managers of an active ETF may actively buy or sell components in the portfolio without regard to conformity with an index.

1. Passive ETF

A passive ETF refers to a fund that is traded on a stock exchange and tracks, simulates, or replicates a specific index. Its subscription and redemption are based on physical securities or conducted according to the terms set out in the securities investment trust agreement.

(1) Securities investment trust ETFs

Securities investment trust ETFs are offered and issued by domestic securities investment trust enterprises, and traded on Taipei Exchange under the Regulations Governing Securities Investment Trust Funds.

1. Passive Equity ETF
   A passive equity ETF is a type of ETF that aims to replicate the performance of a specific equity index, such as the TPEx 50 Index. The security code of a passive equity ETF denominated in currencies other than NTD ends with the letter “K”.
2. Passive Bond ETF
   A passive bond ETF is a type of ETF that aims to replicate the performance of a specific bond index. The security code of a passive bond ETF denominated in NTD ends with the letter 'C', while the security code of a passive bond ETF denominated in currencies other than NTD ends with the letter 'K'.
3. Passive Multi-asset ETF
   A passive multi-asset ETF is an ETF that passively tracks a multi-asset index (under the current regulations, they could only be blend of stocks and bonds) rather than actively selecting investments. The security code of a passive multi-asset ETF ends with the letter “T”.
4. Leveraged and Inverse ETF
   An ETF that tracks, simulates, or replicates a multiple of an index's performance is a Leveraged ETF, while an ETF that tracks, simulates, or replicates a multiple of the inverse performance of an index is an Inverse ETF". The security code of a Leveraged ETF ends with the letter “L”.
   The security code of an Inverse ETF ends with the letter “R”.
   
5. Dual-Currency ETF
   To offer investors a broader range of products and asset allocation instruments in different currencies, the Taipei Exchange has implemented a dual-currency trading mechanism for ETFs (DCT-ETF). Under this mechanism, the issuer of a TWD-based ETF with foreign component securities can list beneficial certificates denominated in an additional currency. The ETF will then be listed and traded in dual currencies. Currently, DCT-ETFs are available in TWD/USD and TWD/CNY.
   In addition to buying and selling DCT-ETFs on the secondary market or subscribing to/redeeming from securities investment trust firms, investors can also convert the TWD ETFs they hold into USD ETFs or CNY ETFs, and vice versa. The trading, clearing, and settlement of DCT-ETFs in different currencies are handled separately; for example, a TWD ETF is settled in TWD, while a USD ETF is settled in USD.

(2)Futures ETF

Futures ETFs are offered and issued by domestic futures trust enterprises, and traded on the Taipei Exchange under the Regulations Governing Futures Trust Funds. The security code of a Futures ETF ends with the letter “U”.
If the fund is intended to track, simulate, or replicate a multiple of the performance of its underlying index in the positive direction (a 'leveraged futures ETF') or in the opposite (inverse) direction (an 'inverse futures ETF'), it is called a leveraged or inverse futures ETF."

2.Active ETF

An Active ETF refers to a fund managed by a securities investment trust company based on a specific investment strategy, where active analysis is used to make decisions. It is traded on the securities market, and its subscription and redemption are carried out through physical delivery or in accordance with the provisions of the securities investment trust agreement.
Under current regulations, a TPEx-listed active ETF can be either an active equity ETF or an active bond ETF. The portfolio of an active ETF must be disclosed daily (fully transparent ETF). The fund name of an active ETF must include the term 'active.'

(1) Active Equity ETF

An Active Equity ETF is an ETF that actively manages a portfolio of stocks, rather than passively tracking a market index. The security code of an Active Equity ETF ends with the letter “A”.

(2) Active Bond ETF

An Active Bond ETF is an ETF that invests in fixed-income securities (bonds) and is actively managed by a portfolio manager or a team of managers. The security code of an Active Equity ETF ends with the letter “D”。