Taiwan Futures Exchange to Introduce Three-Tier Price Limits for Foreign-Component ETF Derivatives

Futures and options on foreign-component ETFs are linked to overseas markets, leaving their trading hours and price movements exposed to international market conditions. The existing single-tier price-limit system provides limited flexibility during sharp swings. Taiwan’s Securities and Futures Bureau and Taiwan Futures Exchange are therefore revising the framework to strengthen trading-risk controls and market stability.

The Securities and Futures Bureau said the Taiwan Futures Exchange plans to replace the current single-tier limits with a three-tier price-limit mechanism for foreign-component ETF futures and options from July 6. The new system will also introduce a five-minute cooling-off period to give the market time to absorb rapid price movements.