Usually, the transactions are negotiated between financial institutions, or conducted by brokers as an intermediary between buyers and sellers. Therefore, it can effectively reduce financial institutions’ capital accrual while improving their efficiency of fund utilization, the exchange said. Moreover, in the past, domestic financial institutions usually conducted central clearing through foreign settlement institutions such as the London Clearing House, and the fees were very high, it said. The exchange’s OTC central clearing mechanism hence allows transactions to be handled domestically, which provides financial institutions more convenience along with lower operating costs, it added. To ensure control over the core technologies behind Taiwan’s financial market, the TAIFEX independently developed the clearing system by integrating 15 modules rather than purchasing one, it said.

Source: Taipei Times August 01, 2022 00:55 UTC