Home

A trader must set his/her deposit account as the designated account with the futures commission merchant (FCM) and may engage in futures trading only after transferring margin to the FCM's "Customer Margin Account".

When engaging in futures trading, a trader may place orders in person, or by voice message, telephone, the Internet, private line, closed private network, in writing, by telegram, or by other means.

• Order contents
  A futures trading order includes the following:
  • the account number and name
  • the method of order placement (e.g. face-to-face, in writing)
  • the date, time, and period of validity of the order
  • the name of the futures exchange
  • the type, volume, and delivery month of the contract
  • the type of order (market order, limit order, market with protection order, or other)
  • the signature or seal of the associated person
  • the signature or seal of the principal
• Filling out the Order
  When a futures commission merchant accepts a futures trading order made face to face by a principal or his/her representative or agent, the principal fills out the trading order form and signs or seals it. When an order is made in writing, by telephone, telegraph, or other means, except where otherwise provided by the Competent Authority or TAIFEX, the associated person who accepts the order fills out the trading order form based on the order particulars. For orders made in writing, by telephone, or by telegraph, the futures commission merchant may fill out the order form by electronic means. If the associated person to whom an order belongs can be determined, the individual order form need not be printed out, provided that trading order records, segregated by associated person and chronological order, are printed out, and are signed or sealed by the associated person that accepted the order and by the department supervisor after market close. Where orders are made through electronic media such as voice message, the Internet, private line, or closed private network, the FCM is not required to prepare and complete the order form on the principal's behalf; provided that the FCM immediately prints records of trading orders in the order that they were received, and that the processing person and the department supervisor sign or seal such records upon market close.

FCMs receiving a customer order to engage in futures trading follow the following steps:

• Filling out an order form
  Every order, whether placed by the principal or its agent, in person or by voice message, telephone, Internet, private line, closed private network, in writing, by telegram, or by other means, should specify the principal’s account number and name, whether the order is a buy or sell, the contract volume, the name of the futures exchange, the delivery month and year, the product’s name, the price, and the order type.
• Receiving an order
  When an FCM receives a trader’s order, the FCM executes the order according to the order’s particulars, including the exchange, the transaction type, the method, and the time. The transaction process is generally as follows:
  • The time of the order is recorded.
  • The principal's name and account number are checked to ensure they match.
  • The order's particulars are confirmed to ensure they are accurate and without error, then the order is turned over to responsible personnel who carry out risk controls and execute the trade.
• Verification and controls
  FCMs perform the following risk controls to maintain trading security:
  • Check that the principal’s account is normal.
  • For orders opening new positions, check that the principal has sufficient margin.
  • For orders to close out positions, check that the principal has sufficient open positions for the close out order.
  • Check whether the principal’s new orders and existing positions in aggregate exceed legally mandated limits on positions.
• Placing orders
  If the FCM has checked the order and found no concerns, the FCM keys it into the trading system in the order in which it was received.
  Once TAIFEX receives an order report and confirms it is error free, TAIFEX enters the order into the matching system for matching. If it is matched, the order confirmation and the execution report are sent directly to the FCM and a clearing member. If it is not matched, the order confirmation is sent to the FCM and clearing member.
  The FCM’s associated person publishes the trader of the status of trades as specified on the execution report as soon as the order is matched.
  The trader may seek verification from the FCM of relevant information regarding any order that the trader has placed. The FCM is obliged to truthfully provide such information.
• Matching Principles and Information Disclosure
  Trading operations at TAIFEX include: the trading process, information disclosure, order prioritizing, matching principles, and order volume limits. These are explained below.
  • Trading process
    Futures and options contracts are matched automatically by computer. When an FCM’s order has been matched, TAIFEX’s trading system immediately issues an execution report to the FCM and sends the execution data to the clearing system, which carries out the mark-to-market and clearing operations.
    • Before market open on every trading session, TAIFEX accepts orders from FCMs and discloses the total number of bid/ask orders, the cumulative quantity of bid/ask orders, the calculated opening prices and volume, the best 5 bid/ask prices and corresponding volumes of simulated matching every 5 seconds for all contracts. In addition, Non-Cancel Period (NCP) will be implemented during 2 minutes prior to opening of trading session, orders can only be entered, but not deleted or modified.
    • Once the market opens, in addition to disclosing the total number of bid/ask orders and the cumulative quantity of bid/ask orders for each contract, TAIFEX also displays price and volume data for the best five bid/ask orders. In addition, for futures contracts, TAIFEX also discloses the price and volume of the best derivative order, which comes from futures calendar spread orders. Under special circumstances TAIFEX may determine the disclosure time and content based on the current bid and ask prices and volumes.
    • During regular trading sessions or after-hours trading session, TAIFEX will continuously disclose the following information by trading instrument, type, and delivery month:
      • - Opening, highest, and lowest prices of the trading session
      • - The last trade price of the trading session
      • - Change from previous daily settlement price
      • - Cumulative volume for the current trading session
      • - Price and volume of the best five bid/ask orders. (Futures contracts also disclose the price and volume of the best derivative order.)
      • - Other relevant information
  • After market close of each trading session, TAIFEX publishes a market report that includes:
    • the opening price, last trade price, settlement price, and last bid/ask order price for each contract;(no settlement price published after market close of after-hours trading session)
    • the highest and lowest price of the trading session for each contract;
    • the price change in absolute and percentage terms for each contract;
    • the historical high and low for each contract;
    • the trading volume for each contract (the trading volume of futures contracts also includes spread orders); and
    • that open interest for each contract. (no open interest published after market close of after-hours trading session)
  • Limitations on order size
    • Market Order:
      

      From May 27 2019, Market orders are limited to a maximum of 10 contracts per order during regular trading session and limited to a maximum of 5 contracts per order during after-hours trading session.

    • Limit Order and Market with protection order(MWP):
      

      Stock index futures, interest rate futures, gold futures, FX futures and Brent crude Oil futures are limited to a maximum of 100 contracts per order; stock index options, gold options and FX options are limited to a maximum of 200 contracts per order; single-stock futures and single-stock options are limited to a maximum of 499 contracts per order.

  • The Futures Trading Report and Volume Report
    After market close every day, TAIFEX produces a Futures Trading Report and a Volume Report that make public the futures market’s trading data.
    
  • Matching principles
    Matching utilizes the following principles:
    • Price priority and time priority. Higher-priced buy orders have priority over lower-priced buy orders. Lower-priced sell orders have priority over higher-priced sell orders. If prices are equivalent, the order first entered into the system has priority.
    • Market orders have priority over limit orders.
    • If the quantity of an order is reduced, the order’s time sequence remains unchanged. If the price is changed, the order is resequenced based on the time of the change. Any changes other than reductions in quantity, change in price, change from limit order to market order or to market with protection order, require canceling the original order and placing a new order.

    Call-auction matching is used at market open. Continuous matching is used during trading hours to market close. At market open, all orders received by the system prior to market open are call-auction matched according to the preceding principles. The opening price is determined based on the price that satisfies the greatest number of orders. Buy orders with prices higher than the determined price and sell orders with prices lower than the determined price are all satisfied. At least one side of the buy orders and sell orders at the determined price must all be filled. During trading hours, continuous matching is utilized; each new order entered into the system goes into the order book for matching.

  • Types of orders(O: types of orders)
    

    Time order received		Before market open					Trading hours***
    Matching method		Call auction					Continuous matching
    Order type		Market		Limit			Market		Market with Protection		Limit
    Order parameters		FOK	IOC	FOK	IOC	ROD	FOK	IOC	FOK	IOC	FOK	IOC	ROD
    Futures	Single order		O		O	O	O	O	O	O	O	O	O
    	Calendar spread order						O	O	O	O	O	O	O
    Options	Single order		O		O	O	O	O	O	O	O	O	O
    	Combination order						O	O			O	O

    * During 2 minutes prior to opening of trading session, orders can only be entered, but not deleted or modified.
    **Prior to opening of regular trading session : orders are accepted from 7:45 to 8:00 for TOPIX Futures, and orders are accepted from 8:30 to 8:45 for other products.
    ***Prior to opening of after-hours trading session : orders are accepted from 14:50 to 15:00 for those products’ regular trading session ends at 13:45. In addition, orders are accepted from 17:15 to 17:25 for those products’ regular trading session ends at 16:15,.
    **** Trading hours are different for each product. Please refer to each product’s description for specifications.
    *****ROD orders are only active during that trading session
• Trade reports and monthly reconciliation statements
  When a trader’s order is completed, the FCM produces a trade report and delivers it to the trader.
  These trade reports are produced to help traders understand the gains and losses resulting from that day’s trades. The content is drawn from key items in the FCM’s settlement report, summarized into an overview of the results of an individual customer’s trades. Traders can use the trade report to see the amount of margin or premium remaining to them at the end of that day’s trading. On discovery of an out trade, the trader can immediately report it to the FCM.
  In addition to trade reports, by the fifth day of every month, FCMs produce a monthly reconciliation statement for the preceding month in duplicate. One copy is sent to the trader, and the other retained by the FCM for its records.
  The monthly reconciliation statement is produced in the same fashion as the trade report. The relevant information is compiled from the daily settlement reports, and sorted by trader into lists of that month’s trades.

FCMs perform a trader’s margin controls and clearing operations as follows:

• During trading, gains and losses on traders’ positions are calculated using the most recent market prices. After close of trade every day, gains and losses are calculated on traders’ aggregate positions using settlement prices.
• When settlement is complete, the FCM replenishes the margin by making a deposit in the designated clearing member’s margin account.
• Calculate the margin balance for each trader.
• Confirm that the trader’s margin balance is greater than or equal to the maintenance margin on the trader’s open positions.
• If the trader’s margin balance is less than the required maintenance margin, the FCM will, pursuant to the brokerage contract, issue a margin call notice requesting that the trader make up the shortfall in the margin balance within the time period specified in the contract.
• Traders who replenish the margin shortfall referred to in the preceding subparagraph may continue to hold their positions.
• In the event that a trader is unable to replenish the shortfall within the contractually specified timeframe, the FCM may offset the trader’s futures contracts.