Taiwan's warrant market, one of the largest in Asia, has revived in recent weeks following the end of a several-month boycott by domestic issuers. The dispute was over taxes on warrant premiums (DW, 2/10), but following a recent court ruling derivative players have launched over 100 contracts.
"We've returned to the market," said Alex Wu, head of the equities department at KGI Securities in Taipei. Wu explained the court ruled in favor of the securities houses and so a tax on the full premium received for a warrant will be dropped. Market participants have noted that much of the premium is used to delta hedge the position and should be exempt from taxation. While regulators are appealing the case to a higher court, securities houses have resumed issuance this month. "We can't keep waiting on this tax issue. There's strong demand from clients," added Wu.
