In June 2020, National Settlement Depository (NSD) and the Taiwan Depository & Clearing Corporation (TDCC) signed a Memorandum of Understanding. The partnership between NSD and TDCC is aimed at forming a long-term cooperation that will help simplify the process of implementing business innovations and will contribute to the development of the capital markets of Taiwan and Russia. We talked with Mr. Sherman Lin, Chairman & CEO of TDCC, about how the corporation works in the current environment and which NSD projects inspired TDCC to develop new services.
The Taiwan Depository & Clearing Corporation (TDCC) was founded in the early 90's, during the heyday of Taiwan's economy. Tell us what tasks the company faced at that time and how they have transformed in the present.
TDCC was established in 1989 with a view to implementing central custody of securities and book-entry clearing system. In its initial stage, the main task was to promote immobilization for Taiwan securities market in order to increase operational efficiency which was crucial for handling the rapidly increasing transaction volume at that time. In addition, the centralized securities depository system also worked to solve problems with securities forgeries, defects, theft during delivery, market participants’ manual, and time-consuming operation, etc. A secure, reliable and trusted post trade infrastructure was set up for the development of a sound capital market in Taiwan.
As the only CSD in Taiwan, TDCC achieved full dematerialization of listed securities in 2011 to further increase the efficiency and lower the risk as well as operating cost for the market participants. Achieving full dematerialization not only marked a milestone of our capital market, but also accelerated TDCC’s digital transformation.
In 2012, the one and only Taiwan Stock Museum was thoughtfully planned out and meticulously created right after full dematerialization by the TDCC to preserve our stock heritage and promote financial literacy among the general public.
The Inception Hall of Taiwan Stock Museum. For more information, please visit https://www.stockmuseum.com.tw/eng/default.aspx
How is TDCC developing today? What global trends and processes of the local economic development have influenced the company over the past decade?
Since Mr. Sherman Lin joined TDCC in 2005, he has led TDCC in promoting business diversification, digital transformation and expanding its clientele. The products covered by TDCC’s services now include equity, fixed income securities, mutual funds, and futures. TDCC also offers a wide range of digital services, such as ePASSBOOK, StockVote, Fund Clear, Depository Query System, AML/CFT Screening System, Corporation Transparency Platform, and IR Platform.
Mr. Sherman Lin, Chairman & CEO of TDCC
TDCC is advancing with the times in innovation and digitalization, gradually transformed into a service-oriented company. We take care of market needs, seize service opportunities for competent authorities and participants and continue to expand business scope. Under our endeavor, the financial market environment will no doubt become better in the future.
Global technology trends have been interwoven into TDCC’s development. As technology has evolved over the past decade, we have recruited more and more people to join us to provide innovative, holistic and client-focused digit services. Recently, TDCC’s Big Data and Analytics Application Platform is being constructed. The platform analyzes data from various asset categories to provide our competent authority with real-time, visualized digital supervision functions.
Looking ahead, we will continue to evolve alongside with new technology in order to focus on innovation, platform economy and assisting government policies to construct a digital infrastructure for Taiwan’s financial market.
What impact did the pandemic have on your work? How did you transform your business? What are your future expectations?
The TDCC has been closely monitoring the COVID-19 situation over the past months and taking necessary measures, such as split site arrangement and remote access services (working from home), to ensure the continuity of our business and assist Taiwan capital market to function without interruption.
The outbreak of the COVID-19 has no doubt placed additional pressure on CSD in terms of managing business with uncertainty. During this pandemic, the TDCC encouraged employees to reshape their thinking and embrace digitalized concepts. Agile development and robotic process automation projects have also been introduced into our business to optimize our operation procedures and strive for rapid and accurate adjustments to manage market changes or black swan events.
What is the company's strategy today?
The TDCC is defined itself as the “financial big data center” in Taiwan, and develops digital financial services through big data, Blockchain, cloud services and other information analyzing technologies.
Facing the drastic transformation of the market, TDCC will increase its focus on digitalization and cybersecurity as well as bringing in innovative technology to offer more digital financial services. In the meantime, based on our core ideas of the "platform economy", "customer orientation" and "open innovation", TDCC will collaborate with private and public sectors to construct an ecosystem of Fintech services for the common good of Taiwan’s capital market.
Which countries and markets do you focus on today to develop your international cooperation? Which services do you see as a major growth area?
The TDCC has maintained long-term cooperative relationships with Asia CSDs through exchange programs. Since 2015, we cooperated with Clearstream and Euroclear for cross-border custody service to process the foreign investment of domestic institutional investors. In terms of mutual fund services, TDCC has cooperated with global information transmission service providers, including BBH and Calastone, to provide automatic fund order routing services since 2012. We also cooperated with global voting platforms including Broadridge Financial Solutions and Institutional Shareholder Services to establish STP voting mechanism for foreign institution investors.
As oversea investment and foreign investment in Taiwan continue to grow, we see cross border services enjoying the most growth in this area. TDCC will provide more services for various asset categories to better serve our customers, both domestic and international.
What does the partnership with NSD mean for you, and what, in your opinion, are the specifics of the company's operation?
It is well-known internationally that NSD has been instrumental in developing payment and Fintech services. NSD’s cash service and Blockchain application experience will be very valuable for us moving forward.
Which priority areas of cooperation with NSD would you highlight and why?
Bilateral meeting at 2019 Sibos
In the bilateral meeting at 2019 Sibos, e-voting was a common interest and we both invested resources into this service. Since we launched StockVote a decade ago, we are happy to share our successful experience with NSD. Your successful launch of e-voting in the Russian market in 2016 was an inspiration for us. Therefore, we would like to follow up to see how your e-voting is doing today and update NSD on the recent creation of an e-voting ecosystem here in Taiwan.
TDCC’s e-voting Ecosystem
In addition to e-voting, the two companies can also share the experience of developing anti-money laundering systems. We were impressed by NSD’s AML system that you shared at the innovation and diversification session in the WFC 2017.
TDCC built an Anti-Money Laundering/Counter-Terrorism Screening Platform in 2016 in order to assist both financial institutes and DNFBPs (Designated Non-Financial Businesses and Professions). This platform has been essential in ensuring that Taiwan is always in compliance with the anti-money laundering policies.
TDCC diversifies its business and develops innovative financial services. Tell us about these services. What is their strategic value for the company and financial market participants?
ePASSBOOK was launched in 2017 and has been one of TDCC’s most successful innovative services. This transformation was a big challenge for us as it featured servicing investors directly. Its strategic value was successfully transforming our business from a traditional B2B model to either a B2B2C or B2C model.
The current version ePASSBOOK 2.0, which was released in 2018, goes beyond the services that conventional physical securities passbooks are able to provide. TDCC has been taking advantage of increasingly specific data to better understand our investors’ requirements as well as optimizing our ePASSBOOK APP’s functions. The new functions of asset integration for cross-asset and cross-account inquiry, and converting the asset balance of each account to market value, are highly valued by our users. ePASSBOOK is indeed “the pioneer in the industry” that offers many integrated services. As of June 10th, 2020, there have been over 1.26 million users of “TDCC ePASSBOOK.”
ePASSBOOK 2.0 APP released in 2018
ReLife Project press conference in 2019
In addition to ePASSBOOK, TDCC’s subsidiary, FundRich, is another successful innovative service under a B2B2C or B2C model. To comply with the policy of Financial Supervisory Commission to promote financial technology innovation, TDCC invested and set up FundRich in 2015. FundRich is engaged in the business of the mutual fund online distribution platform, with missions of “helping investors to invest mutual funds via an innovative platform with reasonable cost, sufficient information and convenient interface”. The “ReLife Project”, retirement investment plans, conducted by FundRich in 2019 drawn over 110,000 registered users and created the trend of investment project for retirement among all citizens.
TDCC celebrated its 30-year anniversary last year. Moving forward to its 4th decade, TDCC is not only equipped with innovative technology as well as a customer oriented mind-set to upgrade or develop services, but also well prepared to cooperate with our participants, regulators and foreign partners for more advanced services to sustain Taiwan’s capital market.