Investors in the Taiwan index futures to be launched next Tuesday will have to put up an initial margin of US$2,500 per lot and pay a maintenance margin of $2,000. The Hong Kong Futures Exchange said the spread rate for the contracts would be $200 per lot per side for the initial margin. It would be $160 per lot per side for the maintenance margin. The exchange said the margin levels were minimum levels and broker members would set their margin requirements on a case-by-case basis. A trader said the margin level was quite low as it represented only about 6 per cent of the value of the contract. 'The Taiwan market has not been volatile recently, so the exchange could set a lower margin level,' he said. 'I believe there will not be great interest in these contracts, as the Taiwan market has not been fully open to overseas investors and there is not much need for hedging.' The Taiwan Index futures and options are the first regional product put together by the futures exchange. The product is based on a Taiwan index created by the exchange which tracks the performance of 60 constituent companies representing more than 50 per cent of Taiwan's stock market capitalisation. It will have a 99 per cent correlation with the Taiwan Stock Exchange's benchmark Weighted Index. The new futures and option contracts will be settled in US dollars and traded on the electronic trading system.