FSC relaxes restrictions on offshore financial unit businesses
Taipei, Nov. 19 (CNA) Taiwan’s top financial regulator has relaxed restrictions on the business scope of offshore banking units (OBUs) of local banks and offshore securities units (OSUs) of local brokerages in a bid to boost turnover of the local bourse.
The Financial Supervisory Commission (FSC) said Tuesday the new trading regulations lift a ban that had limited the value of mutual funds investing in the local bourse sold by OBUs and OSUs to no more than 30 percent of their net assets.
The FSC said it has issued a notice on the market openness rules, which are scheduled to take effect Friday.
That can open the doors for more than NT$100 billion (US$3.26 billion) in foreign funds will enter the local market, the Cabinet-level agency estimated.
The FSC also said it has decided to allow foreign retail investors to buy foreign currency-denominated financial derivatives and structured securities linked to local shares from OBUs of local banks and OSUs of local brokerages.
Currently, only foreign institutional investors are allowed to buy such financial products from the offshore market.
The relaxation on the derivatives and structured financial products is expected to further raise the willingness of foreign investors to participate in the local bourse, and further boost daily trading volume, market analysts said.
The local bourse has moved in consolidation mode in recent sessions with daily turnover falling and for the most part staying below the NT$80 billion mark. Securities companies said that such thin turnover could make them incur losses as they are unable to earn enough fee income to sustain their bottom lines.
Speaking in a hearing at the Legislative Yuan last week, FSC Chairman Tseng Ming-chung admitted that the current daily trading volume was too low, adding that that an ideal level for daily turnover on the main board would be NT$90 billion or even higher.
Tseng said that boosting turnover in the bourse would be a priority for his commission.
