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FSC approves TAIFEX adjustment of the clearing margin/maintenance margin/initial margin ratio for 18 types of listed futures and options contracts

To enhance Taiwan's international competitiveness and effective fund utilization by futures traders, the Financial Supervisory Commission (FSC) approved Taiwan Futures Exchange for an adjustment to the clearing margin/maintenance margin/initial margin ratio for 18 types of listed futures and options contracts such as the Taiwan Stock Exchange Stock Index (TAIEX) Futures Contracts, but with the exception of Mini-TAIEX Futures Contracts. As approved by the FSC on 4 June 2008, the ratio for MSCI Taiwan Stock Index SM Futures Contracts has been adjusted to 1:1:1.25, while the ratio for the remaining 17 has been adjusted to 1:1.035:1.35.[ UP ]

Securities issued by offshore foreign listed and un-listed companies, approved to list on TSE, GreTai, or emerging market, approved for investment by offshore overseas Chinese and foreign nationals

On 22 May 2008, the FSC approved the securities issued by offshore foreign listed and un-listed companies, approved to list on Taiwan Stock Exchange, GreTai and emerging market, which are subject to the Regulations Governing the Offering and Issuance of Securities by Foreign Securities Issuers, as securities included in the scope of securities approved for investment by offshore overseas Chinese and foreign nationals.[ UP ]

Offshore foreign investors allowed to trade futures using non-US currencies accepted by the TAIFEX

Articles 9 and 11 of the Directions for Domestic Futures Trading by Overseas Chinese and Foreign Nationals were amended and issued on 27 May 2008, allowing offshore foreign investors to trade domestic futures using currencies accepted by the TAIFEX. The move is intended to stimulate trading of futures in Taiwan by offshore foreign investors, encouraging greater participation in Taiwan futures trading by reducing their costs and the exchange rate risks connected with holding only US dollars, while spurring further internationalization in the Taiwan futures markets. The TAIFEX will publicly announce the currencies it will accept, and in the future, offshore foreign traders will be able make margin payments in Taiwan in six foreign currencies, including the Euro, Yen, British pound, Australian Dollar, and Hong Kong Dollar, in addition to the US Dollar.[ UP ]

Regulations governing positions concurrently held by responsible persons of securities firms amended and issued

To aid securities firms in finding capable directors, supervisors, and managerial officers, the FSC on 9 June 2008 amended and issued Article 11-1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms. The amendments provide that when a securities firm has an investment relationship with a publicly held non-financial institution, the responsible person of the securities firm may not serve as a director or supervisor of the investee company; the amendments do not place any restrictions on a responsible person who, because of his or her professional qualifications, serves as the responsible person of a publicly held non-financial institution with which the securities firm does not have an investment relationship, or the responsible person of a securities firm serving as the responsible person of a non-publicly held non-financial institution.[ UP ]

Amendment of minimum current assets ratio requirements for securities investment trust funds; regulations adopted governing loans using securities investment trust fund assets as security

To increase the efficiency of investment by funds and allow for greater flexibility in utilization of such funds, the FSC on 6 June 2008 deleted the provision of Article 30, paragraph 1 of the Securities Investment Trust and Consulting Act requiring securities investment trust funds to maintain a current ratio no lower than 5%, while adding provisions regarding the credit rating standards to be met by the counterparties of those funds in repo transactions. In addition, to enhance the ability of funds to meet demands for redemptions, the FSC also issued an order permitting securities investment trust enterprises (SITEs) managing securities investment trust funds to use fund assets to acquire short term loans from financial institutions for the purpose of paying redemption prices to beneficial owners of the fund, freeing fund managers from the restrictions of Article 10, paragraph 1, subparagraph 2 of the Regulations Governing Securities Investment Trust Funds regarding the restriction on using fund assets as security.[ UP ]

Attending the 33rd IOSCO Annual Conference

From May 26 to 29, former FSC Chairman Hu Sheng-cheng led a delegation including Director General Wu Tang-Chieh and members of SROs to attend the 33rd annual conference of the International Organization of Securities Commissions (IOSCO) in Paris. The trip was a rewarding one, bringing about the following concrete achievements:
1. Promotion of cross-border cooperation: During its attendance at the annual conference on 26 May, the FSC signed a cooperation agreement with the Moroccan Securities Commission, the Conseil déontologique des valeurs mobilières.
2. Announcement of Taiwan's plans to hold the 5th Taipei Corporate Governance Forum (TAICGOF): To be held from 5-8 November 2008, the IOSCO Asia-Pacific Regional Committee has this year listed the TAICGOF as one of its training activities.
3. Taiwan Securities Association’s application to be IOSCO affiliate member: During this year's conference, the IOSCO formally announced its acceptance of the Taiwan Securities Association's application for affiliate membership .[ UP ]

FSC amends Regulations Governing Ratios and Auditing of Director and Supervisor Share Ownership at Public Companies

On 20 May of 2008, the FSC amended the Regulations Governing Ratios and Auditing of Director and Supervisor Share Ownership at Public Companies to address current needs in enterprise capitalization and in response to Judicial Yuan Council of Grand Justices Interpretation No. 638 of 7 March 2008. Key changes include four additional shareholding ratio ranges under the existing structure, and express provisions requiring that total shareholding by government and juristic-person shareholders, or their representatives, that are elected as directors or supervisors be calculated using that government or juristic-person shareholder's total number of registered shares. Some provisions were also deleted including provisions setting a specified period of time for directors and supervisors to supplement their shareholding ratios when such ratios are insufficient, and provisions regarding parties to be penalized and the method for imposing responsibility when a violation of obligations under administrative law is done by multiple parties.[ UP ]

FSC amends the Standards Governing the Establishment of Securities Investment Consulting Enterprises, Regulations Governing Securities Investment Consulting Enterprises, and Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises

On 2 May 2008 the FSC made partial amendments to the Standards Governing the Establishment of Securities Investment Consulting Enterprises, Regulations Governing Securities Investment Consulting Enterprises, and Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises to enhance supervision of securities investment consulting enterprises (SICEs). Key amendments to those regulations include the raising of the minimum paid-in capital for a SICE from NT$10 million to NT$20 million, the addition of provisions requiring that a SICE post an operating bond of NT$5 million, the specifying of requirements relating to the suspension of business operations, and the addition of a requirement that SICE employees who engage in trading of securities and equity-type derivatives report such trading to their employer.[ UP ]

FSC makes partial amendments to the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises

Relevant provisions of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises were amended to harmonize with deregulation measures permitting futures brokers, managed futures enterprises, futures trust enterprises, and insurance enterprises to concurrently operate discretionary investment business, and to strengthen supervision of discretionary investment services.[ UP ]

FSC amends the Regulations Governing the Establishment of Internal Control Systems by Securities Investment Trust Enterprises and by Securities Investment Consulting Enterprises Conducting Discretionary Investment Business

Relevant provisions of the Regulations Governing the Establishment of Internal Control Systems by Securities Investment Trust Enterprises and by Securities Investment Consulting Enterprises Conducting Discretionary Investment Business were amended to strengthen enterprises' internal control systems and to harmonize with deregulation measures permitting futures brokers, managed futures enterprises, futures trust enterprises, and insurance enterprises to concurrently operate discretionary investment business or securities investment trust business.[ UP ]

Securities brokers approved to act as sub-distributors for securities investment trust funds

On 8 May 2008 the FSC granted approval for securities brokers to act as sub-distributors for securities investment trust funds. A securities broker while in allocating a client's assets through a segregated wealth management account may subscribe to a securities investment trust fund on its customer's behalf under its own name as the investor.[ UP ]

Futures trust enterprises and managed futures enterprises allowed to concurrently operate securities investment trust business

To harmonize with amendments to the Standards Governing the Establishment of Securities Investment Trust Enterprises, on 23 April 2008 the FSC publicly announced that futures trust enterprises and managed futures enterprises may apply to concurrently operate securities investment trust business, and amended the formats of documents for applications by securities investment consulting enterprises (SICE) and trust enterprises to concurrently operate securities investment trust business, and for the establishment of securities investment trust enterprises (SITE) and their branches.[ UP ]

FSC amends relevant regulations to harmonize with amendments to the Certified Public Accountant Act

To harmonize with amendments to the Certified Public Accountant Act promulgated on 26 December 2007, the FSC amended the Regulations Governing the Organization and Procedures of the CPA Discipline Committee and CPA Disciplinary Rehearing Committee, adopted the Regulations Governing the Hiring of Scholars and Fair and Impartial Persons as Members of the CPA Discipline Committee and CPA Disciplinary Rehearing Committee, Regulations Governing Applications for CPA Certificates and Practice Registration, and the Regulations Governing Implementation of Professional Liability Insurance Carried by Certified Public Accountant Corporations, and also announced the minimum capital requirement for certified public accountant corporations. The main changes to the regulations in connection with CPA discipline were amendment of the number of CPA representatives on the disciplinary committee and the method for adoption of resolutions by the committee. The regulations regarding certified public accountant corporations set out requirements for minimum capitalization, minimum insurance coverage, and compliance matters related to insurance coverage.[ UP ]

FSC drafts "1-2-3 Project for Exchange Listings by Offshore Firms"

In a bid to encourage offshore Taiwanese firms to list on the Taiwan Stock Exchange, the FSC recently drafted the "1-2-3 Project for Exchange Listings by Offshore Firms." The project, which has been designed to comply with Taiwan's current legal framework while at the same time meshing smoothly with international systems, is intended to expand the size of the securities market and encourage firms to invest in Taiwan. Offshore firms will be allowed to directly list their shares in Taiwan. The key focus of the project is to allow newly emerging and large-scale offshore enterprises to list directly on Taiwan's Emerging Stock Market, the Taiwan Stock Exchange, and the GreTai Securities Market. Such shares will trade in the normal manner, while CPAs, attorneys, securities underwriters, and other experts will be relied upon to safeguard investors by ensuring proper disclosure, corporate governance, and market operations .[ UP ]

Changes to block trading system

Three changes have been introduced to further improve the block trading system: (1) block trade prices were formerly limited to within 3.5% of the previous day's closing market price, but the allowable range has now been increased to 7% (the same as the limit applying to ordinary trades); (2) the minimum size of paired trades has been reduced to match the minimum for non-paired trades; and (3) block trades can now be used for SBL short sales (i.e. a specific type of short selling carried out pursuant to "securities borrowing and lending" rules). The use of block trades for SBL short sales will be allowed beginning from 28 July 2008, while the other two measures will take effect on 12 May 2008.[ UP ]

FSC amends Standards Governing the Establishment of Securities Investment Trust Enterprises

The FSC amended the Standards Governing the Establishment of Securities Investment Trust Enterprises on 17 March 2008. Key changes include the following: (1) To coordinate with a decision to allow futures trust enterprises and managed futures enterprises to concurrently conduct securities investment trust business, the Standards set out qualification requirements, required application documents, and staffing requirements for parties interested in applying to conduct such business. (2) The qualification requirements have been relaxed for financial holding companies wishing to act as promoters of securities investment trust enterprises.[ UP ]

FSC amends Regulations Governing Securities Investment Trust Enterprises

The FSC amended the Regulations Governing Securities Investment Trust Enterprises on 17 March 2008. Key changes include the following: (1) The pre-amendment Regulations provided that securities investment trust enterprises, in order to handle redemptions of large-value beneficiary certificates, were allowed to arrange for loans with financial institutions using the assets of a securities investment trust fund as security, but this provision has now been eliminated. (2) In keeping with the principles of collective investment schemes governance, provisions governing the exercise of voting rights for shares held by a securities investment trust have been relaxed. (3) The Regulations specifically list certain fund-related documents that fund distributors are required to keep available at their places of business. (4) To coordinate with a decision to allow futures trust enterprises and managed futures enterprises to concurrently conduct securities investment trust business, the Regulations include express provisions governing the offering period for an initial public offering of a fund as well as the public disclosure of a fund's financial reports and prospectus.[ UP ]

FSC amends "Regulations Governing Information to be Published in Prospectuses for Public Offerings of Beneficial Interest Securities by Trustees and Public Offerings of Asset-Backed Securities by Special Purpose Companies"

The FSC recently amended Articles 9, 10, and 12 of these Regulations in order to ensure more complete information disclosure in the prospectuses for financial asset securitization products. The amended Regulations include new provisions setting out particulars that must be noted in a prospectus. A prospectus must disclose the selection criteria and related statistical data used to determine what trust property or acquired assets will be included in the asset pool. The amended provisions were issued and entered into force on 19 March 2008.[ UP ]

FSC amends "Regulations Governing Responsible Persons and Associated Persons of Securities Investment Trust Enterprises"

The FSC has recently amended these Regulations in order to flesh out requirements governing the establishment of legal compliance units by securities investment trust enterprises (SITEs), and to dovetail with the decision to allow SITEs, futures trust enterprises, and managed futures enterprises to concurrently conduct each other's business.[ UP ]

FSC amends legal provisions governing the range of securities-related products in which a SITE or SICE may trade using discretionary investment assets

In order to allow discretionary investment service providers more flexibility in how they allocate assets under management, the FSC: (1) has raised the risk exposure limit from 30% to 40% for assets under management that are used to trade in securities-related products; (2) allows assets under management to be used to trade in offshore futures or options for which the underlying instrument is a domestic Taiwanese security, basket of securities, or stock index; and (3) has amended legal provisions governing the use of discretionary assets to trade in securities-related products.[ UP ]

FSC revises method for calculating stock bonuses of employees of listed companies

To flesh out procedures connected with the 1 January 2008 switch to expensing of employee profit sharing contributions, the FSC has ruled that where an employee profit sharing scheme is adopted at a listed company's shareholders meeting, the previous day's closing market price must be used as the basis for calculating the number of shares to be distributed, and the calculation must factor in the impact of any offering of rights shares or distribution of stock dividends. Also, when a profit sharing proposal is put on a shareholders meeting agenda, the proposal need not state the number of shares that would be distributed, but instead need only note the dollar amount to be expensed and provide a statement that: (1) the dollar amount is based on the closing market price for the day immediately preceding the shareholders meeting; and (2) the impact of any offering of rights shares or distribution of stock dividends has been factored into the calculation. In addition, if stock price fluctuations could possibly cause a shortfall in a company's authorized capital, it is advisable for the company to put forward a proposal to amend its articles of incorporation.[ UP ]

FSC amends "Directions for Review of Applications by Enterprises Exclusively Engaged in Futures Business for the Issuance of Approval Letters for Registration of the Listing of Stocks on an OTC or Emerging Market"

The amended Directions no longer require that approval letters for OTC listings be issued before 1 June each year. In addition, criteria for determining stability of earning power have been eliminated from the section on OTC listings, and determinations will now be made instead in accordance with the provisions of the "GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets." Also, under the pre-amendment Directions, the adjusted net capital of an enterprise exclusively engaged in futures business had to be equal to at least 40 percent of total customer margin accounts required for open positions during each day of the six months prior to its application. This requirement, concerning that market fluctuations may influence adjusted net capital while the enterprise is not otherwise experiencing material financial or operating difficulties, has been revised, so that a firm may apply for a listing as long as its each month adjusted net capital over the six months preceding application is not below 40 percent.[ UP ]

Multiple subsidiaries under same parent get green light to use combined investment accounts

Domestically listed companies with multiple offshore subsidiaries may face administrative difficulties and pay duplicate custodial fees and processing fees because each offshore subsidiary has been required to establish its own separate investment account. As of 16 April 2008, however, subsidiaries of a single domestic parent are free to choose whether they prefer to establish separate investment accounts for each such subsidiary or use a single combined account to service them all.[ UP ]

Issuance of rules governing implementation of legal compliance system by futures commission merchants (FCM)（2008.3.7）

To enhance attention to legal compliance concepts and promote the establishment of legal compliance systems at FCMs, pursuant to Article 26 of the “Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets”, on 7 March 2008 the FSC issued rules requiring that, beginning on 1 May 2008, exchange or OTC-listed enterprises exclusively operating futures business, securities firms concurrently operating futures business, as well as financial holding companies' futures subsidiaries and sub-subsidiaries, and securities subsidiaries concurrently operating futures business, set up a unit directly under the board of directors or the general manager, to be responsible for planning, managing, and implementing the FCM's legal compliance system.[ UP ]

Foreign investors permitted to engage in the trading of equity derivatives with domestic securities firms and banks（2008.3.6）

Beginning from 6 March 2008, offshore overseas Chinese and foreign nationals may engage, with domestic securities firms and banks, in trading of equity derivatives as regulated in the “GreTai Securities Market Rules Governing Over-the-Counter Trading of Financial Derivatives by Securities Firms”. Those equity derivatives include options and equity swaps involving Taiwan equities, denominated either in New Taiwan Dollars or foreign currency, as well as options and equity swaps involving foreign equities, denominated either in New Taiwan Dollars or foreign currency.[ UP ]

Foreign investors permitted to engage in the trading of structured instruments with domestic securities firms and banks（2008.3.4）

Beginning from 4 March 2008, offshore overseas Chinese and foreign nationals may engage, with domestic securities firms and banks, in trading of structured instruments as regulated in the “GreTai Securities Market Rules Governing Over-the-Counter Trading of Financial Derivatives by Securities Firms”. Those structured instruments include products denominated in New Taiwan Dollars or foreign currency and linked to domestic or foreign equity or interest rates.[ UP ]

Effective registration period shortened for follow-on offerings of domestically offered, domestically investing funds（2008.3.4）

“The Regulations Governing the Offering of Securities Investment Trust Funds by Securities Investment Trust Enterprises” were amended and issued on 4 March 2008. Key elements in the amended provisions include allowing the FSC, after observing changes in the practical environment, to exercise flexibility in modifying the exceptions to follow-on offering requirements, and the shortening of the effective registration period, from 12 to 7 business days, for follow-on offerings of any type of domestically offered, domestically investing fund except for bond, balanced, and money market-type funds.[ UP ]