Menu
Skip to main content block
:::
:::

Newsletter No023

Main Content

Newsletter No: 023

April 17, 2006

I.News and Events   (Chinese)

1. Securities finance enterprises allowed to engage in securities settlement financing

To allow more efficient allocation of capital by securities finance enterprises and to increase liquidity of the securities market, securities finance enterprises are allowed to engage in financing for the settlement of trading securities.



2. New legislations and order regarding corporate governance under the Securities and Exchange Act

On 28 March 2006 the Financial Supervisory Commission (FSC) promulgated the order "Scope of Application for Installation of Independent Directors by Public Companies," and adopted three new regulations: the Regulations Governing the Installation of Independent Directors of Public Companies and Related Compliance Matters, Regulations Governing the Exercise of Powers by Audit Committees of Public Companies, and Regulations Governing the Proceedings of Board of Directors Meetings of Public Companies.



3. Requirement of declarations by the TSEC and securities firms stating that financial statements contain no falsehood or concealment

In accordance with Article 14, paragraph 3 of the Securities and Exchange Act, since the 2005 fiscal year, the financial reports submitted by issuers, securities firms, or the TSEC shall be signed or stamped by the chairman of the board, general manager (or equivalent person), and chief accounting officer on the balance sheet, income statement, statement of changes in shareholder equity, and cash flow statement, and who shall also produce a declaration with the financial report at the time of announcement, filing, or uploading to the Market Observation Post System.



4. Securities Firms given permission to trade credit default swaps with financial institutions

On 21 March 2006, the FSC allowed securities firms, that act as originators in accordance with the Financial Asset Securitization Act and that hold beneficiary securities or asset-backed securities for the purpose of credit enhancement, to trade New Taiwan Dollar (NTD) credit default swaps for hedging purposes with authorized financial institutions.



5. Open non-hedging futures transactions for foreign investors

Selected provisions of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals have been amended to allow foreign investors to engage in non-hedging futures transactions. In addition, the FSC issued orders in March 2006 including: promulgate the Guidelines for Domestic Futures Trading by Overseas Chinese and Foreign Nationals, repealing the Guidelines for Futures Trading by Overseas Chinese and Foreign Nationals and amending the limit on investment by offshore foreigners in government bonds, time deposits, money-market instruments, or NTD interest-rate derivatives which excludes the futures and options trading on Taiwan Futures Exchange to an amount not to exceed 30% of its inward remittance of funds, and providing rules of positions for a period of transition between the old and new systems for foreign investors engaging in futures transactions.



The following are key points in the handling of existing futures hedge positions and NTD margins:

(1) Handling of existing positions: Existing open positions and NTD margins may both be held until full liquidation or settlement at maturity.

(2) Handling of existing NTD margins and offsetting positions: When an open position matures or is offset, the NTD margin equity may be withdrawn and the futures commission merchant may be authorized to convert the NTD margin into US dollars or to remit the amount into the holder's securities investment account.

(3) Handling of additional trades: When futures trading order is placed on the basis of an existing margin, the NTD margin shall be converted to a US dollar margin or remitted into a US dollar margin account within three days after completion of the transaction.






II. Market Wrap-up

As of the end of March, 691 companies were listed on the Taiwan Stock Exchange, same as the previous month. The total capital issued was NT$ 5434.29 billion, an increase of NT$21.39 billion over the preceding month, and the market capitalization was NT$15,916.50 billion, an increase of NT$215.95 billion over the preceding month.

As of the end of March, 512 companies were listed on the GreTai Securities Market, an increase of four against the previous month. The total capital issued was NT$ 655.82 billion, an increase of NT$5.27 billion against the preceding month, and the market capitalization was NT$ 1414.85 billion, an increase of NT$92.06 billion against the previous month.

In March, the trading value of shares on the Taiwan Stock Exchange was NT$2083.43 billion, an increase of NT$ 492.2 billion over the previous month, while the trading volume was NT$51.79 billion, an increase of NT$ 5.83 billion shares compared with the previous month.

As of the end of March, the accumulated net inward remittance of foreign investors was US$ 114.42 billion, an increase of US$0.12 billion over February. There are currently 143 securities firms, 23 futures commission merchants, 45 securities investment trust enterprises and 208 securities investment consulting enterprises.



III. Q&A
1. Investment quotas for foreign investors


Under the amended Regulations Governing Investment in Securities by Overseas Chinese and Foreign Investors, foreign investors are divided into two categories: foreign institutional investors (FINIs) and foreign individual investors (FIDIs). While FIDIs are subject to a US$5 million investment quota, FINIs are free of an upper limit on investment. However, in a few specific industries foreign investors are still subject to investment ceilings under relevant acts or regulations.


2. Investment scope for offshore foreign investors

The scope of investment in Taiwan securities markets open to offshore foreign investors is as follows:

1. Stocks and bond conversion entitlement certificates of listed/GTSM companies.

2. Listed/GTSM beneficiary certificates.

3. Government bonds, financial bonds (including subordinated financial bonds), straight corporate bonds, and convertible bonds.

4. Taiwan Depositary Receipts.

5. Open-ended beneficiary certificates.

6. Underwritten stocks of listed companies in secondary public offerings.

7. Underwritten stocks in IPOs prior to initial listing and underwritten stocks in rights offerings.

8. Underwritten stocks in IPOs prior to initial GTSM listing and underwritten GTSM stocks in rights offerings.

9. Beneficiary certificates prior to initial listing.

10. Call/put warrants.

11. NT dollar bonds issued in Taiwan by international financial organizations.

12. Preferred shares issued by listed/GTSM companies.

13. GTSM Emerging Stocks.

Additionally, Funds that have been duly and timely remitted into Taiwan for the purchase of domestic securities and that have not yet been invested may be used as follows (with the total value of such use not to exceed 30 percent of the amount remitted in, except in the case of outright bond trading):

1. Investment in government bonds, time deposits, and money market instruments; trading of NTD interest-rate derivatives on over-the-counter.

2. Investments in NT dollar time deposits shall be limited to duration of three months, with a one-time extension of three months allowed at expiration.

3. Investments in money market instruments, limited to bills within 90 days of expiration.


3. Requirements over the outward remittance of investment principal, capital gains and the other investment gains by foreign investors.

1. After receiving permission to invest in Taiwan, foreign investors may apply to remit investment capital and investment earnings out of the ROC. However, outward remittances of capital gains and stock dividends may be made from realized earnings only.

2. Applications for foreign exchange remittance for investment capital and earnings shall be handled in accordance with the Act for the Regulation of Foreign Exchange (under the purview of the Central Bank).

3. When a foreign investor intends to repatriate investment earnings, the investor's agent or representative shall submit documents evidencing the filing of a tax return and payment of taxes by an agent/representative approved by the tax authorities and carry out exchange settlement in accordance with the Act for the Regulation of Foreign Exchange; however, during a period when assessment of ROC income tax on capital gains from securities transactions is suspended, the agent or representative may submit a tax clearance certificate from the tax authorities and carry out exchange settlement in accordance with the Act for the Regulation of Foreign Exchange.


4. Exercising shareholder's rights for offshore foreign investors



1. The voting rights of a foreign institutional investor outside of Taiwan ("offshore foreign institutional investor") holding shares in a public company in Taiwan may be exercised as follows:

(1) Exercise electronically or by means of a written form in accordance with Article 177-1 of the Company Act;

(2) Exercise through appointment of a company conforming to Article 3, paragraph 2 of the Regulations Governing Handling of Stock Affairs by Public Companies;

(3) Exercise through appointment of a domestic agent or representative to exercise voting rights at the shareholder meeting;

(4) Exercise through an appointment by the domestic agent or representative, as authorized by the offshore foreign institutional investor, of a party other than the domestic agent or representative to exercise voting rights at the shareholder meeting;

2. An offshore foreign institutional investor that appoints a company as indicated in point 2 of the preceding paragraph or a person as indicated in points 3 and 4 therein to exercise voting rights at a shareholder meeting shall in each case clearly indicate in the letter of appointment its instructions regarding the exercise of voting rights on each proposal.

3. An offshore foreign institutional investor may not give a proxy form issued by the public company to a proxy solicitor or proxy agent.


5. Restrictions on investment of money market instruments for offshore foreign investors

The government's opening of Taiwan’s securities market to offshore foreign investors is primarily oriented toward drawing investment into securities on the centralized exchange market. Investing in money market instruments is purely for short-term cash management needs. The cap of 30 percent should be sufficient for this purpose. Therefore, currently there are no plans to raise the ceiling.


6. Prefunding Issues in Taiwan

1. Domestic financial institutions in Taiwan since 4 May 2004 have been allowed to provide intraday credit to foreign investors to assist foreign investors who, due to time differences, are unable to make timely remittance of funds to complete settlement.

2. In the past, Taiwan's securities market imposed severe penalties for settlement default (a 3-year ban from trading). To avoid fail trade, some securities firms instituted their own requirement on foreign investors to provide settlement funds in advance (i.e., prefunding) when they place an order, causing inconvenience to foreign investors. A late settlement system has therefore been adopted for foreign investors, under certain circumstances, to postpone settlement until 6 p.m. of the third business day after the date of the trade, and extending the deadline for securities firms to report default by foreign investors to the third business day after the date of the trade. Besides, the TSEC has amended Article 76 of the Operating Rules of the Taiwan Stock Exchange Corporation on August 1, 2005, repealing the provision that an investor may not open an account and engage in trading for a period of three years after a conclusive finding of settlement default.

3. Following amendment of Article 60 of the Securities and Exchange Act, the FSC on 22 February 2006 allowed securities firms to participate as lenders in the TSEC / GreTai securities and bond lending centers.


7. Disclosure of the investment positions of foreign investors



The FSC does not disclose investment information of individual foreign investors, but foreign investors are nevertheless obligated to comply with reporting requirements.


8. Locking period of stocks



The trading of stocks held by foreign investors is not subject to a "locking period".


9. Off-exchange transactions

1. Article 150 of the Securities and Exchange Act provides that trading of listed securities shall be conducted on a centralized securities trading market operated by a stock exchange. However, paragraph 4 of the same Article empowers the Competent Authority to make provisions for permitting off-exchange transactions in exceptional situations. For example, a foreign investor who has received approval from the Investment Commission of the Ministry of Economic Affairs under the Act Governing Investment by Foreign Nationals to transfer assets to another foreign investor may do so through off-exchange trading. Many foreign investors have invested in Taiwan stocks through such off-exchange channels over the years.

2. Under current law, securities listed on the GreTai Securities Market (GTSM) can be traded off-market. But, in those cases of securities for which the relevant authorities have duly set a foreign investment ceiling in accordance with law, foreign investors (who must have obtained approval or registration in accordance with the Regulations Governing Securities Investment by Overseas Chinese and Foreign Investors) are required to trade such securities through the GTSM trading system. However, only a very few OTC stocks are subject to this requirement. Most GTSM stocks can also be traded by foreign investors via price negotiation at the business places of securities firms.

3. After each market close, the TSEC also provides auction and tender offer systems in which securities prices are negotiable to satisfy various investors’ demands.


10. Foreign ownership restrictions



Taiwan lifted limits on total/individual foreign shareholding in public companies from 30 December 2000. Applicable acts and regulations may in a few instances limit the percentage of equity holdings by foreign nationals in companies in certain industries (such as posts, telecommunications, and shipping) to meet policy needs related to national interests in the economic, social, or cultural spheres. Most developed countries have similar policies, and the practice in Taiwan is in line with developed-market standards.


11. Odd-lot trading

In the past, offshore foreign investors were permitted to sell stocks in odd lots, but not to buy them. To meet the varied trading and investment demands of foreign investors, the FSC announced on 22 July 2005 that offshore foreign investors are also permitted to buy odd lots.



12. Permission for asset transfers between offshore foreign investors with different ID numbers but where the final beneficiary is the same person

1. A foreign investor may open multiple depositary accounts in Taiwan, as long as each account bears the same investor registration number. Assets may be transferred freely between such accounts, without the need for a buy-sell process.

2. The FSC further announced that transferring of assets accounts involved belonging to the same final beneficiary legal entity and there is no violation of off-exchange trading rules. Moreover, the FSC has eased rules relating to signing documents by a great number of final beneficiaries.


13. Evaluation of the MSCI revision of the Limited Investability Factor

Morgan Stanley Capital International (MSCI) raised the Limited Investability Factor (LIF) applied to the MSCI Taiwan Index to 1 from the former 0.75 effective after market close on 31 May. This adjustment has raised the international standing of Taiwan's securities market and pushed Taiwan into the top spot in the MSCI Emerging Markets (EM) Index, and has helped to boost investor interest in Taiwan stocks, attract a stronger influx of foreign capital, and enliven and expand Taiwan's securities markets.


14. Reformation for FTSE

1. In its list of country classifications announced in September 2004, the FTSE Group upgraded Taiwan and South Korea from its Provisional Watch List for Developed Markets to its Watch List for Developed Markets. In response, the FSC formed a special working group in November 2004 to study and launch further market reforms in Taiwan, and held an overseas roadshow in Hong Kong, Singapore, London, New York, Boston, London, and Edinburgh in May 2005.

2. To support an upgrade of Taiwan's securities market to Developed Market status, the FSC has launched a series of improvements aimed at further deregulating and internationalizing the market. For example: introducing a settlement grace period mechanism for foreign investors, easing requirements for foreign investor participation in the securities borrowing and lending system, streamlining the foreign investor registration system, simplifying asset transfers between foreign investors with different ID numbers, relaxing off-exchange trading systems, as well as completely opening foreign investors to engage in futures transactions for hedging and non-hedging purposes and allowing to trade through individual accounts or omnibus accounts. 
(Chinese)

1. Securities finance enterprises allowed to engage in securities settlement financing

To allow more efficient allocation of capital by securities finance enterprises and to increase liquidity of the securities market, securities finance enterprises are allowed to engage in financing for the settlement of trading securities.



2. New legislations and order regarding corporate governance under the Securities and Exchange Act

On 28 March 2006 the Financial Supervisory Commission (FSC) promulgated the order "Scope of Application for Installation of Independent Directors by Public Companies," and adopted three new regulations: the Regulations Governing the Installation of Independent Directors of Public Companies and Related Compliance Matters, Regulations Governing the Exercise of Powers by Audit Committees of Public Companies, and Regulations Governing the Proceedings of Board of Directors Meetings of Public Companies.



3. Requirement of declarations by the TSEC and securities firms stating that financial statements contain no falsehood or concealment

In accordance with Article 14, paragraph 3 of the Securities and Exchange Act, since the 2005 fiscal year, the financial reports submitted by issuers, securities firms, or the TSEC shall be signed or stamped by the chairman of the board, general manager (or equivalent person), and chief accounting officer on the balance sheet, income statement, statement of changes in shareholder equity, and cash flow statement, and who shall also produce a declaration with the financial report at the time of announcement, filing, or uploading to the Market Observation Post System.



4. Securities Firms given permission to trade credit default swaps with financial institutions

On 21 March 2006, the FSC allowed securities firms, that act as originators in accordance with the Financial Asset Securitization Act and that hold beneficiary securities or asset-backed securities for the purpose of credit enhancement, to trade New Taiwan Dollar (NTD) credit default swaps for hedging purposes with authorized financial institutions.



5. Open non-hedging futures transactions for foreign investors

Selected provisions of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals have been amended to allow foreign investors to engage in non-hedging futures transactions. In addition, the FSC issued orders in March 2006 including: promulgate the Guidelines for Domestic Futures Trading by Overseas Chinese and Foreign Nationals, repealing the Guidelines for Futures Trading by Overseas Chinese and Foreign Nationals and amending the limit on investment by offshore foreigners in government bonds, time deposits, money-market instruments, or NTD interest-rate derivatives which excludes the futures and options trading on Taiwan Futures Exchange to an amount not to exceed 30% of its inward remittance of funds, and providing rules of positions for a period of transition between the old and new systems for foreign investors engaging in futures transactions.



The following are key points in the handling of existing futures hedge positions and NTD margins:

(1) Handling of existing positions: Existing open positions and NTD margins may both be held until full liquidation or settlement at maturity.

(2) Handling of existing NTD margins and offsetting positions: When an open position matures or is offset, the NTD margin equity may be withdrawn and the futures commission merchant may be authorized to convert the NTD margin into US dollars or to remit the amount into the holder's securities investment account.

(3) Handling of additional trades: When futures trading order is placed on the basis of an existing margin, the NTD margin shall be converted to a US dollar margin or remitted into a US dollar margin account within three days after completion of the transaction.






II. Market Wrap-up

As of the end of March, 691 companies were listed on the Taiwan Stock Exchange, same as the previous month. The total capital issued was NT$ 5434.29 billion, an increase of NT$21.39 billion over the preceding month, and the market capitalization was NT$15,916.50 billion, an increase of NT$215.95 billion over the preceding month.

As of the end of March, 512 companies were listed on the GreTai Securities Market, an increase of four against the previous month. The total capital issued was NT$ 655.82 billion, an increase of NT$5.27 billion against the preceding month, and the market capitalization was NT$ 1414.85 billion, an increase of NT$92.06 billion against the previous month.

In March, the trading value of shares on the Taiwan Stock Exchange was NT$2083.43 billion, an increase of NT$ 492.2 billion over the previous month, while the trading volume was NT$51.79 billion, an increase of NT$ 5.83 billion shares compared with the previous month.

As of the end of March, the accumulated net inward remittance of foreign investors was US$ 114.42 billion, an increase of US$0.12 billion over February. There are currently 143 securities firms, 23 futures commission merchants, 45 securities investment trust enterprises and 208 securities investment consulting enterprises.



III. Q&A
1. Investment quotas for foreign investors


Under the amended Regulations Governing Investment in Securities by Overseas Chinese and Foreign Investors, foreign investors are divided into two categories: foreign institutional investors (FINIs) and foreign individual investors (FIDIs). While FIDIs are subject to a US$5 million investment quota, FINIs are free of an upper limit on investment. However, in a few specific industries foreign investors are still subject to investment ceilings under relevant acts or regulations.


2. Investment scope for offshore foreign investors

The scope of investment in Taiwan securities markets open to offshore foreign investors is as follows:

1. Stocks and bond conversion entitlement certificates of listed/GTSM companies.

2. Listed/GTSM beneficiary certificates.

3. Government bonds, financial bonds (including subordinated financial bonds), straight corporate bonds, and convertible bonds.

4. Taiwan Depositary Receipts.

5. Open-ended beneficiary certificates.

6. Underwritten stocks of listed companies in secondary public offerings.

7. Underwritten stocks in IPOs prior to initial listing and underwritten stocks in rights offerings.

8. Underwritten stocks in IPOs prior to initial GTSM listing and underwritten GTSM stocks in rights offerings.

9. Beneficiary certificates prior to initial listing.

10. Call/put warrants.

11. NT dollar bonds issued in Taiwan by international financial organizations.

12. Preferred shares issued by listed/GTSM companies.

13. GTSM Emerging Stocks.

Additionally, Funds that have been duly and timely remitted into Taiwan for the purchase of domestic securities and that have not yet been invested may be used as follows (with the total value of such use not to exceed 30 percent of the amount remitted in, except in the case of outright bond trading):

1. Investment in government bonds, time deposits, and money market instruments; trading of NTD interest-rate derivatives on over-the-counter.

2. Investments in NT dollar time deposits shall be limited to duration of three months, with a one-time extension of three months allowed at expiration.

3. Investments in money market instruments, limited to bills within 90 days of expiration.


3. Requirements over the outward remittance of investment principal, capital gains and the other investment gains by foreign investors.

1. After receiving permission to invest in Taiwan, foreign investors may apply to remit investment capital and investment earnings out of the ROC. However, outward remittances of capital gains and stock dividends may be made from realized earnings only.

2. Applications for foreign exchange remittance for investment capital and earnings shall be handled in accordance with the Act for the Regulation of Foreign Exchange (under the purview of the Central Bank).

3. When a foreign investor intends to repatriate investment earnings, the investor's agent or representative shall submit documents evidencing the filing of a tax return and payment of taxes by an agent/representative approved by the tax authorities and carry out exchange settlement in accordance with the Act for the Regulation of Foreign Exchange; however, during a period when assessment of ROC income tax on capital gains from securities transactions is suspended, the agent or representative may submit a tax clearance certificate from the tax authorities and carry out exchange settlement in accordance with the Act for the Regulation of Foreign Exchange.


4. Exercising shareholder's rights for offshore foreign investors



1. The voting rights of a foreign institutional investor outside of Taiwan ("offshore foreign institutional investor") holding shares in a public company in Taiwan may be exercised as follows:

(1) Exercise electronically or by means of a written form in accordance with Article 177-1 of the Company Act;

(2) Exercise through appointment of a company conforming to Article 3, paragraph 2 of the Regulations Governing Handling of Stock Affairs by Public Companies;

(3) Exercise through appointment of a domestic agent or representative to exercise voting rights at the shareholder meeting;

(4) Exercise through an appointment by the domestic agent or representative, as authorized by the offshore foreign institutional investor, of a party other than the domestic agent or representative to exercise voting rights at the shareholder meeting;

2. An offshore foreign institutional investor that appoints a company as indicated in point 2 of the preceding paragraph or a person as indicated in points 3 and 4 therein to exercise voting rights at a shareholder meeting shall in each case clearly indicate in the letter of appointment its instructions regarding the exercise of voting rights on each proposal.

3. An offshore foreign institutional investor may not give a proxy form issued by the public company to a proxy solicitor or proxy agent.


5. Restrictions on investment of money market instruments for offshore foreign investors

The government's opening of Taiwan’s securities market to offshore foreign investors is primarily oriented toward drawing investment into securities on the centralized exchange market. Investing in money market instruments is purely for short-term cash management needs. The cap of 30 percent should be sufficient for this purpose. Therefore, currently there are no plans to raise the ceiling.


6. Prefunding Issues in Taiwan

1. Domestic financial institutions in Taiwan since 4 May 2004 have been allowed to provide intraday credit to foreign investors to assist foreign investors who, due to time differences, are unable to make timely remittance of funds to complete settlement.

2. In the past, Taiwan's securities market imposed severe penalties for settlement default (a 3-year ban from trading). To avoid fail trade, some securities firms instituted their own requirement on foreign investors to provide settlement funds in advance (i.e., prefunding) when they place an order, causing inconvenience to foreign investors. A late settlement system has therefore been adopted for foreign investors, under certain circumstances, to postpone settlement until 6 p.m. of the third business day after the date of the trade, and extending the deadline for securities firms to report default by foreign investors to the third business day after the date of the trade. Besides, the TSEC has amended Article 76 of the Operating Rules of the Taiwan Stock Exchange Corporation on August 1, 2005, repealing the provision that an investor may not open an account and engage in trading for a period of three years after a conclusive finding of settlement default.

3. Following amendment of Article 60 of the Securities and Exchange Act, the FSC on 22 February 2006 allowed securities firms to participate as lenders in the TSEC / GreTai securities and bond lending centers.


7. Disclosure of the investment positions of foreign investors



The FSC does not disclose investment information of individual foreign investors, but foreign investors are nevertheless obligated to comply with reporting requirements.


8. Locking period of stocks



The trading of stocks held by foreign investors is not subject to a "locking period".


9. Off-exchange transactions

1. Article 150 of the Securities and Exchange Act provides that trading of listed securities shall be conducted on a centralized securities trading market operated by a stock exchange. However, paragraph 4 of the same Article empowers the Competent Authority to make provisions for permitting off-exchange transactions in exceptional situations. For example, a foreign investor who has received approval from the Investment Commission of the Ministry of Economic Affairs under the Act Governing Investment by Foreign Nationals to transfer assets to another foreign investor may do so through off-exchange trading. Many foreign investors have invested in Taiwan stocks through such off-exchange channels over the years.

2. Under current law, securities listed on the GreTai Securities Market (GTSM) can be traded off-market. But, in those cases of securities for which the relevant authorities have duly set a foreign investment ceiling in accordance with law, foreign investors (who must have obtained approval or registration in accordance with the Regulations Governing Securities Investment by Overseas Chinese and Foreign Investors) are required to trade such securities through the GTSM trading system. However, only a very few OTC stocks are subject to this requirement. Most GTSM stocks can also be traded by foreign investors via price negotiation at the business places of securities firms.

3. After each market close, the TSEC also provides auction and tender offer systems in which securities prices are negotiable to satisfy various investors’ demands.


10. Foreign ownership restrictions



Taiwan lifted limits on total/individual foreign shareholding in public companies from 30 December 2000. Applicable acts and regulations may in a few instances limit the percentage of equity holdings by foreign nationals in companies in certain industries (such as posts, telecommunications, and shipping) to meet policy needs related to national interests in the economic, social, or cultural spheres. Most developed countries have similar policies, and the practice in Taiwan is in line with developed-market standards.


11. Odd-lot trading

In the past, offshore foreign investors were permitted to sell stocks in odd lots, but not to buy them. To meet the varied trading and investment demands of foreign investors, the FSC announced on 22 July 2005 that offshore foreign investors are also permitted to buy odd lots.



12. Permission for asset transfers between offshore foreign investors with different ID numbers but where the final beneficiary is the same person

1. A foreign investor may open multiple depositary accounts in Taiwan, as long as each account bears the same investor registration number. Assets may be transferred freely between such accounts, without the need for a buy-sell process.

2. The FSC further announced that transferring of assets accounts involved belonging to the same final beneficiary legal entity and there is no violation of off-exchange trading rules. Moreover, the FSC has eased rules relating to signing documents by a great number of final beneficiaries.


13. Evaluation of the MSCI revision of the Limited Investability Factor

Morgan Stanley Capital International (MSCI) raised the Limited Investability Factor (LIF) applied to the MSCI Taiwan Index to 1 from the former 0.75 effective after market close on 31 May. This adjustment has raised the international standing of Taiwan's securities market and pushed Taiwan into the top spot in the MSCI Emerging Markets (EM) Index, and has helped to boost investor interest in Taiwan stocks, attract a stronger influx of foreign capital, and enliven and expand Taiwan's securities markets.


14. Reformation for FTSE

1. In its list of country classifications announced in September 2004, the FTSE Group upgraded Taiwan and South Korea from its Provisional Watch List for Developed Markets to its Watch List for Developed Markets. In response, the FSC formed a special working group in November 2004 to study and launch further market reforms in Taiwan, and held an overseas roadshow in Hong Kong, Singapore, London, New York, Boston, London, and Edinburgh in May 2005.

2. To support an upgrade of Taiwan's securities market to Developed Market status, the FSC has launched a series of improvements aimed at further deregulating and internationalizing the market. For example: introducing a settlement grace period mechanism for foreign investors, easing requirements for foreign investor participation in the securities borrowing and lending system, streamlining the foreign investor registration system, simplifying asset transfers between foreign investors with different ID numbers, relaxing off-exchange trading systems, as well as completely opening foreign investors to engage in futures transactions for hedging and non-hedging purposes and allowing to trade through individual accounts or omnibus accounts.

 
Note: If you expect to receive this newsletter, or have your name deleted from the sending list, or have your email information changed, please send to newsletter@sfb.gov.tw.If you hope to know more about the Taiwan's securities and futures markets, please surf the websites of Securities and Futures Bureau, Taiwan Stock Exchange, Taiwan Futures Exchange, GreTai Securities Market, Taiwan Securities Central Depository.
Disclaimer: The SFB did its utmost to ensure that the information in newsletter is complete and true. All materials on this newsletter are for general information only. They are not legal or other professional advice and shall not be relied on as such. The SFB and its employees do not warrant the accuracy and completeness of the materials and disclaim all liabilities for eventual loss or damage. Links to external websites are provided purely for convenience. The SFB has no control over the websites and does not assume any responsibility for their contents. Inclusion in this website of any document from a third party or the provision of links does not constitute endorsement of the contents.
Copyright Notice: Copyright protected materials on this newsletter shall not be used for commercial purposes. The SFB permits accurate reproduction of the materials for non-commercial use. When third party copyright is involved, permission for reproduction must be obtained direct from the appropriate copyright owner.

 

Visitor: 5526   Update: 2017-06-14