1. Pursuant to new IFRS Standards, the FSC Announced on November 8th, 2017 Amendments to “Regulations Governing the Preparation of Financial Reports by Company-Type Stock Exchanges,” “Regulations Governing the Preparation of Financial Reports by Company-Type Futures Exchanges” and “Regulations Governing the Preparation of Financial Reports by Futures Clearing Houses”
To accommodate Taiwan’s coming synchronous adoption of International Financial Reporting Standards (IFRS) 9 “Financial Instruments” and IFRS 15 “Revenue from Contracts with Customers,” the FSC amended portions of the above three regulations. The key aspects of the amendments that conform to the aforesaid IFRS standards, which will take effect from fiscal year 2018, include amendments to the accounting items of assets, liabilities, profits and losses, modifications to related schedules and the statements of major accounting items and explicit rules on the disclosure of information pertaining to financial instruments and customer contracts in the notes to the financial report.
2. Amendments of the Regulations Governing Securities Firms to Enhance Securities Firms’ International Competitiveness, Financial Flexibility, and Efficiency of Capital Utilization
To enhance the international competitiveness of securities firms, increase the financial flexibility of such firms and efficiency of their capital utilization, provide greater flexibility to investors utilizing a customer sub-account under a securities firm’s settlement account, and ease qualifying requirements for securities firms to engage in financial derivatives trading business at their business premises, the FSC introduced amendments to some articles of the Regulations Governing Securities Firms on December 5th, 2017. Key content of the amendments are as follows:
(1) Increasing the financial flexibility of securities firms and the efficiency of their capital utilization by:
i. Easing the upper limit of securities firms’ total debts to other parties to net worth from 4 times to 6 times;
ii. Easing restrictions on securities firms’ usage of their special reserve: Previously, when their accumulated special reserve reaches 50 percent of the amount of paid-in capital, half of it may be used for capitalization. This amendment allows securities firms whose special reserve has accumulated to 25% of paid-in capital to capitalize the portion over this amount;
(2) Permitting securities firms not to include the positions for hedging their financial derivatives trading business or handling the exercises into the total amount limits on their holdings on equity securities issued by related parties.
(3) Amending regulations on securities firms’ operation of financial derivatives trading by:
i. Easing the financial ability requirements for securities firms to engage in financial derivatives trading business at their business premises;
ii. In the event that a customer of a securities firm engaged in the trading of financial derivatives and foreign exchange settlement is needed, the customer is permitted to carry out the foreign exchange via the same securities firm which is licensed to handle spot forex businesses;
iii. Permitting securities firms to trade with high-net-worth institutional investors financial derivatives that are linked to securities privately placed domestically or abroad.
iv. Setting rules for reviewing securities firms’ sales of complex, high-risk financial derivatives, and setting out the relevant application process.
(4) Providing greater flexibility to investors utilizing a customer sub-account under a securities firm’s settlement account. In addition to “demand deposit account”, securities firms are allowed to open deposit account with a bank to handle the payment and receipt of customer settlement funds.
(5) Amending explicit regulations on securities firms’ overseas investment by allowing securities firms in compliance with requirements to submit documents to the FSC for approval to increase their investment in overseas enterprises. When material matter on overseas enterprises occurs, the requirements and deadlines for reporting to the FSC are also amended.
3. The order on eligibility, operating procedure and related control measures for securities firms accepting orders for foreign securities trading to retain settlement funds in the securities firms’ settlement accounts with consent of the customers
The FSC introduced amendments to some articles of the Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities on October 6th, 2017, in order to allow securities firms accepting orders for foreign securities trading to retain settlement funds in foreign currencies in their settlement accounts with the consent of the customers. To facilitate compliance by securities firms, the FSC issued the order on eligibility, operating procedure and related control measures for the aforementioned deregulation on November 15th, 2017.