Preface
Located at the geographic center of the Asia-Pacific region, Chinese Taipei, with
its comprehensive industrial infrastructure, plentiful human resources and ample
research and development capabilities, has been one of East Asia’s strongest
economies in recent years.
Economy
In January 2002, Chinese Taipei became the 144th member of the World Trade
Organization (WTO). This has exposed Chinese Taipei to external competitive forces,
including the expansion of external trade through barrier-free access to the economies
of other WTO members and the lowering of domestic consumer prices. Moreover,
thanks to a pick-up in export growth and the successful contamination of the SARS
epidemic in the latter half of 2003, Chinese Taipei’s economic growth rebounded to
positive growth rate of 4.2% and 5.2%, respectively, in the third and fourth quarters of
2003. The economy grew 3.2% in 2003 and expected to grow 4.7% in 2004.
Securities Regulator
The Securities and Futures Commission（SFC）is the regulator of capital markets.
It is a government agency under the supervision of the Ministry of Finance and is
organized in accordance with the Securities and Exchange Law and the Futures
Trading Law.
The SFC conducts market administration and management, based on the
Securities and Exchange Law and regulations enacted under the law, which include
the approval of new issues of securities, the overseeing of secondary trading on the
exchange and GTSM, the licensing of securities professionals, the regulation of
market intermediaries and foreign investors, investors education and protection,
regulation of futures market, and accountancy profession, etc.
1
The SFC has instituted a system for monitoring stock prices to curb trading abuses.
District attorneys on the recommendation of the SFC may prosecute criminal action.
The SFC is empowered to curb abuses and violations of the applicable laws and
regulations through administrative measures such as issuing warnings, imposing fines
and revoking licenses.
To enhance international cooperation, so far, the SFC has signed mutual
information exchanged MOU with 19 foreign securities and futures authorities.
Principal and Alternative Stock Markets
During the 1980s, the SFC focused on improving the management of a rapidly
growing stock market, steps were taken to computerize trading, improve accounting
standard and procedures, increase the number of qualified certified public accountants
and financial analysts, and liberalize and clarify the legal framework for issuing and
trading securities. As a result, the Taiwan Stock Exchange Corp (TSEC) and GreTai
Securities Market (GTSM) were established to act as auction markets for listed stocks.
A. Trading Process
From 2001 onwards, the closing time for regular trading has been extended from
12:00 noon to 1:30 p.m. The regular trading hours of Taiwan’s stock markets are,
therefore, from 9:00 a.m. to 1:30 p.m., Monday through Friday. Orders can be entered
half an hour before the trading session starts. Buy/sell orders are in standard units or
multiples of standard units. One trading unit is 1,000 shares as a uniform par value of
NT$10 per share is applicable to all listed stocks. Orders below 1,000 shares are
considered odd lots and orders over 500,000 shares are block trades.
Additionally, since 2001, the trading orders are submitted to the TSEC/GTSM
between 2:00 p.m. and 2:30 p.m., Monday through Friday. The bid and offer prices of
such orders are restricted to the closing prices of the regular trading session. For the
same reason, buying and selling of odd-lot orders was submitted to the TSEC/GTSM
2
between 3:00 p.m. and 4:00 p.m., Monday through Friday. The bid and offer prices
are restricted to the price deducted 0.5% of the closing prices of the regular trading
session. Block trading orders are submitted to the TSEC/GTSM between 2:30 p.m.
and 3:30 p.m., Monday through Friday. The bid and offer prices of such orders are
restricted to the closing price of the morning trading session.
In order to maintain a stable stock market, the daily price fluctuation limits of
stocks, beneficiary certificates and convertible bonds are set at 7% of the closing price
of the preceding business day. Day trading is allowed only for investors with margin
accounts.
B. Clearing and Settlement
Clearing and settlement for the trades executed at the TSEC/GTSM are carried out
by the Clearing Department. Trade comparison is done at the time when the trade is
executed, and confirmation is sent simultaneously. A clearing report is sent through
computer-link devices to the back offices of the brokers/dealers on the trade (T) day.
The TSEC/GTSM adopts multilateral clearing and T+2 rolling settlement convention.
The process of clearing and settlement can be summarized as follows:
T day (Clearing day)
15:00
TSEC/GTSM
sends
a
trade
affirmation
summary
through
computer-link devices to the back offices of the brokers/dealers.
21:00
the broker adjusts customer accounts for out trades and reports to
TSEC/GTSM and TSCD. TSCD generates “Settlement Summary
Report” for TSEC/GTSM, and adopts multilateral netting computation
for net balances for each broker/dealer.
T+1 day (Position day)
12:00
Deadline for the customer to settle with participating broker.
3
18:00
Deadline for broker/dealer to deposit securities with TSCD.
TSEC/GTSM allows delay of delivery of securities with legitimate
reason and paid-in collateral in full to TSEC/GTSM.
T+2 day (Settlement day)
10:00
TSEC/GTSM instructs its bank to disburse the same-day fund for net
the receiving broker/dealer and instructs TSCD to credit the securities
account for the receiving broker/dealer. However, if the said
broker/dealer has to deliver a same-day fund to TSEC/GTSM,
TSEC/GTSM will instruct TSCD only after confirming receipt of due
payment.
Principal Derivatives Market
After five years of evolutions, the first futures exchange in Chinese Taipei, the
Taiwan Futures Exchange (TAIFEX), was founded through the strenuous joint efforts
of the Government and the private sector. The derivatives market enables market
participants to manage their funds and market risk more effectively through
interaction between the spot and futures market.
A. Trading Process
When a client places an order to the associate person (AP) of a FCM, the AP will
first check the net value of the margin account. If the margin in the client's account is
insufficient, the AP will not enter the orders until the customer has posted enough
margins. Then the AP will time-stamp the order sheet and enter it to the TAIFEX
through the Electronic Trading System (ETS). Once the trades are matched, the
transaction results will be transmitted through the ETS back to the FCMs who will in
turn confirm trades with the client. The TAIFEX will publicize the trade information
through the FCMs as well as the information vendors and transmit such information to
the Clearing Department for the daily market-to-market calculations.
4
Table 1 Trade Matching and Price Disclosure
Comparison between Securities and Futures Markets
Time
Securities Market
Futures Market
8:30-9:00
Receive orders in preparation for the Receive orders in preparation for the
actual trading session
actual trading session
8:45
Collect all the orders entered and
M
determine an opening price on the
A
competitive auction basis
T
8:45-9:00
Matching on continuous basis
C
9:00
Collect all the orders entered and
H
determine an opening price on the
I
competitive auction basis
N
9:00-13:30 Matching (once every 45 sec. to 2
G
min.)
13:30-13:40 Market closes
13:40-13:45
Receive orders but no matching occurs
13:45
Matching to generate a closing price
and then market closes
8:30-8:45
No price disclosure
No price disclosure
8:45
Display the opening and five best bid
D
and offer prices.
I 8:45-9:00
Display market price and five best bid
S
9:00
Display the opening price, bid and and offer prices
C
offer price
L
9:00-13:30 Display the last trade and bid/offer
O
prices. The index is displayed every
S
1 min.
U
13:30
Display the closing price only
R
E 13:30-13:40 Market closes
13:40-13:45
No price disclosure
13:45
Display the closing price only
B.
Order Types
The TAIFEX will only accept market and limit orders for execution:
Market Order: A market order is an order to buy or sell a stated amount of futures
1.
contracts at the best price available.
Limit
Order:
A
limit order is an order to buy or sell a stated amount of futures
2.
contracts at a specified price, or at a better price if obtainable.
However, the FCM may accept orders other than the above two types at its own
discretion on a not held basis, such as market-if-touched, stop, stop limit,
one-cancel-the-other, market-on-close, straight cancel and cancel replace orders.
C. Order Execution and Priorities
1.
Priority will be given first to the orders with the best bid/offer prices and second to
the earliest time of entry into the ETS. Market orders are prior to limit orders.
5
Orders with an identical bid or offer price entered before market opening will be
ranked randomly.
2.
D. Matching Principles
Orders to buy or sell at the market price can be considered as limit orders
1.
registered with limit-up or limit-down, respectively.
Buy orders registered with prices higher than the market price and sell orders with
2.
prices lower than the market price must be all filled.
If not filled during the day, orders will be cancelled automatically. All orders must
3.
be traded within the price limits that are determined by the TAIFEX after the
market closes on the previous business day.
E. Order Limit
Currently, the order limit is 100 contracts and subject to alteration at the discretion
of the TAIFEX based on the market condition.
Table 2 Statistics of Taiwan Futures Market Trading
Unit: Lot
Year
Futures Proprietary
Traders
Futures
Commission
Merchants
Total Trading
Volume
Open
Interest
277,909
8,885
Long
Short
Long
Short
1998
706
713
277,203
277,196
1999
12,367
12,459
1,065,305 1 , 0 6 5 , 2 1 3
1,077,672
5,696
2000
34,860
34,922
1,891,929
1,891,867
1,926,789
9,810
2001
199,428
203,852
4,151,962
4,147,538
4,351,390
19,341
2002 1,195,378
1,278,800
6,748,876
6,665,454
7,944,254
111,793
2003 8,208,796
2004March 1,881,442
9,030,623
23,666,138
22,844,311
31,874,934
695,063
2,104,668
5,392,952
5,169,726
7,274,394
656,954
Bond Market
A. Past and present:
Chinese Taipei’s Bond Market has existed for a fairly long period of time.
6
However, it did not become popular until 1991. Since then the market has witnessed a
turnaround. The government issued several government and construction bonds to
raise capital for national construction projects. Private corporations issued corporate
bonds to raise direct financing from the market. Securities houses have joined bond
trading.
Bond trading in Chinese Taipei remains the staple of over-the-counter trading, and
bonds are traded by negotiation the same as those in the international arena. GTSM
was authorized to take over market surveillance from 1994. Since the rules and
regulations of capital markets were enhanced and reformed, the bond market’s listed
issues and have bond trade volume significantly increase.
B. Primary Market
Currently there are several categories of bond listed, including government bonds,
corporate bonds, financial debentures, convertibles and foreign bonds issued by
foreign financial institutions, denominated in US dollars, Japanese Yen, and New
Taiwan dollars. Driven by government fiscal expansion needs, the amount of bonds
issued has increased steadily year by year, in the form of government bonds, corporate
bonds and financial debentures.
C. Secondary Market
The Taiwan bond market has been going through a rather quick period of
expansion due to the rapid buildup on the supply side of the market, the active pursuit
of bond business from traders and the ongoing downward trend in benchmark interest,
which has precipitated the capital shift from the stock market to the bond market.
On July 24, 2000, the debut of GTSM’s Electronic Bond Trading System (EBTS)
provided a one-stop trading environment for dealers, form quotes, transactions, risk
management, clearing and settlement all on one platform. In October 2001, a bond
comparison system was implemented to integrate the market settlement mechanism.
7
On top of that, GTSM, in July 2002, also implemented a computerized negotiation
trading system to improve efficiency in the bond market, and to establish real-time
and transparent benchmark indication.
Table 3 Trading Rules and Regulations
a. Trading:
Item
Details
• Method－Counter negotiating：Outright Purchase、Repo or
Trade Method
Reverse Repo
－EBTS：Outright
negotiation with equivalent yield
&
•
Business－Counter
negotiating：Dealing
Business Type
－EBTS： Inter-dealers trading only
• Counter negotiating：Monday through Friday 9:00am－3:00pm
Trade Period
• EBTS：Monday through Friday 9:00am－13:30pm
• Quotes in yield or in denominations of NT$100
• Tick：0.01bp (Yield 0.0001%)
• Quote dollar amount：in denominations of NT$10,000 or
Quotes and
multiples
Market Yields
• GTSM shall disclose to public the actual yield or return at
maturity in denominations of NT$100. EBTS also provides
online calculation of market prices or yields
• Traded price calculated without accrued interest barring
• Settlement with accrued interest, but accrued interest excluding
Traded Price and
the maturity due
Interest Accrued
• Accrued interest based on 365 calendar-day bases, and the
actual number of days held.
Limitation on
• None
Quote Spread
• Counter negotiating：Broker and dealer shall disclose relevant
trade information in trade facilities;
GTSM shall disclose daily reference price
via facsimile, information vendor, EBTS
Trade Disclosure
terminal.
• EBTS：Online real-time disclosure of every traded price or
yield.
8
Levies for Bond
Securities
Investment
Transaction Fee
• Tax on securities trading gains：Exempt
• Sales tax：Exempt
• Tax on interest income：
Individual：Cash based, taxable income only includes interest
paid.
Institution ： Accrued based, taxable income based on
possession period. However possession of bond
securities issued in Taiwan by foreign finance
institutions shall be exempted.
• Transaction tax on securities trading：
Gov. bond, Supranational finance institution issued bond shall
be exempted. Corp. Bond, Financial debenture：0.1%
• Only dealing, so exempted
b. Settlement and Delivery
Item
Method
Time Constraint
Detail
• Bearer form bond shall be settled with cash account and
delivered with certificates. However bond securities dealt
through the book entry system shall be handled via a special
account system set up by the Central Bank of China.
• EBTS: Via the book entry system conducted by the Central
Bank of China and the bank cash remittance system
• Counter negotiation: Completed at designated broker/dealer
facilities and can be settled based on
agreed arrangements.
• Repo/Reverse Repo: Can be settled via bond deposit certificates
issued by the bond depository institution.
GTSM shall prescribe the qualifications
for depository institutions, the depository
contract and the format used for deposit
books.
• Counter negotiated trade (in Trader’s Facilities)：
Outright purchase or sale, or Repo/Reverse Repo transaction
shall be settled no later than T+2 business day.
• EBTS trade with equivalent yield：
Shall be settled not later than 13:30 on T+2 business day.
9
Default Handling • Counter negotiated trade：Settled by agreement between both
parties.
• EBTS trade：
Insufficient funds ： Compensated by the margin the dealer
deposit in advance；or GTSM shall call the
difference if margin is depleted.
Insufficient certificate：Use the cash detained to buy the bond
from the market or borrow from the
financial institutions.
Cash settlement and deals rebounded at spare.
Outlook of Market Performance
A. Stock Market
Taiwan’s stock market has moved ahead smartly over the past year, marking it as
one of the world’s best-performing marketplaces. Measured by closing prices, the
Taiwan Stock Exchange’s Weighted Price Index (TAIEX) rose from 4,139 in April
2003 to 7,034 in early March and at the same time, the GTSM rose from 86.57 to
152.03. Even factoring in cautious investor activity following the recent presidential
election in Taiwan, the Taiwan Stock Market remains a global market leader in 2004.
As for Taiwan’s primary market, the 671 companies listed on the TSEC in Mar. 2004
possessed a total market capitalization of US$420 billion (NT$14,283 billion), an
increase of nearly 57.05% since December 31, 2002. Meanwhile, the number of
GTSM-listed companies in Mar. 2004 also increased to 453, a 17.7% increase year
over year. Moreover, the corresponding total capital amount increased from 2002’s
NT$862.25 billion to Mar. of 2004’s NT$1585.28 billion.
Reflecting the impact of the SARS crisis, total trading value on the TSEC in 2003
declined to NT$20,512 billion, down almost 6.7% from 2002. Underscoring the
robust recovery since the SARS incident, however, trading value in the first three
months of 2004 totaled NT$8,721 billion, more than double the same period last year.
10
Table 4. Total Market Value and as a percentage of GDP
Year-end 1991-2003
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004-March
Total Market Value of TSEC-Listed
Shares（NT$ Million）
3,184,028
2,545,508
5,145,410
6,504,368
5,108,437
7,528,851
9,696,113
8,392,607
11,803,524
8,191,474
10,247,600
9,094,940
12,869,100
14,283,420
Percentage of GDP（%）
69.12
47.15
86.70
102.90
71.87
100.62
119.20
96.24
127.06
84.77
107.79
93.29
130.68
139.26
Table 5 Statistics of Publicly Issued Companies
Year-end 1991-2003 (NT$ Billion)
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004March
No. of
TSEC-Listed
Capital
Issued
221
256
285
313
347
382
404
437
462
531
584
638
669
643.08
761.09
908.37
1,099.81
1,346.68
1,661.27
2,106.29
2,734.07
3,083.02
3,661.36
4,096.43
4,444.02
4,725.28
671
4,733.93
Market Value of No. of
TSEC-Listed
GTSMListed
3,184.03
9
2,545.50
11
5,145.41
11
6,504.37
14
5,108.44
41
7,528.85
79
9,696.11
114
8,392.61
176
11,803.52
264
8,191.47
300
10,247.60
333
9,094.94
384
12,869.10
423
14,283.42
Capital
Issued
Market Value of
GTSM-Listed
3.78
4.47
3.96
9.79
173.01
264.13
314.89
381.39
513.76
677.19
681.44
627.30
639.47
10.52
9.79
9.61
26.92
245.73
833.46
1,026.86
887.63
1,468.44
1,050.59
1,412.19
862.25
1,200.78
453 674.62
1,585.28
Table 6 Stock Trading Volumes and Value of TSEC and GTSM 1991-2003
11
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003.
2004March
TSEC
Trading Value
Trading Volume
(NT$ Billion)
(Billion Shares)
9,682.74
175.94
5,917.08
107.59
9,056.72
204.68
18,812.11
351.24
10,151.54
267.30
12,907.56
350.74
37,241.15
654.20
29,618.97
612.01
29,291.52
678.06
30,526.57
630.87
18,354.94
606.42
21,873.95
856.19
20,333.24
917.58
8,721.43
369.21
Trading Value
(NT$ Billion)
0.46
0.67
0.65
0.57
2.80
453.51
2,310.66
1,198.16
1,899.92
4,478.36
2,317.77
2,709.13
2,059.4
GTSM
Trading Volume
(Billion Shares)
0.01
0.02
0.02
0.02
0.17
16.96
43.12
30.68
49.05
88.42
81.49
101.84
101.06
1,194.64
55.83
B. Futures Market
The Taiwan Futures Exchange (TAIFEX) demonstrated impressive growth in year
2003 in terms of trading volume, participation from the institutional investors, and
overall market scale.
The total trading volume in 2003 achieved an all-time record
of 31,874,934 contracts, representing an increase of 301.23 %, compared with
7,944,254 contracts of year 2002. The average daily trading volume for year 2003 is
132,812 contracts, representing a growth of 314.61 %, compared with 32,033
contracts of year 2002.
Particularly, the growth of the TAIEX options is notable despite the fact that it was
only launched near the end of 2001. The average daily trading volume for TAIEX
options for 2003 was more than 90,500 contracts. Regarding the open interests, the
figure for 2003 was 622,446 respectively, showing a dramatic growth.
Domestic individual traders have actively participated in the TAIFEX market. To
attract institutional participants, the TAIFEX has offered one-stop service to meet
participants’ inquiries since midyear 2000. The actual market share of institutional
participants has increased tremendously from 5 % to almost 20% since then. We
12
believe that with the increasing liquidity and decreasing regulatory barriers, the
TAIFEX will continue to provide a better trading environment.
C. Bond Market
Outstanding government bonds reached US$ 76 billion by the end of 2003.
Trading volume of outright purchase and sale (OP/OS) also increased dramatically.
The trading scale for 2003 amounted to US$ 2.08 trillion, representing 52.37% of
total bond trading.
（Ⅰ）Primary Market
In 2003, the outstanding amount of bond market has exceeded US$ 115 billion. Of
this government bond represented US$ 76 billion (80 issues), outstanding corporate
bond represented US$ 23.5 billion (2,666 issues), convertible bond represented US$
3.58 billion (235 issues), bond with warrant amounted to US$ 6.17 million (2 issues),
and foreign debenture reached US$ 4.5 billion (174 issues). (Exchange rate: US$:
NT$=1:34) For details, please reference Table 7.
Table 7: Listed Bonds Statistics of GTSM
Year
Gov’t
bond
Issue
Bal
88
189 567.0
89
64 212.0
90
25 169.1
91
26 327.6
92
31 533.6
93
35 707.7
94
34 787.1
95
38 861.0
96
42 995.1
97
44 1,034
98
45 1,042
.4
99
50 1,243
.0
00
57 1,478
.8
01
65 1,856
.3
02
74 2,212
.9
03
80 2,587
.7
83 2,692
04March
Financial
Debenture
Issue
Bal
10
1.0
3
0.25
2
5.4
3
11.6
5
18.5
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
21
5.0
327 129.9
727 263.89
928 329.39
（Unit: billion NT）
Foreign
Corporate bond
bond
Regular
Issue
Bal
22
17
20
36
35
29
23
28
95
188
487
907
1,206
1,487
2,036
2,666
2801
38.5
35.7
40.8
52.2
50.1
37.1
22.7
41.7
108.3
177.2
298.6
386.2
443.3
516.9
650.9
799.9
834
13
Convertible Warrant
Issue
Bal
10
6.79
20 12.56
20 10.65
18
9.32
16
6.95
17 15.99
44 41.90
70 85.18
79 65.50
86 78.28
97 81.82
158 104.61
235 121.81
256 128.07
Issue Bal Issue
Bal
1
2
3
3
4
0.3
5
1.0
7 29.4
11 63.1
- 18 91.1
- 25 113.1
- 46 143.0
2 0.7
78 142.6
2 0.2 174 153.0
1 0.2 171 145.5
（Ⅱ）Secondary Market
With GTSM’s electronic trading platform, the OP/OS trading value increased to
US$ 2.08 trillion at the end of 2003. With the above systems, trading volume and
the quality of the trading information disclosed were significantly improved.
（Unit: billion NT）
Table 8: Statistics of GTSM Bond Trading
Listed Bonds（ Convertibles excluded ）
Year
OP/OS
OTC
Repos / R-Repos
%
OTC
Total
%
93
748.8
5.69
12,407.0
94.31
13,155.8
94
1,033.2
6.47
14,939.7
93.53
15,972.9
95
1,772.5
8.55
19,048.8
91.45
20,821.3
96
2,621.8
9.27
25,665.7
90.73
28,287.5
97
2,571.0
6.37
37,801.2
93.63
40,372.2
98
7,108.6
12.93
47,850.7
87.07
54,959.2
99
7,212.0
13.82
44,968.7
86.18
52,180.7
00
16,651.0
24.16
52,269.6
75.88
68,920.6
01
52,999.9
44.55
65,968.6
55.49
118,968.5
02
60,805.5
45.19
73,740.0
54.89
134,545.5
03
04March
71,006.3
52.37
64,562.4
47.62
135,568.7
15,453.5
72.56
5,841.2
27.43
21,294.7
Recent Important Measures
Responding to trends in the global securities markets, several major legislative
and regulatory initiatives in Taiwan over the last year aim to make Taiwan a more
attractive capital marketplace. These could be stated in term of the following areas：
A.
Corporate Governance
In order to implement the corporate governance, the “Corporate Governance
14
Best-Practice Principles for TSEC/GTSM Listed Companies” has been published as a
guide for listed companies in 2002. Besides, the SFC also promulgated the revision
of the "Criteria Governing Information to be published in Public Offering and
Issuance Prospectuses", requiring extensive disclosure in the following areas:
 Directors, supervisors, and managers.
 Corporate governance of listed companies.
 Review, analysis and risk management of corporate financial status and operating
results.
 Employee bonuses.
 Remuneration of directors and supervisors.
Public issuing financial holding companies whose shares have already been listed
on the TSEC or OTC, as well as their subsidiary banking, issuance, and securities
brokerage companies which are also public issuing companies, are subject to the
above-mentioned regulations and shall also publish first and third quarter financial
statements, as required by the Securities Law.
B. The Launch of Taiwan’s first exchange traded fund (ETF)
Recently, nations worldwide have made efforts to develop new index products.
Exchange-Traded-Fund (ETF) is a typical example. After a two-year dedication, the
Taiwan Stock Exchange Corporation (TSEC) launched its first ETF on June 30, 2003.
ETF is an innovative product of securitized index, which measures the trend of the
securities market. Investors indirectly invest in the portfolio by holding beneficiary
certificates, which represent the index funds. Therefore, investors are able to follow
the trend of the index by investing in the ETF, a fund traded on the stock exchange.
The ETF consists of the same constituents as the stocks in the index and is divided
into smaller trading units。
C. Foreign Investment
To
further
expand
Taiwan's
securities
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markets,
speed
up
market
internationalization, and facilitate the influx of foreign investment, the SFC decided to
abolish the Qualified Foreign Institutional Investors (QFII) system on October 2,
2003.
Under the new investment framework, foreign investment institutions will no longer
be required to obtain approval from the SFC in order to invest in Chinese Taipei’s
stock market. Instead, they will only need to register with the TSEC before directly
trading securities in Chinese Taipei. They may now also issue depositary receipts on
Taiwanese shares held by them.
Previously, QFIIs were subject to several restrictions that limited their ability to trade
in our markets, in particular a US$3 billion limit on securities investments in Chinese
Taipei; a two-year validity period governing the remittance of approved investment
quotas into Chinese Taipei; and finally, a minimum-assets-under-management test.
D. Investor Protection
The protection of securities investors and futures traders is closely connected
with
the better
development
of healthy securities and
futures
markets.
Internationalization and liberalization trends further dictate the provision of an
impartial and secure trading mechanism. Therefore, the “Securities Investors and
Futures Traders Protection Law” was announced on July 17, 2002, and took effect in
January 2003. Under the law, the Securities and Futures Investors Protection Center
(SFIPC) was established to provide consultation, complaint filing and mediation
services as well as initiating class-action lawsuits on behalf of the qualifying investor
groups. In addition, the Center is required to set aside an investor protection fund to
compensate good-willed investors who fail to regain their money from financially
troubled securities and futures firms.
E. Information Disclosure
Under the supervision of the SFC, the TSEC and GTSM has entrusted the
Securities and Futures Institute (SFI), a leading local securities research organization,
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with the task to evaluate both the standard and the quality of disclosure made by listed
companies. The SFI has organized a committee to evaluate information posted by
listed companies on their own websites as well as on the “Market Observatory Post
System” operated by the TSEC. Findings and recommendations by the SFI are
expected on an annual basis.
Concluding Remarks
The march towards globalization has changed international investment
methods and business management paradigms. The rapid movement of money
around the world and the trend of corporate mergers and strategic alliances already
comprise a serious challenge to the Taiwanese economy, which is composed
primarily of small and medium businesses. Moreover, the evolution of high
technology and the Internet have given humankind greater prosperity and
unlimited prospects.
Therefore, Chinese Taipei not only offers numerous incentives to business and
industry but is also implementing new technologies and regulation to ensure
on-line trading, market structure and financial architecture. We also cooperate with
worldwide securities and futures authorities in information sharing and capital
market activities so as to reduce cross-border transactions risks.
In addition, we
are dedicated to the development of innovative financial products so as to attract
worldwide investment, satisfy the needs of international investors and develop a
sound and efficient financial markets.
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