SECURITIES FIRMS AND BANKS MAY TRADE IN TAIWAN SHARES-BASED DERIVATIVES WITH UNREGISTERED FOREIGN INVESTORS

01/01/2009

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In a ruling dated 11 November 2008, the Financial Supervisory Commission stated that with immediate effect, Taiwan-based securities firms and banks may conduct transactions in derivative products based on Taiwanese shares with overseas Chinese and foreign investors that are not registered in Taiwan under the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals.  The permitted transactions include those in structured products, equity derivatives, and convertible bond asset swap options.  However, they are limited to transactions denominated and settled in foreign currencies, and may not involve physical delivery of Taiwanese shares.

After a securities firm or bank completes a transaction in a derivative product based on Taiwanese shares with an offshore overseas Chinese or foreign investor that is not registered in Taiwan , it must transmit transaction data to the GreTai Securities Market.  The regulatory authority may inspect such transaction data if necessary for the purposes of market regulation.