Investors will be required to have a least NT$10 million in order to open a discretionary managed trading account, according to new regulations introduced this week by the Securities and Futures Commission (證期會).
Discretionary managed accounts allow brokers to trade on the behalf of their clients without having to obtain permission for each individual transaction. According to securities officials, brokers may begin offering the accounts to their customers as early as next month.
According to securities officials, as much as NT$300 billion in stock market funds could be managed through discretionary accounts annually in the measure's first years. Later, the figure could climb as high as NT$1 trillion, officials said.
In addition to minimum balance requirements, securities advisory firms offering the accounts will be required to have at least two years' operating experience, paid-in capital of at least NT$50 million and a net worth higher than the company's face value.
The minimum required networth of securities investment trusts and securities advisory companies will be NT$300 million and NT$50 million, respectively.
Both types of companies will be required to enter into a contract with with their customer.
In addition, financial firms offering the accounts will be required to set up separate departments for the management of discretionary accounts.
This is to keep a securities firm's mutual fund business and discretionary account business separate.
Because retail investors make up 87 percent of the stock market's turnover, securities officials said, the presence of discretionary accounts in the marketplace is expected to increase the role of institutional investors.
In order to protect investors, brokers handling discretionary accounts will be required to outline targeted industrial sectors and investment goals in their contracts with customers.
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