Fri, Oct 10, 2003 - Page 10 News List

Securities rules may be relaxed

By Joyce Huang  /  STAFF REPORTER

The government will modify the period that stockbrokers need to underwrite the issuance of new securities and incorporate international securities-issuance practices by submitting a new set of legal revisions to the legislature.

The government will scrap the minimum 10-day underwriting requirement for local securities brokers, which is stipulated in Article 73 of the Securities and Exchange Law (證交法), Vice Minister of Finance Yang Tze-kaing (楊子江) said yesterday.

The article states that the minimum underwriting period -- by which securities firms are required to help settle listing prices for their clients -- shall not be shorter than 10 days and no longer than 30 days.

But outside Taiwan, international securities firms usually underwrite a share issue within three to five days, which allows buyers to avoid price fluctuations after contracting to buy shares at previously-agreed prices, Yang said.

The vice finance minister said the current underwriting-period regulation restricts Taiwanese securities houses from participation in international primary markets, in which financial instruments -- such as securities -- are sold upon initital issuance.

If the regulation is relaxed, underwriters will be able to settle share prices in line with market expectations.

In addition, they will be more competitive in raising capital in foreign markets, so as to facilitate Taiwan's transformation into a regional capital-raising hub, Yang added.

Yang made the comment yesterday at a seminar focusing on the development of innovative financial practices.

The financial practices seminar was co-organized by the Ministry of Finance and the Taiwan Academy of Banking and Finance (台灣金融研訓院).

An official from the Chinese Securities Association (證券商業公會) who asked to be identified only by the surname Shih, said the government's proposal is a step in the right direction, saying that the government's legal revision will help reduce investor risk in the stock market.

"The longer the underwriting period is, the greater the pricing risks are [for buyers]," Shih said.

"On the other hand, the shorter the underwriting period becomes, the price at which investors agree to buy will be close to market prices, to the advantage of the buyer," Shih said.

Earlier in his opening remarks for the seminar, Yang said that the government's planned Financial Supervisory Board (金監會) is slated to begin operation next July, marking the beginning of the financial sector's internationalization and liberalization.

The yet-to-be-established supervisory board will not only be a unified regulatory body, but also a risk-oriented one, he said.

The board may adopt constructive thinking by coming up with a list of "do-not" regulations instead of conventional regulatory rules, he added.

Addressing the liberalization of the financial market, Chan Tze-ching (陳子政), head of Citibank Taiwan, said that the nation must set priorities in developing a liberal financial infrastructure.

Citing his Hong Kong experience, Chan said that priorities include relaxing capital controls to welcome market participants and cross-border capital flows, while showcasing the country's transparency and market-friendly laws and regulations.

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