Financial institutions operating in Taiwan could find themselves liable for settlements totaling hundreds of millions of NT dollars as a result of the Financial Supervisory Commission's financial services law, presented in draft form yesterday.
The bill is the supreme statute for the nation's financial sector and integrates all of the nation's finance-related laws. It took the regulator three years to draft, with reference to similar legislation in the US, Japan and the UK.
Under the draft law, which will shortly be submitted to the Executive Yuan for review, the commission can require financial institutions to settle disputes out of court.
The regulation will apply in situations where there is insufficient evidence or when distances make the investigations difficult, as in international disputes, commission Secretary-General Austin Chan (
Based on US precedents, these settlements could be considerable, the official said. He cited the example of several mutual fund firms being required to pay a total of US$5 billion as a result of a single administrative probe.
Companies that settled out of court would not venture their reputations, Chan said. However, firms could not take this option if the commission had solid evidence of wrongdoing, he said.
Whereas the maximum fine that can be imposed on banks at present is NT$10 million (US$305,360), Kuo Tu-mu (郭土木), director-general of the commission's legal affairs department, said it was likely that financial institutions could be forced to pay much more to settle disputes in the future.
The draft law holds financial institutions liable without fault if they fail to notify their clients of all potential risks when selling financial products.
The bill also precludes those in charge of financial institutions, including board directors and supervisors, from holding similar positions in non-financial companies in which their financial institutions are investors.
This measure served to avoid conflict of interest that might hamper the performance of financial institutions, the regulator said.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
Hong Kong authorities ramped up sales of the local dollar as the greenback’s slide threatened the foreign-exchange peg. The Hong Kong Monetary Authority (HKMA) sold a record HK$60.5 billion (US$7.8 billion) of the city’s currency, according to an alert sent on its Bloomberg page yesterday in Asia, after it tested the upper end of its trading band. That added to the HK$56.1 billion of sales versus the greenback since Friday. The rapid intervention signals efforts from the city’s authorities to limit the local currency’s moves within its HK$7.75 to HK$7.85 per US dollar trading band. Heavy sales of the local dollar by
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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