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Commission eases rules on trust fund risks and operations

The Financial Supervisory Commission (FSC) yesterday approved changes to trust fund regulations, easing the cap on trust fund risk exposure and allowing insurers to operate trust services.

The amendments raises the ceiling on risk exposure for trust funds from 15 percent to 40 percent of the funds' net assets, and allows local trust funds to commission foreign futures companies to trade foreign futures products.

Local trust companies are also permitted to trade overseas futures or options based on the Taiwan stock index or a basket of local securities.

competitiveness

The newly approved deregulatory measures are in line with the undertaking for collective investment in transferable securities III standards of the EU and will enhance the competitiveness of trust firms, FSC Vice Chairman Susan Chang (張秀蓮) told a media briefing yesterday.

The commission also approved a new directive allowing insurance companies to operate trust services for insurance policies.

Chang said the new measure aims to protect beneficiaries who have not reached legal age or who do not have the capability to protect their compensation from being abused by their guardians.

Seperately, Fitch Ratings (惠譽國際) yesterday forecast a more diversified structured finance activity in Taiwan this year.

The ratings agency said that mortgage loans, consumer loans and small and medium enterprise loans are likely to become the deals of choice for local lenders, rather than real estate investment trusts (REITs) and real estate asset trusts.

soaring prices

Fitch analyst Helen Wong said soaring commercial property prices were making direct sales of assets more attractive than indirect sales, such as REITs, in terms of profits.

Wendy Hsueh (薛惠珍), director of the Research and Consultancy Department at real estate company Debenham Tie Leung (戴德梁行), said that the demand for commercial properties had been strong since last year.

She said investors were attracted to the huge potential given the relatively low rents and prices compared to other Asian cities, with prices likely to increase if cross-strait relations improve.
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