Taiwan Stock Exchange Corp (TWSE, 台灣證交所) said yesterday it is planning to hold two public hearings by the end of this month in a bid to strengthen supervision of trade in Taiwan Depositary Receipts (TDR).
The TWSE said it would invite representatives from the securities industry, government officials and academics to attend the hearings.
The aim is to solicit a wide range of views on how to tighten supervision of TDR trading on the local bourse and how to safeguard investors’ rights, the TWSE said.
The plan for strengthened supervision was initiated after Japanese memory chipmaker Elpida Memory Inc, which issued 200 million TDRs in February last year, filed for bankruptcy protection in Tokyo last month.
Elpida has since been ordered by the TWSE to delist its TDRs from March 28, as its shares are will be delisted on the Tokyo Stock Exchange the same day.
The delisting order has sparked public criticism of the TWSE’s effectiveness in supervising TDR listings.
The TWSE has requested that Elpida unconditionally buy back all outstanding TDRs, which total about 53 million, in accordance with its listing contract.
The exchange said it does not rule out the possibility of taking legal action against Elpida if the company fails to keep its promise to reacquire the outstanding TDRs.
TWSE president Samuel Hsu (許仁壽) said the exchange would do its best to help protect the interests of local investors in the bankrupt Japanese company.
Financial Supervisory Commission Vice Chairman Wu Tang-chieh (吳當傑) said the process of ordering a TDR listing should be reviewed, including the choice of financial advisors for TDR issues and audits of the issuers’ financial statements.
Better supervision by the financial authorities would restore confidence in the stock market, he said.
A total of nine foreign-listed companies issued TDRs on the main board last year, with the volume of TDRs accounting for 6.5 percent of the depositary receipts sold globally, according to TWSE chairman Schive Chi (薛琦).
So far, 34 companies have issued TDRs on the TWSE.
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