The central bank yesterday said that it will lift restrictions to allow securities brokerages to conduct more foreign-exchange transactions to help the industry as it continues to struggle with low turnover on the local bourse.
The change would allow brokerages to conduct spot transactions denominated in New Taiwan dollars and sell foreign-exchange derivative products, the central bank said.
The change represents a significant shift in the central bank’s conservative position on foreign-exchange instruments denominated in NT dollars and are expected to be implemented by the second half of this year, the central bank said.
In 2013, the central bank allowed brokerages to conduct spot exchange transactions between foreign currencies, but the easing did not include the NT dollar.
Under the limitation, local investors are required to acquire foreign currencies from a bank to purchase foreign equities.
Following the change, qualified brokerages could move into territories that were previously only available to banks and bring more streamlined access to foreign equities and currencies.
However, the central bank said that initially, qualified brokerages will be required to enlist a foreign-exchange designated bank to oversee spot covering before they are allowed to operate independently.
Required regulatory filings and customer information verifications remain unchanged, the central bank added.
Meanwhile, average daily turnover last year declined 16.9 percent to NT$68.73 billion (US$2.14 billion) annually and at a faster pace than the 12.1 percent drop recorded in 2015, data from the Taiwan Stock Exchange showed.
As the market cools, Yuanta Securities Co (元大證券), the nation’s largest brokerage by market share, reported that net income for last year fell 24 percent annually, from NT$9.83 billion to NT$7.47 billion.
KGI Securities (凱基證券), the second-biggest brokerage, reported that aggregate net income in the first 11 months of last year registered a 22 percent annual drop to NT$5.77 billion, from NT$7.401 billion in 2015.