The Financial Supervisory Commission yesterday said that it would allow banks and brokerages to launch several new products to help them attract wealthy investors, after easing regulations on investment targets linked with structured notes.
A structured note is a debt security whose return is based on the performances of some indicators, such as a basket of equities, interest rates, commodities or foreign currencies.
The commission would allow the linking of structured notes with more targets, which would encourage banks and their overseas branches to issue more products, FSC Banking Bureau Deputy Director-General Huang Kuang-hsi (黃光熙) told a news conference in New Taipei City.
High net worth clients of banks’ offshore banking units would be allowed to buy foreign currency-denominated derivatives and structured notes that are linked with local shares, he said.
Banks would be allowed to customize a product according to their wealthy customers’ needs and provide the product following the commission’s approval, he added.
To reduce potential risks, only banks with stronger financial fundamentals would be allowed to launch such products, with the bureau scheduled to announce which banks qualify in March, Huang said.
Meanwhile, foreign institutional investors would be allowed to use foreign currencies as collateral for New Taiwan dollar-denominated loans from brokerages to invest in local shares, the commission said.
At present, they have to directly use the NT dollar as collateral and thus have to endure fluctuations in exchange rates, it said.
“The change is expected to make it more convenient for foreign investors and encourage them to increase their investment in local shares,” the commission said, adding that the new rules would take effect in July.
A total of 14 domestic brokerages provide financing to investors, with the combined lending totaling NT$1.4 trillion (US$46.5 billion) as of the end of November last year, it said.
While Taiwan Financial Service Roundtable has urged the commission to allow foreign institutional investors to put up foreign equity as collateral for loans from brokerages, the commission said that it could not reach a consensus with the central bank, which has expressed concern over exchange rates.
The commission added that it would continue negotiating with the central bank.
Offshore securities units would be permitted to provide loans to wealthy investors in the second half of this year like domestic brokerages, the commission said.
However, the commission and the central bank would set new regulations to limit the amount of the loans, it said.
The commission added that it would also ease the limit on the amount of investment in local shares by insurers that use premiums from their foreign currency-denominated investment-linked policies.
‘BIG LOSS’: This year might see the last generation of Huawei’s Kirin chips, as their production would stop next month because they are made using US technology Chinese tech giant Huawei Technologies Co (華為) is running out of processor chips to make smartphones due to US sanctions and would be forced to stop production of its own most advanced chips, a company executive has said, in a sign of growing damage to Huawei’s business from US pressure. Huawei, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. Washington last year cut off Huawei’s access to US components and technology, and those penalties were tightened in May, when the White House barred vendors worldwide from using US
CORPORATE SCANDAL: Cathay Life has invested NT$13.3 billion in Bank Mayapada since 2015, but the latest loss of NT$8.8 billion has completely written off its investment Cathay Life Insurance Co (國泰人壽) yesterday said it would recognize an investment loss of NT$8.8 billion (US$298.1 million) in Indonesia’s Bank Mayapada Internasional Tbk PT due to concerns about the lender’s operations amid a corporate scandal. The company said it would revise its earnings result for June, from a net profit of NT$6.52 billion to a net loss of NT$520 million, its first monthly loss over the past 17 months. After booking an investment loss of NT$5.2 billion in Bank Mayapada earlier this year, Cathay Life has so far recognized total investment losses of NT$14 billion in the lender, executive vice president
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported that revenue last month expanded 25 percent annually, but fell 12.8 percent month-on-month to NT$105.96 billion (US$3.59 billion). In the first seven months of this year, the chipmaker’s revenue surged 33.6 percent to NT$727.26 billion, compared with NT$544.46 billion a year earlier. TSMC has said it aims to grow its revenue by more than 20 percent this year. The company has since May 15 stopped taking new orders from Huawei Technologies Co (華為), its second-biggest customer after Apple Inc, due to the US’ restrictions on exports containing US technologies. TSMC has no plans to
The US stock market has been on a tear, yet the country’s economy is in the dumps. So why do so many people believe — undoubtedly incorrectly — that the stock market has decoupled from reality? The economy many people experience, while bleak, is local, personal and, for the most part, either not publicly traded or plays only a small part in the stock market’s moves. To explain why these personal experiences have so little effect on equity markets, we must look more closely at the market role of the weakest industry sectors. The surprising conclusion: The most visible and economically vulnerable