FSC to allow fund houses to offer products in yuan

By Crystal Hsu  /  Staff reporter

Fri, Oct 12, 2012 - Page 14

The Financial Supervisory Commission (FSC) yesterday announced plans to allow domestic fund houses to issue yuan-denominated products that may also be bought with the New Taiwan dollar.

The liberalization is yet another bid by the government to establish Taiwan as an alternative offshore yuan hub to Hong Kong, an ambition both Singapore and Australia have also made known.

“The commission will soon promulgate the regulatory easing to save investors trading costs and increase their willingness to buy funds denominated in foreign currencies,” the FSC said in a statement.

Currently, local asset managers may create foreign currency funds — with the exception of the yuan — but the products must be settled in foreign currency.

The upcoming relaxation is intended to strengthen the product lines of fund houses so they may be more competitive and better meet the investment needs of Taiwanese customers, the statement said.

Under the present rules, Taiwanese individual investors who wish to own yuan-denominated assets can only do so indirectly due to a lack of a currency settlement mechanism between the yuan and New Taiwan dollar.

Operations involving yuan settlements must wait until China appoints a clearing intermediary in Taiwan so that the fund houses can open an account with that bank, the statement said.

Meanwhile, fund managers may issue multi-currency funds to facilitate cross-border sales, the commission said.