Seventeen securities brokerages will soon be allowed to set up subsidiaries in China, the Mainland Affairs Council (MAC) announced yesterday.
Securities houses, whose net worth exceeds NT$7 billion (US$217 million)with an over 200 percent of capital-adequacy ratio in the past three months, will be allowed to apply to invest in Chinese brokerages, the council said.
The investment capital should be less than 10 percent of a company's net value, the council said.
The measure must still be approved by the Cabinet so no implementation date has been set.
The policy proposal was submitted by the Securities and Futures Bureau and is aimed at relaxing restrictions on China-bound investments by the securities sector, said MAC Vice Chairman Chiu Tai-san (
According to the council's criteria, 17 securities houses will be able to set up shop across the Taiwan Strait, including Yuanta Core Pacific Securities Co, Fubon Securities Co, KGI Securities Co, SinoPac Securities Corp and Capital Securities Corp.
Chuang Tai-ping (
He said that the association had been urging the government to relax restrictions on China-bound investments because more than 10 local securities firms have already set up liaison offices in China. He also said that the capital threshold was "acceptable and reasonable."
However, he expressed concern over China's regulations since Bei-jing only allows foreign securities players to hold less than a one-third stake in joint ventures with Chinese securities partners.
"The securities sector in China is very unhealthy, which increases the risk for Taiwanese players en-tering the market since they won't be allowed to take up a controlling stake," Chuang said.
According to Chuang, the securities sector in China has over 200 billion yuan (US$24.1 billion) in losses, which is close to the size of its total capital.