As banks, bills finance companies and insurers join the securities industry this year, they'll do so without benefit of the kind of privacy protection that is currently provided by the US' Financial Services Modernization Act (FSMA), upon which much of Taiwan's financial deregulation efforts is based.
Analysts say the lack of privacy protection could hobble Taiwan's efforts to deregulate the industry.
"After the Insurance Law is amended later this year, it is expected that the insurance industry will be allowed to invest in securities companies," Finance Minister Paul Chiu (
The move is another major step to loosen financial regulations, coming on the heels of the ministry's decision earlier this month to allow banks to invest in securities companies.
In addition, the ministry is expected to permit bills finance companies to invest in securities firms soon.
"There is an international trend for the financial industry to invest in securities companies," Chiu said. "But since the Insurance Law prohibits insurance companies from engaging in this kind of investment, it is necessary to amend the law first, then we can deregulate sometime later this year."
Lin Tzong-yeong (
"There has been no similar regulation in other countries that stipulates that when a financial institution acquires more than a half interest in a securities firm, there must be a merger of two securities firms or the formation of an integrated securities company," Lin said.
"Theoretically this is unnecessary, but in order to slow down the impact on the securities industry, we took a slower attitude on deregulation."
When it comes to privacy protection, Lin said a firewall between banking and securities affiliates must be set up.
But Lin hasn't said exactly how the firewall would work under the present legal framework, and the lack of a clear outline has some industry watchers worried.
"Privacy protection has been neglected by regulatory agencies during deregulation, at least so far," said Norman Yin (殷乃平), a professor at Chengchi University. "The coverage of privacy protection in the Financial Services Modernization Act enacted in the US in 1999 provides a good example for us."
Although the FSMA allows affiliated financial companies to share customers' personal data with each other, consumers have the right, by written request, to stop the companies from sharing their data with firms outside the corporate group, such as telemarketers.
The FSMA also requires financial companies to disclose to customers in "clear and conspicuous terms" their procedures for protecting personal data. In addition, the act makes it a federal crime to misrepresent oneself to obtain someone's private financial data.
"Unless our agencies improve the loopholes in the near future, the issue of privacy may be seen as a risk by customers," Yin said.
While banks and insurance firms may soon be able to wade into the securities industry, it is not the same as securities companies setting up banks and insurance companies.
Part of the reason for this is that most securities companies are relatively small, with the exception of several large firms such as Yuanta-Core Pacific (
While the minimum capitalization of an integrated securities company is NT$1 billion -- and just NT$200 million for a brokerage -- the minimum capitalization for a commercial bank is NT$10 billion. It is easier for a local bank to acquire a securities company than the other way around. A similar situation applies to insurance and securities companies.
A number of commercial banks have been interested in investing in securities companies in recent months, including E Sun Bank (
After the finance ministry decided to deregulate the market, these banks have been expected to speed up their moves into the securities industry.
A number of financial conglomerates already own both commercial banks and securities companies, including the Shin Kong Group's (
For non-financial groups, there is President Group (
Before the finance ministry's deregulation, these commercial banks could not own more than 20 percent of their affiliated securities companies.
But after the ministry's recent measure, they will be able to invest as much as 100 percent in their securities affiliates, which will free more capital from these groups for other purposes. It means higher capital efficiency for these commercial banks or conglomerates, and that's one of deregulation's bottom line goals.
JITTERS: Nexperia has a 20 percent market share for chips powering simpler features such as window controls, and changing supply chains could take years European carmakers are looking into ways to scratch components made with parts from China, spooked by deepening geopolitical spats playing out through chipmaker Nexperia BV and Beijing’s export controls on rare earths. To protect operations from trade ructions, several automakers are pushing major suppliers to find permanent alternatives to Chinese semiconductors, people familiar with the matter said. The industry is considering broader changes to its supply chain to adapt to shifting geopolitics, Europe’s main suppliers lobby CLEPA head Matthias Zink said. “We had some indications already — questions like: ‘How can you supply me without this dependency on China?’” Zink, who also
At least US$50 million for the freedom of an Emirati sheikh: That is the king’s ransom paid two weeks ago to militants linked to al-Qaeda who are pushing to topple the Malian government and impose Islamic law. Alongside a crippling fuel blockade, the Group for the Support of Islam and Muslims (JNIM) has made kidnapping wealthy foreigners for a ransom a pillar of its strategy of “economic jihad.” Its goal: Oust the junta, which has struggled to contain Mali’s decade-long insurgency since taking power following back-to-back coups in 2020 and 2021, by scaring away investors and paralyzing the west African country’s economy.
Tax revenue from securities transactions last month increased 41.9 percent from a year earlier to NT$30.3 billion (US$975.8 million), rising on an annual basis for the third consecutive month and marking the highest for the month of October as Taiwanese stocks continued to perform strongly, data released by the Ministry of Finance showed yesterday. Last month, the TAIEX surged 2,412.81 points, or 9.34 percent, marking its largest-ever monthly rise for October as market sentiment was buoyed by a nearly 15 percent gain in contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which accounts for more than 40 percent of the
BUST FEARS: While a KMT legislator asked if an AI bubble could affect Taiwan, the DGBAS minister said the sector appears on track to continue growing The local property market has cooled down moderately following a series of credit control measures designed to contain speculation, the central bank said yesterday, while remaining tight-lipped about potential rule relaxations. Lawmakers in a meeting of the legislature’s Finance Committee voiced concerns to central bank officials that the credit control measures have adversely affected the government’s tax income and small and medium-sized property developers, with limited positive effects. Housing prices have been climbing since 2016, even when the central bank imposed its first set of control measures in 2020, Chinese Nationalist Party (KMT) Legislator Lo Ting-wei (羅廷瑋) said. “Since the second half of
RSS