The Financial Supervisory Commission yesterday denied reports that Morgan Stanley Capital International (MSCI) may drop the local bourse from its global indices because of Taiwan's disputes with Singapore over different settlement systems used for futures products.
"MSCI only compiles and provides the index information to the Singapore Exchange Ltd for the MSCI Taiwan Index futures traded in the country's market. MSCI has nothing to do with the issue," the commission's spokesman Lin Chung-cheng (
The Taiwan Stock Exchange (TSE) has been in talks with the Singapore Exchange recently over discrepancies in the settlement of futures products, and the commission hopes to see a mutually beneficial outcome, he added.
"We do not want to see a deadlock or collapse of the bilateral talks," Lin said, adding that the regulator will have alternative support measures if the two sides cannot reach an agreement.
Asked if Taiwan would change its settlement system should its Singapore counterpart refuse, Lin said the agency will ponder all solutions beneficial to Taiwan and the TSE can also refer to settlement systems used in other nations.
The financial regulator's comments came in response to a Chinese-language newspaper report that said MSCI is considering removing Taiwan's stocks from its global indexes because of disputes over its MSCI Taiwan index futures traded on the Singapore market.
To prevent manipulation of the local stock market, Taiwan's financial authority has asked the Singapore Exchange to revise the settlement system used for the MSCI Taiwan Index futures.
The financial regulator also hoped its Singapore counterpart would obtain Taiwan's authorization before purchasing TAIEX data from Reuters Ltd. The commission said in June that it may consider to stop providing data if the parties involved cannot reach an agreement by the end of next month.
The financial watchdog's formerly hardline stance appears to have softened, as Lin said the commission would make decisions with respect to the viewpoints of futures business operators and the Taiwan Futures Exchange.
Toshiaki Matsumae, executive director at MSCI's Tokyo office, didn't return calls to his office.
The removal of Taiwan from MSCI global indices, which are a significant reference for overseas investors, could lead to a considerable outflow of foreign funds from Taiwan. But an analyst said it's highly unlikely MSCI would do so.
"It would be completely unprecedented," said Ben Rudd, a Hong Kong-based strategist at ABN Amro Asia Ltd.
To compete with its Singapore counterpart, Taiwan is slated to open non-hedged trading of Taiwan Index futures on Jan. 3 and the commission said it has proposed to the legislature to cut the trading tax on futures products in a bid to lure arbitragers.
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