The bond market platform of a planned offshore bourse that aims to internationalize Taiwan's capital markets is close to being finalized, the Financial Supervisory Commission said yesterday.
"We are now moving into the stage of executing the bond market of the planned offshore bourse, as it isn't as involved in the complex cross-strait relations," the commission's spokesman Lin Chung-cheng (
The commission has begun promoting the new platform to global bond issuers and underwriters, he said.
The planned offshore bourse comprises two systems -- a stock exchange with an undefined launch time and the bond market, which is slated to open early next year. Trading is to be conducted in US dollars in both platforms.
Bonds backed by foreign governments or international institutions would be exempt from review, while private placements of bonds with a rating of BBB or better would be preferred, Lin said.
The offshore bond market targets the nation's insurers and foreign institutional investors, as yields from offshore trading can be categorized as tax-free overseas income, he said.
Local banks' offshore business units will be able to help their overseas Taiwanese corporate clients issue bonds traded in US dollars on the platform, he said, adding that this is the target source of bond issuers, he said.
The commission expects that the nation's relatively low costs for underwriting and professional services, as well as its abundant capital supply, will give the market a competitive edge against rival Asian countries such as Hong Kong and Singapore as a fundraising hub and in the region.
"The offshore bourse is expected to raise Taiwan's visibility in the international capital market and enhance fund inflows," the commission's chairman Kong Jaw-sheng (
In accordance with international standards, there will be no daily trading limit in the offshore bourse, Kong said, adding that the commission will begin marketing the bourse overseas over the next two months, with the intention of attracting at least 20 companies to the exchange.
He did not give a clear timeframe for this plan.
According to a report in a Chinese-language newspaper yesterday, companies qualified to list on the bourse will include high-tech firms headquartered in the US or Japan, as well as foreign companies invested by overseas Chinese that have been operating for over three years, with a market value exceeding US$50 million and cumulative pre-tax income over US$8 million in the past three years.
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