The government plans to amend regulations to prevent banks from using derivatives trading for mergers or acquisitions, the Financial Supervisory Commission said.
Banks will also need to have investment grade debt ratings to engage in derivatives trading, the commission said in a statement on its Web site. There is no ratings requirement for banks to trade derivatives now, the statement said.
IMPLEMENTATION
The regulator did not say when it will implement the new rules. It posted the revisions on its Web site to seek public feedback over the next seven days, the statement said.
The regulator is proposing to amend the rules because of Chinatrust Commercial Bank's (中國信託商銀) investment in Mega Financial Holding Co (兆豐金控) last year via an offshore derivatives transaction, the Chinese-language Commercial Times said yesterday.
The financial watchdog aims to tighten supervision of "an increasingly complicated risk nature and the complexity of product types in a growing market," it said in the statement, without mentioning Chinatrust Commercial.
Chinatrust Commercial, based in Taipei, is the nation's largest credit-card issuer. The company bought US$390 million worth of notes convertible into Mega shares through its Hong Kong branch without approval from the board of its parent, Chinatrust Financial Holding Co (
CONVERTIBLE NOTES
Chinatrust Financial had regulatory approval to acquire 10 percent of Mega in February last year by buying shares in the local market.
The convertible note purchase gave Chinatrust Financial a bigger stake in Mega Financial than was allowed by the watchdog.
"Banks will be banned from trading derivatives for mergers and acquisitions, or any illegal purposes, regardless of whether they do this for their own or for clients," the commission said in the statement.
Chinatrust Financial completed the disposal of a 3.9 percent stake in Mega Financial, as ordered by the regulator, in June, reducing its holding in the nation's second-largest financial services company by assets to 11.6 percent.
On July 30, Chinatrust Financial said it will sell the remaining stake within four years because it had ruled out Mega Financial as a potential target for a merger or acquisition.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in server chips, expects revenue to decline this year due to sagging demand for 5-nanometer artificial intelligence (AI) chips from a North America-based major customer, a company executive said yesterday. That would be the first contraction in revenue for Alchip as it has been enjoying strong revenue growth over the past few years, benefiting from cloud-service providers’ moves to reduce dependence on Nvidia Corp’s expensive AI chips by building their own AI accelerator by outsourcing chip design. The 5-nanometer chip was supposed to be a new growth engine as the lifecycle
RSS