The legislature’s Finance Committee yesterday approved proposed amendments that would require the National Stabilization Fund to brief lawmakers within three months about the fund’s activity in entering or exiting local equity markets.
The bill, sponsored by Chinese Nationalist Party Legislator-at-large William Tseng (曾銘宗) and his colleagues, aims to make the fund more transparent and accountable, and reduce the chance of politically motivated interventions.
MARKET TURMOIL
The NT$500 billion (US$15.41 billion) fund has helped support the local stock market in times of turmoil caused by non-economic factors, at the instruction of a 13-member oversight committee.
The committee is headed by the vice premier and run by the deputy minister of finance with help from a team of professional players.
“It is important for the fund to have legislative oversight to prevent undue political influence,” said Tseng, who steered the fund for five years during his tenure as deputy minister of finance.
Tseng called for the fund to exit the market after he assumed office as legislator-at large in February, when the local market was relatively calm, but the committee decided that the fund would stay until the middle of April due to concerns over instability linked to the power transition.
Tseng said the intervention was politically motivated, which is at odds with the fund’s mission.
SOLE DISCRETION?
Lawmakers from across party lines lent support to the need for legislative oversight, but disagreed about the clause that would give the fund’s executive secretary the discretion to leave the market as they see fit.
Tseng said that leaving the decision to one person is intended to facilitate the fund’s exit without drawing notice and avert expectations of a market correction.
Deputy Minister of Finance Su Jain-rong (蘇建榮), the fund’s current top executive, expressed reservations, saying the fund should come and go at the unanimous instruction of its committee.
DPP lawmakers rallied behind Su and removed the clause from the bill. They also withheld support from a separate bill by Tseng that would introduce an anti-insider trading clause to futures transaction rules.
Financial Supervisory Commission Chairman Ding Kung-wha (丁克華) said most countries do not have such a mechanism because futures transactions are resistant to insider trading.
Ding asked for more time to study the issue.
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