The Financial Supervisory Commission (FSC) yesterday reversed its stance on amendments to the Banking Act (銀行法) that would allow the regulator to exact penalties for each instance of violation, following widespread contagion risks sparked by the sale of risky derivative instruments.
Pressured by rising concerns about massive losses from yuan-linked target redemption forwards (TRF) — a structured derivative product that was designed to hedge against fluctuations in the strength of the Chinese currency — the commission had previously aimed to expand penalties to banks that had heavily promoted the risky instrument as a high-return investment to clients.
However, the commission yesterday said that it is leaning toward keeping current regulations unchanged, citing a preliminary review of a study conducted by the Taiwan Academy of Banking and Finance (台灣金融研訓院) and the Shih Hsin University Department of Law.
“The study cites a decision by the Taiwan High Court that ruled in favor of Uber drivers, as their violations are part of a recurring and continued business activity,” Banking Bureau Deputy Director-General Sherri Chuang (莊琇媛) said.
According to the ruling, drivers are not subject to multiple fines for each and every fare they pick up using the outlawed ride hailing service, Chuang said.
Similarly, a bank’s financial planner may not be penalized for each TRF contract sold to each client, Chuang said.
Chuang added that the commission would likely keep the maximum penalty against offending banks at NT$10 million (US$331,115), as smaller lenders would collapse under heavier fines, while larger players may be part of financial conglomerates.
In addition, the commission would not be seeking indemnities from financial planners employed by banks, Chuang said, adding that while the commission would instruct banks to terminate employees involved in TRF-related disputes, it is up to each bank to decide whether to take further legal action.
Earlier, the commission was mulling dividing each violation into multiple acts, with each subject to separate penalties.
In TRF-related cases, the violation would be split into separate lapses, including inadequate verification of client risk profiles, as well as contravention of a company’s internal control measures, sales strategy rules and governance of banks’ treasury marketing units, the commission has said.
However, Chuang said that once a penalty is imposed on a bank, further fines may be levied if the offenders are found to have failed to redress the same shortcoming in routine annual or quarterly checks.
The London Metal Exchange (LME) discovered bags of stones instead of the nickel that underpinned a handful of its contracts at a warehouse in Rotterdam, the Netherlands, in a revelation that would deliver another blow to confidence in the embattled exchange. The amount of metal represents just 0.14 percent of live nickel inventories on the LME, worth about US$1.3 million at current prices, so the immediate effect on the metals markets is limited. However, the shock announcement has much wider implications. In an industry riddled with scandals, the LME’s contracts are viewed as unquestionably safe. The news that even a few of
Oil on Friday posted its worst weekly loss since the early months of the COVID-19 pandemic as banking turmoil poisoned investor sentiment. West Texas Intermediate for April delivery dropped 2.36 percent to US$66.74 per barrel, falling 12.96 percent for the week, the largest drop in almost three years. Brent crude for May delivery fell 2.32 percent to US$72.97, posting a weekly loss of 11.85 percent. The failure of Silicon Valley Bank and troubles at Credit Suisse Group AG drove investors from risk assets, with oil-options covering accelerating the sell-off. “Crude action this week reminded many of how quickly the commodity can be decimated by
Singapore pushed New York off the top spot for the strongest growth in residential rents in the final quarter of last year, fueled by a supply crunch and strong demand. The city-state saw annual rents jump 28 percent in the quarter from a year earlier, Knight Frank said in a report. New York followed with 19 percent growth, while London and Toronto took the third and fourth spots, a survey of prime residential rents across 10 cities showed. Singapore’s soaring rents — driven partly due to a lack of supply of new housing during the COVID-19 pandemic — have been a source of
US-based mobile chip designer Qualcomm Inc yesterday opened a manufacturing engineering and testing center in Hsinchu, expanding its presence in Taiwan. Qualcomm also expects to accelerate its purchases in Taiwan, which already rose to NT$240 billion (US$7.9 billion) last year, up from NT$90 billion five years earlier, and should hit NT$300 billion next year. The center is to provide services for the supply chain in the semiconductor industry, Roawen Chen (陳若文), senior vice president and chief supply chain and operations officer of Qualcomm, said at the facility’s inauguration ceremony. It is Qualcomm’s largest and most advanced engineering testing center outside of the company’s