Rules on collateral for stock traders would be eased, the Financial Supervisory Commission (FSC) said yesterday, as it seeks to reduce financial pressure on investors amid volatility on the local stock market.
The announcement of the second relaxation of the rules since the second quarter of 2020 came after the government activated the NT$500 billion National Stabilization Fund on Tuesday to support the local stock market.
When getting a margin call, investors were previously required to deposit cash or securities as collateral to prevent brokerage companies from closing out their portfolio positions.
Photo: CNA
The commission said investors can now also use assets other than cash or securities as collateral, including gold and real estate.
Newly allowed assets must be liquidity similar to the previously required assets, the commission said.
It is further required that their value can be objectively assessed and the brokerages involved must agree to their use, it added.
“For example, mutual funds can be the sources of collateral as well,” Securities and Futures Bureau Deputy Director Kao Ching-ping (高晶萍) told the Taipei Times by telephone.
Investors receive margin calls when their collateral to loan ratio falls below the maintenance requirement ratio of 130 percent. The commission did not adjust this requirement.
As the value of securities used as collateral fluctuates on a daily basis, the collateral to loan ratio might change more frequently and more quickly amid a volatile market, the commission said.
Investors with a collateral to loan ratio of close to 130 percent might therefore receive margin calls more frequently, it said.
“We hope this relaxed measure can help reduce pressure on investors because we have seen local stocks fluctuate more greatly in recent sessions,” Kao said.
In 2020, the commission eased the rules on collateral for three months.
This time, the commission said that the measure would be phased out when the situation in the stock market allows that move.
The commission also encouraged listed companies to buy back shares, saying that it would help improve investors’ confidence in Taiwanese equities.
The TAIEX yesterday closed up 113.84 points, or 0.79 percent, at 14,438.52, recovering from earlier losses induced by the higher-than-expected US inflation data released overnight.
The bellwether electronics sector led the rebound as large-cap semiconductor stocks, in particular contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電), bounced back from their opening lows, while the financial sector moved below its previous closing throughout the session.
Turnover totaled NT$208.999 billion (US$6.99 billion) on the main board, with foreign institutional investors buying a net NT$571 million of shares, Taiwan Stock Exchange data showed.
Additional reporting by CNA
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since