FSC Will Accelerate Liberalization of Cross-Strait Finance

Taipei, Jan. 16, 2012 (CENS)--With the ruling Kuomintang winning the presidential election, the Financial Supervisory Commission (FSC) will embrace an even more aggressive cross-Taiwan Strait financial policy, including the rollout of several liberalization measures soon, such as allowance for securities firms to undertake re-consigned investments in H shares and S shares, as well as local supervision.

In addition, the FSC is studying the feasibility of raising the ceiling for investments by mainland Chinese banks in domestic banks and financial holding companies to 15%, up from 5% now, as well as the securities investment quota of mainland China’s QDIIs (qualified domestic institutional investors).

The FSC is consulting with the Central Bank of China (CBC) for allowing securities firms to accept consignment from clients for investments in securities floated by the Chinese government or enterprises in Hong Kong, known as H shares, in Singapore, known as S shares, or in the U.S. and other places. Under the new policy, local people can invest in stocks listed by Chinese enterprises abroad via re-consignment with domestic securities firms.

The FSC is also pushing localized supervision, entrusting local supervisory institutions to supervise the operations of the Hong Kong subsidiaries of domestic securities firms.

The mainland Chinese branches of six domestic banks expect to win the approval for undertaking renminbi-denominated businesses in the first quarter this year. The Taiwanese branches of the Bank of China and Bank of Communications will also be able to undertake NT dollar-denominated businesses at the same time.

In addition, the FSC has permitted local enterprises to invest in financing leasing firms and venture capital firms in China and is studying allowance for investments in small-amount loans, consumer finance, and loan-guarantee firms in China.

A single mainland Chinese bank can invest up to 5% stake in a local bank or financial holding company, and the total stake owned by all Chinese banks is capped at 10%. The FSC is studying to raise the former ceiling to 15%.