Taiwanese People Will Be Able to Buy Chinese Securities via Re-consignment

Taipei, June 25, 2012 (CENS)--The Financial Supervisory Commission (FSC) plans to greatly open up cross-Taiwan Strait financial businesses following the establishment of currency clearance mechanism, including allowance for local people to invest in mainland Chinese stocks via re-consignment with securities firms and opening up of the issuance of renminbi-denominated mutual fund, insurance policies, and structured notes.

This will be a major step for relaxation of cross-Strait financial exchanges, following the opening up of institutional investors, such as insurance firms, banks, and fund managers, to invest in mainland Chinese securities in recent years.

Presently, local people can buy mainland Chinese securities only via mutual funds. In the future, they can place orders with mainland Chinese securities firms via the mediation of local securities firms for the purchase of stocks and the subscription to mutual funds in mainland China.

The Taipei branch of the Bank of China was inaugurated last Friday (June 22), signifying a major step forward in the establishment of cross-Strait currency clearance mechanism.

In anticipation of the establishment of currency clearance mechanism, the FSC has planned a number of liberalization measures, including extensive opening up of renminbi-related businesses for banks, securities firms, and insurance firms. Consequently, designated forex banks will be able to accept renminbi deposits, foreign enterprises can issue renminbi-denominated bonds in Taiwan, fund managers can issue renminbi-denominated mutual funds, securities firms can accept re-consignment for investment in mainland Chinese securities and launch renminbi-denominated domestic and offshore structured products, and insurance firms can roll out renminbi-denominated insurance policies.

Although the FSC allowed banks and insurance firms to invest in mainland Chinese securities last year, local people still cannot buy mainland Chinese securities and can only buy securities issued by mainland Chinese enterprises overseas, such as H stocks in Hong Kong, S stocks in Singapore, and N stocks in the U.S.