'Currency speculation' under expedited verification: FSC
By Ted Chen, The China PostTAIPEI, Taiwan -- Regulators yesterday stated that evidence provided by the R.O.C. Central Bank relating to alleged currency speculation activities by foreign institutional investors is currently undergoing an expedited review process, in an effort to determine whether violations were committed by the parties involved.
October 24, 2013, 12:07 am TWN
Financial Supervisory Commission (FSC) Chairman Tseng Ming-chung (曾銘宗) stated that the FSC, in conjunction with the Securities and Futures Bureau (證期局) and the Taiwan Stock Exchange (證交所), is in the process of gathering additional evidence. Swift action will be taken once the investigation concludes, Tseng pledged yesterday at a conference hosted by the FSC to discuss further deregulation and innovations in Taiwan's financial sector.
The market yesterday saw trading volume recede to NT$75.872 billion and closed at 8393.62 points, down by 24.65 points or 0.29 percent.
In response to concerns over dwindling trading volumes, Tseng stated that with trading holding above an average of NT$104 billion, volumes had expanded markedly throughout October relative to figures recorded in July and August.
Meanwhile, insurance carriers have expressed concern that their operations would be hampered by the FSC's plans to reduce the limit on shares held in a single company from 10 to 5 percent of overall portfolio composition. In asserting the necessity of implementing policies which yield more good than harm, Tseng replied that every measure implemented by regulators will inevitably give rise to concerns.
Allegations of Currency Speculation
Reports of alleged currency speculation by foreign institutional investors first emerged on Tuesday following a rare announcement by the central bank that it had uncovered incriminating evidence of wrongdoing.
The central bank stated that a company had been moving funds into Taiwan shortly after gaining Foreign Institutional Investor (FINI) status from local regulators. However, the funds were held dormant and later transferred out of Taiwan after a few days, said the central bank. According to the central bank, the act constitutes currency speculation. As part of its initiative to step-up efforts in monitoring currency markets, the central bank detected multiple occasions in which a FINI company had transferred funds into Taiwan but refrained from purchasing any domestic shares or assets, only to transfer the funds overseas within seven days, an act prohibited by current regulations.
The company in question is facing the prospect of having its FINI status revoked, in addition to further legal repercussions, according to reports.
Recent moves by regulators represent a strong display of conviction in warding off speculators, the flow of hot money, and market vultures from the Taiwan market, said financial sector commentators, who added that the stance may be a measure intended to stimulate trading volumes.