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May 26, 2017

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FSC to assist securities firms in expanding overseas

TAIPEI, Taiwan -- The Financial Supervisory Commission (FSC) may relax rules as early as next quarter to facilitate securities firms' reinvestment efforts overseas, FSC Chairman Tseng Ming-chung (曾銘宗) said recently.

The FSC invited securities and futures firms to a conference to discuss their efforts to break into the Asian market. Nearly every securities firm attending the conference expressed the hope that the government increases capital limits that firms are allowed to invest overseas. The current rule stipulates that a security firm may only invest an amount equivalent to 40 percent of its net value overseas.

Tseng said he himself wants to ease the cap limit, and as such, the FSC's general policy is to relax the rule. Upon considering reinvestment needs and requirements in the industry, the FSC will roll out its new policy, Tseng added.

All Parties Favor Relaxation

According to securities firms, they can be profitable only after transaction value on the list market adds up to NT$80 billion. Most securities firms believe that they have to be able to be profitable domestically, before they are able to expand business overseas. As such, they also expressed hope that the government will relax rules to allow them sell more product categories. The FSC has indicated that it would study and keep reviewing relevant regulations.

Among Taiwan's major securities firms, Yuanta Securities (元大寶來證券) has a net worth of NT$92.1 billion, and KGI Securities (凱基證券) has a net worth of NT$68.5 billion. In addition, Fubon Securities (富邦證券) and Capital Securities (群益金鼎證券) also have a very high net worth. Only Yuanta and KGI have expanded their business in Southeast Asian countries, Tseng said, adding that he hopes more securities, investment and futures firms to expand business in the Asian market.

After the largest three securities firms, there are eight additional firms with a net worth of over NT$20 billion. All five of the largest domestic securities firms have a good chance to turn into regional corporations in Asia, Tseng said, adding that the biggest three securities firms have a good chance to achieve this goal in 3 to 5 years. The FSC will provide all the necessary assistance, he said.

As the securities industry become increasingly global, and more and more Taiwanese overseas businesses are in need of securities services, domestic securities must take advantage of Taiwan's geographic position to break into the Asia market, Tseng said.

Tseng said that reinvestment through acquisition or setting up subsidiaries overseas may be the most efficient way of expansion.

In addition to securities companies, the FSC is considering lifting the cap limit on the amount of funds insurance companies are allowed to utilize in their overseas acquisition. In addition, the FSC may allow insurance companies to invest in foreign banks in the future.

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