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May 30, 2017

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Securities firms optimistic about OSUs

TAIPEI, Taiwan -- Most securities firms expressed optimism about profit potential after the government granted approval to 12 securities firms to conduct offshore securities business.

The government recently approved up to 12 securities firms in the Free Economic Pilot Zones (FEPZ) to establish offshore securities units (OSU).

OSUs are just starting out, like a baby learning how to walk, KGI Securities Co (凱基證券) Chairman Mark Wei (魏寶生) said, adding that the pace of the offshore securities business is speeding up. Wei expects the business to account for more than 30 percent of the company's total profit structure in the next three to five years.

Local banks started to establish offshore banking units (OBU) about 30 years ago. Profit made in the banking industry totaled NT$257.6 billion last year, of which OBUs contributed NT$82.4 billion, or 32 percent of the profits.

A total of 12 firms in the pilot zone were recently approved by the government to establish OSUs. This is only a beginning, Wei noted, adding that securities firms need to develop new financial products as well as lift constraints placed on domestic investors to realize profit potential. KGI does not want to left behind, and will try its best to catch up with the banking industry, Wei stressed.

Difference in OBUs and OSUs

Capital Securities Corporation (群益證券) general manager Chao Yung-fei (趙永飛) pointed out that securities firms are different from banks, and there is much difference between OSUs and OBUs, and therefore there will be no competition for customers between the two. How to attract more foreign capital and expand the market are the most critical points, Chao said, adding he expects securities firms to prosper after the taxation system becomes normalized while more financial products are created down the road.

SinoPac Securities Co. (永豐金證券) general manager Yeh Huang-chi (葉黃杞) said OSUs will create many profit opportunities, which, however, will not surface immediately. As securities firms become more familiar with offshore securities business, regulations become normalized and financial products become more diversified, firms will start to reap the benefits within a 2- to 3-year timeframe, Yeh said.

Jih Sun Securities Co. (日盛證券) general manager Emily Chiang (江燕琇) concurred that including securities business in the FEPZs marks a good beginning.

Stock prices of securities firms hiked across the board yesterday. Prices of four securities firms rose more than 6 percent. Stock prices for Capital Securities rose 4 percent to NT$11.7 per share, and Uni-President Securities Group (統一證券) rose 3.22 percent to NT$17.65 per share.

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