The Taiwan Monthly - Special Edition

11 Apr. 2024

Trading Policies

Conducive environment for foreign investment

In a strategic move to foster a more investor-friendly environment for international investors, the Taiwan Stock Exchange (TWSE) implemented a series of market reform measures in 2023. These initiatives aim to enhance market accessibility, streamline processes, and increase flexibility for foreign investors, reinforcing Taiwan's position as an attractive destination for global investment.

Key reform measures introduced by TWSE include:

1.   Allowing Foreign Investors to Leverage Taiwan Stocks as Collateral for Offshore Investments

Effective August 28, 2023, offshore foreign institutional investors (FINIs) can now use Taiwan stocks as collateral for offshore investment activities. This groundbreaking move is designed to boost market accessibility and provide foreign investors with greater flexibility in managing their capital. The process involves qualified FINIs as both collateral provider and receiver, with mandatory oversight from an offshore collateral manager.

2.      Paperless Foreign Investment Registration Processes

As of October 2, 2023, a revolutionary shift in foreign investment registration processes has been implemented by the TWSE. Foreign investors are no longer obliged to physically sign the registration application form and submit the original copy to the Taiwan custodian. This paperless approach is a bold step towards simplifying and expediting the foreign investment registration process. It aligns with TWSE's commitment to not only modernize but also contribute to building an ESG ecosystem in Taiwan capital market.

3.       Timely Settlement Measures for T+2: Prefunding Flexibility

To ensure timely settlement on T+2, some brokers may request investors to maintain sufficient TWD in their cash accounts on T+1. Recognizing the need for flexibility, the Taiwan Securities Association introduced an alternative to the prefunding requirement on December 25, 2023. Investors can now fulfill this requirement by booking an FX value securities settlement date with their Taiwan custodian, offering a more adaptable and efficient settlement process.

These forward-looking reforms underscore TWSE's commitment to providing a conducive environment for foreign investment, fostering transparency, and positioning Taiwan as a premier destination for global investors.

For further inquiries, please contact Mr. Chen at rickychen@twse.com.tw