The Taiwan Monthly

Feb. 2018

Trading Policies

Prefunding is not required by regulations

Some foreign investors consulted the prefunding issue in recent meetings. There is no any prefunding regulation that requires investors to pay the principal of securities purchased one day before settlement day in Taiwan's market. A securities broker accepting a trading order under normal settlement terms shall collect the securities sold or the purchase price of the securities from the investor when the order is transacted or prior to 10 a.m. on the second business day after the trade date. However, NTD is not freely convertible in the foreign exchange market. Therefore, some brokers or custodian institutes require prefunding to prevent default.


Investors are advised to maintain good credit with brokers and custodian institutes in order to be exempt from the prefunding requirement. If an investor can't deliver the principal on time, the investor can apply for delayed settlement or T+5 short-term financing with brokers. In the mentioned circumstances, brokers are required to carry out settlement procedures on the investor's behalf.


For further inquiries, please contact Ms. Tzeng at