The Taiwan Monthly

Trading Policies

New trading regulation for exchange traded notes (ETNs)

For the purpose of attracting international investors to participate in Taiwan's capital market, the Financial Supervisory Commission ("FSC") has released a new order that, pursuant to Article 4, Paragraph 1, Subparagraph 6 of the "Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals", approves the inclusion of exchange traded notes (ETNs) issued in accordance with the "Regulations Governing the Issuance of Exchange Traded Notes by Securities Firms" in the types of securities available to overseas Chinese and foreign investors starting on March 31, 2021. However, the inclusion does not extend to ETNs whose calculation of indicative value involves NTD exchange rates.

 

Moreover, the total amount invested by an overseas Chinese or foreign national in government bonds, corporate bonds (excluding privately placed corporate bonds), financial debentures, money market instruments, and money market funds, plus all NT dollar premiums paid for trades of OTC equity derivatives, OTC NT dollar interest rate derivatives, OTC structured instruments, and option trades on convertible bond asset swaps, plus the net settlement amount on price differences of swaps, must not exceed 30 percent of the net inward remittance. The total amount invested in ETNs will also be counted toward to the limit above.

 

There are currently 16 ETNs listed on the exchange. Except for MasterLink S&P China New Sector (code: 020002) which involves NTD exchange rates in indicative value calculation and is therefore not available to overseas Chinese or foreign investors pursuant to the new order above, overseas Chinese or foreign investors are permitted to invest in any of the other 15 ETNs.

 

The TWSE implements the competent authority's "Capital Market Roadmap" to fulfill the vision for a fair, efficient, innovative, open, diverse capital market that reflects international standards. Granting the investment permission is expected to bring another wave of new money into ETN. The TWSE will continue to promote measures to invigorate the stock market with the aim to attract more cash flows into Taiwan's stock market and increase economic growth momentum.

 

For further inquiries, please contact Kuang-Ching Lee at 1232@twse.com.tw.