The Taiwan Monthly

Jul. 2024

Trading Policies

Securities firms and custodian institutions are allowed to conduct net settlement of buy and sell transactions

The Taiwan Stock Exchange (TWSE) indicates that, in order to improve the operational processes, reduce the costs associated with settlements between securities firms and custodian institutions, as well as to enhance the overall efficiency of utilization of market funds, custodian institutions are now permitted to conduct settlement with securities firms based on the net amount offset by the total buy and sell amounts for all transactions, in addition to the current practice of net settlement on a per-client basis. In other words, on the settlement day, custodian institutions only need to make one transfer on a per-securities firm basis, eliminating the need for individual payments for each client.

 

TWSE states that this new measure was announced on May 24, 2024, and will be implemented on December 2, 2024, providing sufficient time for securities firms and custodian institutions to make necessary adjustments to their computer systems. Since both the current regulations and the new measure are concurrently applicable, whether the new measure is adopted or not is subject to agreement between securities firms and custodian institutions.

 

Preliminary statistics based on data up to the end of April 2024, TWSE indicates that securities firms adopting the new measure could potentially save up to 75% of related costs, demonstrating the significant cost-saving benefits of conducting this new measure for both securities firms and custodian institutions.