The Taiwan Monthly

Intermediaries Service

Enhancing Flexibility in Pre-Funding Mechanism for Altered Trading Method Securities

To improve market efficiency and enhance accessibility for offshore investors, a regulatory amendment, effective from April 2, 2026, has been introduced to refine the pre-funding mechanism applicable to securities subject to altered trading methods.

 

The amendment introduces greater flexibility in the handling of pre-funding requirements. Securities brokers are now allowed to accept buy and sell orders from offshore Overseas Chinese and foreign investors without requiring immediate confirmation of pre-funded assets at the time of order entry. Instead, custodian institutions may, based on client instructions and notifications from brokers, directly earmark the necessary funds or securities at the custodian level.

 

The earmarking status will be communicated through the Taiwan Depository & Clearing Corporation (TDCC) system, enabling efficient and timely exchange of information between brokers and custodians. This mechanism ensures that settlement discipline is maintained while significantly streamlining operational processes.

 

The new measure is expected to reduce order delays associated with cross-border transactions, simplify operational workflows, and lower administrative costs for foreign investors. This amendment aligns with the ongoing commitment to optimizing Taiwan’s capital market infrastructure and fostering a more efficient, investor-friendly investment environment.