The Taiwan Monthly

Market & ETP Overview

FSC officially launches Capital Market Roadmap

In response to the development of the capital market and the three main trends of ESG, digital technologies, and an aging society, the FSC has officially launched the Capital Market Roadmap to forge a forward-looking and globally competitive capital market. The FSC worked with the TWSE and other associated agencies to deliberate and establish the specific measures and timeframe for the implementation of the Capital Market Roadmap. The Roadmap focuses on 5 major strategies with 25 key items and 82 specific measures summarized into eight major themes as follows:

1. Boost fundraising in the capital market:
   To assist corporations in fundraising, the IPO and SPO financing regulations will be optimized based on a firm understanding of business needs. Furthermore, fundraising for startups will be facilitated to support real economic growth. In addition, dual tracks of REIT trusts with the addition of REIT funds will be adopted to stimulate the development of Taiwan’s capital market.
   
   
2. Promote ESG sustainable development:
   To establish the sustainable bond market. A sustainable bond market and comprehensive range of sustainable bonds will be launched, along with the development of ESG financial products. In addition, the feasibility of compiling a domestic ESG index will be evaluated, comprising constituent companies from Taiwan on international ESG indices, such as DJSI, MSCI ESG, and FTSE ESG. Securities firms will be encouraged to issue ETNs tracking the domestic ESG index. Another key issue is the promotion of ESG investing, which includes promoting green sustainable investing and fundraising, raising standards for TWSE/TPEx-listed companies in ESG reporting, verification, and other internal control processes, and advising the securities investment trust sector to take ESG factors into consideration in investment, risk management, and other internal control processes. To direct capital flows into ESG investment and bring Taiwan’s capital market in line with international practices.
   
   
3. Stimulate market liquidity and enhance information transparency:
   With the expected rollout of the market maker system on June 30, 2021, the implementation of the system will be monitored and reviewed to adjust criteria for market making targets, market makers, and qualifications for incentivizing participants. To enhance market transparency and investor risk management, the Roadmap will explore the feasibility of restricting cancelling orders for a certain time prior to opening, additional information disclosure in the period of disposition measures, and the addition of MWP orders.
   
   
4. Advance digital transformation with fintech:
   To comprehensively upgrade digital services, assistance will be provided to securities firms to set up virtual service points or enhance digital financial services at physical locations. Regulations allowing securities investment consulting enterprises to provide automated re-balancing transactions will be reviewed and loosened to fulfill investor needs in line with international practices. In addition, the securities investment trust sector is urged to join the centralized clearing platform for onshore funds to effectively upgrade onshore fund operations.
   
   
5. Encourage securities firms to expand investment banking business:
   To upgrade securities firms’ role in direct financing and reinvigorate the real economy, the Roadmap will assist startups with fundraising and listing, explore regulations and measures related to early investment in pre-listing companies by securities firms, and evaluate and review IPO underwriting and related measures. Furthermore, securities firms are encouraged to develop diverse financial products, such as ETNs tracking ESG indices, to invigorate the new system for product listing.
   
   
6. Launch retirement preparation platform:
   In response to the trend of an aging society and to enhancing the quality of life for retirees, the Roadmap seeks to promote long-term retirement investment plans, establish a retirement preparation platform that matches retirement investment with public welfare concept, and provide information on investment products suitable for long-term retirement preparedness.
   
   
7. Establish CCP mechanism for OTC derivatives:
   To strengthen the foundations of Taiwan’s financial market and align with international financial practices, the Roadmap will establish operating guidelines for a central clearing system for OTC derivatives, as well as a phased launch of CCP clearing services for interest rate swaps (IRS) and non-deliverable forwards (NDF).
   
   
8. Strengthen investor protection:
   The utilization of SupTech through AI, big data, and robotic process automation (RPA) will effectively strengthen the monitoring of TWSE/TPEx-listed companies as well as the operations and products of securities and futures firms. In conjunction with the amendment of the Commercial Case Adjudication Act and establishment of Commercial Courts, the FSC will enhance the functions of the SFIPC. Investor rights will receive more comprehensive protection through measures such as the continuing education through multiple channels of the elderly, retirees, and young investors regarding securities investment and futures trading.

The related measures of the 3-year Capital Market Roadmap will be carried out by the FSC, together with the Taiwan Stock Exchange, Taipei Exchange, Taiwan Depository & Clearing Corporation, and Taiwan Futures Exchange, as well as the Securities and Futures Institute, Securities and Future Investors Protection Center, and other associated agencies. Implementation of the Roadmap will be reviewed each year with rolling updates and revision deployed as necessary in the hopes of realizing the vision of a fair, efficient, diverse, and internationalized capital market with a focus on innovation and openness.

 

Source: Financial Supervisory Commission, Republic of China (Taiwan) website. https://www.sfb.gov.tw/en/home.jsp?id=78&parentpath=0,4&mcustomize=multimessage_view.jsp&dataserno=202012080003&dtable=News

 

For further information, please contact Ms. Kao at 1090@twse.com.tw.