Formosa bond exemption to invigorate market
Taiwan News, Staff Writer
2014-04-11 11:20 AM
After a domestic investment trust fund investing in domestic securities such as Taiwan stocks are approved to be sold by offshore banking units (OBU), their proportion of investment in the domestic stock exchange cannot exceed 30%. However, investment in Formosa Bonds is exempt. This move will help attract more investment to the Formosa Bond market.

The Financial Supervisory Commission (FSC) announced the aforementioned liberalization measures Thursday. It is understood that in the negotiation process with the Central Bank, the Central Bank originally believed that if this type of fund invests in foreign currency-denominated international bonds including Formosa Bonds, these must also be also be included in calculations of the 30% limit because these bonds are issued in the domestic market.

However, the FSC was able to obtain approval for the Formosa Bond exemption.

In order to develop Taiwan’s international bond market and forge Taiwan into an offshore RMB center, the FSC stated, investment in foreign currency denominated bonds including Formosa Bonds by offshore funds and domestic investment trust issued multicurrency funds are exempt from percentage limit calculations for investment in the domestic securities market.

FSC Banking Bureau Deputy Director-General Chang Kuo-ming stated that OBUs should conduct this business according to internal operating procedures approved by their respective board of directors.

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