Taiwan FSC Outlines Plans for Capital Market Development

A 3-year roadmap to be unveiled by year-end includes plans to set up central clearing for OTC derivatives, and improve convenience and efficiency for foreign investors.

Taiwan’s FSC (Financial Supervisory Commission) says it is currently developing a capital market roadmap to address the latest market developments including ESG, digital technologies and an aging society.

“The new roadmap aims to create an ecosystem for market participants to achieve shared well-being and prosperity, thereby fulfilling the vision of a fair, efficient, diverse, and internationalised capital market with a focus on innovation and openness,” the FSC said in a statement.

In the new ‘2021-2023 Capital Markets Roadmap Framework’, the FSC said it will focus on four main objectives: sustainable development, financial inclusion, enhanced competitiveness, and investor protection.

The roadmap, expected to be rolled out by year-end, is aimed at enhancing capital market functions and stimulating Taiwan’s economic growth. The roadmap will also serve as a reference for policymaking, the FSC said.

The capital market roadmap encompasses five major strategies:

• Strengthening primary market functions to support real economic development, by establishing a new innovation board, optimising IPO and SPO financing regulations, enhancing supervision and information transparency of listed companies, expanding responsibilities and management of securities market specialists, and improving audit quality
• Activating the market and increasing efficiency and liquidity, which includes promoting intraday odd lot trading, developing a market-making system, enhancing the clearing and settlement system, improving market transparency and investor risk management, and establishing investment-friendly taxation policies
• Attracting domestic and foreign investment and improving international visibility, by improving convenience and efficiency for foreign investors, promoting Taiwan’s capital market and strengthening international cooperation, increasing investor protection and education, continuing to attract domestic capital, and achieving QCCP (qualifying central counterparty) status under the Basel III framework
• Boosting functions and competitiveness of financial intermediaries, by promoting fintech/regtech and digital transformation, supporting securities firms to develop their investment banking business, encouraging expanded investment trust and consulting operations, stimulating development in futures operations, enhancing information security, and cultivating financial professionals
• Encouraging financial innovation and product diversity, by establishing a sustainable market, expanding the scope of asset management, setting up a central clearing system for OTC derivatives, and promoting the development of diverse financial products for securities and futures markets

The FSC said it will be working with the TWSE (Taiwan Stock Exchange), TPEX (Taipei Exchange), TDCC (Taiwan Depository and Clearing Corporation), and TAIFEX (Taiwan Futures Exchange), as well as other industry bodies and associations, to convene strategic working groups dedicated to rolling out the capital market roadmap by year-end.

The proposed ‘2021-2023 Capital Markets Roadmap Framework’ is outlined here.

So far this year, the FSC has unveiled a three-year fintech development roadmap, a corporate governance and sustainable development roadmap, and a new green finance action plan.