Taiwan relaxes SBL rules further
09 March 2016 Taipei
Image: Shutterstock
The Taiwan Stock Exchange (TWSE) will now allow brokers to borrow securities directly from customers and extend the rollover limit from once to twice, from 1 February, as part of a major overhaul of its securities lending framework.
The borrowing limits placed on customers will also be removed and the range of securities eligible for securities lending will be expanded.
These reforms mark a significant step for Taiwan’s securities lending market, which many hope will soon reassert itself as a major profit centre in the region.
The removal of the rollover limit in particular will be welcomed by many Asian market participants. It was recently described as the “elephant in the room” for the Taiwanese market during a panel discussion at the PASLA/RMA Conference on Asian Securities Lending.
These reforms are just the latest in a string of amendments made by TWSE in recent years. In 2015, onshore Taiwanese banking rules were relaxed to allow them to set more flexible margin levels and also to accept more currencies than just Taiwanese dollars.
Looking ahead, the TWSE has indicated that further changes in the pipeline include: allowing all institutional investors to participate in TWSE’s securities lending system; relaxing existing percentage restriction on daily short sales; and lowering the collateral ratio for fixed rate and competitive bidding transactions.
During the launch day of the reforms, Dr Naikuan Huang, TWSE senior executive vice president, said: “The recent adjustments to TWSE’s securities borrowing and lending rules are the latest steps to be implemented as part of Taiwan’s ongoing reform of its trading rules and market structure.”
“By sharing these developments with foreign institutional investors in Hong Kong, Malaysia and Singapore, we illustrate the increasing range of investment options and strategies now available in the Taiwan market.”
The borrowing limits placed on customers will also be removed and the range of securities eligible for securities lending will be expanded.
These reforms mark a significant step for Taiwan’s securities lending market, which many hope will soon reassert itself as a major profit centre in the region.
The removal of the rollover limit in particular will be welcomed by many Asian market participants. It was recently described as the “elephant in the room” for the Taiwanese market during a panel discussion at the PASLA/RMA Conference on Asian Securities Lending.
These reforms are just the latest in a string of amendments made by TWSE in recent years. In 2015, onshore Taiwanese banking rules were relaxed to allow them to set more flexible margin levels and also to accept more currencies than just Taiwanese dollars.
Looking ahead, the TWSE has indicated that further changes in the pipeline include: allowing all institutional investors to participate in TWSE’s securities lending system; relaxing existing percentage restriction on daily short sales; and lowering the collateral ratio for fixed rate and competitive bidding transactions.
During the launch day of the reforms, Dr Naikuan Huang, TWSE senior executive vice president, said: “The recent adjustments to TWSE’s securities borrowing and lending rules are the latest steps to be implemented as part of Taiwan’s ongoing reform of its trading rules and market structure.”
“By sharing these developments with foreign institutional investors in Hong Kong, Malaysia and Singapore, we illustrate the increasing range of investment options and strategies now available in the Taiwan market.”
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