萬國法律事務所

According to the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals, the foreign funds in Taiwan are required to purchase securities. The same Regulation also authorize the Financial Supervisory Commission (FSC) to limit the use of funds transferred to Taiwan which have not yet been invested in securities such as stocks, Taiwan Depositary Receipts (TDR), bonds, warrants, etc. FSC therefore allows Foreign Institutional Investments to allocate their investments on current assets for up to 30 percent of the total investments so as to provide more flexibility for Foreign Institutional Investments.

In March last year, the foreign fund was found transferred to Taiwan to purchase Taiwan Public Bonds with a term less than 1 year for speculative currency activity. The FSC therefore announces an explanatory release to deem the short-term investment on Taiwan Public Bond shorter than 1 year as the current assets which should not exceed 30 percent of the total assets of the Foreign Institutional Investors in Taiwan. However, some Foreign Institutional Investors who intend to conduct speculative currency activity recently switch their targets to the 2-year Taiwan Public Bond so as to evade the application of such explanatory release.

In order to prevent the foreign fund from speculative currency activity, the FSC official warns that the foreign investors who intend to park their money for speculative currency activity in Taiwan that FSC may revoke the Foreign Institutional Investors (FINI) registration to punish those who seriously breach relevant securities and futures regulations. In spite of that, the Securities and Futures Bureau refuse to comment whether FSC has revoked any FINI registration so far.