Taiwan Central Bank Relaxes Rules for Securities Brokers to Handle FX Products

The central bank's decision will benefit the nation's crowded securities sector through offering new revenue streams.

Under draft revisions issued on the website of Taiwan’s central bank Monday, the country’s securities firms will be allowed to handle spot and derivatives products denominated in the Taiwan new dollar against foreign currencies in a bid to expand the industry’s scope of services.

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Attempting to strike a balanced stance, the central bank set out more relaxed requirements for the sale of foreign exchange derivatives, but gave no timetable for adoption of the rules. The regulator allowed the island’s local brokers to handle forex business for the first time back in 2013.

The central bank’s decision will benefit the nation’s crowded securities sector through offering new revenue streams to sustain profitability amid lower trading volumes and head-to-head competition in Taiwan’s domestic stock market.

Taiwan is actually the most fragmented brokerage market across all the Asian countries, which managed earlier to consolidate the markets. But as the island’s exports are being pummelled by the global slowdown, the government’s overall strategy takes the opportunity to consolidate and strengthen its financial services industry.

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