TaiwanÆs Financial Supervisory Commission signed a memorandum of understanding with Dubai Financial Services Authority (DFSA) yesterday. This is the latest among several bilateral agreements entered into by Taiwan, and separately by China, that have gained a lot of attention in the region.

Taiwan's latest deal will build partnerships in financial market supervision with Dubai. Taipei and Dubai will exchange intelligence on financial market operations, while bolstering cooperation in market developments and transparency in the dealings of organisations that are active in both markets.

David Knott, CEO of the DFSA, and Gordon Chen, the new head in charge of the FSC since July, met yesterday to formally sign the agreements. The Taiwan deal will add to a string of MOUs Knott has collected for the DFSA in the region, with the most recent ones being China and Singapore.

Knott has demonstrated his deal-making prowess in recent months. He signed an agreement with Shang Fulin, chairman of the China Securities Regulatory Commission (CSRC) in late September, and one with Teo Swee Lian, deputy managing director of the Monetary Authority of Singapore (MAS) in late October. The CSRC deal will make it possible for ChinaÆs QDII fund managers to invest in Dubai-listed securities at a higher 10% than the usual 3% for markets without MOUs with China. The MAS deal is on market supervision and joint developments.

Meanwhile, China has since added two more deals with Ireland and Austria on October 23 and October 30, respectively. To date, the CSRC already has pacts signed with 39 countries and 43 international regulators.

These also include Hong Kong, United States, Singapore, Australia, the UK, Japan, Malaysia, Brazil, Ukraine, France, Luxembourg, Germany, Italy, Egypt, Korea, Romania, South Africa, the Netherlands, Belgium, Canada, Switzerland, Indonesia, New Zealand, Portugal, Nigeria, Vietnam, India, Argentina, Jordan, Norway, Turkey, United Arab Emirates, Thailand, Lichtenstein, Mongolia and Russia.

Taiwan boasts 35 such bilateral agreements. Prior to Dubai, the FSC had added Jordan, France, Japan, United States, the UK, India, Australia and the Philippines between 2006 and 2008.

On the sidelines of the signing ceremony yesterday, Chen said officials from the FSC have met with counterparties in charge of international developments at the three major mainland financial regulators û the CSRC, the China Banking Regulatory Commission (CBRC) and the China Insurance Regulatory Commission (CIRC).

The mainland officials went along with the delegation of Chen Yulin, chairman of the Association for Relations Across the Taiwan Strait, who was on a historical visit in Taipei to meet with representatives of the Straits Exchange Foundation. Talks that initially focused on four basic issues û including direct flights, direct cargo shipments and postal services and food security û were expanded to include financial services with the unexpected visits by Yang Kaisheng, president of ICBC, Li Lihui, president of Bank of China, as well as officials of the three regulatory bodies.

Chen notes with the four fundamental issues now resolved, a financial MOU between Taiwan and China will be top on the agenda. He says the FSC has already used all possible channels to express its desire to cooperate with the mainland. Now that China has also indicated a desire to cooperate, he believes the future of cross-strait financial exchanges will be bright.

On the future of Hong Kong as a financial go-between, Chen says that will ultimately depend on the developments of cross-strait policies and developments.

Kao Koong-lian, vice-chairman and secretary-general of the Straits Exchange Foundations, says a financial supervision MOU will likely be signed in the next round of negotiations in the first half of 2009.

Assuming all else goes smoothly, QDII funds could cross shores to TaiwanÆs securities markets by the second half of next year and vice versa for TaiwanÆs funds to enter China through the QFII channels.

To date, seven Taiwanese financial organisations have applied for operating licenses with China. Cathay, Shin Kong and Fubon already operate businesses in China in insurance, asset management and banking.

ICBC is also said to be interested in taking a stake in one of TaiwanÆs financial holding groups. The PeopleÆs Bank of China gave approval for Shanghai Pudong Development Bank, China Merchants Bank, ICBC Asia and Industrial Bank to set up representative offices in Taipei in 2003.

TaiwanÆs president Ma Ying-jeou promises the nation a swift and sound reform of the islandÆs trade and financial relations in the region. There is no doubt changes are taking place at a fast clip, but heavy disapproval in Taiwan on the islandÆs relation with China could raise doubt on willingness of Chinese mainlanders to invest further.