Taiwan FSC sees fintech as key to reform drive

The vice-chair of Taiwan's markets regulator explains how it is focusing on financial technology development to benefit the local investment industry, as part of wider reform.
Taiwan FSC sees fintech as key to reform drive

Financial technology is key to the development of Taiwan’s investment industry, said Huang Tien-Mu, vice-chair of the local markets regulator, which is readying a white paper on future development in this area.

Addressing AsianInvestor’s Taiwan Global Investment Forum in Taipei last week, he spelled out the importance of fintech to the country’s investment industry. 

He said moves in this area were part of the Financial Services Commission's plan to be more open in its financial reform, with the goal of making Taiwan a global investment centre. “As a regulator, we need to change our own mindset to be more open to better promote the market,” Huang added.

Also speaking at the event, Tsai Li-ling, director of investment trust and consulting in the FSC’s securities and futures bureau, noted: “Fintech power should be our core competitiveness.”

Tsai noted that regulator had already made moves since the second half of last year to help asset managers in the country benefit from fintech innovation, after setting up an office for this purpose in September last year.

For instance, the FSC has allowed fund houses to invest in or start fintech-related firms to help them develop their e-commerce businesses and late last year approved the launch of an online distribution platform by Fund Rich Securities, a joint venture between Taiwan Depository & Clearing Corporation and Taipei Exchange. It has also backed the launch of a fintech incubator fund, which launched in October last year and has raised NT$200 million ($6 million) and is targeting a total of NT$1 billion.

The forthcoming white paper might be expected to outline the development of these and potentially other measures to support fintech development, but the FSC declined to provide more details.

Meanwhile, Huang pointed to other areas where the regulator has made changes with the aim of benefiting the funds industry.

For example, it moved in June last year to shorten the new fund approval process to as little as 12 working days for some domestic fund houses. So far Yuanta Securities Investment Trust Company (SITC) and Cathay SITC have been granted the privilege.

In addition, Taiwan is seeking to improve corporate governance and is planning to launch a Stewardship Code this year to that end, reflecting a growing trend in Asia. The code will aim to encourage institutional investors to engage with their investee companies to improve governance standards.

In addition, the Taiwan Stock Exchange last year launched its first corporate governance index with the aim of making it easier to identify the companies most committed to building shareholder value. And, from 2017, it will be compulsory for all listed companies with common stock equal to or greater than NT$5 billion to file corporate social responsibility reports.

However, foreign fund houses might quibble over suggestions that Taiwan is becoming a more open market. The FSC has been tightening regulation in the past couple of years for overseas asset managers, to support the development of the local investment industry and redress the balance between onshore and offshore funds.

As of end-2015, Taiwan had 37 domestic asset managers running 672 mutual funds with a total of NT$2.2 trillion in AUM. That compares with 45 master agents onshore selling 1,024 offshore funds provided by 78 foreign firms, with total AUM of NT$3.1 trillion.

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