Proposed Amendment Draft of the "Regulations Governing Applications of Banks (Including Offshore Banking Units) for Concurrent Operations in Underwriting of Bonds, Beneficiary Securities, Asset-Based Securities, and Proprietary Trading"
2021-03-30
In response to the amendments of the “Regulations Governing Securities Firms” and “Regulations Governing Foreign Bank Branches and Representative Offices”, the Financial Supervisory Commission (FSC) proposed an amendment of the "Regulations Governing Applications of Banks (Including Offshore Banking Units) for Concurrent Operations in Underwriting of Bonds, Beneficiary Securities, Asset-Based Securities, and Proprietary Trading" in Jin-Guan-Yin-Wai-Zi Order No. 10801097470 issued on July 10, 2019.
The amendments are as follows:
1. According to the amendment of Article 19-4 of the “Regulations Governing Foreign Bank Branches and Representative Offices” promulgated on September 26, 2020, 50% of the loan loss provision and reserves against liability on guarantees appropriated in accordance with regulations may be included when calculating the net worth of a foreign bank branch. The net worth of a foreign bank branch referred to this Regulations are amended to include the aforementioned calculation item for the purpose of consistent standards. (Point 6 of the draft)
2. According to the amendment of Article 31-3 of the “Regulations Governing Securities Firms” promulgated on February 3, 2020, securities firms are allowed to engage in trading of foreign bonds and financial derivatives with offshore affiliates and the transaction limits are calculated based on the net worth of securities firms. The transaction limits for proprietary trading of foreign securities between banks and their offshore affiliates shall also be calculated in Banks’ calculation basis for consistency. (Point 7, Subparagraph 1 of the draft)
3. Point 5 of the "Directions Governing Limitations on Types and Amounts of the Securities in which a Commercial Bank May Invest" stipulates that a commercial bank may not invest in corporate bonds and other securities issued by a company in which the bank's responsible person acts as a director, supervisor, or manager. As the overseas subsidiaries of domestic banks may issue corporate bonds for raising funds, the FSC added provisions for exempting the aforementioned restrictions when the foreign subsidiaries of banks issue non-equity bonds and the banks buy and sell on the same day. (Point 7, Subparagraph 2 of the draft)
The FSC stated that the contents of the amendment was published on the FSC website. If anyone has any comments, please visit the webpage “Notice of Draft Regulations” on the FSC “Laws and Regulations Retrieving System” website and state your views within 60 days from the next day of the announcement.
Contact unit：Foreign Banks Division, Banking Bureau
The amendments are as follows:
1. According to the amendment of Article 19-4 of the “Regulations Governing Foreign Bank Branches and Representative Offices” promulgated on September 26, 2020, 50% of the loan loss provision and reserves against liability on guarantees appropriated in accordance with regulations may be included when calculating the net worth of a foreign bank branch. The net worth of a foreign bank branch referred to this Regulations are amended to include the aforementioned calculation item for the purpose of consistent standards. (Point 6 of the draft)
2. According to the amendment of Article 31-3 of the “Regulations Governing Securities Firms” promulgated on February 3, 2020, securities firms are allowed to engage in trading of foreign bonds and financial derivatives with offshore affiliates and the transaction limits are calculated based on the net worth of securities firms. The transaction limits for proprietary trading of foreign securities between banks and their offshore affiliates shall also be calculated in Banks’ calculation basis for consistency. (Point 7, Subparagraph 1 of the draft)
3. Point 5 of the "Directions Governing Limitations on Types and Amounts of the Securities in which a Commercial Bank May Invest" stipulates that a commercial bank may not invest in corporate bonds and other securities issued by a company in which the bank's responsible person acts as a director, supervisor, or manager. As the overseas subsidiaries of domestic banks may issue corporate bonds for raising funds, the FSC added provisions for exempting the aforementioned restrictions when the foreign subsidiaries of banks issue non-equity bonds and the banks buy and sell on the same day. (Point 7, Subparagraph 2 of the draft)
The FSC stated that the contents of the amendment was published on the FSC website. If anyone has any comments, please visit the webpage “Notice of Draft Regulations” on the FSC “Laws and Regulations Retrieving System” website and state your views within 60 days from the next day of the announcement.
Contact unit：Foreign Banks Division, Banking Bureau
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Update：
2021-04-26