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Talk of the Day -- First cross-strait securities regulatory meeting

2013/01/28 23:00:10

Guo Shuqing, chairman of the China Securities Regulatory Commission, arrived in Taipei Monday in preparation for the first cross-Taiwan Strait meeting on securities trading issues.

The top Chinese securities trading regulator will meet with his Taiwanese counterpart, Chen Yuh-chang, chairman of the Financial Supervisory Commission (FSC), Tuesday on a range of issues of mutual interests.

The agenda will include allowing China-incorporated companies to trade their shares on the Taiwan Stock Exchange and easing restrictions on securities firms to acquire stakes in their counterparts on the other side as well as allowing China's QDII to invest more in Taiwan, according to local media reports.

Kuo told reporters upon his arrival that he looks forward to seeing more cross-strait financial exchanges, investment and supervisory cooperation.

He also said China has much to learn from Taiwan's experience in futures trading regulations, referring to Taiwan's 30-year history of futures market development.

The following are excerpts from local media coverage of relevant topics:

United Daily News:

Premier Sean Chen broached the idea of creating a T share market to boost cross-strait financial exchanges.

According to Chen's idea, T share can pattern after Hong Kong's H shares.

H shares refer to shares of companies incorporated in China that are traded on the Hong Kong Stock Exchange. Many companies float their shares simultaneously on the Hong Kong market and one of the two Chinese stock exchanges.

FSC officials said the T shares proposal will be discussed at Tuesday's meeting.

In the initial stage, the officials said Taiwan will mainly target bellwether overseas Taiwan companies in which Chinese businesses hold more than 30 percent of stakes to apply for listing on the local main board or over-the-counter market.

At present, overseas companies with more than 30 percent of Chinese stakes can only issue TDRs and must apply for prior approval if they want to make initial public offering (IPO).

To date, no overseas companies with more than 30 percent of Chinese stakes have filed IPO applications with the FSC.

Securities industry analysts said that given China's capital abundance, many overseas conglomerates are partially Chinese owned.

Once Taiwan eases restrictions and allow those with over 30 percent of Chinese stakes to apply for IPOs without the requirement of prior approval, many Hong Kong-based enterprises and overseas Taiwanese firms are very likely to apply for IPOs in Taiwan, the analysts said. (Jan. 28, 2013).

Economic Daily News:

In addition to the T share issue, Chen and Kuo are also expected to discuss many other issues, including allowing liaison offices set up by Taiwanese securities companies to be upgraded to branch offices and allowed to begin commercial operations.

Most local securities firms have maintained representative offices in China since 1997, but none of them have been give business operation permits.

The FSC will also asked its Chinese counterpart to ease restrictions on Taiwanese securities companies applying for QFII (qualified foreign financial institution) in China and raise the amount they are allowed to invest in China.

On the other hand, China may seek Taiwan's approval to enhance the maximum amount Chinese QDII (qualified domestic institutional investor) can invest in Taiwan's securities market from the current US$500 million to US$1 billion, FSC sources.

The agenda may also include pushing china to allow Taiwanese securities firms to hold up to 51 percent of stakes in joint ventures in China, the sources said, adding that Taiwan will also ask China not to restrict such joint ventures' fields of business.

Kuo and his delegation are scheduled to conclude their Taiwan visit Jan. 30. (Jan. 28, 2013).

(By Sofia Wu)