The Financial Supervisory Commission promulgated, via the Jin-Guan-Zheng-Quan-Zi 1060008569 Directive of April 5, 2017 (hereinafter, the “Directive”), the amendment to Article 4, Paragraph 1, Subparagraph 6 of the Regulations Governing Securities Firms concerning the requirements for relevant reporting by a securities firm on its application to a mainland China competent authority for becoming a QFII and on investment in the interbank bond market in mainland China. The Directive specifically requires that a securities firm withdrawing from the bond market in mainland China or facing penalties by its competent authority is required to issue a letter to the Taiwan Securities Association within five business days upon occurrence of the fact.
The Directive provides that the following matters shall be reported by a securities firm:
1. If the securities firm has applied to become a qualified foreign institutional investor (QFII) in mainland China to invest in securities in stock markets in mainland China and is subject to any of the following matters:
(1) Such securities firm has applied to a mainland China authority to become a qualified institutional investor or to seek investment quota recordation or approval; or
(2) Such securities firm has been recorded with or approved or ejected by a mainland China securities or foreign exchange authority or has voluntarily withdrawn its application; or
(3) The qualification approval granted to the securities firm has been revoked or cancelled by a mainland China securities or foreign exchange authority or the investment quota of the securities firm has been recalled or revoked; or
(4) The securities firm has been penalized by a mainland China securities or foreign exchange authority.
2. If a securities firm has registered with a mainland China authority for investment in the interbank bond market in mainland China, has recorded with a mainland China authority, has changed the amount of its intended investment, has withdrawn from the interbank bond market in mainland China or has been penalized by a mainland China authority.
In addition, the Directive also requires a securities firm to report to the Taiwan Securities Association its position and amount of Renminbi-denominated securities on a monthly basis to safeguard investors’ rights and interests.