The Financial Supervisory Commission lifted the US$50 million restriction on foreign currency investment by bills finance companies by promulgating Article 8 of the Regulations Governing Foreign Currency Bond Brokerage, Proprietary Trading, and Investment by Bills Finance Companies (hereinafter, the “Regulations”) as amended via the Jin-Guan-Yin-Piao-Zi 10702701690 Directive of February 13, 2018.
Before the amendment, Article 8 of the Regulations provided that the ceiling of foreign currency risks assumed by a bills finance company shall be set by the bills finance company to the extent that they do not exceed 15% of its net worth and shall not exceed US$50 million.
However, considering the fact that a bills finance company with a higher net worth is more capable of assuming foreign currency business risks and thus should be able to handle higher amounts of foreign currency business, using 15% as the foreign currency risk cap should be sufficient to control foreign currency position risks of a bills finance company. In addition, a single-amount cap restriction will probably limit the scale of foreign currency business operated by a bills finance company with 15% of its net worth in excess of US$100 million. Therefore, Article 8 of the Regulations as amended removes the US$50 million cap on foreign currency risks and stipulates, instead, that a bills finance company may set its own control limit based on its capability to assume risks to the extent that such risks do not exceed 15% of its net worth.