FSC launches “New Wealth Management Scheme”

Taiwan is equipped with two niches for the development of wealth management— abundant domestic funds and a large scale of high-asset customer base. To attract more citizens and foreign nationals to engage in wealth management services in Taiwan, on December 31, 2019, the FSC launched the “New Wealth Management Scheme.” The Scheme includes three main strategies: first, relaxing restrictions on the financial products that can be invested in by high-end customers with total assets of more than NT$100 million; second, giving green lights to a more diversified range of financial products and services for expanding the scale of Taiwan's wealth management business; and third, increasing wealth management professionals, and strengthening the financial product R&D capabilities of financial institutions. The goal is to make Taiwan's financial institutions more internationally competitive.
The FSC issued the “Regulations Governing Banks Conducting Financial Products and Services for High-asset Customers” on August 7, 2020. The Regulations include eight main deregulatory measures that allow banks to provide a more diverse range of financial products and services to high-asset customers. These measures are as follow:

1. The bank debentures denominated in foreign currencies that are issued by DBUs may be linked to financial derivatives or be treated as structured bonds.
2. DBUs and OBUs can provide the bank debentures specified in the preceding paragraph by way of trust investments, proprietary trades, or sales.
3. Designated foreign exchange banks (DBUs) that conduct securities business can trade structured bonds denominated in foreign currencies with high-asset customers.
4. Trades in an offshore structured product issued by an overseas branch institution or a subsidiary of a domestic bank or securities firm may be handled by a bank that conducts business involving trust investment, proprietary trading, or sales to high-asset customers of DBUs or offshore high-asset customers of OBUs.
5. Offshore banking units (OBUs) can provide high-asset customers with Taiwan-equity linked derivatives denominated in foreign currencies (including structured products) issued by their head offices (or foreign banks' branches in Taiwan) without filing separate applications for each case.
6. Sales of foreign bonds to high-asset customers are not subject to the credit rating requirements.
7. Offshore structured products with the same issuer and the same structure or the same risk rating can be reviewed in accordance with banks’ internal guidelines on product reviews.
8. Other new financial products or consulting services designed or tailor-made for meeting personal need of high-asset customers may be provided by banks if the FSC grants approval.

The FSC receives applications in two batches from banks who aims to conduct such services. The approval list (3 banks) of the first batch was announced on December 31, 2020, and the approval list of the second batch will be released in the second quarter of 2021. After that, applications will be in accordance with the development of the business and banks’ operation.
In addition, the FSC amended the "Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities" and other related regulations during September to December 2020 to allow securities firms to provide a wider range of financial products to high-asset customers.
For high-asset customers with financial resources of more than NT$100 million, adequate professional knowledge and trading experience, and risk-bearing ability, the FSC deregulates rules regarding products and procedure restrictions so that securities firms can expand the scope of financial products suitable for high-asset customers through sub-brokerage business (consigned trades), wealth management business (consigned investment), or securities proprietary business.
In order to strengthen the international competitiveness of securities and futures firms, assist financial institutions to expand the scope of services, and provide customers with more flexibility in the use of funds, the FSC will further relax restrictions on the lines of business that the securities and futures industry can undertake, so as to attract more international capital to invest in Taiwan.