To afford Futures Commission Merchants (FCMs) greater flexibility in their financial operations so they can achieve better capital efficiency, to provide a clear legal basis to govern the offering and issuance of securities by FCMs, and to ensure more timely financial disclosures by FCMs, the FSC amended the "Regulations Governing Futures Commission Merchants" on 22 December 2022. The key points of the amended provisions are as follows:
1.For some FCMs, the deadline for filing of annual financial reports has been adjusted: In order to ensure more timely financial disclosures by FCMs, and also to ensure consistent supervision of different types of financial services firms, the adjusted Regulations require a publicly traded FCM or any FCM that is a subsidiary of a financial holding company to publish and report its annual financial reports to the FSC within 75 days after the close of each fiscal year. This requirement applies from FY 2022.
2.Stipulation of the legal basis for the offering and issuance of securities by FCMs: Considering the needs of FCMs in offering and issuing securities and the consistency of supervision, the legal basis for offering and issuance of securities by FCMs is stipulated.
3.The pre-amendment Regulations provided that when the accumulated special reserve reaches 50% of the amount of paid-in capital, half of it may be capitalized. In order to afford FCMs greater flexibility in their financial operations, the amended Regulations provide that when the accumulated special reserve reaches 25% of the amount of paid-in capital, that portion in excess of 25% may be capitalized.