The FSC introduced amendments to specific articles of the Regulations on Dec 5, 2017 in order to increase international competitiveness of securities firms, enhance flexibility of their financial resource distribution and efficiency of capital utilization, increase fund use flexibility of investors holding separate accounts set up by a securities firm for individual customers in its settlement accounts, and to relax the financial status criteria that shall be met for conducting financial derivative trading activities on the securities firm’s business premises.
1.Enhancing flexibility of securities firms’ financial resource distribution and efficiency of their capital utilization: according to the original regulation, the aggregate liabilities of a securities firm shall not exceed 4 times of its net worth. After the amendment, such limit is now eased to 6 times of its capital net worth. According to the amended regulation, when a securities firm’s special reserve reaches 25% of its accumulated paid-in capital, and the part exceeds this threshold may be capitalized. Before the amendment, the threshold was 50% of the accumulated paid-in capital.
2.When a securities firm engages in performing financial derivative trading contracts and related hedging activities, the amount of such transactions may be excluded from the calculation of its quota for holding equity securities issued by related parties.
3.Amendments to regulations governing financial derivative trading activities by securities firms: the restrictions on financial status for trading financial derivatives on the securities firm’s business premises are now relaxed. Besides, when a customer needs foreign exchange settlement service while conducting financial derivative trading transactions, such service can be provided by the same securities firm conducting spot foreign exchange activities. And a securities firm is allowed to engage in trading derivatives derived from domestical and overseas private placement securities with high net worth corporate investor. Furthermore, the FSC has also introduced requirements for securities firms to review complex derivative products with high risk and has established a related application procedures.
4.Increasing fund use flexibility for investors holding separate accounts set up by a securities firm for individual customers in its settlement accounts: when a securities firm entrusted to buy and sale securities thus sets up separate accounts for individual customers for settlement in the bank, these bank accounts can be revised from current deposit to saving account.
5.Amendments to regulations governing overseas investments of securities firms: now a securities firm meets compliance requirements may submit its application to the FSC for increasing its investments in overseas enterprises. In addition, the FSC has imposed specific deadlines on a securities firm for reporting important events the overseas departments occurred afterwards.