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FSC refunds NT$3 b. to securities firms.

Taipei, Oct. 31, 2011 (CENS)--The Financial Supervisory Commission (FSC) will lower the total appropriation for delivery settlement fund and the handling fee paid by securities firms to Taiwan Stock Exchange and GreTai Securities Market (over-the-counter market), thereby refunding near NT$3 billion to securities firms.

An FSC official pointed out yesterday (Oct. 30) that the FSC hopes that the money can be used by securities firms in renovating or expanding information equipment, or expanding business scale, rather than returning to shareholders.

In the future, payment by securities firms to the delivery settlement fund will be made flexibly, in proportion to the un-delivered position, instead of a fixed-amount payment.

The change was already approved by the FSC the other day and will be put into practice by the end this year, following the revision of related regulations by the Taiwan Stock Exchange and GreTai Securities Market.

The delivery settlement fund was established in 1996, in response to a major default on transaction delivery by a securities firm, which disrupted market trading order. It is a reserve fund meant to cope with major default in the delivery of securities transaction.

The fund provided NT$586 million to settle a major default in transaction delivery in 1998. Afterwards, no major default case in transaction delivery has occurred, leading to growing accumulation of the fund, whose scale now tops NT$10.8 billion.,

The fund is now placed at banks in the form of time deposits, yielding minuscule interest income, and is thus regarded as idle fund by securities firms, many of which ask the regulator to refund the money to them. The FSC then decided to cut the reserve fund to NT$8.4 billion and refund the extra NT$2.4 billion to securities firms.

The remaining fund will be used to cope with possible mistake in online trading and the risk of default on transaction delivery, especially in cases of market crash.

Meanwhile, the FSC also decided to cut the handling fee paid by securities firms to Taiwan Stock Exchange and GreTai Securities market. All securities firms are expected to save NT$370 million on the payment a year, thereby gaining higher flexibility in the utilization of their funds.

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Title Annotation:Financial Supervisory Commission
Author:Liu, Philip
Publication:The Taiwan Economic News
Geographic Code:9TAIW
Date:Oct 31, 2011
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