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FSC to cap share of domestic investors in offshore funds at 70%.

Taipei, Sept. 6, 2010 (CENS)--The share of Taiwanese investors in offshore mutual funds sold in Taiwan will be capped at 70% of the total value of the funds, down from 90% now, and the share owned by domestic investors in offshore private-placement funds will be subject, for the first time, to a 90% ceiling, according to the Financial Supervisory Commission (FSC).

The regulation will not be retroactive but offshore funds will not be allowed to sell their beneficiary certificates to local people, if the share owned by local investors have already exceeded the ceiling. Investors of dollar averaging will not be affected by the regulation. One major case to be affected by the new regulation is AllianceBerstein Global High-Income Fund, with total scale of over NT$300 billion, in which Taiwanese investors account for over 80%.

An FSC official noted that excessive share of Taiwanese investors is at odds with the definition of an offshore fund, which should be an international fund; otherwise, those funds will have no difference with domestic funds. In addition, an offshore fund with high share of foreign investors can arouse international concern, should anything go wrong.

The new regulation will have profound impact on the business of offshore funds on the island, which numbered 1,020 with total scale of NT$2.19 trillion as of the end of June.

The FSC already issued a decree last Friday capping the share owned by domestic investors in the net assets of private-placement offshore funds at 90%.
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Title Annotation:Financial Supervisory Commission
Author:Liu, Philip
Publication:The Taiwan Economic News
Article Type:Brief article
Geographic Code:9TAIW
Date:Sep 6, 2010
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