TWSE Press Release

Multiple currencies are accepted as collateral provided by foreign institutional investors for borrowing securities

Publish Date︰2015/03/18 10:04


Starting from March 30 of this year (2015), when foreign institutional investors borrow securities in Taiwan, they can provide collateral in five major international currencies, which are the Euro, Japanese Yen, British Pound, Australian Dollar, and Hong Kong Dollar, in addition to US Dollar. Implementation of the new measures will significantly enhance the flexibility of fund usage for borrowers.

Taiwan Stock Exchange (TWSE) also states that, since foreign securities borrowers were first permitted to use USD for collateral in 2010, they have often suggested that restrictions on foreign currency collateral should be relaxed. For example, a section of European foreign investors previously stated that they wished to add the Euro to the eligible forms of cash collateral.  Considering that offshore investors in different regions generally hold different international currencies, and to make Taiwan market more compatible with international standards, with the approval from the Financial Supervisory Commission, the TWSE decided to increase the range of collateral provided by foreign institutional investors when they borrow securities to six major international currencies. The TWSE hopes that such measures can facilitate the borrowing of securities by foreign institutional investors.

The TWSE emphasizes that the purposes of allowing the provision of collateral in multiple currencies are improving the trading mechanisms of markets and facilitating the use of funds by foreign institutional investors. With the borrowing fees remaining unchanged, borrowers of securities would not increase the borrowing of securities. Such a measure would not raise concerns that it could encourage short-selling with borrowed securities. The market should treat this measure as a neutral development.