To foster a more international and investor-friendly capital market, the Financial Supervisory Commission (FSC) has announced that offshore foreign institutional investors (FINIs) may now appoint multiple custodian institutions. This policy aims to align with global operational practices and improve efficiency, especially for investors managing assets through different trading teams or asset managers.
Effective February 24, 2025, the Taiwan Stock Exchange (TWSE) has implemented the corresponding operational guidelines - "Guidelines Governing Offshore Foreign Institutional Investors Designating Two or More Custodian Institutions".
Previously, FINIs were limited to a single custodian, often leading to operational complexity and increased costs. The new measure allows for a more flexible structure, enabling up to one primary and three secondary custodian institutions.

To improve foreign investors’ registration procedures and enhance Taiwan market accessibility, foreign investors are exempt from the requirement to personally sign the registration application form, starting from October 2, 2023.
The TWSE amended partial articles of "Operation Directions for Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors for Registration to Invest in Domestic Securities or Trade Domestic Futures," a paperless registration process has been established. Amendments have been made to the registration guidelines as follows:

1. When investors apply for investment registration, they must provide a power of attorney to their agent or a letter of appointment to the representative. This means that they are aware of the contents of the registration application form, and the agent or representative accepts their authorization and transmits the filled-out registration application information online through the TWSE system.
2. In summary, the expression of the investor's intention to register according to the content of the application form could not be limited to physical signatures or electronic signatures, etc. The agent (or representative) should request the investors to provide basic information for registration, conduct customer checks based on internal control systems, and retain authorization documents and related proof documents for auditing purposes.
3. Starting from the date of implementation, relevant registration forms and documents for investor registration will be preserved for future reference by the agent (or representative), and there is no longer required to submit them through official documents to the TWSE.
   

To enhance capital flexibility and promote international participation in Taiwan’s capital market, the Financial Supervisory Commission (FSC) approved a policy effective August 28, 2023, allowing Offshore Foreign Institutional Investors (FINIs) to use Taiwan-listed shares as collateral for offshore investment activities.
Effective March 30, 2026, FINIs are further permitted to create pledges over eligible Taiwan-listed shares as collateral, in addition to the existing collateral arrangement.
Under this framework, FINIs may use eligible Taiwan-listed shares (i.e., shares listed on the Taiwan Stock Exchange (TWSE) or Taipei Exchange (TPEx) and eligible for margin trading) as collateral for the following offshore transactions:

• Offshore derivatives transactions
• Offshore securities borrowing and lending
• Offshore foreign currency financing

To implement this mechanism, FINIs are required to appoint an Offshore Collateral Manager responsible for managing the collateral arrangements. The Offshore Collateral Manager shall, in turn, appoint a Taiwan-based custodian (the “Taiwan Collateral Custodian”) to hold the onshore share collateral in custody.
This policy is expected to expand financing channels for foreign investors, enhance portfolio flexibility, and further attract international investment to Taiwan’s capital market.

To further enhance the flexibility and convenience of foreign investors’ participation in Taiwan’s capital market, the Financial Supervisory Commission (FSC) and the Central Bank of the Republic of China (Taiwan) have approved a measure permitting domestic banks to provide overnight overdraft facilities to foreign investors without domicile in Taiwan.
Effective September 26, 2024, this measure aims to reduce the risk of trade settlement failure and to promote a more friendly and accessible investment environment for international investors. This policy is expected to broaden financing channels for foreign investors, support portfolio stability, and attract greater international capital to Taiwan’s market.

To support efficient trade settlement and enhance the investment environment for foreign investors, the Taiwan Securities Association implemented a flexible alternative to traditional prefunding requirements on December 25, 2023.

1. Background:
   Taiwan operates on a T+2 Delivery versus Payment (DVP) settlement cycle, requiring investors to settle trades by 10:00 AM on T+2. In practice, brokers often request investors to prefund in NT dollars (TWD) by T+1, to ensure timely settlement on T+2. This led to operational constraints for foreign investors, especially those executing FX transactions through third-party banks.
2. Key Measure - FX Booking as Prefunding Alternative:
   To provide more operational flexibility, the Association introduced a measure allowing investors to book FX value-dated for T+2 settlement through their Taiwan custodian. With this arrangement, actual TWD need not be in place by T+1, as long as the FX deal is booked and verifiable by the custodian.

This reduces the risk of settlement delays while offering a more efficient funding process and aligns with international market practices.

In accordance with applicable regulations, when securities firms accept investor orders to buy or sell disposition securities, they are required to collect payment or securities in advance. To accommodate different investor needs, there are now two available methods for advance collection:

1. Traditional Advance Collection:
   Investors must transfer the payment or securities into the securities firm’s settlement account prior to placing an order. The securities firm may proceed with the order only after the funds or securities have been successfully reserved. This well-established model continues to apply to all investors placing orders for disposition securities.
2. Optimized Flexibility Mechanism (Effective May 1, 2024):
   Overseas Chinese and foreign investors may instruct their custodian institutions to reserve the required funds or securities. Reservation information is exchanged between the securities firm and the custodian via the Taiwan Depository & Clearing Corporation (TDCC) system. Once the transaction is completed, the funds or securities are transferred to the securities firm’s settlement account.
   This mechanism, effective from May 1, 2024, enhances flexibility and efficiency in meeting advance collection requirements and is exclusively available to overseas Chinese and foreign investors.

These flexible measures aim to address delays in order placement due to time zone differences and complex notification procedures with custodian institutions. As a result, the mechanism applies only to overseas Chinese and foreign investors, and does not extend to domestic investors or trades involving a change in trading method.

In accordance with applicable regulations, securities firms are required to agree with investors on the following methods for handling settlement after a buy and sell transaction is completed:

1. Traditional Settlement:
   Settlements are processed individually on a per-investor basis, offsetting the net amount of buy and sell transactions. This is the traditional settlement method.
2. Optimized Mechanism (Effective December 1, 2024):
   For investors whose settlements are handled through custodian institutions, buy and sell transactions may be netted at the custodian level. This mechanism, effective from December 1, 2024, applies to investors such as overseas Chinese, foreign investors, securities investment trusts, and securities investment advisors.

The new measure aims to reduce the operational process and costs associated with fund settlements between securities firms and custodians, as well as to enhance overall market liquidity efficiency. In addition to the traditional per-investor net settlement method, custodians may now arrange with securities firms to offset buy and sell transactions based on the total transaction amounts for all investors. This allows custodians to transfer a single payment to the securities firm on the settlement day, eliminating multiple individual transfers.

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