Taiwan’s FSC to further open up RMB derivatives market

04 October 2013   Category: News, China, Taiwan   By Asia Asset Management

Taiwan’s Financial Supervisory Commission (FSC) is looking to broaden the scope of the RMB derivatives business for domestic designated banking units (DBUs). The move is intended to promote the offshore RMB market on the island-state, according to a report from China Times.
 
Chang Kuo-ming, deputy director general of banking at the FSC, tells local media that the first phase of RMB derivatives were single-layered and designed to link with interest rates or currency exchange. The second phase of RMB derivative products will be multi-layered to integrate currency, interest rates, ETFs, and Formosa bonds – the non-New Taiwan dollar-denominated bonds issued in Taiwan. 
 
Mr. Chang says the FSC introduced the regulations to allow RMB derivatives early this year. The commission is working with the Central Bank of Taiwan to implement the second phase in order to accommodate RMB product demand from local lenders.
 
The emergence of DBUs came after Taiwan implemented RMB liberalisation in late 2012, which meant DBUs could facilitate customers to deposit and withdraw RMB at domestic banks and post offices. 
 
The entities are mainly engaged in deposits/withdrawals, remittance, derivatives, loans, and guarantees. RMB deposits in 61 DBUs had reached 54.45 billion RMB (US$8.6 billion) by the end of August.