Taiwan brokers to have access to Shanghai-HK Stock Connect

26 August 2014   Category: News, Asia, China, Global, Taiwan   By Hui Ching-hoo

Taiwan’s high net worth investors (HNWIs) will be able to tap into the soon-to-be-launched Shanghai-Hong Kong Stock Connect, after the Financial Supervisory Commission (FSC) said it was looking to allow domestic securities brokerages to access the scheme through offshore outsourcing.

According to a report from Economic Daily News, an FSC official noted that the commission is studying the possibility alongside the Taiwan Securities Association (TSA).

Under the initiative, Taiwanese securities houses will be able to appoint Hong Kong counterparts to invest in A-share equities for their clients. The investments can be denominated in Taiwan dollars or other foreign currencies.

The Shanghai-Hong Kong Stock Connect programme is a pilot scheme via which the two exchanges will permit investors in both cities to trade eligible shares listed on both markets through local securities firms or brokers. The scheme is expected to be launched in October this year.

It is estimated that the initiative will boost Taiwanese brokers’ outsourced trading volume by more than NT$50 billion (US$1.67 billion). However, unlike the Shanghai-HK pilot scheme, capital flow for local brokerages’ outsourcing is unilateral, in that Mainland investors are not able to wager on Taiwanese stocks under the platform.  

Early last year, the FSC relaxed regulations allowing securities brokerages to outsource to overseas peers in order to trade B-shares and domestically-listed foreign investment shares in Shenzhen and Shanghai, for professional clients whose wealth exceeds NT$30 million.

This measure is not applicable to A-shares, as Taiwanese securities firms have not been awarded QFII status.