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Taiwan's FSC grants privileges to nine foreign fund managers in annual scheme

October 2, 2019

Taiwan’s financial regulator has selected nine foreign fund managers operating on the island for its annual scheme that grants special privileges to those who satisfy certain criteria, the highest number since the programme was launched in 2013.

They are Schroders Investment Management (Taiwan), Allianz Global Investors Taiwan, JPMorgan Asset Management (Taiwan), Invesco Taiwan, FIL Securities Investment Trust Co, AllianceBernstein Investment Taiwan, Franklin Templeton SinoAM Securities Investment Co, UBS Asset Management (Taiwan), and NN Investment Partners, the Financial Supervisory Commission (FSC) says in a statement on September 26.

The privileges are valid from October 1, 2019 to September 30, 2020.

The FSC’s so-called deep cultivation scheme is aimed at encouraging foreign managers to be more committed to the island’s asset management market for the long term.

It provides up to two privileges, such as the ability to submit more fund products for approval at one go and launching new offshore fund types for domestic investors, to managers who can fulfil certain criteria in terms of local employee training and recruitment and the asset size of their locally-managed products.

Managers applying to join the scheme must satisfy these criteria in the 12 months preceding the period in which the privileges become effective.

There are six criteria in total and those who satisfy all of them get to choose the maximum two privileges.

Five of the nine managers who were chosen in the latest round – Schroders, UBS, Invesco, AllianceBernstein, and Allianz Global Investors – met all the criteria, the FSC says.

According to the regulator, one of the most popular privileges chosen by the nine is the ability to launch a single fund that can invest up to 40% in Chinese securities. This came after the FSC raised the limit late last year from 30%.

Other popular privileges included introducing new offshore fund types to domestic investors, and a fast fund approval process, the regulator says.

Donna Chen, president of Taipei-based investment consultancy Keystone Intelligence, expects more fund managers to be included in the scheme in coming years because it can be lucrative for them.

She notes that the number this time was up from seven in 2018 and six in 2017.

“The programme can boost offshore managers from the fund distribution and new product development perspective. For example, a manager with the programme qualification can launch as many as six fund products within a year, against only two for a non-participant,” Ms. Chen tells Asia Asset Management.

There were 1,034 offshore funds in Taiwan with NT$3.56 trillion (US$114.6 billion) of total assets as of August 2019, according to the Securities Investment Trust and Consulting Association.