The Financial Supervisory Commission (FSC) has proposed relaxing restrictions on discretionary investment arrangements by insurance companies to invest in interested parties.
Financial holding companies in Taiwan count among their subsidiaries or affiliates several insurance companies as well as domestic securities investment trust and consulting enterprises. These group companies are subject to regulations on interested parties.
To bolster Taiwan's asset management sector, the FSC encourages life insurance companies to retain domestic asset managers to conduct discretionary investments of their funds.
In a statement, the regulator says that it has completed draft amendments to the "Regulations Governing Transactions Other Than Loans between Insurance Enterprises and Interested Parties" (‘Regulations’ for short), which will soon be announced.
Amendments
The gist of the amendments is:
1.Under existing regulatory provisions, when an insurance company intends to engage in discretionary transactions with interested parties, it may draw up internal operational rules with the concurrence of at least three-quarters of all directors present at a board of directors meeting attended by at least two-thirds of all directors to give the managing department general authorisation to engage in those transactions according to the operational rules. The terms of such transactions may not be more favourable than those offered to other counterparties of the same category.
A proposed amendment allows the authorisation to extend to the management of discretionary transaction fees and commissions.
2.Under existing regulatory provisions, when an insurance company acquires (through investment) or disposes of an ETF issued by an interested party, and if the acquired or disposed amount exceeds 10% of the total beneficiary certificates issued by that ETF, the transaction amount shall be included in the total amount of the insurer's transactions with interested parties.
The proposed amendment stipulates that insurance companies investing in ETFs issued by stakeholders through discretionary transactions shall be exempt from including amounts exceeding 10% of the ETF's total issued certificates in the total balance of the insurer's transactions with interested parties, in accordance with the Insurance Act and other relevant regulations.
The FSC is inviting feedback on the proposed amendments.