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Investors Q&A

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 5.1. Trading

 1. Are Mainland residents able to purchase main board securities through securities brokers?

Currently, only qualified institutional investors are able to purchase main board securities through securities brokers.

 2. Are Mainland residents able to sell main board securities through securities brokers?

Currently, Mainland residents are able to sell main board securities through securities brokers under the following circumstances:
  1. Selling of stocks previously subscribed to or received by a Mainland employee of a main board company.
  2. Selling of stocks previously subscribed to or received by Mainland shareholder of a main board company.
  3. Selling of main board securities previously acquired by a Mainland resident through inheritance.

 3. Is there any limit by percentage of main board stocks that can be held by all foreign investors? If so, what are the limit by percentage?

The Ministry of Finance had removed its shareholding limit by percentage previously imposed on overseas Chinese and foreigners through Instruction No. (89)-Tai-Tsai-Cheng-(8)-106036 issued on December 30, 2000. However, "Foreign Investor Securities Holding Restrictions" imposed by various authorities are still prevalent, and are still being monitored during trading hours.

 4. I am an overseas Chinese currently residing in Taiwan. How do I open an account to trade main board stocks? Are there any limits or restrictions?

  1. Pursuant to Article 46-5 of Taipei Exchange Rules Governing Securities Trading on the TPEx, overseas Chinese and foreigners residing in Taiwan are first required to obtain an ID number from the Taiwan Stock Exchange Corporation by presenting the relevant documents to a securities firm. Once an ID number is obtained, the applicant may proceed to open a main board stock trading account with the securities firm.
  2. Refer to the previous question for investment limits.

 5. What is the sovereign rating and credit rating of Taiwan government?

The sovereign rating and long-term local and foreign currency debt ratings of Taiwan government assessed by various international credit rating agencies are as follows:
 Moody’s (2021.02.24)S&P (2022.04.29)Fitch (2021.09.10)
Sovereign rating outlookPositivePositiveStable
Local currency (long term)Aa3 (Long-term)AA+ (Long-term)AA (Long-term)
Foreign currency (long term)Aa3 (Long-term)AA+ (Long-term)AA (Long-term)

 6. What are Taiwan benchmark government bonds? How often are they issued?

Taiwan benchmark government bonds are 5-, 10-, and 20- year bonds, which are announced quarterly by Taipei Exchange (TPEx). Investors can visit the TPEx website and inquire “The List of Benchmark Bonds” under “Bond Market Info > Application & Services > Documents.”

 7. What types of bonds are available on Taiwan's bond market?

The types of bonds available on Taiwan's bond market include government bonds, financial debentures, corporate bonds, convertible and exchangeable bonds, bonds with warrant, beneficiary securities, NTD-denominated foreign bonds and foreign-currency denominated international bonds.

 8. What are the advantages for foreign investors to invest in Taiwan’s bond market?

Taiwan's bond market offers information transparency, high liquidity and real-time interest rate benchmarks. Investors can also trade government bonds during when-issued period and hedge through a variety of interest rate derivatives.

 9. Is there a when-issued trading system for Taiwan’s government bonds?

Yes, when-issued trading system has been introduced in Taiwan since Dec. 2, 2002.  When-issued trading period is the next business day of announced date (on practice are 3/23, 6/23, 9/23, 12/23) until the business day before issuance day and when-issued transactions are settled on issuance day.

 10. Are there any restrictions for foreign investment in Taiwan’s bond market?

According to Article 4, paragraph 2 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and the order of the Financial Supervisory Commission No. 11003334781 dated March 23, 2021, 
  1. This Order is issued pursuant to Article 4, paragraph 2 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals ("the Regulations").
  2. Offshore overseas Chinese and foreign nationals investing in government bonds, corporate bonds, financial bonds, exchange traded notes, money market instruments, and money market funds, and engaging in trades of over-the-counter (OTC) equity derivatives, OTC NT dollar interest rate derivatives, OTC structured instruments, and option-part trades on convertible bond asset swaps, shall comply with the restrictions set out in Point 4 herein. Investments in money market instruments are limited to bills within 90 days of maturity.
  3. The "OTC NT dollar interest rate derivatives" referred to in the preceding point include NT dollar forward rate agreements, interest rate swaps, and interest rate options; "OTC equity derivatives" include options and equity swaps of Taiwan equities which are denominated in either NT dollars or foreign currency, and options and equity swaps of foreign equities which are denominated in either NT dollars or foreign currency; "OTC structured instruments" includes structured instruments linked to domestic or overseas equities or interest rates which are denominated in either NT dollars or foreign currency.
  4. The total amount invested by an offshore overseas Chinese or foreign national in government bonds, corporate bonds, financial bonds, exchange traded notes, money market instruments, and money market funds, plus all NT dollar premiums paid for trades of OTC equity derivatives, OTC NT dollar interest rate derivatives, OTC structured instruments, and options-part transactions on convertible bond asset swaps, plus the net settlement amount on price differences of swaps, must not exceed 30 percent of the net inward remittance; provided, investment in privately placed convertible corporate bonds will not be counted in the aforesaid total amount. If, after adding corporate bonds or financial bonds that were held prior to 22 April 2015, or government bonds with maturities over one year that were held prior to 11 November 2010, the amount exceeds the limit stated above, the bonds may be held to maturity, but no new positions in such bonds are permitted to be added.
  5. An offshore overseas Chinese or foreign national that writes options must not apply, prior to maturity, for foreign exchange settlement for the premiums collected. This restriction shall not apply, however, for transactions linked to foreign equity products that would thus require application for foreign exchange settlement.
  6. This Order is effective from 31 March 2021. The 13 March 2017 Order No. Financial-Supervisory-Securities-Firms-1060007307 of the FSC is repealed from 31 March 2021.

 11. What instruments are available to hedge interest rate risks in Taiwan?

NTD interest rate derivatives currently available in Taiwan include forward rate agreement (FRA), interest rate swap (IRS), interest rate option. For bond borrowing, there are bond lending center, special issued RS and bond options that can also be used to hedge interest rate risks.

 12. Is there any government bond index in Taiwan?

  1. Taipei Exchange (TPEx) has compiled Taiwan Government Bond Index on January 2, 2005.
  2. Citigroup compiled a Taiwan Government Bond Index (TGBI) on June 29, 2005.
  3. TPEx launched Taiwan Treasury Benchmark Index on April 30, 2010.
  4. S&P Dow Jones compiled a Taiwan Government Bond Index on December 31, 2013.

 13. What are the regulatory and supervisory authorities in Taiwan’s bond market?

The National Treasury Agency under the Ministry of Finance (MOF) is responsible for regulating public treasury systems and supervising the treasury administration at all levels of government. The Central Bank is in charge of government securities auction and registration. Relevant regulations can be found at the MOF website.
The secondary bond market is regulated and supervised by the Financial Supervisory Commission. Taipei Exchange, a foundation type public agency, is in charge of administering the secondary bond market. Secondary market regulations can be found at the Law Source Retrieving System of Stock Exchange and Futures Trading.
Note: The English translation is for reference only. In case of any discrepancy between the English version and the Chinese version, the Chinese version shall prevail.