The Financial Supervisory Commission (FSC) yesterday rejected reports that its handling of the yuan-linked target redemption forwards (TRF) crisis left investors with massive losses.
The commission made the remark after local media outlets last week reported that some foreign business organizations are dissatisfied over the TRF issue.
“We did not receive separate or coordinated official correspondence from the American Chamber of Commerce in Taipei [AmCham] or the European Chamber of Commerce Taiwan [ECCT],” an FSC official told reporters at a news conference in Taipei.
The official, who declined to be named, said that since the reports were published last week, AmCham and the ECCT had come forward to say that they did not reveal their respective views to local media outlets.
The two organizations also said that they did not plan to issue such correspondence, the official said.
However, the official acknowledged that as foreign-trade organizations are comprised of a multitude of members from different sectors, it is likely that some of their members have strong views on the FSC’s handling of the controversial derivative.
Local media reports said that foreign companies have grown increasingly dissatisfied with Taiwan’s perceived heavy-handed political intervention on business issues and regulatory guidelines, and that the two organizations had made a formal request for the commission to explain its rulings.
Many investors who have racked up TRF losses are classified as “professional investors,” and they should not pursue reparations against capital losses via the Financial Consumer Protection Act (金融消費者保護法) as the commission has recommended, the reports said.
Professional investors include financial companies, enterprises, juristic persons or funds with total assets exceeding NT$50 million (US$1.59 million), or natural persons with a proven financial capacity of at least NT$30 million as well as a track record of investment activities, the commission said.
With the typical TRF contract priced at about US$1 million per lot, they are not a likely choice for retail investors, the reports said.
The reports also questioned whether the penalties doled out to banks on grounds of inadequate customer verification and risk disclosure were applicable if the customers were professional investors and not retail investors.
The commission had earlier ordered banks to begin the process of settling TRF-related disputes and enter mediation or arbitration by the end of this month, the FSC official said, adding that the order was made to address the inaction of several banks.
Since 2014, 140 TRF-related disputes have been resolved, while 156 are still unresolved, the commission said.
The resolution process must not affect ongoing business relations, the commission said, while urging banks refrain from pulling credit lines from their clients.
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