Banks Must Ensure Fairness and Transparency in Financial Derivatives Business

New Guidelines Issued by Financial Supervisory Commission (FSC)

Taipei, Taiwan - The Financial Supervisory Commission (FSC) has issued new guidelines to regulate banks’ financial derivatives business, emphasizing the importance of preventing conflicts of interest and insider trading.

Key Requirements for Banks

• Establish management mechanisms to prevent conflicts of interest
• Ensure employees engaged in conducting financial derivatives business have professional abilities
• Provide clear and fair promotional materials to customers
• Disclose risks associated with products
• Formulate “Know Your Customer” systems to understand customers’ financial status and investment needs

Prohibitions

• Using financial derivatives to manipulate financial statements or help customers defer or conceal losses
• Engaging in business transactions related to Taiwan equity with interested parties, including directors, supervisors, managers, and shareholders of the bank

Structured Products

• Banks offering structured products must provide customers with comprehensive risk disclosure statements
• Explain how yield ratios will be achieved

Transparency Requirements

• Report related information on their websites
• File reports with the Banking Bureau of the Commission

Consequences for Non-Compliance

• Suspension from offering certain products or conducting financial derivatives business

Commitment to Fairness and Transparency

“We are committed to protecting the interests of customers and ensuring the stability of the financial system,” said a spokesperson for the FSC. “These new guidelines aim to promote fairness, transparency, and professionalism in the financial derivatives market.”

Effective Date

The guidelines take effect immediately and apply to all banks operating in Taiwan.