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Taipei eyes new rules on foreign institutional investors

Publication Date : 10-07-2014


To prevent foreign institutional investors from disclosing false information to manipulate stock prices, Taiwan's Financial Supervisory Commission (FSC) will introduce new rules this month to curb inappropriate practices.

Barclays earlier published a paper casting a pessimistic outlook on Taiwan's electronics sector after it had raised the target price of eMemory Technology by three-fold. Glaucus Research also recently managed to push Asia Plastic Recycle's stock prices.

FSC Chairman Tseng Ming-chung said it was “very inappropriate” for foreign securities companies to publicise evaluations on certain industries or individual stocks, or forecast stock prices, affecting the market as a consequence.

This kind of practice often results in abnormal fluctuations in stock prices, and consequently major losses for smaller investors, according to the Securities and Futures Bureau (SFB) under the FSC.

Foreign institutional investors often said in response that their reports were never provided to the media. However, according to the FSC's investigation, there are several ways for the media to obtain these reports. They may download the reports from institutional investors' websites, or obtain them from domestic institutional investors or listed companies that are foreign institutional investors' customers.

Sources say that under the new rules, domestic institutional investors and listed companies will be prohibited from releasing foreign institutional investors' reports to the media. Violations may prevent them from conducting certain business in the future. They will also be investigated for suspicion of insider trading.


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