Where Can We Take You? Taiwan
Sparked by the Artificial Intelligence (AI) boom and resultant demand for semi-conductor related products, foreign investors are piling into Taiwan, and currently account for 40% + of the country’s $2.2 trillion stock market capitalization. 1 Just as global investors are giving a greater weighting to Taiwan in their portfolios, local regulators are pushing ahead with a series of positive reforms, all designed to make the market more accessible. In this latest edition of our “Where Can We Take You” series, Marcello Topa, Global Head of Advocacy for Investor Services at Citi, speaks with Jasmine Chu, Taiwan Custody Head, about these changes and their impact.
Marcello Topa |
Jasmine Chu |
Taiwan recently streamlined its account opening process. How did it go?
Chu: Taiwan has been slowly digitalizing the account opening process for foreign investors. Previously, foreign investors - ahead of opening up an account - were required to provide a wet ink signature on a registration form, before delivering that same document in a hard copy format to their local custodian - a process many considered to be wholly inefficient.
Citi held several ongoing discussions with the Taiwan Stock Exchange (TWSE) about the need for reform, and the rules were subsequently relaxed in 2023. Today, foreign financial institutions no longer need to provide a wet ink signature when opening up an account, as custodians – including Citi – will accept registration forms submitted in a PDF format.
Certain account opening documents such as Power of Attorney (POA) and country addendum etc. still require wet-ink signatures, and some believe that this relaxation does not help the overall account opening process. It is important however to remember that this is just one step in the market advocacy journey and an important milestone in Taiwan’s digital transformation.
Taiwan has been updating its pre-funding rules too. What exactly is going on?
Chu: Historically, foreign financial institutions were required to pre-deliver cash and securities in full prior to the broker’s trading quote on T-date for any transactions involving alerted stocks under disposition measures, e.g. due to irregular trading activity, erratic price movements, etc.
The rule was well-meaning – it was supposed to shield investors from excessive volatility – however, it caused challenges elsewhere. Not only did it create additional counterparty and settlement risk for investors, but the rule made it incredibly difficult for foreign investors to trade alerted stocks. Due to the time zone differences involved, the provisions sometimes meant that foreign investors in certain markets were disadvantaged when placing orders with local brokers - at least relative to Taiwan-based institutions. While domestic investors can leave cash and securities with brokers who can earmark those assets in real-time, foreign investors who are required to appoint a custodian by law, need to move stocks from custodians to the local brokers prior to the relaxation.
Following extensive dialogue between Citi Taiwan and the regulator – the Securities and Futures Bureau (SFB), TWSE, the Taiwan Depository & Clearing Corporation (TDCC) and other local market participants, this pre-delivery mechanism was removed in May 2024 for alerted stocks under disposition measures. Now, local brokers can execute a trade involving an in-scope alerted stock once they have received confirmation that a foreign institutional investor’s cash or securities are earmarked for that particular transaction. Together with reducing settlement risk, the changes have led to a number of operational efficiencies, and as a result, it is now much easier for foreign investors to trade alerted stocks.
Can you please elaborate on the different amendments to Taiwan’s custody rules?
Chu: Until February 2025, foreign institutional investors trading domestic securities were only allowed to appoint a single local custodian. Again, the rule was well-intentioned – as there was only one custodian, it was easier for regulators to keep tabs on investors and their positions, but for investors, it created concentration risk and undermined their contingency planning efforts – issues that Citi repeatedly flagged in the 2022 AmCham White Paper.
After discussions with the Financial Supervisory Commission (FSC), the TWSE, and the TDCC, it was agreed that foreign institutional investors would be permitted to appoint one primary custodian, and up to three secondary custodians.
The primary custodian, however, is still the main point of contact for local regulators and financial market infrastructures (FMIs) and are also responsible for a number of administrative activities, such as the registration process for foreign investors and overseeing shareholder services (e.g. providing tax information and split voting declarations) to corporate registrars, dealing with withholding tax statements, shareholder meeting notifications, etc. In contrast, the role of the secondary custodian is fairly limited in both nature and scope.
Despite this, the new and updated custody model in Taiwan allows foreign institutions greater flexibility, insofar as they can appoint different custodians to support their various investment portfolios. Also, with greater competition in the local custody market comes potential cost benefits for clients too.
What other reforms is Citi advocating for in Taiwan?
Chu: We are working on a few initiatives with Taiwan’s regulators.
Firstly, we are pushing for foreign investors trading futures in Taiwan to be allowed to repatriate margin directly into their offshore cash accounts. Currently, there is a convoluted repatriation process whereby the futures margin must be sent from an investor’s futures commission merchants (FCM) customer margin account to their local custodian, before it can be remitted into an offshore cash account. The time and costs involved with remitting funds would fall significantly if local regulators made it possible for margin to be transferred directly from the FCM to an offshore cash account.
We are also speaking to regulators, including the SFB about T+1. I am aware the regulator recently sent out a questionnaire to foreign investors asking them for feedback about moving to T+1. We understand some investors have voiced concerns about FX funding and liquidity should Taiwan transition to T+1 - particularly as the TWD is a restricted currency.
Taiwan is trying to turn itself into a regional asset management hub. What is going on exactly?
Chu: With its deep pool of retail investors and sizeable Exchange Traded Fund (ETF) market, Taiwan is well-positioned to become an asset management leader in Asia-Pacific. This comes as the government recently pledged to transform Taiwan into an asset management hub and double the amount of assets managed in the country to $2 trillion within the next five years.2
To achieve this ambitious goal, the government is rolling out a series of changes. In July 2025, the FSC – in collaboration with local government- announced the establishment of a trial asset management zone in the port city of Kaohsiung. Incentives, including rent discounts, administrative support and subsidies, are being deployed to encourage firms to move to Kaohsiung. Currently, 14 banks, six securities investment trust firms and securities investment consulting firms and three insurance companies have been approved to set up operations in the newly launched asset management zone. 3
The FSC has also relaxed 28 regulations and introduced various measures, including a liberalization of private banking services and an expansion of the number of banks authorized to provide asset-management services to high-net-worth clients. 4 It also announced the creation of a Taiwan Individual Savings Account (TISA), mirroring Japan’s Nippon Individual Savings Account. 5
How is Citi supporting clients in Taiwan?
Chu: Powered by the semiconductor industry and the AI manufacturing supply chain, Taiwan is a market that foreign investors should not ignore. Citi Taiwan, with its diverse and broad client base of both foreign and domestic institutional investors, has extensive and unique insights into the dynamics underpinning this vibrant economy.
Our clients can count on us to help them navigate this growing market, both now and in the future.
1. CEIC Data
2. Asia Asset Management – August 7, 2025 – Taiwan’s asset management hub measures include version of Japan’s NISA
3. FSC – August 6, 2025 - FSC Approves Taishin International Bank's Application for Business Trial in the Kaohsiung Asset Management Zone
4. FSC – August 6, 2025 - FSC Approves Taishin International Bank's Application for Business Trial in the Kaohsiung Asset Management Zone
5. Asia Asset Management – August 7, 2025 – Taiwan’s asset management hub measures include version of Japan’s NISA
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