[14448]
February 8, 2002
TO: INTERNATIONAL COMMITTEE No. 12-02
RE: TAIWAN SFC ISSUES RULINGS ON DERIVATIVES
On January 15, 2002, the Taiwan Securities and Futures Commission issued two rulings
clarifying the criteria to register foreign mutual funds for sale in Taiwan. A memorandum
prepared by local counsel in Taiwan describing the rulings is attached.
One of the requirements for a foreign fund to be approved for sale in Taiwan is that the
fund’s prospectus includes a statement that derivatives comprise less than fifteen percent of the
fund’s portfolio. The rulings define “derivatives” for this purpose and clarify that certain
currency forward contracts and currency swaps may be excluded for purposes of the fifteen
percent test, provided that they are used for bona fide risk hedging. The rulings also clarify the
value that should be used in the calculation with respect to options and other derivative
investments.
Robert C. Grohowski
Associate Counsel
Attachment
Attachment (in .pdf format)