Taiwan’s Depository Receipts Rules Could Prompt Foreign Investment, says BNY Mellon

New rules in Taiwan allowing over-the-counter (OTC), non-capital raising depositary receipts (DR) could make foreign investment in Taiwanese more accessible to global investors, says BNY Mellon.

The Taiwanese regulator amended the ‘Regulations Governing the Offering and Issuance of Overseas Securities by Issuers, allowing Taiwanese companies to establish a level 1 non-capital raising DR, providing global investors more convenient access to local companies.

“Taiwan has long been a popular destination for international investors, known as FINIs in Taiwan,” says Neil Atkinson, head of Asia-Pacific for BNY Mellon’s Depositary Receipts business. “We are often asked, particularly by US investors, to establish DR programs for Taiwanese companies but have been restricted from doing so by regulation.

“Research suggests there is growing demand from Taiwanese companies to be able to increase their international ownership, and global investor sentiment toward Taiwan is buoyant. Accordingly, we may see more Taiwanese companies using DRs in 2015.”

DRs have become increasingly essential for cross-border trading, and have become the preferred instrument both for companies listing shares on global markets, and for investors seeking an international portfolio.

In permitting OTC non-capital-raising DRs, Taiwan would join more than 60 countries worldwide whose companies have created opportunities for secondary market DR investors.