Liberalization of Taiwan’s Securities Markets – The Case of Cross-Taiwan-Strait Listings

Banking and Finance Law Review, Vol. 26, pp. 259-282, 2011

30 Pages Posted: 6 Jul 2011 Last revised: 27 Jul 2011

See all articles by Wen-Yeu Wang Wallace

Wen-Yeu Wang Wallace

National Taiwan University - College of Law

Christopher C. Chen

Singapore Management University School of Law

Date Written: May 5, 2011

Abstract

The purpose of this paper is to examine the liberalization of Taiwan’s capital market regarding cross-Taiwan-Strait listing of securities. Taiwan is in an advantageous position to compete with other Asian rivals to attract issuers and capital from China. However, the long political hostility ensures that there is little regulatory cooperation on both sides of the Taiwan Strait. Assuming that the creation of a cross-strait capital market is an unstoppable trend, this paper examines from the perspective of regulatory competition several regimes that may facilitate Taiwan to overcome regulatory obstacles arising from the special Sino-Taiwan relationship. This paper argues that regulatory cooperation or even harmonization of Sino-Taiwan laws will be very difficult. However, the cooperation of stock exchanges in China and Taiwan may be a first step toward further official collaboration. Another approach is to strengthen domestic supervision in Taiwan with a sponsorship program. Nevertheless, such a program may be very expensive to maintain. Given the regulatory obstacles between Taiwan and China, a better approach seems to open an alternative trading market with more flexible rules designed for Chinese securities in Taiwan. Such a market-oriented approach may liberalise Taiwan’s capital market to Chinese and foreigners, while still maintain the level of domestic investor protection without raising much regulatory and compliance costs.

Keywords: cross-listing, securities regulation, Taiwan, China, Sino-Taiwan relationship, alternative trading, financial supervision

JEL Classification: K10, K22

Suggested Citation

Wang Wallace, Wen-Yeu and Chen, Christopher C., Liberalization of Taiwan’s Securities Markets – The Case of Cross-Taiwan-Strait Listings (May 5, 2011). Banking and Finance Law Review, Vol. 26, pp. 259-282, 2011. Available at SSRN: https://ssrn.com/abstract=1832130

Wen-Yeu Wang Wallace (Contact Author)

National Taiwan University - College of Law ( email )

No.1, Sec.4, Roosevelt Road
Taipei, 10617, 10617
Taiwan
886223973242 (Phone)
886223973264 (Fax)

Christopher C. Chen

Singapore Management University School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

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