Given the strategic goals of the Capital Market Roadmap, the Financial Supervisory Commission (FSC) launched a central settlement and payment mechanism for funds on May 12, 2022. As a result, the Taiwan Depository & Clearing Corporation (TDCC) was required to establish an Onshore Fund Centralized Clearing Platform to facilitate automation, efficiency, and cost-effectiveness in the fund market. The project is a part of the FSC Securities Investment Trust Enterprises Incentive Plan (SITEs Incentive Plan). The plan will start to phase from Q2 2023. It is expected to incorporate all operators within a year and lead the onshore fund market into a new era of standardization and high efficiency.

Onshore fund subscriptions have risen significantly of late. According to the Securities Investment Trust & Consulting Association (SITCA), the onshore fund subscriptions (excluding ETF) accounted for NT$5.5 trillion in 2021. Compared to the data three years ago, subscriptions and redemptions have increased by over 50% and reached 16 million. The statistics show that the Taiwanese have become increasingly interested in fund products. However, the number of issued fund types has exceeded 3,500. Both dealers and investors need to complete the purchase and payment processes according to fund types. This develops complicated many-to-many relationships that consume immense labor and cost. In fact, the cost of wire transfers and payments in the market as a whole was as high as NT$420 million in 2021.

To tackle the problem, the Capital Market Roadmap formulated relevant strategies. The TDCC also built an Onshore Fund Centralized Clearing Platform after studying the central clearing and settlement systems from the fund markets of Europe, the USA, Japan, and South Korea. The goal is to create a centralized, standardized, and automatic settlement system which reduces processing risks and costs while increasing efficiency for dealers and investors to address their many-to-many relationships, data flows, and cash flows. The new approach will give the fund market a competitive edge over other markets.

The TDCC Onshore Fund Centralized Clearing Platform will be phased in starting from Q2 2023. The first phase focuses on the information exchange and payment services between investment trust companies and distribution dealers. It aims to incorporate all dealers into the system within a year. The second phase will help direct investors who directly invest in investment trust companies to save handling fees from fund subscriptions and redemptions. The new services are being released in Q2 2024 and are expected to save tens of millions of wire transfer fees and charges. Under the instruction of the competent authorities, the TDCC, SITCA, and Trust Association of the Republic of China (TAROC) will keep working together to improve the groundbreaking system and meet the milestone in the onshore fund ecosystem.