Taiwan Depository & Clearing Corporation

In light of the increasing trend of overseas investment in recent years and the rapid growth in sub-brokerage transactions and account openings by Taiwanese investors, the Financial Supervisory Commission announced the amendment of Article 23 of the "Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities" on May 8th of this year. This amendment allows sub-brokerage brokers to delegate custody services to TDCC. KGI Securities, taking the lead in responding to this policy, signed an agreement with TDCC. The signing ceremony was held on June 24th, with Deputy Director-General How-ming Hwang of the FSC Securities and Futures Bureau (SFB) attending the event to witness the beginning of a new era in the localization of custodial services.

集保結算所林丙輝董事長（左）與凱基證券許道義董事長（右）共同完成複委託簽約儀式。

In order to serve a wide range of investors in foreign securities, TDCC has completed the construction of a custody system for sub-brokerage which has three key features: Firstly, foreign securities purchased through sub-brokerage can be locally held in custody by TDCC, providing Taiwanese investors with greater assurance in their overseas asset investments. TDCC also plans to further provide inquiry services for foreign securities investments. Secondly, to save operational costs and enhance operational efficiency, TDCC has developed a system with standardized and automated processes, creating a safer and faster operational environment for the market. Thirdly, to encourage participation, TDCC not only offers the most favorable market rates but also introduces an "Early Bird Discount" program, encouraging securities firms to sign agreements by the end of this year.

How-ming Hwang, Deputy Director-General of SFB, stated that amid the global wave of investment and efforts by industry players, the trading volume of sub-brokerage has significantly grown over the past decade. As sub-brokerage continues to flourish, he emphasized the importance of protecting investors' assets. TDCC has earned widespread acclaim in the domestic securities market for its services such as clearing, settlement, depository, and book-entry transfers. It enjoys a strong reputation and trust among Taiwanese investors. Additionally, TDCC has accumulated years of experience in cross-border custody services. Hwang expressed confidence that building upon TDCC's established expertise in custody services, it will further enhance the security of investors' assets in the future.

Chairman Bing-Huei Lin of TDCC stated that TDCC has been providing cross-border custody services since 2015, with the custody of foreign securities now reaching nearly NT$5 trillion. This year, TDCC will further promote local custody services for sub-brokerage, aiming to collaborate with four major global custodians, including Euroclear, Clearstream, Citibank, and JPMorgan Chase Bank. The goals are to protect domestic investors' asset security and establish a standardized and automated operational environment in the market. TDCC appreciates the collaboration of KGI Securities for being the first partner in TDCC's sub-brokerage custody service, demonstrating KGI Securities' commitment to protecting investor asset security. TDCC believes that more securities firms will join in the future to protect the rights of investors.

KGI Securities stated that by delegating the custody of foreign securities to TDCC, securities firms can reduce custody costs and risks, while also advancing the goal of standardization and automated operations. KGI Securities believe that in the future, TDCC, acting as a bridge between securities firms and global custodians, will not only achieve the goals of standardization and automation but also create synergy through cooperation between TDCC and global custodians.

As the key infrastructure of Taiwan's capital market, TDCC has extensive experience in custody and has earned market trust. Through close cooperation with Citibank, the leading sub-brokerage custodian in Taiwan, TDCC is expected to provide seamless services to domestic securities firms. It is believed that in the future, with the joint efforts of TDCC, global custodians, and securities firms, combining TDCC’s local advantage, the international experience of custodian banks, and the protection of investors’ rights by sub-brokerage firms, a new era of local custody for sub-brokerage assets will be created.