August 4, 2004
The Central Bank of China (CBC) has announced to ease rules governing trading by banks of forex derivative products that are not related to the Taiwan currency. According to the new rules, banks will no longer need to seek CBC's approval before conducting such trades.
The derivative products concerned include:
Single products -
1.Forward contracts on interest rate, forward contracts on commodities, and forward contracts on stocks,
2.Forex options, interest rate options, commodity options, and stock options.
3.Forex rate swap, interest rate swap, commodity price swap, and stock price swap.
Package products -
Package products that combine any one of the items given above with foreign-currency time deposits or New Taiwan Dollar time deposits
At the same time, the CBC abolished the stipulation that the price differential in each (non-cash) transaction of up to US$10,000 may not be greater than NT$0.10. From now on the forex banks will set their own exchange rates for buying and selling, and post them at their place of business.
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