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Development of Fintech and Regulatory Environment

The development of financial technology (fintech) is designed to enhance the competitiveness of the financial sector, but is accompanied by potential risks that give rise to new regulatory challenges.

To enhance members’ understanding of Taiwan’s fintech development strategies, AmCham Taipei’s Asset Management, Banking, Capital Markets and Insurance Committees jointly invited Wellington L. Koo, Chairman of the Financial Supervisory Commission, to explain the government’s policy measures and their relation to global regulatory trends. Nearly 100 Chamber members and guests gathered to attend the event at The Regent Taipei on April 20.

In a presentation delivered in Chinese, Koo provided an overview of the current status of Taiwan’s financial sector and noted that regulators and supervisors around the world are promoting the growth of fintech while seeking to ensure the safety and soundness of the financial system.

Chairman Koo cited the tasks facing regulators around the world as they respond to the fintech revolution:

  • Providing interactive supervision and responding to the changes in technology
  • Encouraging the development of fintech innovation
  • Fostering new fintech startups by offering training and resources
  • Developing consistent standards and assisting new ventures in transnational development
  • Implementing regulatory technology to provide real-time monitoring of financial operators’ operating activities
  • Combining non-governmental forces to build a comprehensive information sharing and security system

Speaker Wellington L. Koo, Chairman of the Financial Supervisory Commission; William Foreman, AmCham Taipei President; Leo Seewald, AmCham Taipei Standing Vice Chairman; and AmCham Taipei Committee Co-Chairs

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Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

Smooth Flying for the Global Economy

Even if a flight is smooth, airlines generally recommend keeping your seatbelt fastened in case of any unexpected turbulence. The life jacket beneath the seat is strictly in case of dire emergency.

So it goes for investing in today’s global economy, said Tai Hui, managing director and chief market strategist Asia for J.P. Morgan Funds in his recent presentation to AmCham members at a presentation entitled 2018 Global Economic Outlook: End of the Road or More Room to Run?

From left to right: Speaker Tai Hui, Asia Chief Market Strategist, Asia, J.P. Morgan Asset Management; AmCham’s Governor & Asset Management Committee Co-Chair Christine Jih, Chairman & Chief Executive Officer, BNP Paribas Investment Partners Taiwan Co., Ltd.; Eddy Wong, Managing Director, Head of JPMorgan Asset Management Taiwan

“You don’t know when the flight will get bumpy, and the investment world is very similar,” Hui said at AmCham’s Asset Management & Capital Markets Joint Committee luncheon on March 27 at the Grand Hyatt. “We have to put our seatbelts on – we cannot be complacent. You wear a seatbelt by having a diversified portfolio” that spreads out risks of sudden downturns.

The global economy is maintaining its growth momentum, with synchronized growth expected around the world following from 2017’s strong performance. Extending his flight analogy, Hui said that markets were climbing in 2017, but now they’ve reached cruising altitude. “It’s not the time to worry about wearing a life jacket,” he reassured investors worried about the recent trade spat between the United States and China or about U.S. President Trump’s imposition of tariffs on a number of imports, including steel.

The factors that lead him to remain bullish on investments in 2018 are inflation figures that remain at or below targets in markets around the world, even in the United States, despite the economy operating at nearly full capacity. Wage growth remains sluggish in the United States, where union activity is at an all-time low and the rising “gig economy” of Uber drivers, etc., has crimped wage hikes. But nearly full employment will nevertheless lead to creeping inflation, and Hui anticipates the U.S. Federal Reserve raising interest rates to tighten up the money supply and keep inflation within bounds. Although rising interest rates are often a cause for concern for investors, Hui noted that “when the Fed raises rates, it’s a vote of confidence in the economy.”

For the same reason that tighter money supply points to a stronger business climate, he also parted with conventional wisdom that equities take a hit during money tightening. And while equities in the United States are not cheap, he told audience members that equities on Asian markets are earning 30% more per share than their American counterparts, an attractive bargain. Still the 20% boost to revenues that U.S. companies are currently enjoying thanks the to the Trump tax plan likewise makes them viable targets, and investors now have a wealth of choices.

Even fixed-income products such as bonds are doing well, he noted.

Key concerns are the risk of protectionism or even a trade war between the United States and China, but Hui said that recent negotiations between the two economic behemoths should reassure investors that they will likely work things out. A trade war would contribute to inflation on both sides of the Pacific to potentially disastrous results.

Interested in attending our events? Join us at other upcoming events, click here.

Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

The Global Economic Outlook

At a joint luncheon meeting of AmCham Taipei’s Asset Management, Banking, and Capital Markets Committees on Oct. 20 at the Grand Hyatt Taipei, Belinda Boa, the Hong Kong-based Managing Director of BlackRock Asset Management North Asia, gave a presentation on “Global Economic Outlook,” providing a briefing on the global BlackRock investment team’s assessment of the prospects for the world economy in the year ahead. Among her key points:

  • A gradual rise in interest rates can be expected in the U.S., probably regardless of who is named as the next Federal Reserve chairman. After having forecast rate hikes many times that did not occur, most other analysts are no longer making that prediction. But BlackRock expects rates to increase, though not to the same level as before the global financial crisis.
  • Investors should not necessarily be put off by the currently high equity valuations in the U.S., as the price has been justified by earnings. But preference should be given to other markets. The environment seems especially favorable for emerging markets.
  • Geopolitical factors are injecting more unpredictability than usual into the market. Some major examples are the North Korean nuclear threat, renegotiation of the North American Free Trade Agreement (NAFTA), and growing tensions between the United States and China. There is concern over the possibility of a geopolitical surprise.
  • BlackRock expects sustained economic expansion and is positive on “momentum” and “value” stocks, especially in emerging markets, Japan, and Europe (it is neutral on U.S. stocks). On the fixed-income side, it likes U.S. investment-grade credits.

From left to right: Vincent Ma, CEO / Managing Director, BlackRock Investment Management (Taiwan) Ltd.; AmCham Asset Management Co-chair Christine Jih, Chairman & Chief Executive Officer of BNP Paribas Investment Partners Taiwan Co., Ltd.; AmCham President Andrea Wu; Speaker Belinda Boa, Managing Director, Head of Active Investments for Asia Pacific and Chief Investment Officer (CIO) of Emerging Markets Fundamental Active Equity of BlackRock; AmCham Governor Leo Seewald, Chairman / Managing Director, BlackRock Investment Management (Taiwan) Ltd.; AmCham Asset Management Co-chair Derek Yung, Chairman of Alliance Bernstein Investments Taiwan Ltd.; AmCham Pharmaceutical Committee Co-Chair Lai Li Pang, Managing Director, Merck Sharp & Dohme (I.A.) LLC, TW Branch; and AmCham Advanced Learning Lab Advisor William Zyzo, Advisor, Training Director, Z&A Knowledge Solutions

Interested in attending our events? Join us at other upcoming events, click here.

Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

Joint Committee Luncheon: The Future of Financial Progress and FSC Policy

Addressing the current state of the financial industry and the policy path forward, Financial Supervisory Commission (FSC) vice chairman Cheng-Mount Cheng told a recent AmCham Taipei luncheon audience that the FSC over the past year has taken positive steps to build a better business environment and stimulate financial product innovation in Taiwan.

The presentation, entitled “The Overview of Financial Industry Development and The FSC’s Main Policy,” was delivered at the Regent Taipei on June 16 at a meeting co-sponsored by the Chamber’s Asset Management, Banking, Capital Markets, and Insurance Committees.

Speaker Cheng, Cheng-Mount 鄭貞茂, Vice Chairman at Financial Supervisory Commission 金融監督管理委員會副主委, Andrea Wu, AmCham President, and AmCham Taipei Committee Co-Chairs

Cheng devoted much of his talk to the FSC’s proposed programs for financial technology (“fintech”) innovation. He said that responding to concerns voiced by several fintech companies, the FSC has prioritized implementation of a “regulatory sandbox” – an encouraging space for technological innovation, free of most existing regulatory constraints. Such a mechanism would enable both financial institutions and fintech developers to test new products and services for a trial period of up to 18 months.

Cheng affirmed that fintech is a top priority for the FSC, but that the Legislative Yuan needs to pass authorizing legislation before the regulatory sandbox mechanisms can go into effect.

The Vice Chairman identified the FSC’s main policies as:

  • Promote fintech
  • Develop green finance
  • Support the New Southbound Policy
  • Promote measures for the aged society
  • Expand the scale of the capital market
  • Promote financial inclusion measures
  • Strengthen prevention of money laundering
  • Protect consumers’ rights and interests

Cheng said that these policy priorities are opportunities to bring Taiwan’s financial industry in line with international standards, and even enable Taiwan to become a global leader of financial innovation. “I believe with tech advancing very fast every day, we will see results,” he observed.

While optimistic about the financial industry’s future, Cheng is nonetheless very aware of the FSC’s jurisdictional limitations in shaping that vision. “Many people know that the FSC is in charge of financial markets, but they don’t understand that our capability is quite limited,” he noted.

In a comment for the AmCham Taipei blog, Christine Jih, co-chair of the Asset Management Committee and Chairman & CEO of BNP Paribas Investment Partners Taiwan, said: “Increasing interdepartmental coordination is key to streamlining regulation and strengthening Taiwan’s financial industry. The Vice Chair has been very modest but we all know he has done a lot for the industry. Mr. Cheng is very open-minded and keen to improve this system. This is an industry facing new challenges and new issues every day, and government departments need to talk to each other to keep up with these advancements.”

Interested in attending our events? Join us at other upcoming events, click here.

Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

Joint Luncheon on Global Banking Regulations

On October 14, Ronald Gould, Chairman of Think Alliance Group, spoke to AmCham members and guests at a Joint Committee Luncheon on the topic of Global Banking Regulations Compliance issues, including Dodd-Frank, Anti-Money Laundering (AML), and Know Your Customer rules (KYC).

Large multinational financial institutions, regional banks and even predominately Asian financial holdings with only a limited presence in the United States have been caught off-guard by changing rules and expectations from regulatory authorities.

In reality, AML and KYC compliance is nothing new. But the level of complexity and cross-border ramifications are not well understood. Mr. Gould shared his insights so that listeners might be made more aware and better prepared to handle these issues in the future, in an ever-changing, increasingly complex and globalized economy.

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Some topics covered during Mr. Gould’s presentation included:

  • Changing global regulatory requirements
  • Emerging trends and industry practices for global banks and asset managers
  • More intrusive regulatory oversight, implications of the Dodd-Frank Act in the US that will affect financial institutions and asset managers globally
  • Greater focus on governance, management and compliance including KYC and AML
  • Challenges and opportunities for Taiwan

This event was a joint committee luncheon, hosted by the AmCham Banking, Asset Management, and Capital Markets committees.

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