Taiwan investors warned of potential Chinese stock conflict of interest

Want China Times
Date: 2015-07-11
By: Wei Chiao-yi and Staff Reporter

Investment trust companies in Taiwan have been reminded by regulators of the

Lin Hung-li, chairman of Taiwan's Securities Investment Trust & Consulting Association, July 3. (Photo/Hung His-lung)

Lin Hung-li, chairman of Taiwan’s Securities Investment Trust & Consulting Association, July 3. (Photo/Hung His-lung)

potential conflict of interests they may face redeeming Chinese-themed funds, given the volatility of Chinese stock markets.

Taiwan’s Securities Investment Trust and Consulting Association (SITCA) issued the notice on July 9 to the group’s 37 investment trust company members at the behest of the Financial Supervisory Commission (FSC).

According to the FSC’s Securities and Futures Bureau, insiders in investment trust companies will face a potential conflict of interest after suspended stocks in China resume trading and funds investing in Chinese stocks are assessed and re-valued.

Regulators fear that those insiders, including investment trust firm employees and their family members, will have inside access to information on the process leading to new fund valuations and could apply for fund redemptions ahead of general investors.

Many listed Chinese companies saw trading of their shares suspended this week after the benchmark Shanghai Composite Index plunged from a high of 5,166.35 on June 12 to below 4,000 in early July.     [FULL  STORY]

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