Newsletter
Partial Amendment to the Regulations Governing Insurance Enterprises Conducting Derivatives Transactions
The FSC issued a ruling (Ref. No. Jin-Kuan-Pao-Tsai-10302509851) on 24 December 2014 to amend the Regulations Governing Insurance Enterprises Conducting Derivatives Transactions. Key amendments are summarized as follows:
1. New addition that for hedging needs, insurance enterprises may engage in derivatives transactions to hedge reinvestment of expected principal due within one year and interest accrued on investment position as well as future expected cash flows of in-force insurance policies within one year. New stipulations on the qualifications, requirements and documents required for insurance enterprises to apply for conducting the abovementioned transactions, transaction limits and internal audit.
2. Amendment to the regulations relating to credit ratings on local and foreign financial institutions permitted to conduct hedging transactions with insurance enterprises.
3. New addition to include OTC call options and OTC interest rate swaps for domestic insurance enterprises using actually held positions which have clearly matched spot positions to trade with qualified local financial institutions and local branches of foreign financial institutions, as permitted trading instruments available for insurance enterprises to increase investment returns.
4. Amendment to the regulations relating to credit ratings on issuers or guarantee institutions of structured products available to insurance enterprises and regulations relating to the definition of structured products.