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Taiwan Regulator Tightens Rules on Settlement Defaults Amid Rising Market Risk
Finance · Investment Banks/Brokers · economic_daily · 2026-09-22
Taiwan's FSC has approved stricter settlement default regulations, requiring investors to prepay for trades after a first default to mitigate rising market risks.
What Happened
Stricter Default Rules: The Financial Supervisory Commission (FSC) has approved new regulations from the Taiwan Stock Exchange to manage settlement defaults. Investors who default for the first time will now be required to prepay for securities within ten days, while repeat offenders face a 30-day prepayment requirement.
Rising Default Rates: The default rate for the first eight months of the year rose to 2.2 per 100,000, up from previous years. Although regulators maintain that the overall risk remains manageable, the new measures are intended to proactively address the uptick in market volatility.
Day Trading Oversight: In response to active day trading, the FSC is requiring brokerage firms to implement stricter individual risk controls. Firms must assess day trading performance daily and monitor cumulative losses monthly to prevent potential defaults.
Enhanced Market Stability: By lowering the threshold for prepayment requirements, the regulator aims to curb risky trading behavior. These measures reflect a broader effort to maintain market integrity and protect the financial system as trading volumes remain high.