TAIPEI, June 17 Taiwan's financial regulator has
fined nine banks for improper sales of foreign currency
derivatives, it said on Tuesday, having already punished at
least one for failing to disclose risks associated with such
The banks to be fined rank among Taiwan's largest financial
institutions and include Cathay United Bank, a unit of Cathay
Financial Holding Co Ltd, and CTBC Bank, a unit of
CTBC Financial Holding Co Ltd.
Taiwan's Financial Supervisory Commission (FSC) will levy a
fine of between T$2 million ($66,700) and T$4 million per bank,
the FSC said in a statement.
The watchdog said the banks had not established proper
risk-management mechanisms or evaluated the risk potential of
the products they were selling.
The products, called target-redemption forwards, offer
buyers leveraged bets on foreign-currency gains and offer
regular income as long as the target currency does not weaken
Many believe the banks' yuan-derivative sales are the main
reason behind the punishment, since the move comes as client
complaints mount about losses following a recent sharp fall in
the Chinese currency.
The FSC's statement did not specifically mention the yuan.
It had previously punished Bank SinoPac, a unit of SinoPac
Financial Holdings Co Ltd, for improper sales of
foreign currency derivatives.
The regulator later said three more banks would also be
punished, but declined to say which ones.
It was not immediately clear if those three banks were among
the nine included in Tuesday's announcement.
($1 = 29.9750 Taiwan New Dollars)
(Reporting by Roger Tung; Writing by Michael Gold; Editing by