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Yuan Drop Shakes Taiwan Into Tighter Scrutiny of Its Derivatives 

September 30, 2015

Regina Tan, Bloomberg Business

Taiwan has stepped up its scrutiny of derivatives after the yuan devaluation battered trades tied to the currency.

The island’s regulator is requiring more details to be disclosed as derivatives get ever more complex and entwined between financial institutions, said Jean Chiu, the deputy director general of the Financial Supervisory Commission’s banking bureau. Yuan-linked derivatives have unrealized losses of about NT$50 billion ($1.5 billion) after China’s surprise currency devaluations last month.

“With this new information, we will be able to gather warning signals and ask the market to do something before it’s being pushed to the limits,” said Chiu. “Without more detailed data, when there’s a big move in the market, we don’t know the detailed information of the exposure.”

Watchdogs across Asia are targeting derivatives after the 2008 collapse of Lehman Brothers Holdings Inc. prompted leaders of G-20 nations to improve their markets’ transparency.

Read more: Bloomberg Business

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