Taiwan’s Financial Supervisory Commission on Aug. 25 approved margin financing for U.S. stocks through sub-brokerage accounts, with roughly 930 U.S. stocks and U.S.-listed exchange-traded funds expected to fall within scope. The financing cap will be set at 50%, and the account-wide maintenance ratio must stay at 160%. The new regime could take effect as early as the second quarter of 2027.
The structure is stricter than the one used for Taiwan equities, where margin financing can go up to 60%. Using NT$1 million in investor capital as the example in the report, Taiwan’s domestic stock rules would allow a position of as much as NT$2.5 million, while the planned U.S. stock framework would allow NT$2 million.
The maintenance threshold is also higher. At 160%, a margin call would be triggered once the market value of positions drops to the point where collateral is no longer worth 1.6 times the financing amount. Based on a NT$2 million position, the report said a pullback of a little more than 20% would be enough to reach that line. That leaves less room than Taiwan’s 130% maintenance ratio for domestic stocks. Securities and ETFs purchased with the financed amount must also serve as collateral, leaving no additional credit capacity to recycle elsewhere.
Time-zone mismatch and no price limits drove the tighter rules
Taiwan stocks trade with a 10% daily price limit. U.S. equities do not, and double-digit single-day moves are not unusual.
The time difference adds another layer of risk for Taiwan-based investors. The most active part of the U.S. trading session takes place during Taiwan’s overnight hours, which means margin calls or forced-liquidation notices could arrive while investors are asleep. By the next morning, positions may already have been sold out.
According to a statement cited by Economic Daily News, Huang Chung-hao, deputy director-general of the Securities and Futures Bureau, pointed to two factors in external communications: Taiwan and U.S. trading hours do not line up, and U.S. stocks do not have daily price limits. Regulators used those conditions to justify a wider risk buffer than the one applied in the domestic market.
About 630 stocks and 300 ETFs are expected to qualify
Eligible stocks will be drawn from constituents of the three major U.S. equity indexes: the Dow Jones Industrial Average, the Nasdaq-100, and the S&P 500. The report put that pool at about 630 names.
On the ETF side, products with leveraged or inverse exposure will be excluded. What remains are U.S.-listed ETFs whose underlying assets are mainly stocks or bonds, producing a list of about 300 funds.
Together, the two groups bring the total close to 930 securities. Final lists, however, may still be narrower because brokerages will be allowed to trim them based on their own risk-control standards.
Hong Kong stocks and foreign bonds were not included in this round. The regulator’s explanation was that more than 70% of current sub-brokerage trading is concentrated in U.S. stocks, while the industry has yet to reach consensus on Hong Kong names. Foreign bonds were left aside because obtaining quotes and calculating maintenance ratios would be more complicated.
Foreign securities turnover reached NT$11.3 trillion in the first seven months
Data from the Taiwan Securities Association showed that trading in foreign securities through sub-brokerage channels totaled NT$11.3 trillion in the first seven months of the year, up 109% from a year earlier. Nearly 73% of those funds went into the U.S. market.
The report framed that surge as part of a broader structural issue. Taiwan retail investors who wanted leveraged exposure to overseas stocks have largely had to rely on offshore brokers, while local firms had limited ways to compete. With the new rules in place, the competitive battleground shifts from whether margin financing is available to where rates are set, how foreign-currency scheduling costs are handled, and who ultimately absorbs exchange-rate risk.
Among 25 brokerages currently handling sub-brokerage business, only 19 meet the qualifications to apply. Larger firms with stronger foreign-currency scheduling capacity appear to have an early advantage.
Leverage concerns remain, and the 2027 timeline is not fixed in practice
Concerns over leverage have not disappeared. Some in the market question whether opening margin financing for U.S. stocks at a time when domestic investors already make heavy use of margin in Taiwan equities could add to overall leverage risk.
The brokerage industry’s response, as described in the report, has two parts. First, investors who truly want leveraged overseas exposure already have channels to open accounts with offshore brokers, so the policy is seen more as a way to bring existing demand back onshore and fill a gap in sub-brokerage services. Second, the formal launch is still some distance away, and market conditions by then may look very different from today.
The rulemaking process includes a 60-day public notice period, and both the Taiwan Depository & Clearing Corporation and brokerage firms will need to rebuild back-end systems, a process expected to take at least half a year. By the time the framework actually goes live in the second quarter of 2027, the Federal Reserve’s rate environment and the broader tone of the U.S. stock market may have changed, meaning firms that move early now are not guaranteed to capture the full benefit.