TAIWAN is set to ease rules to allow Chinese mainland banks to buy bigger stakes in Taiwan banks and permit more Chinese mainland firms to invest in its financial industry, a move marking a major advance in cross-strait ties, the Taiwan financial regulator said yesterday.

Jennifer Wang, a vice-chairwoman of the Financial Supervisory Commission of Taiwan, said the proposed change would top the agenda at a meeting on Monday between FSC officials and Shang Fulin, chairman of the China Banking Regulatory Commission.

"The current limit is 5 percent. What we are planning to do is to raise that," Wang said.

She declined to say what limit might be allowed.

"By investing in each other's insurers, banks and asset managers, we hope to boost the size of Taiwan's financial markets.

Wang predicted there would be "very good news" at next Monday's meeting in developing financial ties between Taiwan and China's mainland.

"The worst is over. It will be the year that achieves the most in cross-strait financial ties. There is plenty of room to make progress."

A second meeting between the two banking regulators is scheduled for the second half of the year, Wang said.

The China Securities Regulatory Commission in January said it would allot investment quotas of up to 100 billion yuan (US$16 billion) for Taiwanese seeking to put money into the mainland's financial markets under the Renminbi Qualified Foreign Institutional Investor (RQFII) program.

The CSRC also announced measures at the time to open the mainland's securities and futures markets to Taiwan, following an unprecedented meeting between its ex-chief, Guo Shuqing, and the FSC.

Meanwhile, Bank of Taiwan said its Shanghai branch will commence business on April 2 and will provide new Taiwan dollar clearing services on the Chinese mainland.

Thirteen mainland banks and nine Taiwanese banks have signed up as joining members, Bank of Taiwan Chairman Teng-Cheng Liu said on Thursday after a central bank meeting.

The bank's Shanghai branch has been appointed as Taiwan's currency clearing bank, while Bank of China's Taipei branch is the clearing bank for yuan transactions in Taiwan.