Taiwan's security firms and banks are arguing for fewer restrictions on cross-Straits financial business as the island's authorities prepare to release three new rules in the coming week.

Since November last year, financial companies have performed poorly on the island's stock market, said Wang Shih-cheng, manager of qualified domestic institutional investors (QDIIs) of Jih Sun Securities Co. Ltd, in an interview with Xinhua.

"If the authorities do not speed up the opening of the market to the mainland investors, share prices of financial firms will continue dropping."

The industry had expected a lot from the three memorandum of understanding of banking, insurance and securities, signed in November, he said.

"But the agreements did not fulfill our expectations, for instance, of free investment in stock markets on both sides of the Taiwan Strait, thanks to the restrictions adopted by the authorities."

Taiwan's financial department placed a ceiling on total investment from the mainland's QDIIs at 500 million U.S. dollars and banned them from investing in several key industries such as infrastructure, airlines and telecommunications.

Two mainland QDIIs have entered the Taiwan market since the three memorandum of understanding took effect in January.

"As far as I know, they are not very active due to the restrictions in investment and currency trading," Wang said.

In the coming week, Taiwan authorities are expected to issue three rules to regulate how mainland banks, security and insurance companies can buy into local firms and set up branches in the island.

"Financial and economic exchanges are the most direct and urgent needs of people on both sides," Wang said. "I think we should remove the political stigma."

"There is limited room for a profit increase in the local market as it has been quite stable. But, if more firms can enter the booming mainland market or attract more mainland investors into our market, the business will see a breakthrough."

In Beijing, Qin Xiao, president of China Merchants Bank, a major mainland commercial bank, said the bank had applied to the Taiwan authorities to set up a representative office or branch, but had yet to receive a reply.

"I don't think our bank will compete with Taiwan banks for local business, but instead focus on serving cross-Straits trade and investment," Qin said.

The Bank of China, one of the four state-owned banks, submitted a similar application.

In the past week, two major Taiwan financial firms, Fubon Financial Holding Co. and President Securities Corp., announced plans to set up joint ventures on the mainland.

"They are positive news for the market as joint ventures are a short cut to enter the mainland market," said Hu Sheng-an, an analyst with President Securities Corp.. "But the market's future development depends on big moves to speed up financial cooperation."

The two sides are going to discuss the Economic Cooperation Framework Agreement (ECFA) in the next round of cross-Straits talks, scheduled to be held in the first half of this year.

"If any breakthrough is made on the ECFA, it will also help boost financial cooperation," Hu said.

Su Ning, vice president of the People's Bank of China, said the two sides were preparing for the currency clearance and settlement system, such as direct currency trading and transport and delivery of currencies.

Banks on both sides cannot exchange renminbi with New Taiwan dollars directly, but must use the U.S. dollar as an intermediary.