The United States financial market had undergone a dramatic transformation in 1999 with the enactment of the Financial Services Modernization Act (commonly known as the Gramm-Leach Bliley Act), repealing the prohibition against affiliation of banking and securities institutions and interlock of managements imposed by the Glass-Steagall Act. Nonetheless, even before the advent of the Gramm-Leach-Bliley Act, the United States financial market had experienced a movement of deregulation fueled by court decisions and regulatory rule-making discretions with respect to securities activities (e.g., underwriting, dealing in, investing for bank’s own account securities, etc.) of banking institutions. Shortly after the enactment of the Gramm-Leach-Bliley Act, the Financial Holding Company Law of Taiwan was enacted in 2000, allowing affiliation of banking and securities institutions, a practice banned under the existing Banking Law. In the years that follow, similar deregulations occurred in the Taiwanese financial market with respect to allowing banking institutions to engage in expanded securities activities through a financial subsidiary. Apparently, the regulatory scheme, as well as the related legislative policies, had been instrumental in shaping those of . This paper examines the policies allowing affiliation of banking and securities institutions and expanded securities activities of banking institution, as to whether those policies may serve their intended purpose of integrating commercial and investment banking while maintaining the safety and soundness of banking institutions.