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Basis of promulgation
- These Rules are promulgated pursuant to Article 64 of the Operating Rules of the Taiwan Futures Exchange Corporation.
- A futures commission merchant reporting an out-trade because of an error occurring in futures brokerage trading, or reporting an account number correction because of an error by a trader ("account number correction"), shall do so in compliance with these Rules.
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Procedures for handling out-trades
- Where a futures commission merchant commits an error or omission when engaging in futures brokerage trading, it shall handle the out-trade position through the segregated error account or the original principal's account.
Where a futures commission merchant handles an out-trade position through the original principal's account, it shall first obtain the consent of the principal and shall keep relevant evidentiary documents or records. The Chinese term for "out-trade" shall be noted on the trading order form, and details of the handling of the out-trade shall be fully disclosed in the trade confirmation statement.
Book adjustment of any amount of profit or loss resulting from the out-trade shall be carried out through the error account.
- Where an out-trade results from improper entry of a trader's account number, in addition to handling such out-trade according to the above-stated principles, the futures commission merchant may apply for a position adjustment and have the erroneous position adjusted to the original principal's account.
- Out-trades on opposite sides of the same contract may be adjusted to the segregated error account and mutually offset.
- A futures commission merchant shall handle an out-trade before the close of the next regular trading session following its occurrence, in the case of an out-trade occurring during the regular trading session; or before the close of the second-next regular trading session, in the case of an out-trade occurring during the after-hours trading session. In the case of an expiring contract, if an out-trade position falls on the last trading day, it shall be handled on the last trading day before the close of the regular trading session, before the close of the after-hours trading session, or before the end of trading.
- A futures commission merchant which must report a position adjustment due to handling of an out-trade shall do so pursuant to the provisions regarding position adjustment in Point 5 and Point 15 of the TAIFEX Operational Key Points of Clearing and Settlement for Futures Commission Merchants and Clearing Members.
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Procedures for handling account number corrections
- When a futures commission merchant accepts a trader's application for an account number correction because of an error by the trader, the account number before the correction and the corrected account number for remittance shall without exception belong to the same trader and the same business location. The futures commission merchant shall first check that the correct account for remittance has duly received in full the margin and premium; neither the account number before nor the account number after the correction may be of an omnibus account.
If the position for which the account number correction is made is a day trade of futures contracts under Article 49-2 of the TAIFEX Operating Regulations, the corrected account number for remittance for which the trader applies with the futures commission merchant shall be one for which a risk disclosure statement for day trading of futures contracts has been signed.
After a position for which an account number correction is made has been liquidated by the futures commission merchant, the futures commission merchant may not accept any application for account number correction for that position.
- A futures commission merchant shall carry out account number correction based on the Application for Correction of Account Number filled out by the trader. The futures commission merchant shall note the words "account number correction" on the trading order form.
- A futures commission merchant accepting a trader's application for account number correction shall handle the correction before the close of the next regular trading session following the occurrence, in the case of a transaction occurring during the regular trading session; or before the close of the second-next regular trading session, in the case of a transaction occurring during the after-hours trading session. In the case of an expiring contract, if a position requiring account number correction falls on the last trading day, it shall be handled on the last trading day before the close of the regular trading session, before the close of the after-hours trading session, or before the end of trading.
- If a futures commission merchant needs to file for position adjustment because of an account number correction, it shall do so pursuant to the provisions regarding position adjustment in Point 5 and Point 15 of the Taifex Operational Key Points of Clearing and Settlement for Futures Commission Merchants and Clearing Members.
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Procedures for reporting out-trades and account number corrections
- Computer reporting:
- A futures commission merchant handling an out-trade or account number correction shall report the error to the Taiwan Futures Exchange Corporation within 45 minutes after the closing of the regular trading session for each futures trading contract on the day it completes the handling.
- When reporting an out-trade or account number correction, a futures commission merchant shall enter the details of the out-trade or account number correction into each of the fields on the computer interface provided by the Taiwan Futures Exchange Corporation.
- When network transmission is interrupted due to accidental causes, the futures commission merchant shall file an initial report to the Taiwan Futures Exchange Corporation by fax, and supplementally enter the information when the problem has been resolved.
- Reporting by electronic media:
Where any of the following circumstances occurs with respect to a futures commission merchant handling out-trades or account number corrections, in addition to online reporting on the day of handling, by 5 p.m. on the next business day, the futures commission merchant shall submit a report to the TAIFEX by electronic media:
- For the same trader on a single day, the total number of futures out-trades or account number corrections reaches 40 contracts or more, or for options reaches 160 contracts or more.
- For the same trader on a single day, the total amount of profit or loss after out-trades are redressed or the total amount of profit or loss after the closing out of positions for which account number corrections are made reaches NT$800,000 or more.
A futures commission merchant shall submit a statement of the cause of out-trades, affixed with the seal of the company and the seals of (or signed by) the company's responsible person and the party to the out-trade, and an out-trade report form, affixed with the seal of the company. A futures commission merchant filing an account number correction report shall submit a trader account number correction application, affixed with the seal of the company, and the seals of (or signed by) the company's responsible person. In addition, the following documents, affixed with the seal of the company shall also be submitted to the Taiwan Futures Exchange Corporation (TAIFEX):
- The order form.
- The order details entered online.
- The trade execution information.
If any malfunction occurs in the reporting by electronic media, the futures commission merchant shall file a written report and notify the TAIFEX by telephone.
- Notification mechanism:
When a futures commission merchant handles account number corrections and any of the following levels is reached, it shall notify the TAIFEX:
- For the same trader at the same business location on a single day, the total number of futures or options out-trades reaches 1,000 contracts or more.
- For the same trader at the same business location on a single day, the total amount of profit or loss after out-trades are redressed reaches NT$10 million or more.
To make an out-trade notification referred to above, a futures commission merchant shall submit a Futures Commission Merchant Out-Trade Notification to the TAIFEX by fax. For out-trades occurring during the regular trading session, it shall make the notification to the TAIFEX within 45 minutes after the close of the regular trading sessions for the futures trading contracts on the current day. For out-trades occurring in the after-hours trading session, it shall make the notification to the TAIFEX before 10 a.m. of the next regular trading session following the occurrence.
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These Rules and any amendments hereto shall take force upon announcement after approval and recordation by the competent authority.
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