| Article 1 |
These Rules are adopted pursuant to Article 17, paragraph 3 of the Taipei Exchange (TPEx) Rules Governing Securities Trading on the TPEx ("the Trading Rules").
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| Article 2 |
Except where otherwise required by law or regulation, all matters pertaining to the Clearing and Settlement Fund ("the Fund") are governed by these Rules. Any matters that are not addressed in these Rules shall be handled in accordance with the TPEx Trading Rules or other relevant regulations.
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| Article 3 |
A securities firms engaged in brokerage trading of securities through the TPEx automated trade matching system at its place of business shall pay to the TPEx contributions to the Fund in compliance with the following provisions:
- Before commencing business activities, the securities firm shall deposit a basic sum of NT$6 million to the Fund. After commencing business activities, it shall continue to deposit to the Fund a certain percentage of the amount of net receipts or net payments for its brokerage trades of securities executed through the TPEx automated trade matching system within 10 days after the end of each quarter, until the end of that current year. The certain percentage shall be adopted after TPEx submission to and approval by the competent authority.
- The basic sum to be contributed is reduced to NT$1.5 million from the year following commencement of business. In addition, the securities firm shall each year contribute the above-specified percentage of the amount of net receipts or net payments for its brokerage trades of securities executed through the TPEx automated trade matching system in the previous year. Any shortfall or excess in the amount of contributions already paid shall be deposited with or collected from the TPEx before the end of January each year.
A securities firm engaged in the proprietary trading of securities through the TPEx automated trade matching system at its place of business is required to deposit a basic lump-sum amount of NT$2 million with the TPEx before commencing such activities. After commencing proprietary trading activities and from the first year thereafter, the firm is also required to make contributions in addition to the basic sum at a certain percentage of the amount of net receipts or net payments for its proprietary trades of securities executed through the TPEx automated trade matching system. The contributions shall be calculated and contributed as described in the preceding paragraph.
A securities firm that engages simultaneously in brokerage and proprietary trading of securities through the TPEx automated trade matching system at its place of business shall deposit the aggregate amount of the contributions required under the preceding two paragraphs.
For every additional domestic branch established by a securities firm, the securities firm shall deposit a basic lump-sum contribution of NT$1.5 million with the TPEx before business activities commence. The contribution will be reduced to NT$250,000 from the year after business commences.
For a securities firm that engages only in TPEx trading of bonds and is required to contribute to the Fund, the amount of contributions and the percentages at which contributions are calculated shall be one-tenth of the amounts referred to in paragraphs 1 to 4.
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| Article 4 |
The TPEx, in consideration of the need to provide service to and administer the market, shall allocate NT$100 million as a Special Clearing and Settlement Fund to support the operation of the Fund. Matters relating to management of the Special Clearing and Settlement Fund shall be governed by these Rules.
Following the public announcement and implementation of these Rules, the TPEx shall continue to allocate a certain percentage of business service fees collected (excluding fees for negotiated trades or trades through the Electronic Bond Trading System) to the Special Clearing and Settlement Fund within 10 days after the end of each quarter. However, the amount of the continued allocations shall be limited to NT$300 million.
The "specific percentage" of the preceding paragraph is 100 times the percentage approved by the competent authority pursuant to Article 3, subparagraph 1.
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| Article 5 |
Contributions to the Fund may only be made in cash.
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| Article 6 |
To facilitate administration of the Fund, a Joint Responsibility System Clearing and Settlement Fund Management Committee ("the Committee") shall be established.
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| Article 7 |
The Committee shall be composed of 11 members, to be appointed as follows:
- Eight representatives delegated by the Securities Investment Trust and Consulting Association of the R.O.C (SITCA).
- Three representatives delegated by the TPEx.
The Committee members shall appoint one Chairperson from among themselves. In addition, the Committee shall have one secretary and a certain number of staff, to be appointed or dismissed at the discretion of the Chairperson.
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| Article 8 |
The Committee has the following responsibilities:
- Administering the Fund and providing oversight, review, and approval for collection of shortfalls and refunds of excess amounts.
- Reviewing information on the financial and business performance of securities firms.
- Reviewing information passed on to the Committee regarding irregular circumstances at securities firms discovered by the TPEx through its market surveillance system. TPEx executives may be requested to appear to respond to questions and present statements if necessary.
- Depending on the outcomes of the reviews under subparagraphs 2 and 3, the Committee may proceed with the following dispositions:
- Assigning personnel to audit the financial and business activities of specific securities firms.
- Requiring a securities firm to make additional contributions to the Fund; the specific rules governing the requirement of additional contributions shall be adopted by the Committee.
- Reducing the amount of orders that a specific securities firm may place through the TPEx automated trade matching system, or restricting or suspending its trading activities, subject to TPEx regulations.
The TPEx shall execute the Committee's resolutions and report the results to the Committee.
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| Article 9 |
The Committee shall convene regular meetings once a month, and may hold extraordinary meetings whenever necessary. The chairperson shall serve as the convener of all meetings.
If the chairperson is unable to perform his or her duties, the chairperson may appoint one of the committee members to act on his or her behalf; if the chairperson is unable to appoint a delegate for any reason, the rest of the committee members shall appoint an acting Chairperson from among themselves.
A committee member who is unable to attend a meeting may appoint another committee member as deputy. However, each committee member may serve as deputy for only one other committee member.
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| Article 10 |
Passage of a Committee resolution shall require the assent of a majority of the members present at a meeting attended by at least two-thirds of the members.
Passage of resolutions involving the actions described in Article 8, paragraph 1, subparagraph 4, items B and C shall require the assent of two-thirds or more of the total committee members present at a meeting attended by two-thirds or more of the committee members.
A committee member appointed by the SITCA is prohibited from voting on resolutions if the committee member is an interested party with respect to a securities firm that is subject to a disposition under Article 8, paragraph 1, subparagraph 4. The same committee member also may not cast a vote as another member's deputy.
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| Article 11 |
The TPEx shall notify the Chairperson of the Committee on the same day if the Fund is utilized for the purposes described in Article 13.
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| Article 12 |
The TPEx shall immediately suspend the trading activities of any securities firm that does not make a required contribution to the Fund. The securities firm's trading status will be restored only after the contribution has been made.
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| Article 13 |
When a securities firm defaults on its clearing and settlement obligations to the TPEx, the TPEx shall first handle the default according to the relevant procedures. Any price difference and all related expenses arising from the settlement default will first be deducted from the defaulting securities firm's contributions to the Fund and accrued interest thereupon. When that is insufficient, the shortfall shall be covered from the following resources in the following order of priority:
- The Special Clearing and Settlement Fund allocated by the TPEx under Article 4, paragraph 2.
- Contributions made by the non-defaulting securities firms to the Fund under Article 3, plus allocations to the Special Clearing and Settlement Fund made by the TPEx under Article 4, paragraph 1, prorated according to contributions already made as of the date of utilization.
- Additional contributions to the Clearing and Settlement Fund made by the non-defaulting securities firms under paragraph 3.
After utilization of the amounts to be shared from the resources under subparagraphs 1 and 2 of the preceding paragraph, each securities firm and the TPEx shall replenish the resources utilized, on the scale set by the Committee.
The additional contributions to the Fund under paragraph 1, subparagraph 3 shall be handled by the TPEx as follows:
- The additional contribution to be made by each non-defaulting securities firm during the cooling-off period shall be capped at 100 percent of its required contribution to the Fund in the most recent period.
- The required contribution to the Fund in the preceding subparagraph means the contribution to Fund that securities firms make under Article 3 of these Rules.
The cooling-off period in these Rules means a period of 20 business days from the date a default by a securities firm occurs.
After the TPEx and other securities firms have covered the price difference and all related expenses arising from the settlement default by a securities firm under paragraph 1, the TPEx shall seek recovery of those amounts from the defaulting securities firm.
Any amounts that the TPEx recovers from the defaulting securities firm shall be used for reimbursement of the covered price difference and all related expenses among the respective securities firms and the TPEx at the ratios described in paragraph 1.
The TPEx may enter into a line of credit contract with a bank, and when utilizing the Fund pursuant to the preceding paragraph, may borrow from the bank for necessary expenditures while using Fund assets as collateral. Interest on the loan may be first deducted from the Fund and recovered from the defaulting securities firm at a later date.
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| Article 14 |
A non-defaulting securities firm may submit the following documents to the TPEx during the cooling-off period to apply for exit:
- Explanatory documents including the letter of application for exit and the board of directors meeting minutes.
- Supporting documents (as specified in the attached checklist) showing the payment of the capped additional contribution to the Fund under paragraph 3 of the preceding article, the cessation of participation in market transactions, the completed performance of account transfers and of clearing and settlement obligations with respect to funds and securities, and the full settlement of all accounts.
An application under the preceding paragraph shall be submitted before the 5 business days preceding and exclusive of the expiration date of the cooling-off period. The TPEx shall publicly announce the exit and report it to the competent authority for recordation no later than the final day of the cooling-off period.
When a securities firm applies for exit under paragraph 1, it shall simultaneously submit its application for termination of operations to the TPEx, which will forward it to the competent authority. If the competent authority issues a reply letter agreeing to the securities firm's termination of operations on the TPEx market, the securities firm, from the date of the TPEx's announcement of the exit, will no longer bear any obligation for any amount to be shared under paragraph 1, subparagraph 3 of the preceding article or for replenishment of the resources under paragraph 2 of the preceding article.
"Exit" in this article means a scenario in which a non-defaulting securities firm, during the cooling-off period, has paid the capped additional contribution to the Fund under paragraph 3 of the preceding article, ceased participation in market transactions, completed operations including the performance of account transfers and of clearing and settlement obligations with respect to funds and securities and the full settlement of all accounts, and has submitted its application for termination of operations to the TPEx for forwarding to the competent authority.
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Attachment-Taipei Exchange Checklist of Requirements for Securities Firms' Applications for Exit.odt
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| Article 15 |
If the Fund is subject to compulsory execution by a court or is utilized for any reason, the TPEx and every participating securities firm shall make immediate supplementary contributions to top up the Fund. The TPEx may handle any failure by a securities firm to make such a supplementary contributions in accordance with Article 12.
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| Article 16 |
The TPEx shall hold custody of the Fund in a dedicated bank account, and shall maintain subsidiary ledgers showing the contributions of respective securities firms. The Fund may be used for the following:
- Purchases of government bonds.
- Deposits in banks, or savings deposits with the postal administration.
- Other manners of utilization reported to and approved by the competent authority.
Interest accruing on contributions to the Fund shall be settled once every half year. By the end of January and July each year, the TPEx shall refund the interest or earnings received to each of the respective securities firms, after deducting taxes and the necessary expenses.
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| Article 17 |
When a securities firm terminates its TPEx trading contract, it may apply to the TPEx to recover its contributions to the Fund only after all outstanding transactions have been settled and all accounts have been closed. The same shall be true when the dissolution of a securities firm is approved or its business license is voided.
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| Article 18 |
The TPEx shall provide the competent authority with a written report of all receipts and expenditures by the Fund and the status of its utilization within 10 days after the end of each month, and shall notify the SITCA by copy.
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| Article 19 |
These Rules, and any amendments hereto, shall be publicly announced and implemented following consultation between the TPEx and the SITCA and submission to and approval by the competent authority.
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