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Operating procedures for the handling of undeliverable trade reports and reconciliation statements by futures commission merchants ("FCM")
- If an FCM sends a reconciliation statement to a futures trader that has conducted no trades, has no open positions, and whose margin and premiums are unchanged in the current month, upon receiving notification from a member of the public that that futures trader does not reside at the address to which the statement was sent or a postal unit returns the reconciliation statement sent by the FCM, that FCM shall promptly notify that futures trader via the telephone contact number listed in the account opening contract, and request that it conduct a change of correspondence address, or collect the reconciliation statement by some other method, within the agreed-upon time period. In addition, the FCM shall proceed pursuant to these Operation Directions.
- A synchronous recording and written record of the telephone notification of the preceding paragraph shall be retained. That written record shall include the account number, name, and contact telephone number of the futures trader; the time at which notification was received from a member of the public or the postal unit returned the reconciliation statement; the time at which the responsible staff member effected telephone notification and the result of that telephone notification; and the signature or seal of the responsible staff member; it shall also be reviewed, and signed or sealed by the proper supervisor (managerial officer).
- An FCM that is unable to contact a futures trader shall simultaneously send the reconciliation statement by registered mail with return receipt to the futures trader's correspondence address and household registration address, and proceed in accordance with the circumstances set forth below:
- If the reconciliation statement sent to the correspondence address is not returned, it shall still send the reconciliation statement to the futures trader's correspondence address pursuant to regulations.
- If the reconciliation statement sent to the correspondence address is returned, it shall re-send the reconciliation statement to the futures trader's household registration address.
- If the reconciliation statement sent to the correspondence address and that sent to the household registration address are both returned, after obtaining evidentiary documentation issued by a postal unit stating that no such person (i.e. that futures trader) exists, there is no forwarding address, or the mailed statement was unclaimed by the deadline, it may be temporarily exempted from sending reconciliation statements.
- If an FCM sends a trade report or a reconciliation statement to a futures trader that has conducted trades in the current month, but the trade report or reconciliation statement is returned, the FCM shall contact that futures trader via the telephone contact number listed in the account opening contract, or by other types of contact method. If the FCM is unable to contact the futures trader, it shall on its own adopt a communication mechanism for when that type of futures trader places an order or applies for withdrawal, and shall implement the operations under rules and regulations related to client credit check and Know Your Client (KYC) procedures, risk control, and anti-money laundering and countering terrorism financing.
- The FCM shall retain all evidentiary documentation including all records of notification or return, written records of telephone notification, records regarding registered mail with return receipt, and the reconciliation statement for which the postal unit acknowledges receipt or which it returns that the FCM is required to obtain so that it is permitted to send the reconciliation statement to the futures trader's household registration address or temporarily be exempted from sending reconciliation statements. The required retention period for that documentation shall be the same as that of the account opening contract, and it shall retain the telephone notification recording record for no less than 1 year.
- The FCM shall, at the end of each month, summarize changes to the list of futures traders for which it may be exempted from sending reconciliation statements (format as per attachment Table 1), and submit it to this Corporation for recordation before the fifth day of the following month.
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Operating procedures for FCMs to adjust the frequency with which reconciliation statements are sent and to cancel accounts
- An FCM may, on the last day of each fiscal year, inspect the accounts of futures traders that meet all of the following conditions, and send the reconciliation statement for December of the current fiscal year to that futures trader via registered mail with return receipt before the fifth day of the first month of the following fiscal year; it may be temporarily exempted from sending the reconciliation statements for the remaining months of the following year:
- No trades were conducted in the most recent year, and there are no open positions, in any of the futures trader's trading accounts.
- There were no changes to the margin or premiums in the most recent fiscal year in any of the futures trader's trading accounts.
- The total balance of margin and premiums in all of the futures trader's trading accounts is NT$10,000 or less.
- An FCM may, on the last day of each fiscal year, inspect the accounts of futures traders that meet all of the following conditions, and send the reconciliation statement for December of the current year to that futures trader via registered mail with return receipt before the fifth day of the first month of the following fiscal year. Thereafter, the FCM is temporarily exempted from sending reconciliation statements:
- No trades were conducted in the most recent three fiscal years, and there are no open positions, in any of the futures trader's trading accounts.
- There were no changes to the margin or premiums in the most recent three fiscal years in any of the futures trader's trading accounts.
- The total balance of margins and premiums in all of the futures trader's trading accounts is NT$10,000 or less.
- Before it sends the reconciliation statement for December of the current year to the futures trader pursuant to the preceding two paragraphs, an FCM shall send notification by letter, or specify on the reconciliation statement, regarding the conditions under which an FCM is permitted to send a reconciliation statement only once per fiscal year and is temporarily exempted from sending reconciliation statements, and shall request that the futures trader conduct complete withdrawal of any balance of margin and premiums that belong to it as soon as possible.
- Operations for cancellation of dormant accounts:
- The FCM may inspect dormant accounts which have had no trades conducted for a long time and have no open positions and no margin or premium balance remaining. If after inspection the FCM wishes to terminate a futures trader's contract and cancel the trader's account, the FCM may at its discretion notify the futures trader in person or via telephone, letter, fax, email, text message, or other electronic means.
- After the aforementioned notice has been effectively served, if the futures trader does not express objection within 1 month, the FCM may terminate the contract and cancel the account.
- The FCM shall adopt rules relating to the determination of dormant accounts and notices thereof. The related rules shall expressly state the requirement to scrupulously retain relevant supporting information or records showing that the notice to the futures trader of termination of the contract has become legally effective and shall include the method for notifying a futures trader of termination of the contract, the supporting documents that must be retained, the periods for preservation of the various documents, channels for complaints by futures traders, the procedures for handling complaints, and other relevant matters.
- The FCM may stipulate in the brokerage contract with a futures trader that the FCM may proceed directly to terminate the contract and cancel the account if no trades have been conducted for 3 consecutive years and there are no open positions and no margin or premium balance remaining in the account.
- An FCM shall prepare summary lists of the futures traders for which it sends only one reconciliation statement per fiscal year and those for which it is exempted from sending reconciliation statements and of futures traders whose accounts have been canceled (formats as per attached Table 2, Table 3, and Table 4); in the following fiscal year, the FCM shall re-state each month whether a futures trader on the aforecited list complies with the provisions of these Operation Directions and the FCM has resumed sending reconciliation statements each month, and after having that list reviewed and signed or sealed by the proper supervisor (managerial officer), retain it on file for recordation.
- An FCM shall retain all evidentiary documentation, including records of mailings sent by registered mail with return receipt, postal unit acknowledgements of receipt, the supporting information or records relating to the cancellation of dormant accounts, the lists of futures traders for which it only sends reconciliation statements once per fiscal year and the lists of futures traders for which it is exempted from sending reconciliation statements, and the summary lists of futures trader account cancellations. The required retention period for that documentation shall be the same as that of the account opening contract.
- If an FCM is permitted to only send a reconciliation statement once per fiscal year, or is temporarily exempted from sending reconciliation statements, pursuant to regulations it still must prepare the reconciliation statement and provide it to the futures trader upon request at any time.
- When an FCM conducts the sending of reconciliation statements and the cancellation of accounts pursuant to the operating procedures for FCMs to adjust the frequency with which reconciliation statements are sent as set forth in Point 2 of these Operation Directions, if the circumstances are as set forth in the operating procedures for the handling of undeliverable reconciliation statements by an FCM of Point 1 of these Operation Directions, it shall proceed pursuant to the latter operating procedures.
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An FCM shall incorporate these Operation Directions into its internal control system and internal audit operations, and after submitting them for adoption by the board of directors, the FCM's internal auditors shall thoroughly review them and retain a record.
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