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These Operating Procedures are adopted pursuant to Paragraph 3 of Article 2 of the Taiwan Futures Exchange Corporation Guidelines for Applications by Futures Commission Merchants to Continue Operation After Force Majeure Events.
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The main office and branch office of a futures commission merchant (below, "supported FCM") may respectively open supporting backup accounts (with an upper-case "Y" as identification code) in their own names at their main office, branch office, or the office of another futures commission merchant (below, "supporting FCM"). The supported FCM shall open one supported backup account at its own office (with an upper-case "Z" as identification code).
The provisions of contracts for establishing supporting backup accounts with other FCMs as referred to the preceding paragraph shall conform to the Taiwan Futures Exchange Regulations Governing the Brokerage Contracts of Futures Commission Merchants, and shall include the following additional items:
- Standards governing collection of margins and method of payment thereof.
- [Methods of] payment of various fees, handling of account errors, and assignment of liability.
- Method of clearing gains and losses on trading in the supporting backup account.
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(Deleted)
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Before using a supporting backup account for trading, a supported FCM shall transmit a Futures Trading Backup Account Report Form by fax to the Taiwan Futures Exchange Corporation ("this Corporation"), and shall report to this Corporation by mail, enclosing the above form, prior to the following business day.
A supporting FCM receiving a trading order from a supported FCM shall notify the supported FCM of the code number of the given order form, which the supported FCM shall record in the order form of the futures trader corresponding to that order as a basis for subsequent position adjustment.
Account errors occurring in supporting backup accounts shall be handled in accordance with Taiwan Futures Exchange procedures.
A supporting FCM shall deliver trading reports and gain/loss data for the supporting backup account to the supported FCM, who at close of the regular trading session shall produce a record of trading and deliver it to the futures trader.
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During the period a supported FCM uses a supporting backup account, this Corporation shall transfer positions in the supporting FCM's backup account to the supported FCM's supported account after close of the regular trading session. If there is any expiring futures trading contract position in the supporting FCM's backup account, this Corporation, before performing settlement upon expiration, shall transfer the position from the supporting FCM's backup account to the supported FCM's supported account. The supporting FCM's clearing member shall fill out and fax to this Corporation a Supporting Backup Account Position Transfer Report Form.
If the supported FCM discontinues use of the backup account, the supporting FCM's clearing member shall fill out and fax to this Corporation a Supporting Backup Account Position Transfer Report Form. The Taiwan Futures Exchange will perform position transfer operations following receipt of fax notification with the Futures Trading Backup Account Position Transfer Report Form.
Under the circumstances in the preceding two paragraphs, the supporting FCM's clearing member shall deliver the original of the Supporting Backup Account Position Transfer Report Form to this Corporation on the business day following completion of the position transfer.
Except where a supported FCM has otherwise reported to and received approval from this Corporation, it shall perform adjustment of the positions of each client's account from the supporting backup account prior to the trading hours of the regular trading session on the next business day following completion of the position transfer in accordance with Taiwan Futures Exchange position adjustment procedures.
Where an account error occurs in the results of position transfer or adjustment operations, an FCM shall duly undertake reporting of the account error and adjustment of the position in accordance with applicable Taiwan Futures Exchange procedures.
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Margin of a supporting backup account shall be calculated after the buyer's position and the seller's position have been offset against each other; margin of a supported backup account shall be calculated by addition of the seller's and buyer's positions.
Gains or losses on a supporting backup account position shall be figured into the supporting FCM's final settlement margin equity. For amounts payable and receivable on gains and losses between the supporting FCM and the supported FCM, the clearing member for the settlement margin payable may perform settlement margin transfer operations through this Corporation on the business day following the position transfer.
During the period in which a supported FCM makes use of a supporting backup account in accordance with Article 3, paragraph 2, subparagraph 3 herein, the figure for the supported FCM's excess settlement margin equity shall be added to that of the supporting FCM and calculated jointly with it.
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When a supporting FCM executes a trade order delivered by the supported FCM, the processing fees, Flexible Contract Surcharges, and clearing fees shall be paid by the supporting FCM.
A supporting FCM applying to transfer a position shall pay position transfer fees in accordance with regulations.
A supported FCM that performs a position adjustment shall pay position adjustment fees in accordance with regulations.
Collection of futures transaction tax shall be performed by the supported FCM on behalf of this Corporation in accordance with regulations.
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