| Article 1 |
These Regulations are adopted in accordance with Article 13, Paragraph 4 of the Rules Governing Management of the Futures Exchange and Article 31, Paragraph 4 of the Rules Governing Management of Futures Clearing Houses.
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| Article 2 |
Except where otherwise provided by law or regulation, procedures for special audits of futures commission merchants and clearing members and provision of guidance by this Corporation shall be governed by these Regulations. Matters not provided for herein shall be governed by the Operating Rules of the Taiwan Futures Exchange Corporation and other applicable regulations.
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| Article 3 |
Where any one of the following conditions applies to a futures commission merchant or a clearing member, this Corporation may dispatch personnel to conduct a special audit and provide guidance:
- A substandard rating under this Corporation's Regulations Governing Early Warning of Operational Risk of Futures Commission Merchants and Clearing Members.
- The existence of significant flaws in internal auditing procedures.
- Owner's equity of below 60% of minimum paid-in capital, or net capital after adjustment of less than 20% of the total aggregate margin required for outstanding positions.
- Inability to carry out clearing and settlement obligations.
- Failure to effect improvement after the issuance of a disposition by this Corporation or the Competent Authority due to a violation of the law, the Operating Rules of the Taiwan Futures Exchange Corporation, or other rules or regulations.
- The occurrence of unexpected incidents of a serious nature, or the issuance of directives by the Competent Authority.
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| Article 4 |
When auditors proceed to the entity being audited to perform a special audit, they shall produce the certification documents issued by this Corporation.
When executing their duties, auditors shall maintain a fair and impartial stance and a serious and rigorous attitude toward their work, and uphold their duty to maintain confidentiality.
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| Article 5 |
When performing a special audit, this Corporation may require a futures commission merchant or a clearing member to produce an assessment of its own performance, detailing the following matters and annexing relevant documents and statistical materials:
- Reasons for the occurrence of conditions in Article 3 above and an assessment of their impact.
- Whether related personnel are in violation of the law, and their liability.
- Financial condition and the names of personnel having custody of, and the locations of, account books and property items.
- A plan for improvements and resolution of problems.
- Other matters designated by this Corporation or the Competent Authority.
For plans for improvements and resolution of problems adopted pursuant to Subparagraph 4 above, the futures commission merchant or clearing member shall submit regular reports on implementation progress by the deadlines prescribed by this Corporation. This Corporation may require the futures commission merchant or clearing member to perform further self-assessment and improvements depending on the effectiveness of implementation of the plan.
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| Article 6 |
Futures commission merchants and clearing members may neither evade nor refuse auditing procedures undertaken by this Corporation; in case of evasion or refusal, trading or clearing operations may be suspended in accordance with Articles 128 and 129 of the Operating Rules of the Taiwan Futures Exchange Corporation.
Employees of futures commission merchants and clearing members shall cooperate in providing explanations of matters related to their professional duties during audits of those areas. Where they are involved in evading or refusing an audit, this Corporation may assess the severity of the situation and at its discretion may issue a warning or suspend the operations of the futures commission merchant or clearing member, in accordance with Article 134 of the Operating Rules of the Taiwan Futures Exchange Corporation.
"Evasion or refusal" as referred to in the preceding two paragraphs refers to any of the following:
- When, during an on-site audit, a futures commission merchant or clearing member deliberately creates an incident, or though not deliberately, nonetheless allows to occur an incident that could have been foreseen under the circumstances, or delays in immediately eliminating such an event when elimination would have been possible, thereby interfering with the smooth progress of the audit.
- When, during a document audit, the futures commission merchant or clearing member is late in producing relevant account books, bills, or materials that this Corporation has notified it by letter to produce.
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| Article 7 |
When performing a special audit and guidance of a futures commission merchant or clearing member, this Corporation may engage lawyers, accountants, or other persons familiar with futures operations who have no conflicts of interest to assist in auditing, guidance, and handling other necessary matters.
Fees arising out of the audit or guidance referred to in the preceding paragraph shall be borne by the futures commission merchant or clearing member.
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| Article 8 |
This Corporation may take any of the following measures after a special audit of a futures commission merchant or a clearing member:
- Assist with guidance and improvements required in operations.
- Handle under applicable regulations any violation of the Operating Rules of the Taiwan Futures Corporation or other rules or regulations.
- Report to the Competent Authority any violations of laws or regulations.
- Take any other necessary measures.
A futures commission merchant or clearing member that considers there to exist obstacles or difficulties with respect to compliance with the measures imposed on it by this Corporation, it may submit a response to this Corporation setting forth its reasons.
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| Article 9 |
This Corporation may handle violations of these Regulations by a futures commission merchant or clearing member or responsible person or employee thereof in accordance with applicable regulations.
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| Article 10 |
After submission to and ratification by the Competent Authority, these Regulations, and any amendments hereto, shall take force from the date of public announcement.
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