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Order of the Financial Supervisory Commission
Issue date: 25 October 2024
Issue no.: Financial-Supervisory-Securities-SITC-1130384919
- Pursuant to Article 3, paragraph 3, subparagraph 3 and Article 4, paragraph 3, subparagraph 3 of the Securities Investment Trust and Consulting Act, approval is granted that securities investment trust enterprises (SITEs) and securities investment consulting enterprises (SICEs) (excluding those operated concurrently by another enterprise) may operate the following business:
- A SITE or SICE may accept a mandate by a foreign asset management institution, with respect to that institution's offshore fund product that does not have the nature of a securities investment trust fund, to sell and offer consulting on such product within Taiwan to the professional institutional investors and high-asset customers listed below. For each offshore fund product not having the nature of a securities investment trust fund, the total number of high-asset customers shall not exceed 99 persons, and the product shall not involve New Taiwan dollar foreign exchange settlement.
- The term "professional institutional investor" means a professional institutional investor conforming to Article 4 of the Financial Consumer Protection Act.
- The term "high-asset customer" means a juristic person or natural person who meets all of the conditions listed below and has applied in writing to the SITE or SICE to be a high-asset customer:
- The customer provides proof of financial capacity showing a net value of investable assets and/or value of insurance products equivalent to NT$100 million or above; or has investable assets with the SITE or SICE with a net value equivalent to NT$30 million or above and provides a statement of financial capacity declaring holdings of investable assets with a net value and/or insurance products with a value equivalent to NT$100 million or above.
- The SITE or SICE confirms that the natural person, or the person(s) authorized by the juristic person to conduct trades, possesses adequate professional knowledge and trading experience with respect to financial products and confirms that the natural person or juristic person has adequate risk-bearing capacity.
- The customer agrees to sign on as a high-asset customer after fully understanding that the SITE or SICE may be exempted from liability for providing financial products or services to high-asset customers, and to natural persons or juristic persons under applicable laws and regulations relating to professional investors.
- The term "investable assets" above means financial assets including cash deposits, domestic or foreign securities or short-term bills (including bonds or short-term bills purchased through repo or reverse repo transactions), structured products, and gold passbooks. The term "net value" means the amount of the customer's investment principal after deducting the amount of collateralized financing or pledged loans. If a financial asset has an open market price or reference price, the net value shall be calculated as the amount of its value measured at its market price or reference price after deducting the amount of collateralized financing or pledged loans. The term "value of insurance products" means the policy value of investment-linked insurance or non-forfeiture value of non-investment-linked life insurance.
- A natural person or juristic person that already has professional investor status and meets the conditions of item B.a and is confirmed by the SITE or SICE as having adequate risk-bearing capacity may apply in writing to the SITE or SICE to be a high-asset customer.
- With respect to the conditions required to be met by a high-asset customer, the SITE or SICE firm shall fulfill its due diligence responsibilities and obtain reasonable and credible supporting evidence from the customer and conduct review and approval in accordance with the know-your-customer procedures and customer acceptance criteria established by the SITE or SICE.
- One having the status of high-asset customer under item B or D shall be deemed to be a natural person or juristic person with professional investor status as provided under relevant laws or regulations governing the business of the financial products or services provided by the SITE or SICE.
- The SITE or SICE shall carry out follow-up review at least once every 2 years in accordance with the adopted follow-up review procedures to ensure that the customer continues to meet the eligibility conditions for high-asset customers. The SITE or SICE shall regularly evaluate the net value of investable assets the customer has with the SITE or SICE. If it finds that the customer's net value of investable assets does not reach the standards of financial capacity required for high-asset customers, it shall obtain the customer's written confirmation on whether the customer wishes it to continue to provide additional financial products or services applicable for high-asset customers.
- A high-asset customer may apply in writing to the SITE or SICE to terminate the customer's status as a high-asset customer.
- A SITE or SICE may accept a mandate by a foreign asset management institution, with respect to that institution's offshore fund product, to provide the following services to the operator of a bank's offshore banking branch (OBU) or of a securities firm's offshore securities branch (OSU), provided that it does not involve customers of the OBU or OSU and does not involve New Taiwan dollar foreign exchange settlement:
- Proactively contact the operator and, based on the foreign asset management institution's product content, market trends, market demand, and the business needs of the operator, provide the operator with relevant fund product sales strategies, product promotion and descriptions, and assist in the launch of the fund product and internal education and training.
- Proactively contact and put the foreign asset management institution in touch with the operator and, when the foreign asset management institution comes to Taiwan, or by means of video conferencing, accompany it in meetings or visits with the operator. Also, cooperate with the foreign asset management institution in organizing seminars to offer operators information on market trends, investment strategies, and product introductions.
- Assist in accepting, processing and verifying trade orders for the fund product of the operator and other related administrative matters.
- After the relevant fund product has been launched, proactively provide fund product information, internal education and training, and consulting services, based on the operations of the foreign asset management institution and the needs of the operator.
- Provide translation services, including submission and translation of product, trade, and other information, and direct translation of real-time communication.
- A SITE or SICE may accept a mandate by a foreign asset management institution, with respect to that institution's offshore fund product that does not have the nature of a securities investment trust fund, to provide the services listed in the preceding subparagraph to a bank or securities firm, provided that it does not involve customers of the bank or securities firm and does not involve New Taiwan dollar foreign exchange settlement, and shall, before providing the services, sign a mandate contract with the foreign asset management institution.
- A SITE or SICE shall comply with the following when conducting the business under the preceding point:
- The SITE or SICE shall meet the qualifications for a master agent set out in Article 9 of the Regulations Governing Offshore Funds.
- A SITE or SICE that will conduct the business under subparagraph (1) of the preceding point shall sign a mandate contract with the foreign asset management institution or its designated institution, regarding the matters for which the SITE or SICE is mandated with respect to the specific offshore fund product, and the contract shall specify that no other institution may be mandated in Taiwan to handle the matters for that fund product.
- A SITE or SICE that will conduct the business under subparagraph (3) of the preceding point shall confirm that the bank or securities firm is one that is entitled under FSC regulations to handle entrusted investment or trading, under a trust or brokerage trading arrangement, of offshore funds that do not have the nature of a securities investment trust fund.
- The first time that a SITE or SICE applies to conduct the business under any subparagraph of Point 1, it shall apply to the FSC for approval, submitting the documents listed below. If there is any subsequent change to an approved item, there is no need to apply for approval again. However, within 10 business days from the date of the change, the original application letter and a statement of the reason for the change shall be submitted to the Securities Investment Trust and Consulting Association of the R.O.C. (SITCA).
- Documents showing the SITE or SICE meets the qualifications for a master agent set out in Article 9 of the Regulations Governing Offshore Funds.
- Profile of the mandating foreign asset management institution.
- The internal control system for engaging in the relevant business, including but not limited to rules with respect to selection and contract-signing procedures for foreign asset management institutions and products, full know-your-customer procedures, product evaluation and review, business solicitation, consultation and sales, information verification and segmentation, trade instructions, payment collection, payment and receipt of funds, delivery of reconciliation statements, education and training (including internal staff education and training and the operating principles for providing education and training for OBUs, OSUs, banks, or securities firms), dispute resolution, and execution of other service operations, etc.
- Those applying for the business under subparagraph (2) or subparagraph (3) of Point 1 must also provide a list of the OBUs, OSUs, banks, or securities firms and the operation items and contents.
- A SITE or SICE that has been approved to engage in business under Point 1 shall, by the 10th business day of each month, perform information filing in accordance with SITCA rules. One that has been approved to engage in business under Point 1, subparagraph (1) additionally shall, within 5 days from the date of completion of payment of the fund price, submit to SITCA a Statement of Investment Positions in an Offshore Fund That Does Not Have the Nature of a Securities Investment Trust Fund (see format in Attachment).
- When conducting business under Point 1, a SITE or SICE may not engage in general advertising or public inducement.
- A SITE or SICE already conducting business under subparagraph (1) or (2) of Point 1 before this Order takes effect does not need to apply to the FSC for approval again. If there is any subsequent change to an approved item, it shall do as provided in Point 3.
- This order is effective from this day forward.
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