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Enforcement Letter

Organisation
Organisation Order of the Financial Supervisory Commission
Issue No.
Issue No. Financial-Supervisory-Securities-Firms 1140366761 CH
Issue Date
Issue Date 2026/01/06
Content
Content     Order of the Financial Supervisory Commission

    Issue date: 6 January 2026
    Issue no.: Financial-Supervisory-Securities-Firms-1140366761

  1. Pursuant to Article 22-4, paragraph 1, subparagraph 7 of the Offshore Banking Act, approval is granted that an offshore securities branch of a securities firm may conduct non-restricted purpose loan business.
  2. When an offshore securities branch conducts non-restricted purpose loan business, the customers shall be limited to natural persons, juristic persons, government entities, or financial institutions outside the territory of the Republic of China (ROC). Payments and receipts shall be limited to foreign currencies. Funds extended through financing may not be converted into New Taiwan dollars, and customers may not purchase foreign currency with New Taiwan dollars for the purpose of repayment.
  3. A securities firm applying for an offshore securities branch to conduct non-restricted purpose loan business shall meet the following qualifying conditions:
    1. The securities firm's head office has been approved by the FSC to conduct non-restricted purpose loan business.
    2. The conditions set out in Article 2 of the Regulations Governing the Establishment of and Compliance Matters for Offshore Securities Branches.
  4. A securities firm applying for an offshore securities branch to conduct non-restricted purpose loan business shall submit the following documents to the Taiwan Securities Association for it to review and forward to the FSC for approval:
    1. Board of directors meeting minutes.
    2. Internal control system (including operational rules and risk management mechanisms).
    3. Documents showing compliance with the preceding point.
    4. Other documents that the FSC requires to be submitted.
  5. An offshore securities branch conducting non-restricted purpose loan business shall be subject mutatis mutandis to the provisions of the Operating Rules for Securities Firms Handling Non-Restricted Purpose Loan, except with respect to the following matters:
    1. Procedures for applying to conduct non-restricted purpose loan business.
    2. Client eligibility restrictions.
    3. Scope of collateral and margin-call collateral.
    4. Custody and remittance of collateral.
    5. Standards for calculating the financing amount against collateral.
    6. Calculation standards for the market value of collateral for the purpose of the collateral maintenance ratio.
  6. When an offshore securities branch conducts the matters under subparagraphs B to F of the preceding point, it shall do so in accordance with the provisions of the Standard Directions for the Internal Control Systems of Securities Firms.
  7. When an offshore securities branch conducts non-restricted purpose loan business, the scope of collateral used for such purpose shall be limited to the following, and no pledge may be created on the collateral:
    1. Foreign stocks: stocks that are listed on U.S. securities exchanges and that furthermore are constituent stocks of the Dow Jones Industrial Average Index, the Nasdaq 100 Index, or the S&P 500 Index.
    2. Foreign exchange traded funds (ETFs): non-leveraged and non-inverse ETFs listed on U.S. securities exchanges, that furthermore have a primary investment focus on equities or bonds, rank among the top 500 by net asset value, and are among the top 300 by average daily trading volume over the preceding 30 days.
    3. Investment-grade foreign bonds: foreign bonds whose long-term debt credit rating, or the long-term debt credit rating of their issuer or guarantor, is at least BBB- as rated by Standard & Poor's Ratings Services, BBB- as rated by Fitch Ratings Ltd., or Baa3 as rated by Moody's Investors Service, Inc.
    4. Foreign currencies: U.S. dollars (USD), euros (EUR), Japanese yen (JPY), pounds sterling (GBP), Australian dollars (AUD), and Hong Kong dollars (HKD)
    5. Other collateral approved by the competent authority.
  8. The total financing amount extended to customers by a securities firm's head office and branches in conducting non-restricted purpose loan business, combined with the total amount extended by the securities firm's head office and branches in securities business loan and in margin purchases under securities margin purchase and short sale facilities, shall not exceed 400% of the company's net worth. The securities firm shall furthermore report the relevant information to Taiwan Stock Exchange Corporation on a daily basis.
  9. After an offshore securities branch has been approved by the FSC to conduct non-restricted purpose loan business, if the securities firm's regulatory capital adequacy ratio falls below 150 percent for 2 consecutive months, the securities firm shall suspend such business. It may resume it only after the ratio has met regulatory requirements for 3 consecutive months and resumption has been reported to and approved by the FSC. The same shall apply if the securities firm has obtained approval to conduct such business but has not yet commenced it.
  10. This Order is effective from this day forward.
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