| Article 22 |
|
| Article 23 |
In accepting discretionary futures trades from principals, a managed futures enterprise shall enter into mandate contracts for discretionary futures trading with the principals and deliver copies of the contracts to the custodian institution.
The managed futures enterprise shall enter into the mandate contracts for discretionary futures trading referred to in the preceding paragraph with principals severally, and may not accept joint mandates. The contracts shall set forth the following:
1. The names and addresses of the parties to the contract.
2. The managed futures enterprise's obligation to provide notice and explanations prior to the signing of the contract, pursuant to the provisions of the preceding article.
3. The conditions and time limits under which the contract may be rescinded after signing.
4. The funds consigned at the time discretionary trading is mandated.
5. Stipulations and amendments regarding basic futures trading policies and the scope of trading, with the scope of trading to state the names or classes of futures products traded.
6. The granting of and any limitations on the power to make and execute trading decisions.
7. The granting of and any limitations on the power to direct utilization of assets in discretionary trading.
8. The names of the personnel making discretionary trading decisions and their deputies.
9. Stipulations regarding designation of the custodian institution and its execution of related matters.
10. The name of the futures broker consigned for trading.
11. Confidentiality obligations and the duty of care of a good custodian.
12. Reporting obligations.
13. The fees that shall be borne by the principal, including compensation of the managed futures enterprise, and the means of calculation and the time and method of payment of the same.
14. The date on which the contract takes effect and its effective term.
15. Provisions for amendment to and termination of the contract.
16. The obligation to provide notification in the event of major changes and the means of notification.
17. Provisions regarding settlement obligations after termination of the mandate relationship.
18. Provisions regarding handling of breach of contract.
19. Provisions for dealing with bankruptcy or dissolution, or dispositions requiring suspension of business or voidance or revocation of the business permission.
20. Provisions for dispute resolution and the relevant jurisdictional court.
21. Other necessary provisions in regard to the rights and obligations of the parties to the contract.
The full amount of the discretionary trading funds consigned pursuant to subparagraph 4 of the preceding paragraph shall be delivered in a lump sum by the principal to the custodian institution for handling of related matters; the same shall be true at the time of any increase in the funds consigned.
The basic futures trading policies and the scope of trading referred to in subparagraph 5 of paragraph 2 shall be carefully drafted, taking into account the principal's financial resources, trading experience and objectives, and restrictions prescribed by acts and regulations.
The power to direct utilization of assets in discretionary trading referred to in subparagraph 7 of paragraph 2, where it involves the utilization and scope of idle funds, shall be determined by the SFC.
Where the futures broker consigned for trading referred to in subparagraph 10 of paragraph 2 and the managed futures enterprise are mutually invested enterprises or where a controlling or subordinate relationship exists, such facts shall be disclosed in the contract.
"Compensation of the managed futures enterprise," as used in subparagraph 13 of paragraph 2, may include incentive fees collected in accordance with SFC regulations.
Termination of the contract as referred to in paragraph 2, subparagraph 15 may be effected at any time during the term of the contract upon written notice from the principal; termination by the consignee shall be effected through written notice to the principal one month prior to termination.
In regard to the methods for dispute resolution as referred to in subparagraph 20 of paragraph 2 and the mandate contract for discretionary futures trading, the Federation of Futures Industry Associations shall adopt regulations governing mediation procedures and draft a contract template, which shall be submitted to the SFC for recordation; the same shall apply for any amendments thereto.
The mandate contract for discretionary futures trading and the related materials referred to in paragraph 1 shall be retained for a period of five years after the extinguishment of the mandate relationship, provided that where a dispute occurs, they shall be retained until the resolution of the dispute. |
| Article 24 |
|
| Article 25 |
In accepting consignments from a principal for discretionary futures trading, the managed futures enterprise may not in any way or for any reason take custody of the trading funds consigned by the principal or the subject assets obtained with those funds.
Where a managed futures enterprise accepts consignments for discretionary futures trading, the principal shall designate a custodian institution and enter into a separate mandate contract with the custodian institution, appointing the custodian institution to undertake the opening of accounts, deposits of margins and premiums, clearing and settlement, account servicing and other related matters.
The custodian institution shall enter into mandate contracts as referred to in the preceding paragraph severally with each principal, and may not accept joint mandates.
In carrying out the operations referred to in paragraph 2, the custodian institution shall first review the scope and limitations of the mandate contract for discretionary futures trading.
The content and contract template for the mandate contract referred to in paragraph 2, and any amendments thereto, shall be drafted by the Federation of Futures Industry Associations and submitted to the SFC for recordation. |
| Article 26 |
Custodian institutions designated by principals shall be limited to the following:
1. Banks approved by the Ministry of Finance for custodial operations with a credit rating at a specified level or higher from a credit rating agency approved or recognized by the SFC.
2. Futures clearing houses approved by the SFC for the custodial operations referred to in paragraph 2 of the preceding article.
At the time the principal designates a bank of the kind referred to in the preceding paragraph as custodian institution, the funds consigned for trading shall be deposited by the principal for custody with the bank, and the bank consigned to carry out the related matters set out in paragraph 2 of the preceding article.
At the time the principal designates a futures clearing house as referred to in paragraph 1, subparagraph 2 as custodian institution, the funds consigned for trading shall be deposited by the principal in a bank deposit account in the principal's name, and the given futures clearing house consigned to carry out the related matters set out in paragraph 2 of the preceding article. |
| Article 27 |
|
| Article 28 |
|
| Article 29 |
|
| Article 30 |
|
| Article 31 |
|
| Article 32 |
|
| Article 33 |
|
| Article 34 |
|
| Article 35 |
|
| Article 36 |
|
| Article 37 |
|
| Article 38 |
|
| Article 39 |
|
| Article 40 |
|
| Article 41 |
|