| Article 44 |
Except where provided otherwise, a futures commission merchant shall comply with the following provisions when conducting futures trading on behalf of customers:
- When a futures commission merchant processes account opening, it shall enter into a brokerage contract with the principal specifying the account opening date, and the name, gender, age, profession, address, telephone number, and personal identification card number of the principal; where the principal is a juristic person it shall specify its name, address, business administration number, and the respective rights and obligations of the futures commission merchant and the principal, and shall recognize these Rules, relevant public announcements, and the Rules Governing Brokerage Contracts of Futures Commission Merchants as being integral parts of the contract.
- The principal shall open the account by appearing in person with his or her national identity card and affixing his or her signature or seal on site at the place of business, except in the following circumstances:
- If the principal applies with the Futures Commission Merchant to conduct the pre-account opening procedures outside its place of business.
- If the principal handles the account opening by written correspondence or electronically.
- If the principal is a juristic person, the juristic person and the representative shall affix their signatures or seals on the brokerage contract and shall issue a power of attorney.
- The futures commission merchant shall assign an account number to the principal.
- When the principal signs the brokerage agreement, a seal specimen or signature card of the principal shall be kept. The handling of futures trading procedures shall be effected against the same seal specimen or signature. However, if the Taiwan agent and custodial institution of an offshore overseas Chinese or foreign national are the same person, the agent account opening and settlement seal of the custodian institution may be taken as the specimen seal.
- If the principal is an ROC national without household registration who is not an onshore overseas Chinese, the principal shall bring in person a Taiwan Area Residence Certificate sufficient to prove their status as an ROC national without household registration, and shall submit an ROC passport or other documentation sufficient to prove possession of ROC nationality, as well as other identity document sufficient to identify the person (e.g., National Health Insurance Card, driver's license, or student ID) to complete account opening procedures and sign on the spot.
- When a futures commission merchant processes account opening, the principal shall submit documents necessary for identity verification as required under the Regulations Governing Anti-Money Laundering of Financial Institutions.
The TAIFEX shall adopt guidelines for futures commission merchants accepting principals' applications for conducting pre-account opening procedures outside the places of business of the futures commission merchants, and for the processing of account opening procedures by written correspondence or electronically.
(Deleted)
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| Article 44-1 |
When a futures commission merchant accepts to open an account for a custodian institution representing a principal that mandates the [futures commission merchant] to conduct discretionary futures trading, the names of both principal and mandatary shall be specified in the account name, a brokerage contract for account opening and discretionary futures trading shall be signed, and an agreement shall be entered into for the custodian institution to be the agent for collection/payment and settlement of margin and premium, and the following documents shall also be submitted:
- A photocopy of the written agreement signed by the principal, mandatary, and custodian institution regarding their respective rights and obligations. However, if a Chinese-language legal opinion issued by a lawyer may be substituted for the written agreement detailing the rights and obligations of the three parties pursuant to Article 17, paragraph 7 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises of the Securities Investment Trust and Consulting Association of the ROC (the "Discretionary Investment Business Regulations"), then those provisions shall be followed.
- Where the principal mandating the discretionary futures trading is a natural person, a photocopy of his/her National Identity Card shall be submitted. Where the principal mandating the discretionary futures trading is a juristic person or other institution, a photocopy of its juristic person registration document, photocopy of the notice of assignment of uniform ID number for establishment of tax withholding entity issued by the tax authority (a profit-seeking enterprise may be exempt from submitting such copy of notice), and photocopy of the National Identity Card of the representative of the juristic entity shall be submitted.
- Photocopies of the company registration documents of the mandatary for the discretionary futures trading and the custodian institution, and photocopies of the National Identity Card of the responsible persons thereof.
- A photocopy of the National Identity Card of the person who makes decisions in the discretionary trading (including any deputy thereof) and of any other associated persons who execute trades, and original copy of power of attorney issued by the discretionary futures trading mandatary to the aforesaid personnel.
- The letter containing instructions from a foreign qualified institutional investor, when that investor, pursuant to Article 17, paragraph 10 of the Discretionary Investment Business Regulations, applies to convert a futures trading account originally used for its own trades to a discretionary futures trading account, or when the investor, after converting the account from one for its own use to a discretionary futures trading account, reverts to a futures trading account for its own use.
A futures commission merchant shall not accept a mandate to engage in futures trading until after the procedures for opening of a new account for discretionary futures trading as prescribed in preceding paragraph have been completed and the required account-opening information and account number have been entered into the computer files of the TAIFEX. In case of any change, after account-opening, in the person who makes decisions in the discretionary trading (including any deputy thereof) or any other associated persons who execute trades, a mandate to engage in futures trading shall not be accepted unless and until the required documents listed in subparagraph 4 of paragraph 1 have been updated.
Where the principal mandating the discretionary futures trading consists of multiple persons who are jointly mandating the same managed futures enterprise, futures trading may not begin until after identity registration has been carried out by submitting the applicable documents in accordance with the TAIFEX's Directions for Registration Processing for Managed Futures Enterprises Accepting Joint Mandates for Discretionary Futures Trading.
Where the principal mandating the discretionary futures trading consists of multiple persons who are jointly mandating the same managed futures enterprise, the identity documents to be submitted under paragraph 1, subparagraph 2, are the identity document of each principal and the Joint Mandate ID Number document issued by the TAIFEX in accordance with the Directions for Registration Processing for Managed Futures Enterprises Accepting Joint Mandates for Discretionary Futures Trading. Among the account-opening information required to be entered into the computer files of the TAIFEX under paragraph 2, the "ID/uniform ID number" shall be the Joint Mandate ID Number assigned by the TAIFEX in accordance with the Directions for Registration Processing for Managed Futures Enterprises Accepting Joint Mandates for Discretionary Futures Trading.
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| Article 44-2 |
An overseas Chinese or foreign national, or mainland area investor, that engages in domestic futures trading shall appoint an agent or representative within the territory of the ROC to file tax returns and pay taxes on his or her behalf. Documents evidencing such appointment shall be completed and submitted to the competent tax authority for approval. In case of a change of agent or representative, the successor agent or representative shall prepare another set of such documents evidencing its appointment to file and pay taxes on behalf of the client, and shall submit such documents to the competent tax authority for approval.
The documentation evidencing the mandate relationship for the purpose of filing tax returns and paying taxes as described in the preceding paragraph shall be filled out in the form prescribed by the Ministry of Finance.
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| Article 44-3 |
An offshore overseas Chinese or foreign national, or mainland area investor, that engages in domestic futures trading shall appoint a local agent or representative to carry out procedures such as opening an account for domestic futures trading, exercising rights related to futures trading, applying for foreign exchange settlement, and paying taxes.
The required qualifications for the agent or representative referred to in the preceding paragraph are as follows:
- Requirement of an agent:
- If a natural person: Must have legal capacity. If the person is a natural person who is an overseas Chinese or a foreign national, he must be living within ROC territory and possess an Overseas Compatriot Identity Certificate, or an ROC passport with an Overseas Compatriot Identity Endorsement, or an Alien Resident Certificate.
- If a juristic person: Must be established in accordance with ROC acts and be qualified to act as an agent.
- If a foreign juristic person: Must have established a branch company within ROC territory and be qualified to act as an agent.
- Requirement for a representative: Must be the representative at a representative office established in the ROC, or be the responsible person at a branch office.
Where an agent is either a juristic person or a foreign juristic person as set forth under subparagraph 1, items 2 and 3 of the preceding paragraph, one natural person must be designated to carry out the services of agent.
A futures commission merchant may act as agent for an offshore overseas Chinese or foreign national, or mainland area investor. The matters and scope for which it may serve as agent shall be as prescribed by the competent authority. Before acting as agent for an offshore overseas Chinese or foreign national, or mainland area investor, a futures commission merchant shall verify that the appointing offshore overseas Chinese or foreign national, or mainland area investor, has not opened with a custodian bank any custodial securities trading account, NT Dollar deposit account, or securities custody account. If it has opened such an account, it shall cancel the account and obtain written evidence of the cancellation.
When a futures commission merchant acts as agent for an offshore overseas Chinese or foreign national, or mainland area investor, it may not act as an agent for the trading of securities, opening of an NT Dollar deposit account, or conducting of physical delivery. If any likelihood arises that trading by the offshore overseas Chinese or foreign national, or mainland area investor, involves physical delivery, the futures commission merchant acting as agent shall immediately notify the offshore overseas Chinese or foreign national, or mainland area investor, to liquidate the position or to appoint a custodian bank to replace it as agent. If the agent has not been replaced in time and exercise/assignment is made requiring physical delivery, the futures commission merchant acting as agent, within 3 business days from obtaining the deliverables, shall complete the disposal of them and deposit the funds obtained into the customer margin account with the futures commission merchant engaged for futures trading by the offshore overseas Chinese or foreign national, or mainland area investor.
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| Article 44-4 |
Overseas Chinese and foreign nationals, and mainland area investors may engage in domestic futures trading only after submitting the relevant documents and carrying out identity registration as required in accordance with the Operation Directions for Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors for Registration to Invest in Domestic Securities or Trade Domestic Futures.
Offshore overseas Chinese and foreign nationals that have mandated an offshore foreign futures commission merchant that has opened an omnibus account with a futures commission merchant to engage in domestic futures trading through the omnibus account also may engage in domestic futures trading only after submitting the relevant documents and carrying out identity registration as required in accordance with the Operation Directions for Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors for Registration to Invest in Domestic Securities or Engage in Domestic Futures Trading. However, this requirement does not apply to those engaging in domestic futures trading through an undisclosed omnibus account.
When carrying out the registration under paragraph 1 or paragraph 2, offshore overseas Chinese and foreign nationals, and mainland area investors, shall submit an application form together with all the following documents:
- a power of attorney for the agent or letter of appointment for the representative;
- identity documents conforming to the provisions of Article 3, paragraph 4;
- other documents as required by the Competent Authority or TAIFEX.
The identity registration procedures under paragraph 1 or paragraph 2 are not required for those who have already carried out identity registration with the Taiwan Stock Exchange Corporation ("TWSE") and obtained the qualification for investing in domestic securities.
When an overseas Chinese, foreign national, or mainland area investor duly carries out the identity registration, the TAIFEX may reject the application if any one of the following situations exists:
- the registered documents or particulars thereof are found to be fraudulent or untrue;
- the registered documents are incomplete or have not been fully filled out, and the applicant has failed, upon notification by the competent authority, to provide the missing information within the specified time period; or
- the registrant has committed a major violation of applicable futures laws or regulations;
- the TWSE or TAIFEX cancels the registration pursuant to the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals, Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors, or the Directions for Futures Trading by Overseas Chinese and Foreign Nationals.
After an overseas Chinese, foreign national, or mainland area investor has registered, TAIFEX may reject the registration if any one of the circumstances set out in the preceding paragraph is discovered. If the registration has already carried out, the TAIFEX may cancel the registration, and notify any futures commission merchants that has opened an account to immediately cease accepting new orders from that investor; provided, this restriction does not apply to new orders undertaken to dispose of pre-existing transactions. When the claims and liabilities of the account are fully settled, the futures commission merchant shall cancel the account immediately.
An offshore overseas Chinese or foreign national referred to in the proviso to paragraph 2 may engage in domestic futures trading only after information including that investor's Chinese and English name, identity category, date of establishment or birth, and nationality or area have been reported to the TAIFEX by the offshore foreign futures commission merchant, the domestic agent of the offshore foreign futures commission merchant, or the futures commission merchant that processed the opening of the omnibus account. When necessary, the TAIFEX may require the submission of statements or registration of identity.
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| Article 44-5 |
A futures commission merchant processing account opening for an onshore overseas Chinese or foreign national to engage in domestic futures trading shall obtain the documents listed below from the onshore overseas Chinese or foreign national before it may open an account:
- Photocopy of certification of completion of identity registration;
- Overseas Chinese and foreign natural persons: an Overseas Compatriot Identity Certificate and a passport, or an ROC passport with an Overseas Compatriot Identity Endorsement, or an Alien Resident Certificate and a passport;
- Foreign institutional investors: Ministry of Economic Affairs recognition certificate, company registration certification, business registration certification, and national identity card (or alien resident certificate or passport) of the responsible person.
A futures commission merchant that processes the account opening for domestic futures trading of an offshore overseas Chinese or foreign national, or of a mainland area investor, shall open such account only after receiving the following documents submitted by the offshore overseas Chinese or foreign national, or mainland area investor, and signed by its respective domestic agent or representative:
- Photocopy of certification of completion of identity registration.
- Photocopy of the national identity card, alien resident certificate or company registration (or amendment registration) certification of the domestic agent or representative.
- The photocopy of the contract with the domestic agent or power of attorney for the agent, the content of which shall comply with the applicable provisions of these Rules and the laws and regulations of the competent authority.
The photocopy of the contract in the preceding subparagraph 3 may be replaced by a statement submitted by the domestic agent. The statement shall state that the content of the contract entered into between the offshore overseas Chinese or foreign national, or mainland area investor, and the domestic agent complies with the applicable provisions of these Rules and the laws and regulations of the competent authority.
A futures commission merchant processing omnibus account opening for an offshore foreign futures commission merchant to engage in domestic futures trading shall comply with the preceding paragraph 2 and paragraph 3 and additionally shall obtain the following documents which are signed or sealed by the domestic agent before it may open an account:
- certification that it is a qualified member of a foreign futures exchange recognized by the competent authority;
- statement that within the past 1 year, it, in its home country, or its branch unit in Taiwan, has not been sanctioned by a relevant authority or self-regulatory institution for securities or futures by the suspension of the securities or futures brokerage business of its head (or a branch) office;
- statement that within the past 3 years, it has not breached a futures trading contract or securities trading contract in its home country or Taiwan, or violated the reporting obligations where the circumstances are serious;
- statement that within the past 3 years, it has not had its omnibus account cancelled by the TAIFEX.
A futures commission merchant processing account opening for an overseas Chinese or foreign national, or mainland area investor, to engage in trading on the TAIFEX, after completing account-opening procedures, shall notify the TAIFEX.
Paragraph 4 shall apply mutatis mutandis when a futures commission merchant processes omnibus account opening for an offshore foreign futures commission merchant to engage in foreign futures trading, provided that the requirement under paragraph 2, subparagraph 1 shall not apply.
An overseas subsidiary in which a securities firm or futures commission merchant has greater than 50 percent shareholding may apply to open an omnibus account if the overseas subsidiary has been granted permission by the competent authority where it is located to operate futures brokerage business and meets the qualifications of paragraph 4, subparagraphs 2 to 4.
When a futures commission merchant processes account opening for a principal that is an overseas Chinese or foreign national or a mainland area investor, the principal shall submit documents necessary for identity verification as required under the Regulations Governing Anti-Money Laundering of Financial Institutions.
Chapter I General Principles These Rules are adopted pursuant to Article 8 of the Regulations Governing Trading of Securities on the Taipei Exchange and Article 10, paragraph 1 of the Regulations Governing the Issuance of Call (Put) Warrants by Issuers ("Issuance Regulations").
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| Article 44-6 |
The term "Call (Put) Warrant" as used in these Rules means a security issued (or conferred) by a third party other than the issuing company of the underlying security(ies), and representing a right on the part of the holder of the call (put) warrant to purchase the underlying security(ies) from, or sell them to, that party at an agreed-upon strike price during an exercise period or on a specified expiry date, or to collect the price difference by cash settlement.
A third party referred to in the preceding paragraph shall first obtain approval of qualification as a call (put) warrant issuer under Chapter II of these Rules.
One issuing call (put) warrants who also carries out TPEx listing shall comply with the applicable provisions of Chapters III and V of these Rules.
One engaging in TPEx contract-based call (put) warrant business shall comply with the applicable provisions of Chapters IV and V of these Rules.
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| Article 44-7 |
An offshore overseas Chinese or foreign national, or a mainland area investor, engaging in domestic futures trading shall designate a domestic agent or representative to apply to open a segregated foreign exchange deposit account for futures trading. The agent it designates to open the account must be an onshore futures commission merchant, financial institution, or a securities firm approved by the competent authority to act as a custodian institution.
The segregated foreign exchange deposit account for futures trading referred to in the preceding paragraph must be opened at a domestic financial institution under the name of a segregated custodial account mandated with the custodian institution, provided that for an offshore overseas Chinese or foreign national, or a mainland area investor, that engages only in domestic futures trading and furthermore does not handle physical delivery and does not invest in domestic securities, its segregated foreign exchange deposit account for futures trading may be opened under its own name, or its futures trading payment/receipt operations may be done through its offshore deposit account, free of any requirement to open a segregated account for futures trading at a domestic institution.
An offshore overseas Chinese or foreign national, or mainland area investor, that has already invested in domestic securities in accordance with the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals or the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors may use its New Taiwan Dollar account for securities trading to purchase foreign currencies announced by the TAIFEX to engage in futures trading.
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| Article 44-8 |
Funds remitted in under the preceding article by an offshore overseas Chinese or foreign national, or mainland area investor, may be used for the following purposes only:
- To engage in domestic futures trading, provided that this restriction shall not apply where the competent authority provides otherwise.
- To cover securities settlement when, as evidenced by relevant transaction statements, the funds it has remitted in under the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals or the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors are insufficient to meet its settlement requirements in securities investments.
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| Article 44-9 |
Where a securities firm entrusts another institution with hedging operations, the risk management institution shall have net worth of at least NT$1 billion as stated in its financial report and shall have a credit rating of a certain grade as prescribed in Article 5, paragraph 3, subparagraph 2 of the Issuance Regulations.
Where a securities firm or a risk management institution is a foreign institution or a subsidiary of an ROC-based financial holding company, it may adopt the credit rating of its group holding company, in which case the group holding company shall provide an unconditional and irrevocable guaranty. For one applying to issue call (put) warrants and also for TPEx listing and trading, the credit rating of the holding company shall comply with the provisions of Article 5, paragraph 3, subparagraph 2 of the Issuance Regulations.
Chapter III Issuance, TPEx Listing, Early Termination of TPEx Listing, and Cancellation of Call (Put) Warrants Where any of the following circumstances applies to a securities firm that has already obtained approval of its qualification as a call (put) warrant issuer, the securities firm shall suspend issuance or handling of call (put) warrants; the issuance operations of the warrants already approved but not yet issued shall be suspended, and the suspension shall be reported to the competent authority for recordation. However, the validity of call (put) warrants already issued or already traded shall not be affected.
- Failure to comply with the provisions of Article 3, paragraph 1, or the latter part of paragraph 2, of the Issuance Regulations.
- Failure to comply with the financial requirements under the subparagraphs in Article 5, paragraph 2, subparagraph 1 or 2, or paragraph 3, subparagraph 1, 2, or 5, of the Issuance Regulations. The same applies too in the event that its latest CPA-reviewed financial report does not comply with the above-mentioned provisions.
- In the operation of warrant business, failure to comply with any provision of Article 5, paragraph 2, subparagraphs 4 to 7 of the Issuance Regulations. The same applies too in the event that a branch unit as referred to in Article 5, paragraph 3, subparagraph 5 of the Issuance Regulations fails to comply with any of the aforementioned provisions.
- Any of the circumstances under Article 7, subparagraphs 3 to 10 of the Issuance Regulations.
If any of the events listed in the subparagraphs below occurs after a securities firm has obtained qualification approval, the securities firm shall be restricted from applying to issue or handle call (put) warrants for 1 year. If the securities firm has already obtained approval for issuance or handling but has not yet issued or handled the warrants, it shall be suspended from the issuance or handling, and the suspension shall be reported to the competent authority for recordation. However, the validity of call (put) warrants already issued or handled shall not be affected:
- The securities firm is ranked in Level 5 for the most recent year, or in Level 4 for the most recent 2 years, in the assessment conducted pursuant to the Operation Directions for Assessment of Securities Firms Risk Management System.
- The securities firm has violated Article 23, paragraph 1 herein or provisions of the TPEx Operation Directions Governing Liquidity Providers of Call (Put) Warrants, and it has been sanctioned within the most recent year by the TPEx or the TWSE by imposition of penalties in a cumulative amount of NT$300,000 or more or by restriction of application for issuance of call (put) warrants two times.
- The securities firm has been restricted by the TPEx from applying for issuance of call (put) warrants because of an irregularity in the quotation system of its call (put) warrant liquidity provider in the current year, and it still has failed to take corrective action.
Directions for handling irregularities in the quotation system of a call (put) warrant liquidity provider shall be separately prescribed by the TPEx.
A securities firm that continuously fails to issue any call (put) warrants for 1 year or more shall be suspended from the issuance or handling of call (put) warrants. The TPEx may report a securities firm in writing to the competent authority for recordation if the aforesaid circumstance occurs or if, pursuant to paragraph 1, the securities firm has been suspended from issuing of or handling issuance matters regarding call (put) warrants for 1 year or more and still fails to take corrective action.
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| Article 44-10 |
To engage in domestic futures trading, an offshore overseas Chinese or foreign national, or a mainland area investor, shall appoint a bank approved by the FSC to offer custodial services, or a securities firm approved by the competent authority to act as a custodian institution, or a futures commission merchant to act as its agent and to handle matters related to futures trading, such as clearing and settlement and reporting of relevant information.
Where an offshore overseas Chinese or foreign national places an order to engage in domestic futures trading through an offshore foreign futures commission merchant that has established an omnibus account at an onshore futures commission merchant, the matters set out in the preceding paragraph shall be handled by a custodian bank, a securities firm, or a futures commission merchant, designated as agent by such foreign futures commission merchant.
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| Article 44-11 |
A securities firm conducting wealth management business by means of trusts shall transmit relevant information for each month, that is prepared in the format prescribed by the Securities Association and has been reported to the FSC for recordation, to the Securities Association by the 10th day of the following month.
For a securities firm conducting wealth management business by means of trusts, when it reports to the Trust Association with statements related to trust accounts pursuant to Article 10 of the Regulations Governing the Concurrent Operation of Trust Business, it shall also report to the Securities Association with copies of the same statements.
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| Article 44-12 |
The custodian bank, securities firm, or futures commission merchant designated as agent shall establish accounts in which information on the utilization of the funds of each offshore overseas Chinese and foreign national, or mainland area investor shall be fully recorded on a daily basis, and report to the competent authority for foreign exchange business the previous day's foreign exchange settlement of funds, foreign exchange deposit balance, and summary information on the equity in the customer margin account with the futures commission merchant by 12 noon of the next business day; within ten days from the end of each month, the custodian institution shall prepare for the previous month an itemized statement of the equity in the customer margin account with the futures commission merchant and the cumulative foreign exchange settlement amount, and report the same to the competent authority for foreign exchange business with a copy to the TAIFEX for registration.
A futures commission merchant handling trading in domestic futures by offshore overseas Chinese and foreign nationals, or mainland area investors, shall make daily reports of the status of foreign exchange settlement of funds and summary information on the equity in the customer margin account. The TAIFEX will prescribe regulations governing these operations.
Paragraphs 1 and 2 shall apply mutatis mutandis when a futures commission merchant handles trading in foreign futures by offshore overseas Chinese and foreign nationals.
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| Article 44-13 |
If an offshore overseas Chinese or foreign national, or a mainland area investor, violates any provision of Article 44-7 to Article 44-12, paragraph 1, or Article 49-1, paragraph 3, of these Rules, or fails to produce any document requested by the Competent Authority under Article 98 or 99 of the Futures Trading Act, the TAIFEX may notify the futures commission merchant to immediately cease accepting orders from that offshore overseas Chinese or foreign national, or mainland area investor, or notify the futures commission merchant that it may not accept any order from that offshore overseas Chinese or foreign national, or mainland area investor, during a period set by the TAIFEX; provided, this restriction shall not apply to orders placed to dispose of pre-existing transactions.
Where an offshore overseas Chinese or foreign national, or mainland area investor, violates the provisions of the preceding paragraph and the circumstances are serious, the TAIFEX may, in addition to notifying the futures commission merchant to immediately cease accepting orders from that offshore overseas Chinese or foreign national, or mainland area investor, in accordance with the preceding paragraph, also may notify the futures commission merchant to cancel the account opened by the offshore overseas Chinese or foreign national, or mainland area investor, under the preceding paragraph after the claims and liabilities thereof have been fully settled.
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| Article 45 |
Upon accepting a principal's mandate to open a futures trading account, a futures commission merchant shall provide a brokerage contract and a risk disclosure statement for the principal to sign or seal and keep a copy of it, with the date noted thereupon, after having explained the contract content and futures trading procedures to the principal.
The futures commission merchant shall provide the brokerage contract, risk disclosure statement, and explanatory documents specifying the respective rights and obligations of the futures commission merchant and the principal under their contractual relationship. Unless the principal opens the account electronically, or the principal's identity has been verified by a staff member responsible for account opening and the principal has issued a written statement agreeing that the explanatory procedures may be done by electronic means, qualified associated persons of the futures commission merchant shall give the principal a detailed explanation of the same (including margin call methods and provisions for substituted off-set operations for the principal by the futures commission merchant). The brokerage contract shall not be signed until the principal has issued a written statement confirming that it has received full disclosures and has read and understood the relevant documents.
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| Article 46 |
A futures commission merchant shall closely inspect the information filled out by principals opening new accounts for errors or omissions. It shall not accept the mandate until the account opening procedures have been completed and the new account information and account number have been keyed into the TAIFEX's computer files.
When a principal reports a change in any account information set out in any of the subparagraphs below, a principal who is a natural person shall appear in person with identity documents and documents certifying the change in account information to register the change and affix his or her signature or seal on site. If the principal is a juristic person, the juristic person shall issue a power of attorney and register the change based on the documents certifying the change of account information. If the account opening was duly performed by an agent on behalf of the principal, the agent shall bring the documents certifying the change of account information and carry out the registration of the change:
- Change in name, ID number, or seal specimen or signature specimen originally left on record.
- New addition of, or change to, a mandatary; however, termination of a mandate does not fall within this restriction.
When the principal applies to change any account information other than information specified in any subparagraph above, the principal may use the procedures in the preceding paragraph, or the principal may use a written application, in which case the written application documents shall be signed in person by the principal using the original specimen seal or specimen signature, or made using electronic documents signed with an electronic signature issued by a certification authority.
An FCM shall adopt risk control mechanisms and audit procedures addressing all instances in which a principal has issued a written power of attorney authorizing another person to engage in futures trading and electronic documents signed with an electronic signature issued by a certification authority are used to make a change to account information other than information specified in the subparagraphs of paragraph 2.
After verifying the accuracy of the information, the futures commission merchant shall make the change to the account information, and record the change on-line via computer connection.
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| Article 46-1 |
A futures commission merchant processing omnibus account opening to engage in domestic futures trading shall, after having completed the procedures for opening an account and keyed the account information and number into the computer files of the TAIFEX, file a report together with the documents listed below to the TAIFEX within 3 business days:
- Photocopy of the omnibus account mandate contract.
- Photocopy of the contract signed between the offshore foreign futures commission merchant and the domestic agent, the power of attorney for the agent, or the statement issued by the domestic agent.
- Photocopy of certification that the offshore foreign futures commission merchant has completed identity registration.
- Photocopy of certification that the offshore foreign futures commission merchant meets the conditions for opening an omnibus account.
- Photocopy of the identity document of the domestic agent.
- Photocopy of the agreement of the outcome of negotiations in respect of the omnibus account position declarant.
- Other documents required by the TAIFEX.
The position declarant referred to in subparagraph 6 of the preceding paragraph must be the offshore foreign futures commission merchant, the domestic agent of the offshore foreign futures commission merchant, or the futures commission merchant that processed the opening of the omnibus account.
If the reporting documents in paragraph 1 are incomplete or contain any falsehood, the TAIFEX may notify the futures commission merchant that processed the opening of the omnibus account to supplement or correct them within a time limit; if the futures commission merchant fails to do so within the time limit, or the offshore foreign futures commission merchant does not meet the qualifications required to open an omnibus account, the TAIFEX may notify the futures commission merchant to immediately cease accepting orders from that offshore foreign futures commission merchant; provided, this restriction shall not apply to orders placed to dispose of pre-existing transactions.
The futures commission merchant shall cancel the omnibus account opened by the offshore foreign futures commission merchant under the preceding paragraph after the claims and liabilities thereof have been fully settled.
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| Article 46-2 |
With the exception of the type of business under Point 4, paragraph 1, subparagraph 4, which shall be conducted pursuant to the Regulations Governing Management and Utilization of Collective Investment Trust Funds, to conduct business set out in Point 2, paragraph 1, subparagraph 2 herein a securities firm shall submit the application, together with following documents, to the TWSE, which shall review them and forward a report to the FSC for its approval:
- Documentary proof that the securities firm meets the qualification requirements for conducting business set out in Point 2, paragraph 1, subparagraph 1 herein (not required if the securities firm is simultaneously applying for approval for that business).
- Articles of incorporation or equivalent documents.
- Documentary proof of the regulatory capital adequacy ratio.
- The CPA-audited and attested financial report for the most recent period.
- Documentary proof of the long-term credit rating.
- Documentary proof that the securities firm meets the qualification requirements for operating this line of business (proof that it has not been sanctioned by the FSC is not needed).
- Minutes of the meeting at which the board of directors passed the resolution to apply to operate this line of business.
- Documentary proof of the effectiveness of the internal control system and risk management culture, passed by resolution of the board of directors:
- The securities firm has specifically corrected any material defects in internal controls.
- The securities firm has properly handled customer complaint cases and maintains good quality in treating customers fairly.
- The board of directors and senior management personnel effectively implement corporate governance and take measures to enhance the effectiveness of the risk management culture.
- Business plan, with content including the following items:
- Business planning: the trust business activities, types of trust business, and operational procedures and risk management for operating this line of business.
- Accounting system.
- Internal control system and internal audit system.
- Matters concerning protecting the rights and interests of customers.
- Business operation capability and investment of resources: staffing and equipment assessment (including information systems), plans for professional talent development and training for the next three years, salary and compensation incentives and performance evaluation system.
- A list of personnel that operate and manage trust business, and documentary proof of their qualifications.
- A written statement of the non-existence of the circumstances listed in Article 2 of the Regulations Governing Expertise or Experience with respect to the responsible person.
- A template trust agreement.
- Other documents as required by FSC regulations.
An ROC branch of a foreign securities firm intending to apply to conduct the business under the preceding paragraph shall file its application with the TWSE, which shall forward a report to the FSC, and shall furnish with the application a letter of consent from the board of directors of its head office, or a document signed by an entity or personnel authorized by the head office.
To conduct business set out in Point 2, paragraph 1, subparagraph 1 herein, a securities firm shall submit the application, together with the following documents, to the TWSE, which shall review them and forward a report to the FSC. Approval to conduct the business is deemed to be granted if the FSC does not raise any objection within 15 days:
- Minutes of the directors meeting that approved the plan to conduct wealth management business.
- Business plan: to include, among other items, the management policy and working procedures set out in Point 8 of these Directions.
- Documentary proof that the securities firm meets the qualification requirements for operating this line of business (proof that it has not been sanctioned by the FSC authority is not needed).
An ROC branch of a foreign securities firm intending to apply to conduct wealth management business shall file its application with the TWSE, which shall forward a report to the FSC, and shall furnish with the application a letter of consent from the board of directors of its head office, or a document signed by an entity or personnel authorized by the head office.
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| Article 47 |
A futures commission merchant shall refuse to open an account for a principal found to meet any of the following descriptions:
- A person under 20 years of age;
- A person who has been declared bankrupt, or has entered liquidation proceedings pursuant to a court ruling, and whose rights have not yet been restored;
- A person who has been declared by a court to be under guardianship or guidance, unless such declaration has been voided;
- An agent appointed by a juristic person to open an account who is unable to provide documentation of the authorization to open the account;
- An overseas Chinese or foreign national, or mainland area investor, that mandates it to open an account but fails to produce documentary proof of registration issued by the TWSE or the TAIFEX;
- An offshore overseas Chinese or foreign national, or mainland area investor, opening an account that fails to produce the photocopy of its contract with a domestic agent, power of attorney for the agent, or the statement from its domestic agent;
- Personnel and employees of the Securities and Futures Bureau of the Competent Authority, futures exchanges, futures clearing institutions, futures industry associations, or the Federation of Futures Industry Associations;
- (Deleted)
- A person who has defaulted on a futures trading contract or securities trading contract and the case is not yet closed and 5 years have not yet elapsed;
- A person who has been convicted by a final judgment of violating any law or regulation governing futures trading or securities trading, where 5 years have not elapsed since the judgment; or who is on record as having been suspended from trading securities or futures by notice of the Competent Authority, and where 5 years have not elapsed since expiry of the suspension period;
- A futures commission merchant that has not obtained approval from the Competent Authority to engage in proprietary trading.
- A principal that applies to convert an account it originally opened as a discretionary futures trading account to a futures trading account for its own trading use.
Internal personnel of futures commission merchants shall comply with applicable regulations when opening accounts and engaging in futures trading.
A futures commission merchant discovering that any circumstance in any subparagraph of paragraph 1 applies to a principal that has already opened an account shall immediately cease accepting orders from the principal. Provided, this restriction shall not apply to orders for offsetting existing open positions.
When the claims and liabilities of the principal referred to in the preceding paragraph have been fully settled, the futures commission merchant shall cancel the account.
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| Article 47-1 |
A futures commission merchant shall refuse to open an omnibus account for an offshore foreign futures commission merchant to which any of the following circumstances applies:
- it does not meet the requirements of Article 44-5, paragraph 4, subparagraph 1 or 7;
- within the past 1 year, it, in its home country, or its branch unit in Taiwan, has been sanctioned by a relevant authority or self-regulatory institution for securities or futures by the suspension of the securities or futures brokerage business of its head (or a branch) office;
- within the past 3 years, it has breached a market trading contract or breached an information reporting obligation, where the circumstances were serious;
- within the past 3 years, it has had an omnibus account cancelled by the TAIFEX.
In the event that any of the circumstances set out in the preceding paragraph prohibiting processing of omnibus account opening applies to an offshore foreign futures commission merchant that has already opened an omnibus account, the [domestic] futures commission merchant shall immediately cease accepting new orders therefrom; provided, this restriction does not apply to new orders undertaken to dispose of pre-existing transactions.
The futures commission merchant shall cancel the omnibus account opened by an offshore foreign futures commission merchant described in the preceding paragraph after the claims and liabilities thereof have been settled.
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| Article 48 |
When a futures commission merchant accepts a futures trading order made face to face by a principal or his/her representative or agent, the principal shall fill out the trading order form and add his/her signature or seal. When an order is made in writing, by telephone, telegraph, or other means, the associated person who accepts the order shall fill out the trading order form based on the order particulars. For orders made in writing, by telephone, by telegraph, or by teletext or video messaging, the futures commission merchant may fill out the order form by electronic means; if the associated person to whom that order belongs can be determined, individual order forms need not be printed out, provided that trading order records, segregated by associated person and chronological order, shall be printed out, and after closing of the regular trading session, shall be signed by the associated person that accepts the order and the department supervisor. Where orders are made through electronic media such as voice message, the Internet, private line, or closed private network the futures commission merchant is not required to prepare and complete an order form on the principal's behalf; provided that it shall immediately print records of the trading orders in the order that they were received, and upon closing of the regular trading session, the processing person and the department supervisor shall sign such records.
The trading order record of the preceding paragraph shall contain the name and account number of the principal, order method, date and time of the order, period of validity, the name of the futures exchange, the name of the futures trading contract, volume, and the delivery month, type of order (market order, limit order, market with protection order, or other), and the name or code number of the associated person taking the order.
Where an order is given over the Internet, the futures commission merchant shall record the principal's Internet Protocol (IP) address and electronic signature; where an order is given by a telephone voice menu system, the futures commission merchant shall record the principal's telephone number by using the caller ID display function provided by telecommunications institutions; however, the aforementioned telephone number may be omitted when printing out the order record.
Unless the principal places the order in person and signs/seals the order form or the parties commit otherwise by prior agreement, a futures commission merchant shall deliver the order form to the principal to sign or seal after the order is placed unless the principal is asked in advance to fill out a Non-in-Person Order Signature/Seal Waiver Consent Form.
When a futures commission merchant accepts and executes futures trading orders by telephone, it shall make a synchronous tape recording and keep the record at its business place.
When a futures commission merchant accepts transmission of the contents of a futures trading order by fax, telegraph, computer system, or other equipment, the transmitted contents shall be kept on file for inspection.
Except in the case of orders placed by voice message, the transmission of electronic documents such as futures trading orders, order confirmations, and execution reports between a futures commission merchant and a principal employing an electronic trading method shall carry an electronic signature issued by a certificate authority for identification and verification. However, this restriction shall not apply in cases in which an order is placed by means of a private line or closed private network and in which all the following requirements are furthermore met: the provisions of paragraph 13 of this article have been complied with, security measures are employed such that the identity of the principal can be verified, the full and confidential transmission of the electronic document is ensured, and the futures commission merchant and principal are unable to deny the trade.
The printed trading order records and order records in the form of computer files for any trading orders referred to in paragraph 1 made by an electronic means such as voice message, the Internet, private line, or closed private network, or filled out by electronic means by the futures commission merchant, shall be kept for at least 5 years. Recordings and the contents of transmissions referred to in paragraphs 5 and 6 shall be kept for at least 1 year. However, in the event of any dispute over a futures trading order, the records shall be kept until it has been confirmed by the principal, or until a final determination has been rendered through arbitration or a final and unappealable judgment has been handed down by a court. If a trading order is filled out by electronic means and is not individually printed out, it shall be stored in a non-revisable, non-erasable electronic storage medium.
In the event of telephone recording equipment malfunctions or operational omissions, the futures commission merchant shall, within 2 trading days of the occurrence, submit a report to the TAIFEX stating the incident, cause, and remedial measures taken.
Where a trading order form is filled out and submitted electronically, or record-keeping operations for trading orders made through voice message, the Internet, private line, closed private network, or other electronic trading modes conform to the following provisions, trading order records need not be printed out:
- Records are kept using a non-revisable, non-erasable electronic storage medium, and are completed on the same day the trade is executed.
- Comprehensive indexing and management procedures are instituted.
- Dedicated personnel are placed in charge of administering the records, and the electronic data files can be converted to printed format at any time.
The particulars required to be stated in trading orders under paragraph 1 are as provided by the Competent Authority.
A futures commission merchant that fills out a trading order form electronically shall do so in accordance with the TAIFEX's Guidelines for Futures Commission Merchants that Fill Out Trading Orders Electronically, and only after submitting the relevant documentation to the TAIFEX to apply for approval. Such rules shall be separately prescribed by the TAIFEX.
If a futures commission merchant accepts trading orders placed by a principal using Direct Market Access shall handle such orders in accordance with the TAIFEX's Guidelines for Futures Brokerage Merchants Engaging in Direct Market Access Business, and shall submit the relevant documentation to the TAIFEX to apply for approval before conducting such business. Those Guidelines shall be separately prescribed by the TAIFEX.
A futures commission merchant is prohibited from using computer-set group codes in the handling of futures brokerage trading orders, provided that this restriction does not apply if the futures commission merchant is a managed futures enterprise, securities investment trust enterprise, or securities investment consulting enterprise authorized to conduct discretionary futures trading on behalf of a principal or principals.
The securities firm shall append the customer's wealth management account number after the trust assets account number to distinguish it.
A securities firm conducting wealth management business by means of trusts shall make itemized entries on a daily basis of all receipts, payments, and asset allocation status, and shall keep records of the receipts and payments and corresponding allocations.
The method of fund transfer between the securities firm and its customers and other institutions shall be limited to inter-account transfer.
When a securities firm conducts wealth management business by means of trusts, it shall carry out tax withholding for the customer, who is the taxpayer, and issue a tax withholding statement for the fiscal year in which the income occurs in accordance with the Income Tax Act and its related regulations.
When a securities firm conducts wealth management business, it may collect a fee from the customer, with the fee rate to be stipulated between the securities firm and the customer.
The provisions of Point 26, paragraph 3 shall apply mutatis mutandis to the method of transfer when returning a customer's funds after the securities firm has withheld tax and deducted applicable fees in accordance with the preceding two paragraphs.
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| Article 48-1 |
Upon obtaining any notification delivered by an issuer of financial instruments or any other material in connection with rights and interests of a customer, the securities firm shall immediately forward them to the trust settlors and beneficiaries, and shall compile a reconciliation statement each month and deliver the same to each trust settlor and beneficiary for inspection by the 10th day of the following month.
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| Article 48-2 |
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| Article 49 |
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| Article 49-1 |
A futures commission merchant accepting orders to engage in domestic futures trading under an omnibus account may not accept any trading order for a futures trading contract that stipulates physical delivery, unless otherwise provided by the TAIFEX.
A futures commission merchant may not accept any order to handle physical delivery from an offshore overseas Chinese or foreign national, or mainland area investor, whose agent is a futures commission merchant. If any likelihood arises that trading by such offshore overseas Chinese or foreign national, or mainland area investor, involves physical delivery, the futures commission merchant shall immediately notify the offshore overseas Chinese or foreign national and its agent to liquidate the position or to appoint a custodian bank to replace the agent.
If the offshore overseas Chinese or foreign national, or mainland area investor, referred to in the preceding paragraph has not replaced its agent in time and exercise/assignment is made requiring physical delivery, the dispositive measures in Article 44-13 of these Rules shall be taken and the provisions of the brokerage contract and the rules of the TAIFEX shall be complied with.
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| Article 49-2 |
A futures commission merchant intending to accept orders from a principal to engage in day trading of futures contracts shall sign a risk disclosure statement with the principal, and shall add normative provisions and matters for attention relating to day trading of futures contracts.
Futures commission merchants shall incorporate the below-listed operational norms and risk management mechanisms into their internal control systems, and faithfully implement them, in accordance with the Chinese National Futures Association Self-Regulatory Rules for Brokerage Domestic Day Trading by Futures Commission Merchants:
- qualifying requirements for principals that may engage in day trading;
- procedures and methods for controlling the placement of orders in day trading;
- intraday risk control mechanisms for day trading;
- norms for compulsory closing out of day trading positions.
- method for handling any balance of open positions after market close remaining to a principal from day trading.
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| Article 50 |
A futures commission merchant shall prepare a trade report statement immediately after the trade is matched and deliver the same to the principal to sign or seal. Orders that are not matched shall be affixed with a seal indicating the transaction was not completed and then, along with the matched orders, shall be kept together with other business vouchers for recordation.
If the principal has placed the trading order through an agent and it is the agent that confirms the trade report statement referred to in the preceding paragraph, the order form from the principal itself shall be submitted therewith.
When a futures commission merchant accepts an order for a futures trade, if trade confirmation has been carried out and records retained after the execution of the transaction by the principal, the futures commission merchant may be exempted from the requirement under paragraph 1 of this article to obtain a signature or seal.
The format of the trade report statement referred to in the preceding paragraph shall be prescribed by the TAIFEX.
If a securities firm or any of its associated persons violates these Directions in conducting wealth management business, the FSC may impose sanctions commensurate with the seriousness of the circumstances pursuant to Articles 56, 65, and 66 of the Securities and Exchange Act and the provisions of the Trust Enterprise Act.
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| Article 51 |
A futures commission merchant's associated persons shall notify the principal of the status of trades as specified on the execution report as soon as trading orders are matched.
The principal may seek verification from the futures commission merchant of relevant information regarding any futures trading order that it has placed. The futures commission merchant handling the order shall truthfully provide such information.
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| Article 52 |
A futures commission merchant may accept trading orders in the form of market orders, limit orders, market with protection orders, careful discretion orders, or other types of orders.
Orders as referred to in the preceding paragraph shall be valid only during the current trading session. For orders accepted by futures commission merchants through the Internet or other electronic means of transaction, the valid date and trading session for the order shall be stipulated; for orders made over the Internet, the valid date and trading session for the order shall be displayed on the electronic interface where the order information is entered.
"Market order" refers to an order in which the principal, without setting a limit on the price, mandates the futures commission merchant to place an order to trade.
"Limit order" refers to an order in which the principal mandates the futures commission merchant to place an order to trade within a designated price limit.
"Market with protection order" refers to an order with no price specified when entered by the futures commission merchant, and after it is received by the TAIFEX trading system, the price is determined in accordance with TAIFEX rules.
"Careful discretion order" refers to an order in which the futures commission merchant accepts authorization by a specified customer to decide on its behalf, within a range of price limits specified by that specified customer, the time and price at which a trading order is placed.
The term "specified customer" in the preceding paragraph means a principal who meets one of the following conditions:
- The principal is a professional institutional investor, meaning the principal is a domestic or foreign bank, insurance company, bills finance company, securities firm, fund management company, government investment institution, government fund, pension fund, mutual fund, unit trust, securities investment trust company, securities investment consulting company, trust enterprise, futures commission merchant, futures service enterprise, or leverage transaction merchant.
- The principal is a juristic person or fund whose CPA-audited or reviewed financial report for the most recent period shows total assets in excess of NT$50 million. However, in the case of a juristic person outside the territory of the ROC, its financial report is not required to be CPA-audited or reviewed.
- The principal is a natural person who meets all of the following conditions:
- The natural person provides proof of financial resources of NT$50 million or more.
- The natural person possesses adequate professional knowledge or trading experience with respect to financial products.
- The natural person furnishes a signed statement specifying that a registered qualified associated person of a futures commission merchant has explained in detail to him/her the rights, obligations, and risks related to careful discretion orders, and that he/she has been fully advised of and understood the same before signing the statement as a specified customer.
The requirement, as set out in subparagraph 3, item B of the preceding paragraph, that a natural-person specified customer shall possess adequate professional knowledge or trading experience with respect to financial products means that the person meets one of the following condictions:
- The person has in the past held a position at a securities, futures, financial, or insurance institution, or has other academic or work qualifications sufficient to demonstrate possession of professional knowledge of futures.
- The person meets all of the following condictions:
- At least six months have elapsed since the person established an account.
- The person provides proof of the number of his/her trades on the futures market for the most recent year having reached 20; the same shall apply in the case where 1 year has not elapsed since the person established an account.
- The person has never had any record of default in futures trading, or has had a record of default in futures trading, but three years have elapsed since the settlement of the default case.
When a futures commission merchant accepts authorizations to place careful discretion orders, it shall specifically state the words "careful discretion order" on the trading order form and keep records of principals' careful discretion orders pursuant to regulations.
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| Article 53 |
Except where otherwise provided, a futures commission merchant may not accept futures trading orders without first collecting in full the margin from the principal.
A futures commission merchant accepting trading orders under an omnibus account shall collect in full the trading margin in advance for the aggregate trading volumes of each individual trader under the account.
When carrying out position offsetting and offsetting of specified position combinations and specified positions in futures trading contracts under an omnibus account, a futures commission merchant shall do so in respect of open positions of single individual futures traders.
A futures commission merchant accepting orders from offshore overseas Chinese and foreign nationals, or mainland area investors, to engage in TAIFEX futures trading shall conduct margin receipt/payment in a foreign currency announced by the TAIFEX, unless otherwise provided by the TAIFEX.
The futures commission merchant shall stipulate with the principal that the margin shall be collected in accordance with the standards prescribed by the TAIFEX or the standards as prescribed under the SPAN margin calculation method. The amount of margin collected from the principal by the futures commission merchant may not be less than the amount as stipulated.
The standards referred to in the preceding paragraph shall be prescribed and adjusted by the TAIFEX respective to specific futures trading contracts.
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| Article 53-1 |
A futures commission merchant intending to accept orders from a principal to engage in day trading of futures contracts shall first collect the futures trading margin in full in accordance with the TAIFEX's rules concerning the calculation and collection of margin for day trading.
The amount of margin for futures day trading that a futures commission merchant collects from its principal may not be lower than the standard prescribed by the TAIFEX.
The TAIFEX shall publicly announce the kinds of futures contracts, contract delivery months, and trading hours for which futures commission merchants may engage in day trading.
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| Article 54 |
A futures commission merchant shall not accept orders to engage in futures trading until the principal has opened a deposit account in a designated financial institution.
The margin collected by the futures commission merchant from the principal may be in cash or in the securities approved by the Competent Authority.
A futures commission merchant depositing securities as margin shall do so in the manner set out below; the relevant operation procedures shall be separately prescribed by the TAIFEX.
- A futures commission merchant shall stipulate with the futures trader that securities deposited by the futures trader as margin may be used only to offset the margin required for the trader's own open positions and new orders, or, with the consent of the futures trader, may be utilized by the futures commission merchant or the clearing member to offset the margin required for positions carried by the clearing member.
- When the futures commission merchant deposits an NT Dollar amount in the futures brokerage business customer margin account in the form of central book-entry bonds, it shall deposit all of the central book-entry bonds with the TAIFEX to cover the NT Dollar margin required for open positions and new trades of its brokerage business.
A futures commission merchant making payment of excess cash, margin, or premium as instructed by the principal shall do so by transfer into the principal's deposit account referred to in paragraph 1.
For an application for a securities firm's head office or branch unit to conduct wealth management business by means of trusts, the securities firm shall apply for reissuance of the permission license within 6 months from the date the permission is granted. If the securities firm fails to apply for reissuance within the time period, the FSC may revoke the permission license. Notwithstanding the foregoing, where there is a legitimate reason, an application may be filed with the FSC before expiration of that period, for an extension of 6 months, to be granted only once.
When applying for reissuance of the permission license, the securities firm shall submit the registration particulars of its head office or branch unit, together with other documents as required by FSC regulations, to the TWSE, which shall review them and forward a report to the FSC.
A securities firm conducting wealth management business by means of trust shall, in addition to applying for reissuance of its permission license, complete the registration of its added lines of business in the FSC-designated Internet reporting system, pursuant to the requirements of the Regulations Governing the Concurrent Operation of Trust Business. Prior to the registration, the securities firm shall have both the general manager and the person in charge of legal compliance to verify that the lines of business to be registered comply with applicable laws and regulations, and shall prepare documentary proof of admission to membership in the Trust Association and that it has set aside compensation reserve fund pursuant to provisions of the Trust Enterprise Act. Concurrent operation of trust business shall be commenced only after the TWSE has reviewed the aforementioned documentation and forwarded a report to the FSC.
Where the head office or branch unit of a securities firm fails to commence operations within 3 months from its receipt of the permission license, or where it has commenced operations but subsequently suspends them of its own accord for 3 months or longer, the FSC may revoke the permission license. However, this restriction shall not apply where there is a legitimate reason, and an extension has been approved by the FSC.
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| Article 55 |
In addition to the margin as specified in Article 53, a futures commission merchant may collect additional margin depending on the principal's credit status or the nature of the trading.
When the amount of the margin is adjusted, a futures commission merchant shall notify the principal to pay the difference within the time period provided in the brokerage contract.
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| Article 56 |
A futures commission merchant shall open a "customer segregated margin account" (hereinafter, "Customer Margin Account") in an institution designated by the Competent Authority to handle deposits and transfer of margin and premium between the futures commission merchant and its principals, and shall report the balance of deposits and status of central book-entry bonds in the Customer Margin Account to the TAIFEX on a daily basis. The reporting procedures shall be as set out in the Taiwan Futures Exchange Corporation Rules Governing Online Reporting Procedures for Futures Commission Merchants.
When a futures commission merchant accepts orders to engage in futures trading, all payments and receipts shall be transacted through the Customer Margin Account. All withdrawals of funds and central book-entry bonds from the customer margin account shall be conducted by means of account transfer and a detailed record with accompanying payment vouchers shall be kept.
The futures trader shall transfer the securities deposited as margin that a futures commission merchant receives or delivers during futures trading into the TAIFEX's segregated margin collateral account. However, where the futures trader agrees that the futures commission merchant or clearing member may utilize the securities to offset the margin required for the positions carried by the clearing member, the futures trader shall transfer the securities into the futures commission merchant's segregated margin collateral account. When the futures commission merchant deposits an NT Dollar amount in the futures brokerage business customer margin account in the form of central book-entry bonds and conducts the operations to post the bonds as margin collateral, the futures commission merchant shall transfer the central book-entry bonds into the TAIFEX's margin collateral account on the business day after the day it receives such central book-entry bonds.
A futures commission merchant shall publicly post the name of the institution in which the Customer Margin Account has been opened and the account number in a conspicuous place in the futures commission merchant's place of business; the same shall apply to any modification or cancellation of the account.
A futures commission merchant shall not exercise overdrafts on funds or securities deposited in the Customer Margin Account of any principal, nor create any security interests or other rights thereupon, nor divert them to serve as another principal's margin, premiums, clearing and delivery fees, commissions, or processing fees, or to cover insufficient funds of other principals.
A financial institution that concurrently conducts futures trading operations shall not open any Customer Margin Account with a financial institution that it operates itself.
For an application for a securities firm's branch unit to conduct business set out in Point 2, paragraph 1, subparagraph 2 herein, the securities firm shall submit the application, together with following documents, to the TWSE, which shall review them and forward a report to the FSC for approval:
- Documentary proof of that the securities firm's head office has obtained the approval from the competent authority to operate wealth management and trust businesses.
- Minutes of the meeting at which the board of directors passed the resolution to apply to operate this line of business.
- Documentary proof of the effectiveness of the internal control system and risk management culture, passed by resolution of the board of directors:
- The securities firm has specifically corrected any material defects in internal controls.
- The securities firm has properly handled customer complaint cases and maintains good quality in treating customers fairly.
- The board of directors and senior management personnel effectively implement corporate governance and take measures to enhance the effectiveness of the risk management culture.
- Business plan, with content including the following items:
- Business planning: the trust business activities, types of trust business, and operational procedures and risk management for operating this line of business.
- Accounting system.
- Internal control system and internal audit system.
- Matters concerning protecting the rights and interests of customers.
- Business operation capability and investment of resources: staffing and equipment assessment (including information systems), plans for professional talent development and training for the next three years, salary and compensation incentives and performance evaluation system.
- A list of personnel that operate and manage trust business, and documentary proof of their qualifications.
- A written statement of the non-existence of the circumstances listed in Article 2 of the Regulations Governing Expertise or Experience with respect to the responsible person of the branch unit.
- Other documents as required by FSC regulations.
Where the head office and a branch unit of a securities firm simultaneously apply for the approval to conduct the business under the preceding paragraph, they may consolidate the identical application documents.
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| Article 57 |
A futures commission merchant engaging in futures trading for customer accounts shall mark to market on a daily basis the combined total of the owner equity balance and the collateral value of each principal in the Customer Margin Account. Where the combined total is lower than the maintenance margin provided in the brokerage contract, the futures commission merchant shall notify the principal to replenish the combined total of the owner equity balance and the collateral value by the amount that it falls short of the initial margins for its open positions within a specified deadline.
If the principal is unable to replenish the shortfall within the deadline as provided in the preceding paragraph, the futures commission merchant may liquidate its open positions.
The maintenance margin provided in the brokerage contract as referred to in paragraph 1 may not be less than the standard publicly announced by the TAIFEX.
The initial margins and maintenance margins publicly announced for each contract by the TAIFEX shall be calculated by taking the clearing margin of each respective contract as the basis amount and adding a certain percentage that is to be prescribed by the TAIFEX. The initial margins and maintenance margins under the SPAN margin calculation method shall be calculated by taking the clearing margin under the SPAN margin calculation method as the basis amount and adding a certain percentage. The calculation method shall be prescribed by the TAIFEX.
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| Article 57-1 |
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| Article 57-2 |
Unless a futures commission merchant has an agreement otherwise with the principal in writing, for any open position held by a principal in day trading of futures contracts, the futures commission merchant shall notify the principal and request that the principal voluntarily close out the position by the deadline set by the futures commission merchant. In the event that it is impossible to deliver notice to the principal or that the principal fails to voluntarily close out the position by the deadline, unless due to reason of force majeure, the futures commission merchant shall close out the position in futures trading on that day before the close of the regular trading session.
For any position that has not yet been closed out in the regular trading session on that day after following the method in the preceding paragraph, if the principal is unable, on that day by the deadline set by the futures commission merchant, to replenish the margin to the initial margin level for that futures contract, the futures commission merchant shall during the next regular trading session close out the position until it is liquidated out in full.
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| Article 57-3 |
When handling position transfer operations upon application by a principal, a futures commission merchant shall do so in accordance with the TAIFEX Directions for Futures Commission Merchants Handling Position Transfers for Futures Traders.
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| Article 58 |
Where any of the following circumstances exists with respect to a principal, the futures commission merchant shall respond according to the Guidelines for Futures Commission Merchants in Reporting Default by Principals.
- Where, after a futures commission merchant liquidates in full a principal's open position of futures trading contracts according to the terms of the brokerage contract, the equity amount in the principal's Margin Account is negative, and the principal fails to pay the full amount of the margin call within 3 trading days of notification; provided, this restriction shall not apply in any of the following circumstances where the TAIFEX sets a different deadline for the margin call:
- where the futures commission merchant conducts operations for the collection and disposal of the securities deposited by the principal in accordance with the TAIFEX Guidelines for Futures Commission Merchants and Clearing Members Conducting Operations in Relation to the Posting of Securities as Margin Collateral.
- where a serious domestic or international political or economic emergency results in illiquidity in the domestic futures market.
- Failure to perform settlement obligations on the expiration day of futures trading contracts.
The Guidelines for Futures Commission Merchants in Reporting Default by Principals referred to in the preceding paragraph shall be separately prescribed by the TAIFEX.
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| Article 58-1 |
Where any event listed in paragraph 1 of the preceding article occurs with respect to a discretionary futures trading account, except under the circumstances set out in paragraph 2 below, the futures broker shall handle the matters in accordance with provisions governing breach by an ordinary principle.
Where any event listed in paragraph 1 of the preceding article occurs with respect to a discretionary futures trading account, and it is the result of failure by the mandatary to perform any responsibility that it is obligated to perform as a result of an unauthorized transaction, such event shall be handled as follows:
- The futures broker, by no later than 5 p.m. on the date on which the breach is confirmed, shall prepare a written report on relevant facts with the seal of the company and the signature or seal of its responsible person fixed thereupon, together with a photocopy of the notification of unauthorized transaction issued by the custodian institution, related transaction vouchers, and the brokerage contract (including the documents submitted for account opening), and shall fax the aforesaid to the TAIFEX. The broker shall notify the TAIFEX by telephone before forwarding an original copy of the documents to the TAIFEX for reporting to the competent authority. However, those that meet the conditions of Article 42, paragraph 5 of the Discretionary Investment Business Regulations may substitute a notice of unauthorized trade issued by a party authorized to do so under the relevant contract or legal opinion for the notice of unauthorized trade issued by the custodian institution.
- In connection with the futures trading account, the futures broker shall immediately take the measures specified in paragraphs 3 and 4 of Article 47 of the TAIFEX Operating Rules. Other accounts in the name of the same principal shall not be subject to restrictions under Article 47 of the TAIFEX Operating Rules.
The TAIFEX shall relay information reported per subparagraph 1 of paragraph 2 hereinabove to all futures brokers and the Chinese National Futures Association.
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| Article 59 |
If a principal's rights or interests are impaired or any other dispute arises when the TAIFEX notifies other futures commission merchants of a report of default by a principal as filed by a futures commission merchant, the futures commission merchant that filed the report of default shall bear all liability.
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| Article 60 |
A futures commission merchant that accepts orders from principals to engage in futures trading may not breach the provisions of the brokerage contract it enters into with the principal.
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| Article 61 |
Futures commission merchants shall keep itemized records of accounts for each principal and mark them to market on a daily basis to reflect changes in each principal's margin account fund balance, securities balance, and collateral value, and shall prepare itemized statements thereof, and furthermore shall report the total equity value in the principal's Customer Margin Account to the TAIFEX on a daily basis. The reporting procedures shall be as set out in the Taiwan Futures Exchange Corporation Rules Governing Online Reporting Procedures for Futures Commission Merchants.
After completing the accounting referred to in the preceding paragraph, a futures commission merchant shall carry out the following procedures:
- Deduct the principal's futures trading losses from the Customer Margin Account.
- Deposit the principal's futures trading earnings into the Customer Margin Account.
- Immediately issue a margin call to the principal to deposit funds in cash replenishing his owner equity balance to the initial margin amount when the combined total of the owner equity balance and the collateral value in the Customer Margin Account falls below the maintenance margin requirement.
- Follow the principal's instructions regarding handling of the excess combined total of the principal's owner equity and securities balance in the Customer Margin Account over the required initial margin.
Payment of a margin call as referred to in paragraph 2, subparagraph 3 shall be made by the principal within the time period specified in the brokerage contract.
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| Article 62 |
A futures commission merchant shall produce a monthly account reconciliation statement in duplicate, and prepare it by the 5th day of the following month, with one copy to be kept by the futures commission merchant and one copy to be delivered by the 10th day of the following month to the principal for review.
The content of the account reconciliation statement referred to in the preceding paragraph shall include the following items:
- Name and account number of the principal.
- The type, volume, unit price, and date of all trades transacted during the given month.
- Itemized margin and premium payments for futures trading during the given month.
- Itemized deposits and withdrawals of funds and securities by the principal from/to the Customer Margin Account, the month-end owner equity balance, and the collateral value of the principal.
- Itemized and total futures trades by the principal and their delivery months.
- Itemized and total amounts of exchange fees and taxes withheld.
- Itemized and total amounts of profits or losses on futures trading.
- Other particulars related to futures trading.
Futures commission merchants shall keep copies of the account reconciliation statements on file for 2 years and may store them in [electronic] media format.
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| Article 63 |
A futures commission merchant shall maintain confidentiality regarding a principal's account information and order matters and shall make no external disclosures except in the case of inquiries conducted in accordance with laws and regulations or lawfully conducted by the TAIFEX.
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| Article 64 |
A futures commission merchant reporting an out-trade because of an error occurring in futures brokerage trading, or reporting an account number correction because of an error by a trader, shall do so in compliance with the Rules for the Reporting and Handling of Out-Trades and Account Number Corrections by Futures Commission Merchants promulgated by the TAIFEX.
A futures commission merchant shall open a segregated Error Account in its own name and list the company's business administration number along with the account number. Taxes and exchange fees on trading through the Error Account shall be paid in accordance with regulations.
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| Article 65 |
Futures commission merchants engaged in futures trading are prohibited from any of the following actions:
- Conceal or alter any trading information transmitted from the TAIFEX.
- Recommend specific types of futures trades or provide judgments on the rise or fall [of prices] to the principal or to unspecified multiple persons without a reasonable basis, to encourage or induce unnecessary or unreasonable trading.
- Directly or indirectly set up any fixed site outside the futures commission merchant's principal place of business or branch offices to sign brokerage contracts with futures traders. However, this restriction shall not apply if the Competent Authority has provided otherwise.
- Directly or indirectly set up any fixed site outside the futures commission merchant's principal place of business or branch offices for the purpose of accepting orders by principals to engage in futures trading.
- Misappropriate a principal's funds or securities.
- Keep custody for a principal of a principal's funds, seal specimen, or passbook. However, this restriction shall not apply if the Competent Authority has provided otherwise.
- Lend funds to or borrow funds from a principal or act as an intermediary between a lender and the principal.
- Make unauthorized alterations to a time stamp affixed on any order, trade report statement, or other voucher.
- Conduct futures trading on behalf of a principal in a volume or open position in excess of the amount permitted by futures trading laws or regulations.
- Provide accounts for purposes of trading by a principal.
- Accept discretionary authorization by a principal to determine the trading contract, volume, and price of futures trading without official approval.
- Use a principal's account or name to engage in futures trading.
- Engage in futures trading that does not conform to the specifics or terms or conditions of a principal's order.
- Conduct futures trading on behalf of a principal without the principal's authorization.
- Make profit guarantees or profit-sharing or risk-sharing agreements with a principal; or accept orders on an installment payment basis.
- Open accounts or engage in futures trading on behalf of others. However, this restriction shall not apply if the competent authority has provided otherwise.
- Solicit, broker, or promote the trading of futures trading contracts other than those as announced by the Competent Authority under Article 5 of the Futures Trading Act.
- Enter into a brokerage contract with a principal by fraud, coercion, or any other improper means.
- Provide information on recommended trades to a principal by any means, provided that where other laws or regulations provide otherwise, this restriction shall not apply.
- Use information obtained through business relationships for the purpose of trading futures for oneself or to provide others such information for their use in trading futures.
- Make use of non-employees to carry out business relating to futures trading. However, this restriction shall not apply if the competent authority has provided otherwise.
- To produce or assist another person to produce false futures-related trading records.
- Violate the standards of self-governance adopted by the Federation of Futures Industry Associations.
- Otherwise violate futures regulations or requirements of the Competent Authority governing compulsory or prohibited acts.
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| Article 66 |
A futures commission merchant that declares bankruptcy, is dissolved, suspends operations, or is ordered by law to stop accepting orders from principals shall, in accordance with the orders of the Competent Authority, transfer all related accounts of principals to another futures commission merchant with whom a succession contract has been entered into; except in cases where the futures commission merchant is a clearing member, which shall be handled in accordance with Article 54 of the Futures Trading Act.
Within 2 trading days of receiving such order from the Competent Authority, a futures commission merchant, unless it has legitimate reason otherwise as submitted to and approved by the Competent Authority, shall transfer the deposits, securities balance, and the collateral value in the Customer Margin Account and the itemized Customer Margin/ Equity statements to the other futures commission merchant referred to in the preceding paragraph. All expenses arising from the transfer shall be borne by the transferring futures commission merchant.
A futures commission merchant shall, within 2 months of commencing operations, submit to the Competent Authority and the TAIFEX for recordation a photocopy of the succession contract under which the other futures commission merchant agrees to accept transfer of the accounts of principals in the event of any circumstances as provided in paragraph one.
Where any futures commission merchant suspends operations, before it winds-up all futures trading matters initiated prior to the suspension, its operations within such scope shall be deemed as not suspended.
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