| 1 |
This Agreement is entered into for purposes of the applicant (Party A) opening an account with the securities firm (Party B) for trading of securities on the TPEx in accordance with Article 43 of the Taipei Exchange (TPEx) Rules Governing Securities Trading on the TPEx (the "Trading Rules"). Party A and Party B agree to mutually comply with the terms and conditions set forth below:
- The TPEx Trading Rules and all stipulations, non-periodic announcements, and amended rules and bylaws of the TPEx constitute an integral part of this Agreement.
- Trading activities on the TPEx are divided into brokerage trading and proprietary trading. Trades are matched through negotiation, the automated trade matching system, or the Electronic Bond Trading System. In TPEx brokerage trading, a transaction fee shall be imposed at the regulated rate after a trade is executed. In proprietary trading, no transaction fee may be charged.
When engaging in TPEx trading, a securities broker shall not pay, in whole or in part, any transaction fee receivable by it to any introducing person related to the trading as their remuneration; provided, this restriction shall not apply under any of the following circumstances:
- The transaction fee is paid under a contract to a foreign financial institution that is registered and permitted by the competent authority of the local country to operate securities business.
- The transaction fee is paid, under a contract entered into for cross-selling, to a subsidiary of a financial holding company.
The term "local country" in subparagraph 1 of the preceding paragraph shall be separately defined by the TPEx.
- Party B may accept trade instructions from Party A or its authorized representative and prepare and issue trade orders in accordance with Article 87 of the Securities and Exchange Act only if such instructions are made in person or using written correspondence, telegraph, telephone, voice message, Internet, private line, closed private network, or other means agreed to by the TPEx. When Party A or its authorized representative places brokerage trading orders by means of telephone, written correspondence, telegraph, or other trading method agreed to by the TPEx, Party B's associated persons responsible for brokerage trading shall fill out trade order forms in writing or electronically, print trade order records, and sign/chop them. Where Party B fills out the order electronically, if hierarchical delegation of responsibility for brokerage trading can be implemented and the brokerage trading personnel by whom an order was processed can be confirmed, it is not necessary for party B to print individual hard copies of the order; provided, it shall print records of the orders in the sequence that they were received, and furthermore after closing of the market the trading order records shall be signed/chopped by Party B's associated persons responsible for brokerage trading. In the case of orders placed by Party A by electronic trading methods such as voice message, the Internet, private line, or closed private network, Party B need not prepare and fill out an order form in writing; provided that it shall print records of the orders in the sequence that they were received, and furthermore after closing of the market the trading order records shall be signed/chopped by Party B's processing persons and department chief or associated persons responsible for brokerage trading. The order records shall contain the name or account number of the principal, the time the order was placed, the type of securities, the price (limit price or market price), the number of shares or par value, the type of order, the time in force (rest-of-day, immediate-or-cancel, fill-or-kill), the name or number of the associated person, and the order method.
Where Party A's order is placed via the Internet, Party B shall record the IP and electronic signature used in each order in the order records. When Party A's order is placed via voice message, Party B shall make use of the telecommunications provider's caller ID service to record the caller's telephone number.
With the exception of orders placed by voice message, electronic signatures issued by a certification authority shall be used to identify and confirm order tickets, order confirmations, execution reports, and other such electronic documents transmitted between securities brokers and principals that place orders by an electronic trading method. This restriction shall not apply, however, under the following circumstances:
- When an order confirmation or execution report is delivered by telephone, facsimile, text messaging, voice message, or webpage program.
- When the conditions are met for exemption under the TPEx Operation Directions for Implementation of Direct Market Access by Securities Brokers.
When Party B accepts trading orders made by telephone, in writing, by telegraph, or other means agreed by the TPEx and uses an electronic method to fill out the order ticket, or accepts trading orders made by electronic trading methods such as voice mail, the Internet, private line, or closed private network, it need not print out trading order records if its trading order record storage operations comply with the following provisions:
- The records are kept using an electronic storage medium that cannot be altered or deleted, and are completed on the same day the trade is executed.
- The records are fully indexed, and management procedures are in place.
- Specific personnel are responsible for records management, and it is possible at any time to convert the electronically stored data to hardcopy format.
If trade orders are filled out in electronic form without printing individual hard copies, the data must be stored on electronic media that cannot be altered or deleted.
Party B shall exercise the duty of care as a prudent manager when managing the customer's computerized connections to the trade system. Party B shall not be held liable for compensation for any disruptions of the normal operation of the computer connection caused by war, natural disaster, or other force majeure events that are not attributable to Party B.
When Party B accepts trading orders from Party A for trades within 30 minutes prior to the commencement of trading of the current session or within a certain period of time prior to the close of trading, if after the quotes have been placed with the TPEx any large cancellation or change to the quotes occurs, the TPEx may notify Party B to require it, upon accepting any order from Party A, to collect in full from Party A in advance the funds or securities, the margin for margin purchase, or the margin for short sale.
- If Party A is a juristic person or a specified natural person, it may authorize Party B to exercise discretion over the price and timing at which to place trade orders, within a price interval of which the upward and downward limits are designated by that customer. In which case, Party B will be required to retain records of the customer's authorization and orders in accordance with regulations. Party B may accept orders with a predetermined time in force. For any trade order accepted by Party B through the Internet or other electronic method of trading, the time in force of the order shall be stipulated with Party A; for any such orders made over the Internet, Party B shall display the time in force on the screen on which the trading order information is entered.
- For brokerage trades on the TPEx, Party B shall prepare a trading report at the time a trade is executed and obtain Party A's signature on the trade report (signature can be waived if Party A has signed a book-entry settlement agreement, or is entitled by law or regulation to collect/pay settlement proceeds via remittance). Party B shall collect or pay Party A's settlement proceeds only through a deposit account opened in Party A's name, unless otherwise permitted by law or regulation. Securities that are receivable from or deliverable to Party A shall be handled in accordance with the Operating Rules of the Central Securities Depository.
For brokerage trades on the TPEx, Party B shall collect from Party A the proceeds for the securities purchased, or the securities sold, or the price difference after offsetting purchases and sales pursuant to the Operational Rules Governing Day Trades of Securities, by 10 a.m. on the second business day after the trade date. However, if Party A is an offshore overseas Chinese or a foreign national, any late settlement report submitted by Party B to the TPEx shall comply with the TPEx Directions for Securities Brokers Reporting Delayed Settlement and Default by Customers.
When Party B accepts an order for margin trading, it shall collect the legally required margin for the margin purchase or short sale from Party A by 10 a.m. on the second business day after the trade date.
- For proprietary trades on the TPEx, Party B shall prepare trade confirmation slips, settlement slips, and delivery statements (if for delivery of physical securities) and obtain Party A's signature on them. By the second business day after the trade date, payments of trade prices and delivery of securities must be settled, or delivery of securities performed in accordance with the relevant provisions of the Operating Rules of the Central Securities Depository.
- In the event that Party A defaults on settlement obligations, Party B shall immediately report the default in accordance with the TPEx Directions for Securities Brokers Reporting Delayed Settlement and Default by Customers and complete the settlement procedures on Party A's behalf; in which case it may collect a penalty equivalent to a maximum of 7 percent of the trade amount from Party A. However, if it is a settlement default in day trading as defined in the Operational Rules Governing Day Trades of Securities, the maximum amount of the penalty shall be calculated based on the price difference after the netting of equal quantities of the security bought and sold in normal settlement trades in day trading on that day.
If Party A is an offshore overseas Chinese, foreign national, or mainland area investor and delay of settlement results in any borrowing of securities, payments made on behalf of Party A, or other related expenses, Party A shall return those amounts to Party B when completing settlement.
If Party A defaults on its settlement obligations, Party B may suspend or terminate the account opening agreement and cancel Party A's account. Within 3 business days from the business day following the report of default, all securities held by Party A shall be transferred into Party B's settlement default account and sold at prices agreed between the two parties to cover the debts and expenses arising as a result of the default.
Party A may resume trading using the existing account once the abovementioned debts and expenses have been repaid within the period specified in the preceding paragraph, and after Party B has reported closure of the default case.
If Party A does not fully settle all outstanding debts and expenses within the period specified in paragraph 3, Party B shall proceed to terminate the account opening agreement and cancel Party A's account.
No later than the first business day after Party A's default, Party B shall undertake to dispose, through Party B's settlement default account, of the securities or proceeds foreclosed by Party B under paragraph 1. If there is any remainder after the proceeds of such disposal have been used to cover the debts and expenses arising from Party A's default, it shall be returned to Party A. If any shortfall remains, Party B may dispose of other assets already received from or payable to Party A in connection with other brokerage trades to offset the debts and expenses and obtain compensation. If a shortfall still remains, Party B may claim compensation from Party A.
When any default occurs out of unauthorized trading through a trading account or discretionary investment account referred to in Article 45-4 of the TPEx Trading Rules, if there is failure to close the default case within the time limit specified in paragraph 3, the securities broker that accepted the order shall terminate the account opening contract for that account and cancel the account and shall simultaneously do the same for any other account opened by the customer at the same business premises. However, prior to such failure to close a default case within the time limit specified in paragraph 3, a non-defaulting account at the same business premises shall be handled in accordance with Article 47, paragraph 2 of the TPEx Trading Rules.
When default occurs out of unauthorized trading through a discretionary investment account or default occurs through a trust account opened by a trust enterprise, the restrictions of Article 47, paragraph 2 of the TPEx Trading Rules will not apply to other accounts in the name of the principal of the discretionary investment account, nor will they apply to trust accounts opened by the trust enterprise at other business premises of the same securities broker or at other securities brokers. However, if the trustee of the trust account through which the default occurs is not the trust enterprise, then other trust accounts in the name of that trustee shall be handled in accordance with Article 47, paragraph 2 of the Trading Rules.
After Party B has proceeded according to paragraphs 1 and 6, Party B shall immediately take the measures required under the TPEx Directions for Securities Brokers Reporting Delayed Settlement and Default by Customers, and notify Party A.
If the aggregate number of shares of securities foreclosed by Party B under paragraphs 1 and 6 during the period of a single default reaches or exceeds 5 percent of the number of shares or par value of the underlying securities already issued, and furthermore reaches or exceeds the average daily volume of the underlying securities during the 20 trading days prior to reporting of the default, Party B may adopt either of the following measures to handle the default:
- If handling of the default cannot be completed through reverse trades during the 3 consecutive business days from the first business day following the date of confirmation of Party A's default by the customer, Party B, by reaching a mutual agreement with Party A or by notice to Party A, may, depending on market conditions, in accordance with the content of the agreement or the notice, complete handling of the default through reverse trades within 180 days, and report the matters under the agreement or notice to the TPEx via letter for recordation.
- The Parties may reach an agreement setting a price(s) to serve as the basis for calculating profit/loss, and Party B shall submit the written agreement reached between the parties to the TPEx via letter for recordation.
Any of Party A's property received by Party B in connection with trading orders, as well as funds payable to Party A arising out of such trades, may be deemed a lien on debt generated in trading conducted by Party B for Party A, and may be retained by Party B until Party A has discharged its debt.
If Party A has committed any breach of its clearing and settlement obligations and commits another breach within a period of 1 year thereafter, then for 10 consecutive business days beginning from the day Party B accepts Party A’s first trade during the 3-month period beginning from the date of public announcement of closure of the case, Party B shall collect from Party A in advance and in full the securities or funds for all orders placed Party A.
- Parties A and B will be deemed to have breached the account opening agreement if they violate any TPEx trade rules or announcements. If a party is deemed to be violation, the other party shall report the matter to the TPEx in writing, submitting relevant evidence, within 5 days from the settlement date, for handling by the TPEx.
- Any dispute between the parties arising from or in connection with this Agreement shall be handled in accordance with the provisions of the Securities and Exchange Act governing arbitration.
- If Party A does not trade on the TPEx for ___ consecutive years, Party B may notify Party A of termination of this Agreement.
- Party B may deliver notifications to Party A with respect to any matter by any of the following means:
- In person.
- By written correspondence. Delivery address:
- By telephone. Telephone number:
- By fax. Fax number:
- By email. Email address:
- By text message. Text message number:
- By other electronic means. Specifically:
(If any of items B to G is not filled in above, Party B may not use the means in that item to deliver notifications to Party A, unless otherwise agreed by Party A.
|