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These Directions are established pursuant to Article 35-6 of the Taipei Exchange Rules Governing Securities Trading on the TPEx.
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Securities brokers are required to collect in advance, in full or a certain percentage of, the funds or securities required for settlement of any transactions involving stocks placed under an altered trading method, managed stocks, reverse auction, or any other securities for which the advance collection of funds or securities is required under TPEx rules, and the customers' trade orders in such cases must be stamped with the words "Funds/Securities Received" before processing. However, a customer may use funds left on deposit in the settlement account of the securities firm for the purpose of such advance collection.
The above requirement of advance collection does not apply to sales of a single stock placed under an altered trading method or of a managed stock by a customer for whom a custodian is acting as agent or by a government fund, where the cumulative amount per day is less than NT$50 million, nor does it apply to purchases or sales through a default-handling account, a call (put) warrant liquidity provider account, or a call (put) warrant hedging account.
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Advance collection of funds and securities shall be done in the following manner:
- For advance collection of funds, the securities broker may accept deposit by its customer of the funds directly into the settlement account on the day the customer places an order or the preceding business day, by means such as deposit, remittance, account transfer, or transfer by financial card. The securities firm shall also verify that the funds have been deposited in the customer's own name before processing the trade order.
- For advance collection of securities, the securities broker may collect spot securities, or may accept instructions by the customer, in person or by telephone, telegraph, or fax, instructing the broker to carry out procedures to earmark the customer's securities in central custody.
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If the customer's trade order is not successfully executed, the securities broker shall on the same day immediately return, or otherwise handle in accordance with relevant laws and regulations, the funds or securities collected in advance from the customer, unless the end of the trading hours falls after banking hours, in which case the funds collected in advance may be returned the following business day. This requirement does not apply, however, if the customer has agreed for the funds to be left on deposit in the securities firm's settlement account.
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Securities brokers shall negotiate and stipulate with their customers the ownership of interest arising on funds that may be collected in advance on a business day preceding an order or refunded on a business day following an order, and shall keep a record of the stipulation.
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Securities brokers are required to accurately maintain itemized daily reports (see format in attachment) on the collection and subsequent handling of all funds and securities collected in advance. The order forms of trades for which funds and securities are collected in advance shall also be consolidated into booklets daily and made available for future reference.
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The provisions of these Directions related to the advance collection of funds and securities do not apply to after-hours odd-lot trading. However, this exemption does not apply to advance collection of funds and securities under Article 47, paragraph 5 of the Taipei Exchange Rules Governing Securities Trading on the TPEx.
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These Directions, and any amendments hereto, shall be publicly announced and implemented after approval by the competent authority.
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