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Directions for the Full Implementation of the Book-Entry Transfer System in the Centralized Securities Exchange Market  CH

Amended Date: 2015.06.04
1     When a principal and a securities firm enter into a "Securities Trading Brokerage Contract " and open an account, a central securities depository account and a deposit account at the financial institution designated by the securities firm ("Book-Entry Account") shall be opened simultaneously. The securities firm may accept securities trading orders from the principal only after the above-mentioned accounts have been opened and the principal has executed a letter of authorization with the financial institution authorizing said institution to receive and make settlement payments.
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2     If the principal has executed the "Securities Trading Brokerage Contract" and opened an account but failed to open a Book-Entry Account before the full implementation of the book-entry transfer system, said Book-Entry Account shall be properly opened for the securities firm to engage in book-entry transfer.
3     When a securities firm consigned to trade in securities receives from and pays funds to the principal, it shall do so by way of book-entry transfer through the Book-Entry Account opened by the principal.
4     Where the principal engages the securities broker to sell securities and the securities delivered by the principal for settlement are registered stocks that have never been transferred or are registered stocks which have been transferred and for which transfer registration procedures have been carried out with the issuing company, and where the conditions set forth in Article 82-1, Paragraph 2 of the Operating Rules of the Taiwan Stock Exchange Corporation ("TWSE") are met, if the principal is not the owner of the stocks, the securities firm shall deliver said securities to the principal's central securities depository account for book-entry settlement in accordance with the TWSE Guidelines for the Reporting of Sales by Engaged Securities Firms of Stocks Not Owned by the Principal.
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5     (Deleted)
6     Under otherwise stipulated below, the provisions in Paragraphs 1 to 3 with respect to the opening of deposit account and the receipt and payment of funds apply to payments made or received for securities trading:
  1. The TWSE otherwise permits settlements by account transfer (remittance).
  2. The principal has authorized the securities broker to keep custody of and invest the principal's funds.
  3. The principal has authorized the securities broker to invest balances of funds from the trading of securities on behalf of the principal.
  4. The principal has authorized the securities broker to invest the settlement funds payable to clients in respect of securities business in the brokerage business of the money market.
  5. The principal agrees the securities broker may keep the settlement funds in the settlement account of the securities firm.
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7     Where the securities firm accepts an engagement to trade in securities where the trading method is changed and funds and securities shall be collected in advance in accordance with applicable laws and regulations, the funds and securities collected in advance shall be transferred via the book-entry system, and said securities shall be earmarked, through the settlement account and the central securities depository account.
8     Where the securities firm is engaged to purchase or sell securities, it shall set up a designated current deposit account (settlement account) in a financial institution to manage the receipt and payment of settlement payments of the principal. Funds in said settlement account may not be used for other purposes, unless the principal has authorized the securities firm to keep custody of and invest the funds and to invest balances of funds from the trading of securities on behalf of the principal.
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