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Taiwan Stock Exchange Corporation (TWSE) Operation Directions for Direct Market Access by Securities Brokers  CH

Amended Date: 2009.09.23
1     Definition
    Direct Market Access shall refer to the trading system directly connected by dedicated line or closed private network between the principal and the securities broker. Via the connection, trading instructions from the principal may directly transmit to the computer system of the securities broker and, upon verification by the computer of the securities broker, transmit to the TWSE, without the need to go through the automated order-placing process involving the securities broker's personnel.
2     Operation Directions
  1. In providing Direct Market Access, the securities broker shall amend its internal control and audit regulations accordingly and, two weeks before launching the Direct Market Access, file the launch date, data transmission structure, process, and descriptions of a control mechanism that is deemed upon reasonable evaluation to be able to ensure ID verification, comprehensiveness and confidentiality of data, and non-repudiation of transactions, with the TWSE in writing for recordation.
  2. Before accepting the principal's orders placed via Direct Market Access, the securities broker shall file the principal's account information with the TWSE.
  3. The securities broker handling orders placed via Direct Market Access shall establish a computer screening function and management procedures to ensure the legal compliance of every trading order. Orders placed via Direct Market Access operate the same way as other kinds of orders. When the orders are transmitted to the TWSE, the time and serial number of the orders shall be provided and there shall be no skipped, omitted or repeated serial numbers; Orders placed via Direct Market Access and orders via other kinds of methods shall be sequenced fairly.
  4. If the connecting portals of both the principal placing orders via Direct Market Access and the securities broker (or overseas branch offices thereof) are located outside the territory of the R.O.C., the form of network connection must conform to the applicable local laws and regulations of the country they are located, and such connecting portals and the trading systems of the Taiwan branches (headquarters) of the securities broker shall be connected with dedicated lines or the ' exclusive trading network of the securities broker.
  5. The use of electronic signatures issued by the certification institution is not required if the transmission of electronic documents, including securities trading orders, order confirmations, and execution reports, between the securities broker and the principal meets either of the following conditions:
    1. A.The connecting portals of both the principal and the securities broker (or overseas branch offices thereof) are located outside the territory of R.O.C.
    2. B.The securities broker has signed a contract and a risk disclosure statement with the investor stating the rights and obligations of both parties, risk allocation and burden of proof when in dispute, and other security mechanisms are in place for transmission of the electronic documents above.
    Where the exemption under Item B of the preceding subparagraph is satisfied, the securities broker shall file the security mechanisms with the TWSE in writing for recordation and shall complete the filing process on the Securities Firm Filing Web-Entry. Subsequent amendments thereto shall be filed in the same manner.
  6. Securities brokers operating Direct Market Access and other kinds of order-placing methods shall comply with applicable regulations of the securities market, and implementing data protection and risk management. They shall not affect the order and efficiency of the stock exchange market.
  7. If irregularities occur during the Direct Market Access operation by the securities broker which may potentially affect the trading order of the market, the TWSE may request the securities broker to suspend, or may limit or prohibit, the use of Direct Market Access by specific, partial or all of the clients.
3     Process of Direct Market Access operation and preparation of trading order records by securities brokers:

    Surveillance system of the principal Dedicated line, or closed private network Computer system of the securities broker TWSE
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