Chapter I General Principles |
| Article 1 | These Rules are adopted pursuant to Article 45-1, paragraph 1 of the Regulations Governing Securities Firms, Article 11, paragraph 2 of the Standards Governing the Establishment of Securities Firms, and Article 21-1, paragraph 1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms.
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| Article 2 | A securities firm operating brokerage business for trading and exchanging beneficial certificates of funds (hereinafter, "fund brokerage") shall do so in accordance with these Rules and related provisions, except as otherwise provided by law or regulation.
"Fund brokerage business" means a securities firm handling trading or exchanging of funds between customers over a trading platform.
For the purposes of these Rules, "fund" means a securities investment trust fund or offshore fund as defined in Article 5 of the Securities Investment Trust and Consulting Act but does not include any fund already listed on the Taiwan Stock Exchange or Taipei Exchange.
If fund brokerage business handled by a securities firm will involve foreign exchange business, the securities firm shall obtain the consent of the Central Bank.
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| Article 3 | Terms used in these Rules are defined as follows:
- The competent authority: the Financial Supervisory Commission.
- Trading platform: the information platform set up by a securities firm for the operations of fund brokerage business.
- Trade: the purchase or sale of a fund over the trading platform by a securities firm based on an order received from a customer.
- Exchange: a transaction in which one fund is exchanged for another fund over the trading platform by a securities firm based on an order received from a customer.
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| Article 4 | To apply to operate fund brokerage business, the applicant shall apply to establish a securities firm or convert into a securities firm under Article 9 or 10-2 of the Standards Governing the Establishment of Securities Firms, or to add an additional business type or business item under Chapter VI of the Standards Governing the Establishment of Securities Firms. It shall submit the application and supporting documents to the TPEx which will review them and then forward them to the competent authority for approval.
After a securities firm has received approval from the competent authority under the preceding paragraph, it shall submit an application (Attachment 1) clearly stating the required information, along with the required supporting documents, to the TPEx to apply to sign a Contract for Operation by a Securities Firm of Brokerage Business for Trading and Exchanging Beneficial Certificates of Funds (Attachment 2).
If a securities firm, when it has merely signed the Contract with the TPEx under the preceding paragraph, experiences any of the matters required to be reported as listed in Article 4, paragraph 1 of the Regulations Governing Securities Firms, it shall, unless otherwise provided by law or regulation, submit its report to the TPEx, which shall forward it to the competent authority.
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| Article 5 | A securities firm shall adopt an internal control system pursuant to the provisions relating to fund brokerage business set out in the Standard Directions for the Internal Control Systems of Securities Firms adopted by the TPEx and submit it for approval by its board of directors and shall comply with Articles 21 to 24 and Article 36-2, paragraph 2 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets.
A securities firm's operation of the business under these Rules shall comply with laws and regulations, its articles of incorporation, and the internal control system referred to in the preceding paragraph.
Whenever the TPEx gives notice to make any amendments to the internal control system referred to in paragraph 1, the securities firm shall make the amendments within the specified time limit.
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| Article 6 | A securities firm operating fund brokerage business shall adopt a risk-based approach to perform its anti-money laundering and countering the financing of terrorism (AML/CFT) operations, in accordance with the provisions of the Money Laundering Control Act, the Counter-Terrorism Financing Act, the Regulations Governing Anti-Money Laundering of Financial Institutions, and the Regulations Governing Internal Audit and Internal Control System of Anti-Money Laundering and Countering Terrorism Financing of Securities and Futures Business and Other Financial Institutions Designated by the Financial Supervisory Commission.
A securities firm operating fund brokerage business shall establish an internal control and audit system for AML/CFT, based on the risk of money laundering and terrorism financing as well as its business scale, and taking into reference the Taiwan Securities Association Template for Guidelines Governing Anti-Money Laundering and Countering Terrorism Financing of Securities Firms, and shall have the system approved by its board of directors, and furthermore shall regularly review whether any amendments to the system are needed.
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| Article 7 | The places of business and facilities of a securities firm operating fund brokerage business shall comply with the standards governing sites and facilities as prescribed by the TPEx.
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| Article 8 | A securities firm shall, on a customer-by-customer basis, establish mechanisms for the collection, payment, transfer, and custody of money and mechanisms for the recordation, transfer, and custody of funds, and incorporate them into its internal control system.
The securities firm shall sign a contract with the centralized securities depositary enterprise, and on a daily basis transmit data including the itemized details of trades and exchanges of funds over the trading platform to the information reporting system designated by the centralized securities depositary enterprise, and the centralized securities depositary enterprise shall save backups of the data and make it available for querying and reference by investors. If any discrepancy is discovered, the securities firm and the centralized securities depositary enterprise shall jointly investigate and determine the cause and correct the discrepancy.
The itemized data that the securities firm shall transmit under the preceding paragraph shall be confined to funds for which the collection and payment of money for subscription and redemption is done through a segregated bank account designated for this purpose by the centralized securities depository enterprise.
Matters relating to information transmission, handling of irregularities, and fees shall be handled in accordance with the provisions of the centralized securities depositary enterprise.
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| Article 9 | A securities firm operating fund brokerage business shall, in accordance with Article 38-1 of the Regulations Governing Securities Firms, establish a segregated deposit account with a bank for the collection and payment of customer money. The money in that account shall be kept separate and independent from the securities firm's own assets and may not be used for any other purposes.
A securities firm may not utilize the money referred to in the preceding paragraph except for the purpose of making required payments on behalf of its customer.
A securities firm operating fund brokerage business shall sign a trust agreement with the financial institution with which the segregated deposit account is opened, designate the segregated deposit account as the trust account, and engage the financial institution to manage, utilize, and dispose of the funds in the account in accordance with the trust agreement.
A securities firm operating fund brokerage business, if it fails to do as set out in the preceding paragraph, may not accept money from customers.
A securities firm's creditors may not, to satisfy any debt owed by the securities firm with respect to its own property, make any claim or exercise any other right against money obtained by the securities firm for a customer in connection with business.
The trust agreement signed between the securities firm and the financial institution in accordance with paragraph 3 shall stipulate the following:
- The scope of the management and utilization of the trust property shall be limited to investment in funds as defined in Article 2, paragraph 3 herein or other scope of investment/utilization approved by the TPEx or the competent authority.
- When the trustee financial institution makes payments or transfers money in accordance with the instructions of the securities firm, it shall check the trade data of the securities firm's customer.
- The securities firm agrees that the trustee financial institution shall provide data related to the transactions of the dedicated trust account as required by the competent authority or the TPEx to audit the business of the securities firm.
- If the securities firm suspends operations, terminates its operations, reorganizes, is declared bankrupt, dissolves, has its establishment registration or permit canceled, or is otherwise unable to perform matters in connection with the payment of money, the beneficial rights in the trust shall vest in the customer. The trustee financial institution shall then promptly return the trust property to the customer or transfer it to the new trustee financial institution.
- Except as provided in the preceding subparagraph, the beneficial rights in the trust may not be transferred or pledged.
- Other matters as provided by the TPEx or the competent authority.
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| Article 10 | The securities firm's chief officer for and personnel executing fund brokerage business and its internal audit officer and internal auditors shall possess the qualification of securities agent and shall participate in pre-service and in-service training as required by the TPEx.
In the case of a securities firm operating only fund brokerage business, the board of directors shall appoint one senior officer to serve as the chief AML/CFT compliance officer.
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| Article 11 | The internal auditors of a securities firm shall perform regular or unscheduled internal audits of its finances, business, and information security, prepare internal audit reports, and keep them available for auditing.
The internal audit reports under the preceding paragraph shall include whether the finances and business of the securities firm comply with relevant laws and regulations and its internal control system.
A securities firm shall file with the TPEx, in the prescribed format by the end of each fiscal year, its annual audit plan for the next fiscal year, and within 2 months from the end of each fiscal year, it shall file with the TPEx in the prescribed format its report on the execution of its previous fiscal year's annual audit plan.
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| Article 12 | A securities firm shall keep records of its handling of fund brokerage business and keep them available for auditing.
The records under the preceding paragraph shall be kept for at least 15 years. In the event of any dispute, however, they shall be kept until the dispute is resolved.
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