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Taiwan Stock Exchange Corporation Procedures for Handling Emergencies at Branch Units of Foreign Securities Firms  CH

Amended Date: 2015.01.22 
1     These Procedures are specifically established for the handling of emergencies at branch units of foreign securities firms.
2     For purposes of these Procedures, a branch unit of a foreign securities firm shall mean a branch which is established within the territory of the R.O.C. by a foreign company or organization pursuant to Chapter 4, Section 2 of the Standards Governing the Establishment of Securities Firms and has signed a contract for the supply and use of the centralized securities exchange market with the Taiwan Stock Exchange Corporation ("TWSE") for carrying out securities business.
    For purposes of these Procedures, the handling of emergencies shall mean measures taken by the TWSE in response to a financial crisis or economic crisis that hits the head office of a foreign securities firm.
3     On the day it becomes aware of a financial crisis or economic crisis as mentioned in the preceding article, the TWSE shall establish an ad hoc crisis management center, consisting of the Trading Department, Intermediaries Service Department, Surveillance Department, Corporate Communications System and other relevant department together with the competent authority and Taiwan Depository & Clearing Corporation (TDCC) invited.
4     The convener of the ad hoc crisis management center shall be at the level of vice president or above of the TWSE. The convener shall coordinate relevant departments and take the following steps:
  1. For the purpose of confirming the news and obtaining the most updated information about the incident, contact the stock exchange, securities regulator at the place of the head office of the foreign securities firm, and international organization of securities affairs etc. urgently via telephone, facsimile or e-mail.
  2. News release regarding updates of such event shall be distributed solely by the crisis management center on its own initiative.
  3. Once the preceding confirmation process is completed, the TWSE shall take action as follows:
    1. Promptly issue a letter to the branch unit of such foreign securities firm in Taiwan to request such branch unit to advise, within two days of the receipt of such notice, the latest update regarding its financial condition, which shall also cover its analysis of such financial crisis of the head office and an estimate of potential impact of the financial problem of its head office on it.
    2. Upon the reporting by the branch unit of such information requested according to the preceding paragraph, the TWSE shall immediately make it publicly available pursuant to Article 25, Paragraph 4 of the Operating Rules of the TWSE.
    3. Should such branch unit fail to provide the information indicated in Subparagraph a as required, it shall be banned from trading from the next business day pursuant to Article 142, Paragraph 1, Subparagraph 1 of the Operating Rules of the TWSE and Article 4 of the TWSE Determination Standards and Handling Procedures for the Avoidance or Refusal of Examinations by Securities Firms.
  4. If the business of the head office of the foreign securities firm has been partially suspended due to the economic crisis overseas, the TWSE shall take action as follows:
    1. On the day the TWSE becomes aware of the fact or the following business day, immediately send personnel to its branch unit in Taiwan for financial inspection pursuant to the TWSE Rules Governing Targeted Examinations of and Guidance to Securities Firms, use the on-line monitoring system to control the types and amounts of securities deposits and withdrawals by such branch unit, and ascertain whether funds held by such branch unit are managed pursuant to Article 38 and Article 39 of the Regulations Governing Securities Firms and not used for other purposes, to secure the interests of customers.
    2. Except otherwise as instructed by the competent authority, the on-line monitoring mentioned in the preceding subparagraph shall last at least until the crisis management center agrees there is no threat toward the safety of the domestic market.
  5. If the business of the head office of the securities firm has been completely suspended due to the economic crisis overseas, in addition to the above steps taken when such business is partially suspended, the TWSE shall take action as follows:
    1. On the day the TWSE becomes aware of the fact or the following business day, request the responsible person of such branch unit in Taiwan to explain the Chinese wall established between such branch unit and its foreign head office to the crisis management center, with the relevant financial materials presented, within 24 hours.
    2. From the next business day of such notice, pursuant to Article 8 of the TWSE Rules Governing Targeted Examinations of and Guidance to Securities Firm, lower the multiple of net funds available for use to the extent that the amount of its brokerage or dealer trading does not exceed the amount of funds exclusively appropriated for operations within the territory of the R.O.C. as set forth in the Article 29 of the Standards Governing the Establishment of Securities Firms.
    3. Unless an application is made by the branch unit of the foreign securities firm in Taiwan and approved by the crisis management center or unless the competent authority gives its instruction, the above restrictions shall not be removed.
  6. If the head office of such foreign securities firm has been declared bankrupt in its jurisdiction due to the economic crisis overseas, the TWSE shall take action as follows:
    1. From the following day after the TWSE becomes aware of the fact, ban its branch unit in Taiwan from engaging in brokerage or dealer trading on the TWSE and report to the competent authority in writing.
    2. Before trading is halted as in the preceding subparagraph, request the appointed securities firm or designate other securities firm to handle any outstanding settlement affairs on behalf of the branch unit pursuant to the TWSE Rules Governing Targeted Examinations of and Guidance to Securities Firms under the assistance and guidance of personnel sent by the TWSE, to secure the interests of customers.
    3. Disclose relevant material information to other securities firms and investors on the Market Information System.
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5     Issues not addressed by these Procedures are governed by other applicable regulations of the TWSE.
6     These Procedures shall take effect after having been submitted to and approved by the competent authority. Subsequent amendments thereto shall be effected in the same manner.