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Article 41
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A securities firm may not entertain an application to open a margin account from any customer to whom any of the circumstances below applies. If an account has already been opened, the securities firm shall promptly notify the customer to close out all outstanding margin purchases and short sales on the next business day and thereafter cancel the margin account; if the customer fails to close out all outstanding margin trades within this time limit, the securities firm shall, by the mutatis mutandis application of Article 81, paragraph 3, close out the trades for the customer starting from the next business day.
- The customer does not meet the account opening threshold requirements.
- The customer applies to open a margin account using the name of another person.
- Any circumstance under Article 76, paragraph 1 or 3, of the TWSE Operating Rules or Article 47, paragraph 1 or 2, of the TPEx Trading Rules applies to the customer. However, if any circumstance under Article 76, paragraph 3, subparagraph 1 of the TWSE Operating Rules or Article 47, paragraph 2, subparagraph 1 of the TPEx Trading Rules applies to the customer, and the information has been forwarded by the TWSE or the TPEx at 11:30 a.m. the given morning, the securities firm shall notify the customer on the following business day.
- A brokerage account previously opened by the customer at the securities firm has been cancelled.
- The customer falls in any of the circumstances listed below with the securities firm and the case has not been closed:
- Failure to perform a settlement obligation on time under Article 91 of the TWSE Operating Rules or Article 87 of the TPEx Trading Rules.
- Breach of the margin agreement it has entered into with the securities firm.
- Default under Article 33 of the Operating Rules for Securities Lending by Securities Firms.
- Violation under Article 28 of the Operating Rules for Securities Business Money Lending by Securities Firms.
Provisions of the preceding paragraph shall apply mutatis mutandis in the event the customer is in one of the following circumstances:
- A juristic person has agreed for dissolution by resolution, is ordered for dissolution by competent authority, or is being dissolved as ordered in a court ruling, or is undergoing liquidation in accordance with the Company Act.
- A juristic person is being taken over or its debts are being cleared by the competent authority for the juristic person in accordance with the Banking Act, Insurance Act, Trust Law or other laws and regulations.
- A juristic person is ordered to suspend its business or its business license has been revoked by the competent authority for the juristic person.
- Money and/or securities in a margin account are the subject of a court ruling for provisional attachment or other compulsory execution.
- The customer is the subject of a court petition for reorganization, composition, or bankruptcy under the Company Act or the Bankruptcy Act, or has agreed to a composition, or is ordered for reorganization or bankruptcy by court ruling; or, if being a natural person, has commenced liquidation as ordered by court, and has not had its rights reinstated.
- The customer's assets are ordered to be confiscated or frozen during criminal proceedings.
- A clearinghouse for negotiable instruments has blacklisted the customer.
Where the sum of financing sought by the customer and the assessed amount of its other loan business with the same securities firm does not exceed NT$500,000, the securities firm may not inquire about the credit information regarding negotiable instruments, provided where an inquiry discloses the customer has been discredited by the clearing house, the preceding paragraph will still apply.
A securities firm may not entertain an application to open an account from a customer to whom any of the circumstances below applies at another securities firm, securities finance enterprise, or securities exchange, and where the case has not been closed. If an account has already been opened, the securities firm may not accept orders for margin purchase or short sale trades; after the customer has closed out its margin purchase and short sale trades, the securities firm shall immediately cancel the margin account:
- Breach of a margin agreement it has entered into with a securities firm or securities finance enterprise.
- Default under Article 33 of the Operating Rules for Securities Lending by Securities Firms.
- Violation under Article 28 of the Operating Rules for Securities Business Money Lending by Securities Firms.
- Event under Article 42, 45, or 49 of the TWSE Securities Borrowing and Lending Rules.
- Default or violation under the securities finance enterprise's securities settlement financing operating rules or securities lending operating rules.
Where any circumstance in the preceding four paragraphs applies to a juristic person or its responsible person, the responsible person or any juristic person represented thereby is also prohibited from opening a margin account. An account that has already been opened shall be subject to the provisions of paragraph 1 and the preceding paragraph.
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