These Directions are established in accordance with Article 28-1, Paragraph 5 of the Operating Rules of the Taiwan Stock Exchange Corporation ("TWSE").
Net available funds of a securities firm are calculated as follows:
Net available funds = Current assets - Current liabilities + Clearing and settlement fund + Operating bond
When applying to a branch office in Taiwan of a foreign securities firm, the abovementioned formula is based on the balance of each such item as listed in the monthly statement filed by said office each month; when applying to a futures commission merchant that concurrently engages in securities business, the above formula is based on the balance of each such item as listed in the monthly statement of the securities department filed each month.
The net funds available to a securities firm may be calculated as below without being subject to the restrictions in paragraphs 1 and 2 if it, for special reasons, makes an application accompanied by a letter of guarantee issued by a domestic bank and obtains the special approval of the TWSE 10 business days prior to the commencement date of the guarantee.
- The TWSE may relax the period of availability from two business days prior to the commencement date of the term of guarantee to two business days prior to its expiration based on a term of guarantee of not more than 10 business days as stated in the letter of guarantee (settlement days).
- The TWSE may include the amount of guarantee stated in the letter of guarantee in the net available funds of the securities fir4m.
A securities firm shall file via electronic media a "Calculation Sheet of Net Available Funds" (refer to attachment) based on the abovementioned formula and the content of the monthly accounting summary of the previous month, and the relevant supporting documents, with the TWSE for verification, prior to the seventh day of each month.
A newly established securities firm shall fill out the abovementioned Calculation Sheet based on its balance sheet submitted at the time it applied for approval and certificate of license, and submit the Calculation Sheet along with its supporting documents to the TWSE for verification upon the execution of the "Contract for Supply and Use in Centralized Securities Exchange Market Transactions."
When engaging in capital increase in cash, the securities firm may fill out the Calculation Sheet referenced in Paragraph 1 based on the content of the daily accounting summary of the date of approval by either the Ministry of Economic Affairs or the registration authority where the company is located, that is in charge of amendment registrations of companies, and submit the Calculation Sheet along with its supporting documents to the TWSE for verification.
The Net Available Funds stated in the Calculation Sheet referenced in the preceding three Paragraphs will be recorded in the TWSE computer files at the following times after being verified by the TWSE against monthly accounting summary, balance sheet or daily accounting summary to be correct:
- The net amount calculated in accordance with Paragraph 2 will be recorded before the newly established securities firm starts its operation.
- The net amount calculated in accordance with Paragraph 3 will be recorded after the verification, with the original amount stated in the computer files updated.
The Net Available Funds of a securities firm during the 16th day of each month to the 15th day of the next month will be the net amount stated in the TWSE computer files.
If a securities firm fails to fill out and submit the Calculation Sheet in accordance with the above-mentioned provisions, the Calculation Sheet lacks sufficient supporting documents, or there are other issues, the TWSE may use the net amount for the previous month as the Net Available Funds of the current month and, where necessary, may directly determine the Net Available Funds of said securities firm based on relevant information and notify the result of determination to the securities firm and record the same in the computer files of the TWSE.
When the total reported amount of brokerage or dealer trading entered by a securities firm in a single day reaches the largest multiple of its Net Available Funds, the TWSE shall stop the input of its terminals. If the largest multiple of its Net Available Funds is either 20 times or five times, the TWSE may issue early warnings at its discretion when the amount reaches two appropriate times below the largest multiple and notify the securities firms when the above-mentioned amount reaches the times set forth in the early warnings.
The securities firm may still continue the inquiry, change and cancellation procedures after the TWSE stops the input of its terminals. However, the TWSE will cease calculating total amounts reported by said firm.
When the TWSE stops the input of the terminals of a securities firm pursuant to the preceding Paragraph, it shall report to the competent authority for recordation and notify its board of directors of the implementation details.
The Net Available Funds for a securities firm and the total reported amount of brokerage or dealer trading entered by a securities firm in a single day shall be calculated collectively among the head office and the branch offices. A securities firm that concurrently operates brokerage and dealer trading of securities shall also calculate collectively its Net Available Funds or the total reported amount of trading.
Article 28-1 of the Operating Rules of the TWSE does not apply to a securities firm that is concurrently operated by a financial institution and a special-purpose securities firm in which the TWSE makes equity investment that accepts only trading and listing requests from special-purpose securities firms incorporated by a foreign exchange.
Article 28-1 of the Operating Rules of the TWSE, except Paragraph 3 of said Article, applies mutatis mutandis to a futures commission merchant that concurrently engages in securities business.
When a securities firm violates Article 2, Paragraph 2 or Article 3, Paragraphs 1 and 2 of these Directions, the TWSE may take the measures set forth in Article 135 of the Operating Rules of the TWSE.
These Directions shall take effect within a prescribed time limit after having been submitted to and approved by the competent authority.