Chapter III Application by a Financial Institution to Concurrently Operate Securities Business |
| Article 13 | A financial institution that in accordance with the Banking Act or other laws and regulations may concurrently operate securities business, when filing an application for the concurrent operation of such business, shall do so under the name of the financial institution. |
Info |
| Article 14 | With the exceptions of futures commission merchants (FCM), proprietary trading of government bonds, foreign bond trading agency business, business with special approval granted by the FSC based on policy considerations, and business for which permission for concurrent operation has been obtained prior to the issuance of these Standards, a financial institution that concurrently operates securities business shall restrict such concurrent operations to only one of the following:
1. Securities underwriting.
2. Securities dealing.
3. Securities trading brokerage or intermediary services.
4. Securities underwriting and dealing.
5. Securities dealing and over-the-counter securities brokerage.
An FCM that concurrently operates securities business shall restrict such concurrent operations to only one of the following:
1. Securities dealing.
2. Securities trading brokerage or intermediary services.
3. Securities dealing and securities trading brokerage or intermediary services.
An FCM that is concurrently operated by another business may not apply to concurrently operate securities business. |
Info |
| Article 15 | A financial institution that concurrently operates securities business shall allocate the operating capital in the same amount as that required under Article 3 hereof. If the paid-in capital of the financial institution is insufficient to allocate the operating capital, it shall carry out a capital increase before applying for concurrent operation.
A financial institution that concurrently operates securities business shall allocate operating capital through funds set aside especially for this purpose and, unless doing as provided for in Article 102 of the Banking Act, may not use it for purposes other than securities business. |
Info |
| Article 16 | The provisions of Article 6, 7, 8, 11, and 12 shall apply mutatis mutandis to a financial institution that applies to concurrently operate securities business. The provisions of Articles 11 shall apply mutatis mutandis to a financial institution that only operates as a dealer in government bonds and the financial institution shall assign at least one full time associated person to handle such business. |
Info |
| Article 16-1 | An FCM that applies to concurrently operate securities business shall meet all of the following requirements:
1. Its CPA-audited and attested financial report for the most recent period shows no accumulated deficit, is in compliance with Article 17 of the Regulations Governing Futures Commission Merchants, and is free of the circumstances specified in Article 22 of those same Regulations.
2. It has not been subject to a warning sanction by the FSC in the most recent 3 months.
3. In the most recent half-year it has not been subject to any FSC sanction under Article 66, subparagraph 2 of the Act ordering the company to dismiss any director, supervisor, or managerial officer from office, nor subject to any FSC sanction under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act ordering it to dismiss its responsible person or other relevant personnel.
4. It has not been subject to any FSC sanction suspending business operations in the most recent year.
5. It has not been subject to any FSC sanction voiding permission for any part of its business in the most recent 2 years.
6. It has not, in the most recent year, had its trading operations suspended or restricted pursuant to the bylaws of the futures exchange or a futures clearing house.
7. Other requirements as specified by the FSC.
If an FCM is not in compliance with a requirement in subparagraphs 2 to 6 of the preceding paragraph, but the circumstances have shown concrete improvement, it may be exempted from those restrictions with the approval of the FSC. |
Info |
| Article 16-2 | An FCM that applies to concurrently operate securities business shall, except as otherwise provided by law, establish an independent department dedicated to handling securities business. That department's operations and accounting must be independent. |
Info |
| Article 17 | In filing an application with the FSC for the permit to concurrently operate securities business, a financial institution shall submit all of the following documentation:
1. The application (Annex 6).
2. Photocopy of its business license.
3. Articles of incorporation or document equivalent to articles of incorporation.
4. Business plan: specifying the principles of business operation; internal organization and division of labor; personnel recruitment; overview of the site and facilities; and financial forecasts for the next 3 years.
5. Meeting minutes of the board of directors or board of governors.
6. List of directors and supervisors.
7. Statement declaring that none of the circumstances in Article 53 of the Act exists in respect of its directors and supervisors (Annex 5).
8. Certification of the deposit made under Article 7.
9. Documentation affirming the availability of the computer linkage as required under Article 8.
10. Other documents as required by the FSC.
An FCM that applies to concurrently operate securities business, in addition to submitting the documentation of the preceding paragraph, shall also submit the most recent CPA-audited and attested financial report, and operating rules regarding risk segregation and conflicts of interest for securities and futures business operations. |
Info |
| Article 18 | Within 6 months from the date of the permit issued by the FSC for concurrent operation of securities business by a financial institution, it shall apply to the FSC for issuance of a business license and submit all of the following documentation:
1. The application (Annex 7).
2. Internal control system for the securities business.
3. List of managerial officers and associated persons with certification of their qualifications.
4. Statement declaring that none of the circumstances in Article 53 of the Act exists in respect of its managerial officers (Annex 5) .
5. Documentation certifying compliance with Article 6.
6. Documentation certifying the deposit of the operation bond.
7. Contract affirming the availability to utilize the computer linkage facilities under Article 8.
8. Other documents as required by the FSC.
The permit for the operation of securities business shall be voided if the financial institution fails to apply for the license within the period prescribed in the preceding paragraph. The period prescribed in the preceding paragraph may be extended, however, if the financial institution applies to the FSC, with good cause, prior to the expiration of the period. Such an extension shall not exceed 6 months and may be granted only once. |
Info |
| Article 18-1 | In the event that a financial institution only applies to operate as a dealer in government bonds, its application for the permit under Article 17 may be exempted from the requirement of the documentation of subparagraphs 4, 6, 7 and 8; its application for the business license under Article 18 may be exempted from the requirement of the documentation of subparagraph 5. |
Info |
| Article 18-2 | In any of the following circumstances, the FSC may deny an application from a financial institution for a permit for concurrent operation of securities business:
1. Any of the circumstances in Article 53 of the Act applies with respect to a director, supervisor, or managerial officer.
2. Any misrepresentation or falsehood is found in any content or information in the application documents.
3. The business plan or the internal control system is not concrete enough, or cannot be implemented effectively.
4. Other circumstances under which denial of permission is considered necessary to protect the public interest.
If the application documents submitted under this Chapter are incomplete or otherwise contain incomplete information, and the situation is not corrected within a time limit designated by the FSC, the application documents will be rejected. |
Info |