Chapter III The Application by a Financial Institution to Concurrently Operate Securities Business |
| Article 13 | A financial institution which, in accordance with the Banking Act or other laws and regulations, may engage in securities business shall file the application under the name of the said financial institution.
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| 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 a permission for concurrent operation has been obtained prior to the issuance of these Standards, a financial institution that concurrently engages in securities business shall restrict such concurrent operations to only one of the following:
- Securities underwriting.
- Securities dealing.
- Securities trading brokerage or intermediary services.
- Securities underwriting and dealing.
- Securities dealing and securities brokerage at its place of business.
An FCM that concurrently engages in securities business shall restrict such concurrent operations to only one of the following:
- Securities dealing.
- Securities trading brokerage or intermediary services.
- Securities dealing and securities trading brokerage or intermediary services.
An FCM that is concurrently operated by another business may not apply to concurrently engage in securities business.
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| Article 15 | A financial institution which concurrently operates securities business shall allocate the operating capital in the amount same as that required under Article 3 hereof; if the paid-in capital of the said financial institution is insufficient to allocate the operating capital, a capital increase has to be made before the application.
A financial institution which concurrently operates securities business shall allocate operating capital through funds set aside especially for this purpose and unless governed by Article 102 of the Banking Act, may not use it for purposes other than securities business.
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| Article 16 | The provisions of Article 6, 7, 8, 11, and 12 shall be applied mutatis mutandis to a financial institution which applies to concurrently operate securities business. The provisions of Articles 11 shall be applied mutatis mutandis to a financial institution which only operates as a dealer in government bonds and the said financial institution shall assign at least one full time associated person to deal with such business.
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| Article 16-1 | An FCM that applies to concurrently engage in securities business shall meet all of the following requirements:
- 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.
- It has not been subject to a warning sanction by the FSC in the most recent 3 months.
- 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.
- It has not been subject to any FSC sanction suspending business operations in the most recent year.
- It has not been subject to any FSC sanction revoking a portion of its business permit in the most recent 2 years.
- It has not, in the most recent year, had its trading operations suspended or restricted pursuant to the bylaws of a futures exchange or futures clearing house.
- 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.
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| Article 16-2 | An FCM that applies to concurrently engage in 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.
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| 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:
- The application (Annex 6).
- A photocopy of its business license.
- Articles of incorporation or equivalent documentation.
- A business plan which specifies: the principles of business operation; the division of internal organization; the employment of personnel; the description of facilities; and its financial projection for the next 3 years.
- The minutes of the Board of directors.
- The list of directors and supervisors.
- A statement declaring the inapplicability of Article 53 of the Act in respect of its directors and supervisors (Annex 5).
- The certification of the deposit made under Article 7.
- The documentation affirming the availability to the computer linkage as required under Article 8.
- Other documents that the FSC may so require.
An FCM that applies to concurrently engage in 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 differentiation and conflict of interest for securities and futures business operations.
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| Article 18 | The application by a financial institution for a securities business operation license shall be filed within 6 months from the date of the permit issued by the FSC and all of the following documentation shall be submitted:
- The application (Annex 7).
- The system of internal control for the securities business.
- The list of managerial and associated persons with certification of their qualifications.
- A statement declaring the inapplicability of Article 53 of the Act in respect of its managers (Annex 5) .
- The documentation certifying the compliance with Article 6.
- The documentation certifying the deposit of operation bond.
- The contract affirming the availability to utilize the computer linkage facilities under Article 8.
- Other documents that the FSC may so require.
The permit for the operation of securities business shall be revoked if the said financial institution fails to apply for the license within the duration prescribed in the preceding paragraph. The duration prescribed in the preceding paragraph may be extended, however, should the said financial institution apply to the FSC, with just cause, prior to the expiration of the duration. Such an extension shall not be more than 6 months and may be applied only once.
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| 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 exempt the documentation of subparagraphs 4, 6, 7 and 8; its application for the securities business operation license under Article 18 may exempt the documentation of subparagraph 5.
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| Article 18-2 | In any of the following circumstances, the FSC may reject an application from a financial institution for a permit for concurrent operation of securities business:
- Any of the circumstances in Article 53 of the Act applies with respect to a director, supervisor, or managerial officer.
- Any misrepresentation or falsehood is found in any content or information in the application documents.
- The business plan or the internal control system is not concrete enough, or cannot be implemented effectively.
- 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 returned.
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