Chapter IV Handling of Violations |
| Article 52 | When any of the following circumstances applies to a securities firm, the TPEx may notify it to take supplementary or corrective action within a prescribed time period:
- Violation of Article 6, Article 7, Articles 15 to 28, Article 31, Articles 33 to 36, Article 38, Article 41, Article 42, or Article 44.
- Execution of financial derivatives trades not in conformance with the relevant portions of the securities firm's application or filing.
- A regulatory capital adequacy ratio less than 200 percent.
- Execution of trades not in conformance with the securities firm's "procedures for handling financial derivatives transactions" or its internal control or auditing systems.
- Violation of the applicable provisions of other TPEx Regulations, regulations, operating procedures, guidelines, directions, supplementary Regulations, public announcements, or circulars.
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| Article 53 | When any of the following circumstances applies to a securities firm, the TPEx may issue a warning and notify it to take supplementary or corrective action within a prescribed time period:
- Violation of Article 4, Article 14, paragraph 3, Article 29, Article 30, Article 37, Article 37-1, paragraph 1, subparagraphs 1, 3, or 4, or paragraph 2, Article 39, Article 40, Article 43, or Articles 45 to 50.
- Failure to take supplementary or corrective action within the time period prescribed in the preceding article.
- A violation of these Regulations or of related TPEx Regulations such as to affect the rights and interests of investors or orderly trading in the market.
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| Article 54 | When any of the following circumstances applies to a securities firm, the TPEx may impose a penalty of not less than NT$50,000 and not more than NT$3 million.
- Violation of Article 5, Articles 8 to 10, Article 37-1, paragraph 1, subparagraph 2, Article 39, or Article 40.
- Failure to take supplementary or corrective action within the time period prescribed in the preceding article.
- A violation of these Regulations or of related TPEx Regulations that has a material effect on the rights and interests of investors or orderly trading in the market.
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| Article 55 | When any of the following circumstances applies to a securities firm, the TPEx may suspend or terminate its financial derivatives trading, provided that such action shall not affect the validity of an already-transacted derivative product:
- Imposition of a penalty pursuant to subparagraph 2 of the preceding article three or more times during the preceding half-year.
- Failure to pay a penalty imposed pursuant to subparagraph 2 of the preceding article.
- Noncompliance with the conditions of Article 11, paragraph 1, subparagraph 1 or 2.
- Noncompliance with Article 12 by a foreign securities firm.
- The regulatory capital adequacy ratio of the securities firm has remained below 200 percent for 3 consecutive months.
- Receipt of a sanction from the competent authority under Article 66, subparagraph 2 of the Securities and Exchange Act due to financial derivatives business.
- Violation of Article 37-1, Article 39 or Article 40 and the violation is of a material nature.
- A violation of these Regulations or of related TPEx Regulations that has a material effect on the rights and interests of investors or orderly trading in the market.
- A material instance of inability to perform on a financial derivatives trade.
- Assessment, in accordance with the Directions for Risk Management Assessment Systems of Securities Firms, finding that the securities firm was Grade 5 during the most recent period or Grade 4 during the two most recent periods, or failure to conduct an assessment.
- The securities firm has failed to engage in financial derivative product trading business for 1 year after becoming qualified to engage in such business.
When a securities firm's qualification for trading of financial derivatives has been suspended or terminated due to circumstances under any subparagraph of the preceding paragraph, upon the extinguishment of the cause and in the absence of a cause under any other subparagraph of that paragraph, the securities firm may apply for restoration of its qualification by submitting relevant evidentiary documentation. The TPEx may restore the firm's qualification after performing a verification review and reporting to and receiving the consent of the competent authority.
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| Article 55-1 | In the event that employees of a securities firm have violated relevant provisions of these Regulations or of any directions, supplementary regulations, public announcements, or circular letters of the TPEx, the TPEx may, depending on the seriousness of the violation, notify the securities firm to warn such employees or halt their execution of business for a period from 1 month to 6 months.
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