Chapter VII Risk Control |
| 30 | A securities firm conducting securities business money lending may not engage in transactions with any party having any of the following relationships with it:
- A director, supervisor, representative of a juristic-person director or juristic-person supervisor, employee, or shareholder holding more than 10 percent of the total shares, of the securities firm.
- A spouse of a director or supervisor, or of a representative of a juristic-person director or juristic-person supervisor, of the securities firm.
- A minor child of a person of a status specified in subparagraph 1 herein.
The conditions such as financing interest rates and processing fees imposed by a securities firm on related parties and affiliates other than those listed in the preceding paragraph may not be more favorable than those on other customers.
A securities firm shall incorporate the provisions of the preceding two paragraphs into its internal control system.
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| 31 | In securities business money lending conducted by a securities firm, the securities firm shall adopt an internal control system regarding circumstances such as over-concentration of the outstanding balance of financing to customers in a single party, a single group of related parties, or a single security, and shall adopt risk control mechanisms.
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| 32 | (deleted)
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| 33 | In securities business money lending conducted by a securities firm, the sum of the total amount of financing to customers plus the total financing amount of borrowing and lending of funds for unrestricted purposes and margin purchases and short sales of securities may not exceed 400 percent of the securities firm's NAV.
When a securities firm conducts securities business money lending, the combined total of money lending financing limits that it extends to each customer shall be regulated by the securities firm. The securities firm shall adopt its own internal procedures for credit extension operations and risk management, in order to appropriately assess customer credit limits and manage credit extension risks. Such procedures shall at least incorporate the following:
- Means of assessment of the maximum lending amount to individual customers. The assessment shall take the loan amounts extended to approved customers in other loan businesses into consideration. The percentage by which the total value of funds or securities loaned to individual customers in the overall loan business may not exceed the net worth shall be prescribed. Approval of the board of directors is required if the financing amount to individual persons reaches the higher of NT$300 million and 1% of the securities firm's NAV.
- Means of assessment of the maximum lending amount of a single security to individual customers. The assessment shall take the loan amounts extended to approved customers in other loan businesses into consideration.
- Means of identification of securities or customers with a high risk. Special monitoring and approval procedures shall be established in regard to the amount of high-risk securities or the lending limit to high-risk customers.
- The lending limit to customers shall be determined according to principles that are both fair and reasonable. Lending of such whole amount to a single customer shall be avoided.
- If the assessment of the maximum financing amount to individual customers indicates certain individual customers are known or can be determined to be related accounts, which means the credit risks of such customers are related (for example, the risk of providing trading service to such customers), the lines of credit of all such related customers are subject to combined regulations in consideration of the credit risks and apply to renewals and adjustments of credit lines by customers which have opened an account and to new accounts, provided in the event of a change in respect of a related account of a customer, such as credit line adjustment or addition of related accounts, the financing amounts of the customer and its related accounts are still subject to combined regulation.
A securities firm conducting securities business money lending shall file the data in the preceding paragraph with the TWSE on a daily basis.
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| 34 | In securities business money lending conducted by a securities firm, with respect to customers posting collateral in the form of securities being purchased by the customers, if the amount of financing made available to customers on any single business day exceeds 50 percent of the securities firm's NAV or reaches NT$1 billion, or if the outstanding balance of financing to customers exceeds 100 percent of the securities firm's NAVh, the securities firm shall file the relevant financing data with the TWSE on the same day.
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