Chapter II Sub-accounts Within the Cash Management Account |
| Article 17 | A securities firm conducting business relating to custody and investment of funds on behalf of customers shall, upon receipt of a customer's written request for the provision of such business services, first verify that the customer has established and maintains an account for book-entry transfer of securities and funds for the transactions specified in Article 9, paragraph 1, subparagraph 1 before it may accept the request and enter into an agreement with the customer for custody and investment of the customer's funds and subsequently provide such services to the customer.
The Taiwan Securities Association shall prepare and furnish a template of the agreement for custody and investment of funds on behalf of customers as specified in the preceding paragraph.
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| Article 18 | A customer shall give written notice to the securities firm of any change of name, national ID number, certificate ID number, government uniform invoice number on the profit-seeking enterprise registration certificate, and address or mailing address of the customer, agent, or representative, as supplied in the agreement for custody and investment of funds on behalf of the customer.
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| Article 19 | A securities firm conducting business relating to custody and investment of funds on behalf of customers shall set up a separate sub-account within its cash management account for each customer and record the following therein on a daily basis:
- Transfer of customer funds from any specified source.
- Transfer of funds not reaching the minimum investment level.
- Transaction in subject instruments and the transfer of funds.
- Transaction involving further reinvestment of funds as agreed with the customer and the transfer of funds.
- Transfer of interest accrued on custodied funds and income arising from investing of funds.
- Transaction conducted to meet the customer's need of settlement funds and the transfer of funds.
- Transaction conducted to meet the customer's request for early withdrawal of funds and the transfer of funds.
- Transaction conducted due to the customer's early termination of the agreement or non-renewal of the agreement upon expiration and the transfer of funds.
The securities firm shall retain all records and all receipt and payment vouchers relating to any receipt and release/payment of funds under the preceding paragraph and relevant investing activities, and prepare a reconciliation statement on a monthly basis based on daily account records and send it to the customer. Additionally, the reconciliation statement shall provide transaction details and balance details of subject instruments already used, specifying:
- In the case of a fund, the name of the fund, total number of units, and net asset value.
- In the case of a repo transaction, the counterparty, type of underlying bonds, monetary amount assigned for transaction, interest rate, and duration of agreement.
- In the case of an outright transaction, the type, name, face amount, face interest rate, purchase amount, execution price, transaction date, expiration date, and any other relevant information with respect to the underlying instrument.
The securities firm shall make a notation in the reconciliation statement indicating any transaction under subparagraphs 1 to 3 of the preceding paragraph that is conducted with the securities firm itself or with a company that is an interested party of the securities firm.
The securities firm shall obtain a letter of consent signed by each customer agreeing that the securities firm may provide the relevant information regarding its custody and investment of funds on behalf of the customer to the TWSE, the GTSM, and any institution designated by the competent authority for their collection, computerized processing, and international transmission or use of the information in accordance with applicable laws and regulations.
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| Article 20 | A securities firm shall keep detailed and accurate records for its conduct of business relating to custody and investment of funds on behalf of customers, and shall prepare the following statements on a daily basis:
- Daily statement of receipt and payment of custodied funds through the cash management account.
- Daily statement of transactions and transfers involving investment of funds through the cash management account.
- Statement of funds custodied, invested, and transferred through the cash management account with respect to each customer.
The statements prepared and completed under the preceding paragraph may be stored in electronic form. The electronic statements shall be prepared and stored in a way that they cannot be edited or erased and can be readily converted into written form.
The securities firm shall at the end of each month transmit to the TWSE the current-month information regarding daily statements of receipt and payment of custodied funds, and daily statements of transactions and transfers involving investment of funds, through the cash management account.
All statements, vouchers, and documents relating to the business contemplated hereunder shall be preserved for a minimum of five years, or for a longer period if so required by any other applicable law or regulation regarding the period of preservation for such materials. Notwithstanding the foregoing, in the event of dispute, the materials shall be preserved until resolution of the dispute.
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| Article 21 | A securities firm investing in any of the eligible instruments specified in Article 10, paragraph 2 may, if so agreed with the customer, further reinvest the funds received upon sale, expiration, early termination, or redemption, as the case may be, of the subject instrument,.
With the exception of a subsequent repo transaction with the same counterparty or a switching of shares between funds, any funds falling within the scope of the preceding paragraph shall be transferred to the cash management account before further reinvesting.
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| Article 22 | If a customer lacks sufficient funds to settle a trade, the securities firm shall on its own initiative cover the customer's settlement obligation with the custodied funds of the customer not yet reaching the minimum investment level, and, if still insufficient, then dispose of subject instruments in the order of priority as agreed with the customer to cover the settlement obligation.
For the purposes of transferring the needed settlement money under the preceding paragraph, the securities firm shall first forward the proceeds received on disposal of subject instruments to its cash management account, and then promptly transfer the proceeds to its relevant settlement account and settle the obligation on behalf of the customer.
The securities firm shall promptly give notice to the customer for clarification of responsibilities when it finds that the customer still lacks sufficient funds for settlement of trade even after action has been taken under paragraph 1, or when the proceeds from disposal of subject instruments cannot be timely transferred to the account by the due time for settlement of the customer's obligation.
For the purposes of paragraph 1, the account with respect to which further action is to be taken due to a customer's lacking of sufficient settlement funds may only be one that involves a source of funds specified in Article 9, paragraph 1 and as agreed between the securities firm and the customer.
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| Article 23 | To withdraw money, a customer shall complete and submit a Customer Request for Withdrawal of Custodied or Invested Funds on the date of the withdrawal request.
Upon request by the customer under the preceding paragraph, the securities firm shall transfer the requested withdrawal amount from the customer's custodied funds not yet reaching the minimum investment level, and, if still insufficient, then dispose of any subject instrument in the order of priority as agreed with the customer, to meet the customer's withdrawal request.
The securities firm processing transfer of funds under the preceding paragraph in response to the customer's withdrawal request shall, by the due time as agreed with the customer, forward the funds as transferred separately to the securities firm's cash management account, to the account for book-entry transfer of securities and funds opened by the customer for engaging in securities trading on the exchange or over-the-counter market.
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| Article 24 | For an early termination of agreement to become effective, the customer shall submit a completed Request for Termination of Agreement on the date of the request.
Article 7, paragraph 3 shall apply mutatis mutandis with respect to the securities firm's processing of the customer's funds still held in custody in the cash management account and of any subject instrument involving the customer's funds and any subsequent transfer of funds upon the customer's request for early termination of the agreement or non-renewal of the agreement upon expiration.
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