Chapter I General Principles |
| Article 1 | These Regulations are adopted pursuant to Article 18, paragraph 2 of the Securities and Exchange Act ("the SEA").
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| Article 2 | A futures commission merchant that operates securities introducing broker business ("securities introducing broker") is a securities service enterprise, and shall obtain approval from the competent authority.
The only parties that may apply to become a securities introducing broker are futures commission merchants that operate futures brokerage business.
A futures commission merchant that concurrently operates securities brokerage business may not apply to operate securities introducing broker business.
A futures commission merchant that operates securities introducing broker business shall abide by the provisions of these Regulations and the related requirements of the Taiwan Stock Exchange Corporation (TWSE), the GreTai Securities Market (GTSM), and the Taiwan Securities Association (TSA).
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| Article 3 | Securities introducing brokers accept mandates from securities firms to engage in the following types of business:
- Soliciting securities trading business from securities investors.
- Acting on a securities firm's behalf to open accounts for securities investors.
- Accepting securities trading orders from securities investors and delivering the orders to a securities firm for execution.
- Acting on a securities firm's behalf to notify securities investors to settle securities transactions.
- Other related business approved by the competent authority.
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| Article 4 | A securities introducing broker that solicits securities trading business shall do so in the name of the mandating securities firm, and may not make misrepresentations, exaggerations, biased representations, fraudulent statements, or engage in other misleading conduct, and shall be subject, mutatis mutandis, to Article 5 of the Regulations Governing Securities Firms.
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| Article 5 | When acting on a securities firm's behalf to open accounts for securities investors, a securities introducing broker shall be subject, mutatis mutandis, to Articles 33 and 34 of the Regulations Governing Securities Firms.
When the mandating securities firm confirms and signs or seals the relevant information pertaining to account openings for securities investors performed on its behalf by the securities introducing broker pursuant to the preceding paragraph, it shall do so in accordance with securities laws and regulations and related provisions.
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| Article 6 | In receiving securities trading orders from securities investors and forwarding the orders for execution by the mandating securities firm, the securities introducing broker shall be subject, mutatis mutandis, to Article 35 of the Regulations Governing Securities Firms.
A securities introducing broker that operates the business of the preceding article and the preceding paragraph shall do so in accordance with the requirements of the TWSE, the GTSM, and the TSA regarding account openings, credit checks, transaction limits, and brokered transactions.
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| Article 7 | The brokerage contract that the securities introducing broker enters into with a securities investor on behalf of a mandating securities firm shall expressly stipulate that the securities introducing broker is jointly and severally liable with the mandating securities firm for damages arising out of its execution of any business listed under the subparagraphs of Article 3 of these Regulations.
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| Article 8 | A securities introducing broker may concurrently accept mandates from one or more securities firms; a securities firm may concurrently mandate one or more securities introducing brokers.
Each time that a mandated securities introducing broker enters into a mandate contract with the mandating securities firm of the preceding paragraph and commences business, the mandating securities firm shall first make respective contributions to the clearing and settlement fund of the TWSE and the settlement fund of the GTSM.
The amount of the contributions to the clearing and settlement fund and the settlement fund of the preceding paragraph is NT$3 million for each securities introducing broker. However, from the first year after a securities introducing broker enters into a mandate contract with a securities firm and commences the business, the amount that the securities firm is required to contribute to the clearing and settlement fund and the settlement fund, with respect to each securities introducing broker, shall be reduced to NT$2 million, and prior to the end of January of each year, the mandating securities firm shall make a deposit with the TWSE and GTSM for any shortfall in contributions, or in the event of a surplus, a withdrawal.
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| Article 9 | A securities introducing broker shall adopt an internal control system in accordance with the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets, prescribed by the competent authority, and the Rules Establishing Standards for the Internal Control Systems of Securities Introducing Broker Businesses Operated by Futures Commission Merchants, jointly prescribed by the TWSE and other securities-related institutions.
A securities introducing broker shall operate in accordance with laws and regulations, its articles of incorporation, and the internal control system of the preceding paragraph.
The adoption and amendment of the internal control system of paragraph 1 shall be reported to and approved by the board of directors, and a copy retained for inspection; when the competent authority or another securities-related institution requires revision within a prescribed period of time, the revision shall be made within that period.
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| Article 10 | The sites and facilities at which a securities introducing broker operates shall conform to the standards for sites and facilities adopted by the TWSE and the GTSM.
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| Article 11 | When any of the following circumstances applies with respect to a securities introducing broker, it shall report the matter to the competent authority:
- Litigation has resulted due to securities introducing broker business operated or engaged in by the securities introducing broker or any of its directors, supervisors, or employees.
- Any of the conditions referred to in Article 53 of the SEA applies with respect to a director, supervisor, or managerial officer.
- A director, supervisor, or employee has violated the SEA or an order issued by the competent authority pursuant to the SEA.
- Any other matter to be reported as required by the competent authority.
Matters to be reported pursuant to the preceding paragraph shall be reported to the competent authority by the securities introducing broker through the TWSE within five days from the date of the occurrence of the matter or the date on which it learns of the matter, and notification shall at the same time be provided to the mandating securities firm.
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