Chapter III Monitoring and Oversight
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Section 1 Finances and Operations
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| Article 21 | When a futures commission merchant receives permission from the competent authority to operate securities introducing broker business, it shall complete amendment of its business registration, then open a special account with a financial institution designated by the competent authority and deposit an operating bond. An operating bond shall also be deposited when a branch unit receives permission to operate securities introducing broker business.
The operating bond required under the preceding paragraph is NT$10 million for the securities introducing broker and NT$5 million for each branch unit.
The financial institution in paragraph one shall be a bank that has been approved to operate custody business, and meets the conditions prescribed by the competent authority.
The operating bonds of paragraph one shall be deposited in the form of cash, government bonds, or financial bonds.
Operating bonds deposited by a futures commission merchant in connection with its operation of securities introducing broker business may not be separately deposited in different institutions, reported lost, or rescinded. The deposited operating bond and associated certificate of depository may not be provided as a security, and unless approved by the competent authority, may not be withdrawn or replaced.
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| Article 22 | By the tenth day of each month, a securities introducing broker shall submit to the TWSE or GTSM a statement of the business volume in the preceding month.
The forms for the monthly statements referred to in the preceding paragraph, and any amendments thereto, shall be respectively prescribed by the TWSE and the GTSM and filed with the competent authority for recordation.
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| Article 23 | A securities introducing broker shall enter into a mandate contract with the mandating securities firm, which shall contain the following particulars:
- The names of the parties to the contract.
- That either party shall notify the other upon receiving a securities investor's complaint.
- Provisions for commissions and other relevant fees.
- The scope of agency business of the securities introducing broker and the procedures for its execution.
- The scope of information and services to be provided by the parties to the contract.
- That neither party shall refuse a request of the other party for provision of necessary business and financial information.
- That neither party to the contract shall improperly use information obtained from the other party.
- That when the securities introducing broker is unable to perform the business, it shall be directly handled by the mandating securities firm.
- A method for handling damages attributable to either party to the contract.
- A method for handling damages not attributable to either party to the contract.
- That the mandating securities firm shall bear joint and several liability if the securities introducing broker is liable for damages caused to a securities investor or any third person resulting from deliberate intent or negligence in performing any type of business under the subparagraphs of Article 3, paragraph 1.
- The settlement of trading disputes.
- The alteration of contract provisions.
- The rescission or termination of the contract.
- The effective date of the contract.
- Other necessary statements of the parties' rights and obligations.
- Other matters required by the competent authority.
A mandating securities firm may not enter into an agreement in advance with a securities introducing broker to waive the liability referred to in subparagraph 11 of the preceding paragraph. Any change, rescission, or termination of the mandate contract of paragraph 1 above shall be reported to the competent authority in advance for recordation by.
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| Article 24 | A mandating securities firm may not, by a mandate contract or in any other manner, agree with a securities introducing broker to allow the securities introducing broker to execute any types of business on its behalf other than those listed under Article 3.
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| Article 25 | To protect the rights and interests of the securities investors, a securities introducing broker shall promptly deliver the securities trading orders of securities investors to the mandating securities firm for execution.
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| Article 26 | In the operation of securities introducing broker business by a futures commission merchant, the business shall be operated by a dedicated department and a dedicated person shall be assigned responsibility for its management, and the business shall be executed by registered, qualified associated persons for securities business.
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| Article 27 | A securities introducing broker shall keep at its business premises all the business-related certificates, vouchers, books of account, statements, records, contracts, and relevant documents for inspection at any time by the competent authority, the TWSE, the GTSM, or other institutions designated by the competent authority.
The retention period for the certificates, vouchers, books of account, statements, records, contracts, and relevant documents referred to in the preceding paragraph shall be as provided in the Business Accounting Act and other relevant laws and regulations.
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| Article 28 | The competent authority, the TWSE, the GTSM, or an institution designated by the competent authority may examine the business or finances of the securities introducing broker and other necessary matters.
A securities introducing broker shall provide explanations and relevant documents in connection with the examinations referred to in the preceding paragraph.
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Section 2 Personnel |
| Article 29 | The term "associated person" as used in these Regulations shall mean a person engaging in the following types of business on behalf of a securities introducing broker:
- The businesses under Article 3 herein.
- Internal auditing of a securities introducing broker.
No person handling the business of either subparagraph 1 or subparagraph 2 of the preceding paragraph may concurrently handle the business under the other subparagraph.
An associated person as referred to in paragraph 1 shall be a qualified securities firm associated person. The supervisor of a futures commission merchant's dedicated department for the operation of securities introducing broker business shall be qualified as a securities firm senior agent.
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| Article 30 | Those who are qualified as associated persons for both securities and futures may concurrently engage in brokered futures trading and in the businesses listed under Article 3.
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| Article 31 | A securities introducing broker shall register its responsible person and associated persons, and file any change in those positions, with the TWSE or GTSM; an associated person may not execute his or her duties without being registered.
Under any of the following circumstances, the TWSE or GTSM shall refuse to register a responsible person or an associated person of a securities introducing broker, or shall void their prior registration:
- Any of the conditions under Article 53 of the SEA applies with respect to a responsible person.
- Any of the conditions under Article 54, paragraph 1 of the SEA applies with respect to an associated person, or an associated person does not meet the qualifications of Article 29, paragraph 3 of these Regulations.
- Any of the conditions under Article 54, paragraph 1 of the SEA applies with respect to an associated person who serves as the supervisor of a futures commission merchant's dedicated department for the operation of securities introducing broker business, or such an associated person does not meet the qualifications of Article 29, paragraph 4 of these Regulations.
- Violation of Article 32 of these Regulations.
- Failure to successfully complete pre-job training or on-the-job training in accordance with regulations.
- There is factual proof that the responsible person or associated person has been engaged or involved in other dishonest or improper activities, demonstrating his or her unsuitability for the position.
In the event of a change of responsible person or associated person at a securities introducing broker, the securities introducing broker shall report the change to the TWSE or GTSM for registration within five days after the change. Work permits for associated persons shall be re-issued or surrendered, and the securities introducing broker will remain liable for the conduct of the associated person prior to registration of the change.
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| Article 32 | A responsible person or associated person of a securities introducing broker assuming or directly handling the duties under Article 3, paragraph 1 shall faithfully carry out the duties in accordance with the principle of good faith.
The enterprises and personnel of the preceding paragraph may not commit any act prohibited by Article 37 of the Regulations Governing Securities Firms or Article 18 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms.
Employees who are not associated persons may not violate the provisions of the preceding two paragraphs, and in addition, are prohibited from carrying out the duties or acting as a deputy in carrying out the duties of an associated person.
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| Article 33 | Article 2 paragraph 1, Articles 3 through 8, Article 10, Articles 14 through 17, Article 18 paragraph 3, and Articles 19 through 21 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms apply mutatis mutandis to the responsible persons and associated persons of securities introducing brokers.
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