Chapter I General Provisions |
| Article 1 | These Guidelines are established pursuant to the requirements under the Financial Supervisory Commission ("Competent Authority") order no. Financial-Supervisory-Securities-Zi-10300522232 dated January 21, 2015.
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| Article 2 | In providing commission agency services for investment in the money market of the settlement money payable to the client from securities transactions undertaken on behalf of the client (" Money Market Fund Investment Services of Securities Firms"), the securities firm shall act in accordance with securities and exchange laws and regulations, these Guidelines, and the applicable policies, regulations, public announcements, and directives of the Taiwan Stock Exchange Corporation ("TWSE"), GreTai Securities Exchange ("GTSM"), and the Chinese Securities Association ("CSA").
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| Article 3 | For purposes of these Guidelines, the " Money Market Fund Investment Services of Securities Firms" shall mean services of the securities firm as engaged by the client where the securities firm may, before paying the settlement money of the securities transactions undertaken on behalf of the client that are payable to the client below to the savings account the client opens with a financial institution, first deposit the money, as agreed, in the "Securities Firm Money Market Fund Investment Account" ("Investment Account") and invest such funds in the money market in the securities firm's name:
- settlement money payable to the client from securities trading undertaken by the securities firm in the centralized securities exchange market or GTSM on behalf of the client;
- money payable to the client from the exercise of a call/put warrant by the securities firm;
- money payable to the client from bond transactions or repurchase agreements/reverse repurchase agreements of bonds between the securities firm and the client;
- money payable to the client from transactions between the securities firm and the client of financial products as defined in the GreTai Securities Market Regulations Governing Over-the-Counter Trading of Financial Derivatives by Securities Firms;
- settlement money payable to the client from the trading of foreign securities by the engaged securities firm and re-consignment thereof; and
- others as required by the Competent Authority.
The securities firm shall allocate and utilize the settlement money payable to the client from securities transactions described above, pursuant to its agreement with the client, and shall not keep these funds.
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| Article 4 | The "Securities Firm Money Market Fund Investment Account," or "Investment Account," shall be separated from assets owned by the securities firm. Neither the funds in the Investment Account nor the underlying investment shall be used for any other purposes. With regard to liabilities of the securities firm incurred from its own assets, no creditor of the securities firm may claim to impose an attachment of or exercise any other rights in the funds in the Investment Account and the underlying investment.
For purposes of receipt and payment of money in connection with the Securities Firm Money Market Fund Investment Services of Securities Firms, a designated New Taiwan Dollar current account shall be opened with a bank under the name of "XX Securities Firm Money Market Fund Investment Account."
In handling Money Market Fund Investment Services of Securities Firms, the engaged securities firm shall always and only transfer funds between bank accounts.
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| Article 5 | When applying for provision of the Services, the securities firm shall meet the following conditions and qualification criteria and complete an application form to be submitted, together with other required documents, to the TWSE. If the TWSE determines the securities firm satisfies the qualification standards and the requirements under these Guidelines in its review, it will forward the application to the Competent Authority for approval:
- Type of securities firm: A qualified securities broker;
- Self-owned capital adequacy ratio: The self-owned capital adequacy ratio declared prior to the application shall be more than 150%;
- The most recent financial report audited or reviewed by the CPA shows no accumulated losses and complies with the provisions of Articles 13, 14, 16, 18, 18-1 and 19 of the Rules Governing Securities Firms; and
- Legal compliance:
- Has not been subject to the penalties under Article 66, paragraph 1 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 1 of the Futures Trading Act within the last three months;
- Has not been subject to the penalties under Article 66, paragraph 2 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act within the last six months;
- Has not been subject to an order of suspension of business by the Competent Authority within the most recent year;
- Has not been subject to a decision on withdrawal or revocation of the business license by the Competent Authority within the last two years; and
- Has not been subject to a decision on suspension of or restriction on trading by the TWSE, GTSM or Taiwan Futures Exchange Corporation according to their operating rules or business regulations.
The restrictions under subparagraph 4 of the preceding paragraph may be waived for a securities firm failing to satisfy the conditions therein if its violation of law has been specifically corrected and so acknowledged by the Competent Authority.
A securities firm permitted by the Competent Authority to provide Money Market Fund Investment Services of Securities Firms may not so provide until after it has submitted a photocopy of the approval document issued by the Competent Authority, with the service commencement date stated, to the TWSE three business days in advance.
Personnel of the securities firm performing the Services shall meet the qualification criteria under the Rules Governing Responsible Persons and Associated Persons of Securities Firms, promulgated by the Competent Authority.
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| Article 6 | If, after commencing the Services, the self-owned capital adequacy ratio of the securities firm drops below 150% for two consecutive months, the securities firm shall voluntarily suspend its provision of the Services.
If, upon occurrence of the circumstance described in the preceding paragraph, the securities firm fails to voluntarily suspend its provision of the Services, the TWSE shall request the securities firm to immediately suspend its provision of the Services.
The securities firm shall close the position for its investment in the money market and transfer the money received therefrom to the book-entry account opened by the client for trading of securities on the centralized securities exchange market or GTSM, within one business day following its suspension of the Services.
Upon suspension of its provision of the Services, the securities firm shall immediately report to the TWSE and inform the TWSE of the status of the action as required in the preceding paragraph.
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| Article 7 | The securities firm shall not submit an application to the TWSE for resumption of the Services unless its self-owned capital adequacy ratio as reported has exceeded 150% for three consecutive months and shall not resume the Services until the Competent Authority has approved its application forwarded from the TWSE.
The provisions of Article 5, paragraph 3 shall apply mutatis mutandis to the securities firm which has obtained approval for resumption and reported the commencement of the Services.
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| Article 8 | When providing the Services, the securities firm shall utilize the funds in the underlying investment, as agreed, in the name of the "XX Securities Firm Money Market Fund Investment Account" if the settlement money payable to the client has reached the threshold amount for utilization agreed with the client.
The securities firm may utilize the above funds only in the domestic money market that adopts the New Taiwan Dollar.
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| Article 9 | The securities firm must clearly inform the client of the associated conflict of interest and control measures and obtain the client's written consent, or it may not use the funds in the Investment Account to engage in the transactions described in the preceding article with a company in which the securities firm has a stake.
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| Article 10 | When providing the Services, the securities firm shall distribute the losses or profits from the same underlying investment of the client according to the ratio of the investment amount of the client and other agreed terms, and add the profits to the original funds for further utilization or for return to the client.
The securities firm providing the Services shall be responsible for any and all monetary losses caused by malpractice without jeopardizing the client's rights and interests.
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| Article 11 | The securities firm may charge a management fee to the client for the Services provided, at the rate to be determined by and between the securities firm and the client.
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| Article 12 | The securities firm shall establish an effective internal control system in regard to its provision of the Services. The above internal control system shall state the departments of the securities firm in charge, the procedures for commencement, suspension and resumption of the Services, how the funds used shall be transferred, how the funds less than the threshold amount for utilization as agreed shall be transferred, fund utilization directions, how profits and losses shall be allocated and transferred, management fee, handling of funds for the client's settlement, the client's application for recovery of funds, handling of the client's early termination of the agreement, collection, payment and utilization of money, and other matters relating to account management and data transmission, as well as matters required by the Competent Authority to be specified.
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