Chapter VIII Risk Control |
| Article 28 | A securities firm conducting non-restricted purpose loan business 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% 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.
|
|
| Article 29 | For non-restricted loan 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 clients in a single party, a single group of related parties, or a single security, and shall adopt risk control mechanisms.
|
|
| Article 30 | In non-restricted purpose loan conducted by a securities firm, the sum of the financing amount and total amount of financing to clients plus the total financing amount in margin purchases and short sales of securities may not exceed 400% of the securities firm's net asset value. The securities firm shall report the related information to TWSE daily, and the report shall include finance purpose, finance amount, and collateral type, etc.
When a securities firm conducts non-restricted purpose loan business, the highest 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 client credit limits and manage credit extension risks. Such procedures shall at least incorporate the following:
- To assess the maximum non-restricted loan purpose amount to individual clients, 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 or 1% of the securities firm's NAV.
- To assess the maximum non-restricted purpose loan 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.
- To identify securities or client 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 clients 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.
|
|
| Article 31 | In non-restricted purpose loan conducted by a securities firm, if the amount of financing made available to client on any single business day exceeds 50% of the securities firm's net asset value or reaches NT$1 billion, or if the outstanding balance of financing to customers exceeds 100% of the securities firm's net asset value, the securities firm shall file the relevant financing information with the TWSE on the same day.
|
|
| Article 32 | When a securities firm calculates the amount of the combination of the non-restricted purpose loan business and the securities business money lending, for each securities or beneficiaries certificate eligible as collateral for financing, the outstanding balance of financing shall not exceed 5% of the of such TWSE or TPEx listed stocks or beneficial right; the total amount of non-restricted purpose loan business, the securities business money lending, credit transaction business financing balance, and the balance of securities finance business handling securities delivery shall not exceed 25% of such TWSE or TPEx listed stocks or beneficial right.
If the total amount of non-restricted purpose loan business, the securities business money lending, credit transaction business financing balance, and the balance of securities finance business handling securities delivery exceed 20% of such TWSE or TPEx listed stocks or beneficial right, the outstanding balance shall be distributed in proportion. The distribution method will be enacted by TWSE or TPEx and submit to the competent authority for approval.
For the security reaches the outstanding balance set forth in paragraph 1, the adjustment may be made by the TWSE for the non-restricted purpose loan business.
|
|