Chapter I General Principles |
| Article 1 | These Rules are prescribed in accordance with Article 45-1, paragraph 1 of the Regulations Governing Securities Firms, Article 11, paragraph 2 of the Standards Governing the Establishment of Securities Firms, and Article 21-1, paragraph 1 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms.
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| Article 2 | Securities firms operating the business of proprietary trading of security tokens shall do so in compliance with these Rules, except as otherwise provided by law or regulation.
These Rules do not apply to securities, other than securities representing security tokens, regulated under Article 6 of the Securities and Exchange Act for which provisions have already been made under other laws or regulations.
Financial reports of securities firms and issuers shall be prepared in accordance with applicable laws and regulations. For matters on which applicable laws and regulations are silent, they shall be prepared in accordance with generally accepted accounting principles and with the guidelines issued by the Accounting Research and Development Foundation in Taiwan. Certified public accountants (CPAs) engaged to audit and attest the financial reports of securities firms and issuers shall comply with applicable laws and regulations. For matters on which those laws and regulations are silent, CPAs shall comply with generally accepted auditing standards and with the guidelines issued by the Accounting Research and Development Foundation in Taiwan.
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| Article 3 | Terms used in these Rules are defined as follows:
- The competent authority: means the Financial Supervisory Commission.
- Issuer: means a company limited by shares organized under the Company Act of the Republic of China (Taiwan), excluding any TWSE listed, TPEx listed, and emerging stock companies.
- Trading platform: means the information platform set up by a securities firm for purposes of operating the business of proprietary trading of security tokens.
- Information disclosure section: means the information system set up by a securities firm for use in disclosing information related to issuers, including an issuer's basic information, annual financial reports, fundraising plan, status of utilization of funds, and material information, for convenient query and reference by investors.
- Professional investor: means a professional investor meeting the conditions set out in Article 3, paragraph 3 of the Regulations Governing Offshore Structured Products.
- Business day: means a trading day for purposes of the operation by securities firms of the business of proprietary trading of security tokens.
- Overseas Chinese and foreign nationals: means those meeting the definitions set out in Article 3 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals.
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| Article 4 | To apply to operate the business of proprietary trading of security tokens, the applicant shall apply to establish a securities firm under Articles 9 and 10 of the Standards Governing the Establishment of Securities Firms, or to increase the type of business or business operations under Chapter VI of the Standards Governing the Establishment of Securities Firms, and submit the application documents to the TPEx for it to review and then forward to the competent authority for approval.
After a securities firm has obtained approval from the competent authority under the preceding paragraph, it shall submit an application (Attachment 1) stating all the required information, accompanied by the documents required to be submitted therewith, to the TPEx, to apply to sign with the TPEx a Contract for the Operation by a Securities Firm of the Business of Proprietary Trading of Security Tokens (Attachment 2).
If a securities firm that has signed a contract with the TPEx under the preceding paragraph encounters or will encounter any of the events required to be reported under Article 4, paragraph 1 of the Regulations Governing Securities Firms, it shall file a report with the TPEx for forwarding to the competent authority, unless otherwise provided by law or regulation.
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| Article 5 | A securities firm shall adopt an internal control system pursuant to the provisions relating to the operation of security token propriety trading business set out in the Standard Directions for the Internal Control Systems of Securities Firms jointly adopted by the TPEx and the centralized securities depositary enterprise, and submit it for approval by its board of directors, and shall comply with Articles 21 to 24 and Article 36-2, paragraph 2 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets.
A securities firm's operation of the business under these Rules shall comply with laws and regulations, its articles of incorporation, and the internal control system referred to in the preceding paragraph.
Whenever the TPEx or the centralized securities depositary enterprise gives notice to make any amendments to the internal control system referred to in paragraph 1, the securities firm shall make the amendments within the specified time limit.
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| Article 6 | A securities firm operating the business of proprietary trading of security tokens shall adopt a risk-based approach to perform its anti-money laundering and countering the financing of terrorism (AML/CFT) duties, in accordance with the provisions of the Money Laundering Control Act, the Counter-Terrorism Financing Act, the Regulations Governing Anti-Money Laundering of Financial Institutions, and the Regulations Governing Internal Audit and Internal Control System of Anti-Money Laundering and Countering Terrorism Financing of Securities and Futures Business and Other Financial Institutions Designated by the Financial Supervisory Commission.
A securities firm operating the business of proprietary trading of security tokens shall establish an internal control and audit system for AML/CFT, based on the risk of money laundering and terrorism financing as well as its business scale, and taking into reference the Taiwan Securities Association Template for Guidelines Governing Anti-Money Laundering and Countering Terrorism Financing of Securities Firms, and shall have the system approved by its board of directors, and furthermore shall regularly review whether any amendments to the system are needed.
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| Article 7 | The places of business and facilities of a securities firm operating the business of proprietary trading of security tokens shall comply with the standards governing sites and facilities as prescribed by the TPEx.
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| Article 8 | A securities firm shall establish a mechanism for the recordation, transfer, and custody of security tokens on a customer-by-customer basis, and incorporate it into its internal control system, for the handling of matters such as the receipt and delivery of, changes to, and inventory and custody of security tokens of customers.
The securities firm shall sign a contract with the centralized securities depositary enterprise, and on a daily basis transmit data including the itemized changes to and balances of security tokens to the information reporting system designated by the centralized securities depositary enterprise, and the centralized securities depositary enterprise shall save backups of the data. If any discrepancy is discovered, the securities firm and the centralized securities depositary enterprise shall jointly investigate and determine the cause and correct the discrepancy.
Matters relating to information reporting, handling of irregularities, and fees shall be handled in accordance with the provisions of the centralized securities depositary enterprise.
The securities firm shall engage CPAs on a quarterly basis to audit data including the itemized changes to and balances of security tokens under paragraph 2, to ensure the correctness of the data.
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| Article 9 | A securities firm operating only the business of proprietary trading of security tokens shall appoint one general manager to be responsible for the overall management of the entire company's business, who shall meet the qualifications under Article 9 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms. The securities firm furthermore shall first submit documents verifying that its candidate meets the required qualifications to the TPEx for review and its approval before the candidate may fill that position..
The securities firm's proprietary trading officer for the execution of security token business and its internal audit officer shall possess qualification as senior securities agents, and shall meet the qualifications set out in Article 10 of the Regulations Governing Responsible Persons and Associated Persons of Securities Firms.
The securities firm's personnel executing security token business and its internal auditors shall possess the qualification of securities agent or higher, and at least one of the internal auditors shall possess one of the following qualifications:
- Have at least three years of professional work experience such as a computer programmer or a systems analyst.
- Have at least two years engaged in computer auditing at a CPA firm.
- Passed and received certification from the Information Systems Audit and Control Association (ISACA) for the "Certified Information Systems Auditor (CISA)".
The personnel under the preceding two paragraphs shall participate in pre-service and in-service training as required by the TPEx.
The securities firm shall appoint one person as an officer in charge of coordination and supervision of information security, and also shall appoint at least one person as a dedicated information security personnel responsible for security token proprietary trading business, who shall be responsible exclusively for tasks or duties related to information security. The aforesaid dedicated information security personnel shall hold a total of not less than two cyber security professional licenses, and shall continuously maintain the validity of the licenses.
In the case of a securities firm operating only the business of proprietary trading of security tokens, the board of directors shall appoint one senior officer to serve as the chief AML/CFT compliance officer.
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| Article 10 | The internal auditors of a securities firm shall perform regular or unscheduled internal audits of its finances, business, and information security, prepare internal audit reports, and keep them available for auditing.
The internal audit reports under the preceding paragraph shall include whether the finances, business, and information security of the securities firm comply with relevant laws and regulations and its internal control system.
A securities firm shall file with the TPEx, in the prescribed format by the end of each fiscal year, its annual audit plan for the next fiscal year, and within 2 months from the end of each fiscal year, it shall file with the TPEx in the prescribed format its report on the execution of its previous fiscal year's annual audit plan.
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| Article 11 | A securities firm shall keep records of its handling of security token business, and keep them available for auditing.
The records under the preceding paragraph shall be kept for at least 10 years. In the event of any dispute, however, they shall be kept until the dispute is resolved.
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