Chapter VI Brokerage Trading By Securities Brokers |
| 75 | Securities brokers conducting brokerage trading of securities shall comply with the following provisions:
- When accepting an account opening for processing, a securities broker shall first enter into a brokerage contract with the principal, recognizing these Operating Rules, the TWSE Regulations Governing Brokerage Contracts of Securities Brokers (hereinafter, the "Regulations Governing Brokerage Contracts"), public announcements, circular letters, and the regulations of the Taiwan Securities Association as integral parts of the contract, and specify the date of account opening and the following matters:
- For a principal that is a natural person: name, gender, age, occupation, address, telephone number, and National Identity Card number; if there is an agent, the agent's name and National Identity Card number.
- For a principal that is a juristic person: the juristic person's name, address, government uniform invoice number, phone number, representative, and authorized person.
- For a principal that is a person of no legal capacity or limited legal capacity, or who has been declared by a court to be placed under assistance, his/her statutory agent, guardian, or assistant shall sign/seal the brokerage contract and indicate the kinship relationship. All business vouchers for brokerage trading of securities, subscription of securities, and settlement matters shall be signed/sealed by the statutory agent, guardian, or assistant.
- For a principal that is a juristic person, such juristic person and its representative shall sign/seal the brokerage contract, and a power of attorney shall be provided. All business vouchers for brokerage trading of securities and settlement matters shall be signed/sealed by the authorized person.
- A director, supervisor, or employee of a securities firm may not open an account, engage in the brokerage trading of securities, purchase securities, or handle settlement-related matters on behalf of any other person, unless he/she is the statutory agent or guardian of the principal.
- When the principal or his/her/its statutory agent or authorized person signs the brokerage contract, a seal specimen card or signature card of the principal or the principal's statutory agent or authorized person shall be kept, and that same seal or signature shall be used for any orders placed in person for brokerage trading or subscription of securities and for the procedures for carrying out settlement, provided when the principal cancels an authorization, he/she/it may do so by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent; where the Taiwan agent and custodial institution of an offshore overseas Chinese or foreign national are the same person, the agent account-opening and settlement seal of the custodian institution may be taken as the specimen seal.
- When a principal or his/her/its statutory agent authorizes an agent to engage in brokerage trading, purchase securities or process settlement-related matters, a power of attorney shall be issued, and the seal specimen or signature card of such agent shall be kept for handling, provided when the principal cancels his/her/its authorization, he/she/it may do so according to the proviso in the preceding subparagraph .
- Where settlement of the principal's payment and securities is to be made by the book entry method, and where a letter of consent is signed, signature/seal of the settlement slips (order tickets for non face-to-face orders, trade reports, etc.) may be waived. However, before settlement, information relevant to the brokerage trade shall be given to the principal and a confirmation record shall be kept on file. Where, pursuant to law or regulation, the principal may effect receipt or payment of the purchase price by account transfer (or remittance), signature/seal of the settlement slips (order tickets for non face-to-face orders, trade reports, etc.) may be waived. However, before settlement, the securities firm shall give notice of information relevant to the brokerage trade to the principal and the custodian institution to be the agent for trade settlement, and shall keep a confirmation record on file.
- A securities broker may not use computer-set groups in handling securities trading orders. The order ticket and trading order record shall record information pursuant to Articles 4 and 12 of the Regulations Governing Information to be Published in Order Tickets, Trade Reports, and Reconciliation Statements Prepared by Securities Brokers Upon Receiving Orders to Buy or Sell Securities of the Competent Authority, and be prepared in accordance with the following provisions:
- Trading through non-electronic media:
- For trading orders placed in person: the principal or its agent or authorized person that places trading orders for securities in person shall fill out an order ticket and affix their signature/seal thereto.
- For trading orders placed via telephone, in writing, by telegraph, or by another method approved by the TWSE: if the principal, or its agent or authorized person places an order for trading of securities by one of the above methods, the associated person handling the order at the securities broker that accepts the order shall fill out the order ticket by hand or electronic means; with the exception of orders placed by telephone, the letter, telegram, or relevant documents shall be attached to the back of the order ticket.
Where the securities broker fills out the order ticket by electronic means, if delegation of responsibility for the execution of the trading order can be implemented and the employee handling that trading order confirmed, order tickets need not be printed out individually, provided that they shall be stored using a non-revisable, non-erasable electronic medium.
- Trading through electronic media:
Means that a principal uses voice mail, the Internet, dedicated line, closed private network, or other electronic means approved by the TWSE to place a trading order, which the securities broker shall handle in accordance with the following provisions:
- Where a trading order is placed through an electronic medium, the securities broker need not prepare or fill out an order ticket on the client's behalf.
- If a trading order is placed via the Internet, the internet protocol (IP) address and electronic signature thereof shall be recorded. If a trading order is placed via voice mail, through coordination with the telecommunications institution the caller-end number display function shall be enabled, and the number of the incoming call recorded.
- When a securities broker accepts a trading order through non-electronic media, and uses electronic media to fill out the order ticket, or accepts a trading order through electronic media, it shall print trading order records in chronological order, and after close of market, have them signed/sealed by the brokerage personnel handling the order. However, if the storage operations of the trading order record meet the following requirements, the trading order record need not be printed out and signed:
- A non-revisable, non-erasable electronic storage medium is used, and preparation of trading order records is completed on the day the trade is executed.
- Comprehensive indexing and management procedures are set up.
- Management responsibility is assigned to designated personnel, and electronic data files can be converted into print format at any time.
- The brokerage trading of securities, order confirmation, and execution report between a securities broker and a principal shall be conducted in accordance with the following provisions:
- Trading through non-electronic media:
The execution report may be given by electronic mail, telephone, facsimile, text message, voice message, or the Internet.
- Trading through electronic media:
The transmission of the brokerage order for purchase/sale of securities, order confirmation, execution report, and other electronic documents between a securities broker and the principal who uses an electronic trading method other than voice mail shall carry the electronic signature issued by the institution providing vouchers for identification and confirmation; however, this restriction shall not apply in the following circumstances:
- Order confirmation and execution report are conducted by telephone, facsimile, text message, voice menu system, or the Internet.
- The conditions for exemption are met under the Operational Guidelines for the Implementation of Direct Market Access by Futures Brokers.
- The order ticket referred to in subparagraph 8 shall be numbered in the order it is received. Its format and particulars to be recorded shall be as prescribed by the Competent Authority. When there is any dispute in connection with a trade, the order ticket shall be kept until the dispute is resolved. When there is no dispute, order tickets shall be kept in accordance with the following provisions:
- For unexecuted trades: destroy after one week; however, if an order ticket is filled out by hand, it shall be stamped "Unexecuted".
- For executed trades: if there is no dispute, keep for 5 years together with other business vouchers.
- If, after an order from a principal to trade within 30 minutes prior to the commencement of market trading hours or within a certain period of time prior to the close of market trading hours as accepted by a securities broker is reported to the TWSE, there occurs a massive revocation or amendment to the report, the TWSE may request the securities broker to collect in advance from its principal, upon accepting the trading order, the funds or securities, margin for margin purchases, or margin for short sales.
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| 75-1 | A securities broker opening an account for a principal shall comply with the following:
- Except the following situation, if the principal is a natural person, he/she shall open the account against the original identity card and put signature/affix seal personally:
- where the principal is of no legal capacity or limited legal capacity, or has been declared by a court to be placed under assistance, his statutory agent, guardian, or assistant shall open the account against the original identity cards of the statutory agent, guardian, or assistant and that of the principal and put the signature/affix seal personally. If the principal has not received an identity card yet, a household registration certificate may be supplied instead. The guardian or assistant shall also provide documentary evidence that he or she is the guardian or assistant.
- where the principal is a person dispatched by a juristic person to work overseas, he may entrust an agent to open the account against the original identity cards of the agent and the principal as well as the power of attorney and certificate of employment overseas issued by the said juristic person, both legalized by an ROC representative office or an institution entrusted by such office. (3) where the principal specifies NT$1 million as the maximum daily trading volume and has not opened a margin trading account, the securities broker may open an account for him/her/it by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent, and the principal may determine at his/her/its sole discretion the manner in which credit check is to be performed, provided a new credit check must be carried out according to the relevant requirements if the maximum daily trading volume is to be adjusted.
- Where the principal handles account opening by written correspondence or electronic means, the TWSE Standards Governing Principal Identification and Management of Credit Line Categorization in the Processing by Securities Firms of Account Opening will govern.
- Where the principal is a juristic person, the authorized person shall provide a copy of the registration document of the juristic person, a copy of the notice of issuance of uniform number for taxable entities issued by the tax authorities (a profit-seeking enterprise may be exempt from submitting such copy of notice), the power of attorney, and photocopies of the identification cards of the responsible person of the juristic entity and that of the authorized person for processing. The securities broker shall confirm in writing that the account is opened through authorization.
- If the principal has engaged a custodian institution to open the account on its behalf, or submits proof that settlement is to be handled on its behalf by a custodian institution, it is not necessary to confirm in writing that the account is opened through authorization.
- Where the principal is a group that is not incorporated as a juristic person, it shall open the account in the individual name of its responsible person, and include the group name side-by-side therewith in the account name. To open the account, the responsible person shall submit a photocopy of certification that the group has been registered with the competent authority (or of its approval for establishment, recordation, or other evidentiary document of its registration), photocopy of the notice of issuance of a uniform number for tax withholding entities issued by the tax authorities (if exempt from income tax withholding, one copy of the Certificate of Exemption from Tax Withholding must also be submitted), and a photocopy of the National Identity Card of the responsible person.
- Except for certain account numbers that it may handle as an account without a number under exceptional circumstances for which reasons have been noted, the securities broker shall assign an account number sequentially to each account in the order opened; provided that numbers canceled in (calendar) years other than the current year may be used sequentially.
A securities broker shall ensure that the items supplied on the applications are error free and complete. It shall not accept any order to trade in or subscribe to securities from the principal unless it completes the account opening process and the written confirmation procedures referred to in subparagraph 2 of the preceding paragraph and keys-in the account information and account number into the computer system of the TWSE.
A securities broker to cancel an account for a principal may do so by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent.
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| 75-2 | When a securities broker processes an application for opening of an account made by a custodian institution representing a principal in discretionary investment, the name of both the principal and the authorized discretionary trader shall be specified in the account name, an Account Opening and Brokerage Contract for Discretionary Investment Trading of Securities shall be signed, the custodian institution shall be stipulated as the agent for settlement payment and delivery, information required for account opening shall be entered into the computer file of the TWSE as instructed online, and the following documents shall be submitted:
- Photocopy of written agreement signed by the principal, the authorized discretionary trader, and the custodian institution regarding respective rights and obligations. However, under the circumstances in which a Chinese-language legal opinion issued by a lawyer is permitted to be substituted for the tripartite agreement of discretionary investment as set out in Article 17, paragraph 7 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises of the Securities Investment Trust and Consulting Association of the ROC ("Regulations Governing the Conduct of Discretionary Investment Business"), those provisions shall govern.
- Where the principal is a natural person, photocopy of his/her National Identity Card shall be submitted; provided that where the said principal is of no legal capacity or with limited legal capacity, or has been declared by a court to be placed under assistance, a photocopy of the National Identity Card of his/her statutory representative, guardian, or assistant shall also be submitted. Where the principal is a juristic person or other institution, photocopy of the registration document of the juristic entity, photocopy of the notice of issuance of uniform number for taxable entities issued by the tax authorities (a profit-seeking enterprise may be exempt from submitting such copy of notice), and photocopy of the National Identity Card of the responsible person of the juristic entity shall be submitted.
- Photocopy of the corporate registration document of the authorized discretionary trader, and photocopy of the National Identity Card of the responsible person of such company.
- Photocopy of the National Identity Card of the investment manager (including any deputy thereof) or any other person authorized to execute trades, and the original power of attorney issued by the authorized discretionary trader to the aforesaid personnel.
- When a foreign professional institutional investor, under Article 17, paragraph 10 of the Regulations Governing the Conduct of Discretionary Investment Business, applies to convert an original brokerage trading account into a discretionary investment account, or to revert that discretionary investment account into a brokerage trading account for its own trading, or applies to cancel the discretionary investment account because of allocation of a portion of the assets to another mandatary, the investor's instruction letter shall be submitted.
A securities broker may accept orders for trading of securities through a discretionary investment account referred to in the preceding paragraph only after the procedures for opening the account have been completed and the required information has been entered into the computer files of the TWSE. In case of any change, after account-opening, in the investment manager (including any deputy thereof) or any other person authorized to execute trades, orders for trading of securities may not be accepted unless and until the documents under subparagraph 1 of paragraph 4 have been replaced.
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| 75-3 | When a securities broker accepts an application to open an account on behalf of a trustee of trust property, the account name shall indicate that it is a segregated trust account, and the following documents shall be submitted:
- Where the trustee is a trust enterprise:
- Photocopy of the juristic person registration documentation of the trust enterprise and photocopy of the notice of issuance of uniform number for taxable entities issued by the tax authorities.
- Power of attorney and photocopies of the National Identity Cards of the representative of the juristic person and the attorney in fact.
- Where the settlor is a natural person, a photocopy of the person's National Identity Card; where it is a juristic person, a photocopy of the documentation of its juristic person registration.
- Summary terms and conditions contract for the trust.
- Where the trustee is not a trust enterprise:
- Where the settlor and trustee are natural persons, photocopies of their National Identity Cards; where they are juristic persons, photocopies of their juristic person registration documentation, and the power of attorney and photocopies of the National Identity Cards of the representative of the juristic person and the attorney in fact.
- Photocopy of the notice of issuance of uniform number for taxable entities issued by the tax authorities.
- Photocopy of the trust deed.
Where a trading account under the preceding paragraph belongs to a charitable trust, a photocopy of the approval document by the competent authority for the target industry shall also be submitted.
A securities broker shall make a detailed check of the documents related to opening of the segregated trust account, and shall accept orders to trade securities only after completing the account opening procedures and entering the account opening information into the computer files of the TWSE.
Paragraph 1, subparagraph 1, and paragraph 3, do not apply when a settlor engages a securities broker to trade in listed securities on a fixed-term, fixed-amount basis by way of trust.
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| 75-4 | Each headquarters and branch of a securities firm may open two omnibus trading accounts in its own name, for purposes of accepting securities trading orders from domestic and foreign (including overseas Chinese and foreign nationals) principals respectively; provided that a mainland area principal may not use an omnibus trading account.
A principal may use an omnibus trading account only after opening a securities trading account; the omnibus trading account may be used to participate in TWSE ordinary trading (i.e., the trading time as specified under Article 3 of the TWSE Operating Rules), after-market fixed-price trading, odd-lot trading, and block trades that are settled on the second business day following the trade date. It may also, after carrying out a securities borrowing transaction through a securities firm under the TWSE Securities Lending and Borrowing Rules, [use the borrowed securities] to trade through the omnibus trading account. A principal that is allowed by regulations to engage in margin trading may engage in margin trading through the omnibus trading account.
If a principal has authorized a trader to conduct trades and handle allocation of trade prices and volumes, it shall provide a power of attorney and specify the allocation of trade price and volume and relevant authorized matters. However, where a same authorized trader is authorized by offshore overseas Chinese or foreign nationals, domestic funds, or units of a same group, the power of attorney may be waived, and the authorized trader shall provide a statement specifying the principals' ID numbers or uniform invoice numbers, names, and other relevant information. The TWSE may, in accordance with operational needs, require securities firms to provide certifying documents relating to the aforesaid authorizations.
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| 75-5 | When a securities firm accepts orders to trade securities through an omnibus trading account, it shall make trading quotes corresponding to the orders placed by the principals or the authorized traders thereof, and shall note the name or symbol of the principal or the authorized trader on the order ticket or the trading order record.
The securities firm shall transmit the itemized allocations of trade price and volume as instructed by the authorized trader to the TWSE by 6 p.m. on the trade date, and the itemized orders of the principals and authorized traders thereof, to the TWSE by 6 p.m. on the first business day following the trade date, provided that this restriction shall not apply if the TWSE provides otherwise.
Operational directions related to omnibus trading accounts will be prescribed by the TWSE.
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| 75-6 | A principal that meets any of the following conditions is not subject to the restriction of opening only one trading account at the same business place of the same securities broker:
- Discretionary investment account.
- Trading account opened by an offshore foreign institutional investor.
- Mainland Area Invsitutional Investor under Point 6 of the Operation Directions for Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors for Registration to Invest in Domestic Securities or Trade Domestic Future.
- Trading account opened by a domestic professional institutional investor as defined in Article 19-7, paragraph 2 of the Regulations Governing Securities Firms.
- Segregated trust accounts opened based on the different types of contract for the respective trust accounts.
When opening two or more trading accounts for the same principal, the securities broker shall add notes after the name of the principal specifying the reasons for opening the accounts, in order to clearly segregate the authorities and duties associated with each such account.
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| 75-7 | For a securities broker to accept an application for account opening, a principal shall provide documents necessary for verification of identification as required under the Regulations Governing Anti-Money Laundering of Financial Institutions.
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| 76 | Upon discovering that a principal falls in any of the following categories, a securities broker shall refuse to open an account or, if an account has already been opened, refuse to accept orders for brokerage trading or subscription of securities:
- Persons without legal capacity or with limited legal capacity, who do not have the agency or authorization of their legal guardian.
- Personnel or employees of the Securities and Futures Bureau (SFB) of the Competent Authority who fail to submit a letter of consent from the SFB.
- Personnel of the TWSE who fail to submit a letter of consent from the TWSE.
- Persons declared bankrupt and whose rights have not been reinstated.
- Persons declared by a court to be placed under guardianship where such declaration has not been voided; provided, this restriction shall not apply when a guardian disposes of securities for purposes of the interest of the ward.
- Persons declared by a court to be placed under assistance where such declaration has not been voided; provided, this restriction shall not apply if the person under assistance has obtained the consent of the assistant or permission from a court.
- Juristic persons opening accounts that cannot supply proof that there is authorization to open the account.
- Securities dealers which have not been approved by the Competent Authority.
- A principal who has engaged a director, supervisor, or employee of a securities firm to open an account with such securities firm as an agent or representative of the principal.
- The principal is applying or applied to convert an account it originally opened as a discretionary investment account to a brokerage account for the principal's own trading use.
Insiders of securities firms opening accounts for brokered securities trading shall comply with the Rules Governing Insiders of Securities Firms Opening Accounts at Their Securities Firms for Brokered Securities Trading prescribed by the TWSE.
Upon discovering that a principal falls in any of the following categories, a securities broker shall refuse to open an account or, if an account has already been opened, refuse to accept orders for brokerage trading or subscription of securities:
- Any person that has breached a contract relating to securities trading, where the TWSE or the GreTai Securities Market have notified all securities brokers of this fact, where the case has not been closed and less than 5 years have elapsed. However, this provision does not apply to brokerage trades that are made for purposes of offsetting margin purchases or short sales that were already executed for the same principal on the same day, and are of the same type and same quantity of securities, nor does it apply to opposite offsetting trades made on the same day in brokerage day trading in accordance with the Operational Rules Governing Day Trades of Securities.
- Any person that, in connection with a violation of the Securities and Exchange Act or forging (or altering) TWSE listed or Taipei Exchange listed securities, has been indicted in a public prosecution and the case is still pending, or has been adjudicated criminally guilty by a final and unappealable court judgment within the last 5 years.
- Any person that has breached a futures contract where the case has not been closed and less than 5 years have elapsed, or that has violated future trading laws or regulations and has been adjudicated criminally guilty by a final and unappealable judgment of a judicial authority within the past 5 years.
Upon conclusion of a case of breach of a brokerage contract by a principal, the securities broker shall promptly report such conclusion to the TWSE; the TWSE will in turn inform all other securities brokers.
Where a principal repeats its breach of a brokerage contract within a year (inclusive), the securities broker shall collect from principals in advance the full funds or securities for orders placed for 10 consecutive business days from the initial trade date as entertained by the securities broker within three months of the date of announcement of the conclusion of the case.
The operating procedures for the advance collectioon of funds or securities under the preceding paragraph are governed by the Operation Directions for the Advance Collection of Funds and Securities by Securities Brokers in Brokerage Trading mutatis mutandis.
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| 77 | When a securities broker processes account opening for overseas Chinese or foreign nationals for the purpose of brokered sale of securities, the securities broker shall obey relevant laws and regulations and comply with the following provisions:
- If special-case approval is granted by the Investment Commission of the Ministry of Economic Affairs, Science-Based Industrial Park Administration, or the Export Processing Zone Administration, a photocopy of the approval to sell document and power of attorney for the filing and payment of tax required by the tax collection authority must be retained, provided no such power of attorney is required if no tax agent is required. That account may only accept sell orders, and only for the type and amount of securities as originally approved in the investment plan. If, prior to the 19 November 1997 amendments to the Act Governing Investment by Foreign Nationals and the Act Governing Investment in Taiwan by Overseas Chinese, special-case approval to hold unlisted stocks has not been granted by the Investment Commission of the Ministry of Economic Affairs, the Science-Based Industrial Park Administration, or the Export Processing Zone Administration, and such stocks are subsequently approved for listing, the original investment information (such as trading vouchers, wire transfer receipts, and tax payment receipts) shall be submitted , and a special application shall be made by letter to the TWSE for its approval for account opening, before brokerage orders to sell such stocks may be accepted.
- In regard to securities obtained due to gift, succession, or pursuant to Article 167-1, paragraph 2; Article 167-2; Article 235-1; or Article 267 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act or prior to relinquishing one's original nationality or prior to the implementation of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and Procedures for Remittance on 28 December 1990, and the resulting shares alloted, subscribed for or assigned, a copy of the identification or company registration certificate (or document of equivalent validity), the power of attorney for filing tax returns required by the tax collection authority, and the following documents shall be submitted for account opening. That account may only accept sell orders, and trading shall be limited to the sale of the aforesaid securities. No such power of attorney is required if no tax agent is required.
- Where the securities and the said entitlements are obtained through gift, transfer procedure shall be completed and the certificate of payment of gift tax or other certification issued by the tax collection authority shall be submitted.
- Where the securities and the said entitlements are obtained through succession, transfer procedure shall be completed and the certificate of payment of estate tax or other certification issued by the tax collection authority shall be submitted.
- Where the securities and the said entitlements are obtained pursuant to Article 167-1, paragraph 2; Article 167-2; Article 235-1; or Article 267 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act, a certificate of employment valid at the time the employee obtains the shares through allotment, subscription or assignment and documents evidencing the allotment, subscription or assignment shall be submitted.
- Where the securities are obtained prior to relinquishing one's original nationality or prior to the implementation of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and Procedures for Remittance on 28 December 1990, document proving the source of the securities or other documents shall be submitted.
- Securities obtained in compliance with the preceding subparagraph may be sold by mutatis mutandis application of Article 82-1.
- Where foreign securities have been obtained before they are listed on the centralized securities exchange market of the TWSE on a primary listing basis, documentary proof of securities holdings issued by the agent for stock affairs engaged by the foreign issuer, or the documentary proof that employees have subscribed to or been allotted shares in accordance with the laws and regulations of the country of registration, the power of attorney for the filing and payment of tax required by the tax collection authority, and the documentary proof of identity of the principal or the principal's company registration certificate (or document of equivalent validity) shall be submitted to conduct account opening. That account may only accept sell orders, and trading shall be limited to the sale of the amount of holdings. No such power of attorney is required if no tax agent is required. If the holder of those securities, after opening the present account, subsequently opens an account with a securities broker for securities trading under Article 77-4, the present account shall be canceled.
- A principal referred to in subparagraph 1, 2, or 4 that obtains stock of another TWSE listed company, TWSE primary listed company, or emerging stock company, by duly participating in a public tender offer through an offer to sell, or by the issuer's participation in a merger or acquisition, or that obtains stock as a result of allotment, subscription or assignment, may sell the stock through those accounts.
If the principal under the preceding paragraph is an offshore overseas Chinese or foreign natural person, he or she may mandate a Republic of China lawyer, CPA, custodian bank, or securities firm as his or her agent to open a New Taiwan Dollar account to be used solely for purposes of securities settlement, and shall submit the documents listed below:
- Documentary proof of identity: i.e., a certificate of nationality or photocopy of a valid passport, which shall be legalized by an overseas representative office or authorized entity of the Republic of China.
- Photocopy of the contract for opening of the securities account, and submit for inspection the original of the central depository account passbook.
- Power of attorney for the agent, which must be legalized by an overseas representative office or authorized entity of the Republic of China.
- Record of ID Number in the Republic of China issued by the National Immigration Agency of the Ministry of the Interior.
- A lawyer or CPA mandated as agent must have obtained a license to practice as a lawyer or CPA in the Republic of China, and shall submit for inspection the original of his or her documentary proof of identity and lawyer or CPA license; a custodian bank or securities firm mandated as agent shall provide the original of its business license, the original of which shall be returned after it has been inspected and a photocopy made to be retained on file.
Foreign banks with branch offices in the Republic of China may use the name of the branch office to open the account in accordance with Article 75. Such account may only accept sales orders, and purchase orders shall not be accepted.
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| 77-1 | Securities brokers accepting account opening applications from the domestic agent of a depositary institution for an overseas depositary receipt shall ensure that the account name clearly states its relation with and the rights and obligations of the securities of such listed company, and shall further supply the following documents:
- Copy of the approval to issue overseas depositary receipts issued by the Competent Authority.
- Copy of the power of attorney executed by a depositary institution appointing a domestic agent.
- Photocopies of the National Identity Card, Alien Resident Certificate, or company registration (or amendment registration) certification of the domestic agent or representative of the depositary institution. Provided, if such documentation for the same domestic agent or representative has already been submitted to and placed on file by the broker, it need not be resubmitted.
The trading account referred to in the preceding paragraph may be used only to execute sales orders unless the issuance plan of such depositary receipt, the depositary contract, and the custodian contract specifies that the depositary institution may purchase and then re-issue securities from the centralized exchange market, and such depositary institution files an application, containing copies of the above purchase and issuance documents (including abstract translations), with the TWSE; upon the filing of such application, the securities broker may accept purchase orders for the securities indicated on the depositary receipt.
When holders of overseas depositary receipts acquire shares of a listed company as a result of a demerger and capital reduction conducted by a company that has sponsored the issuance of overseas depositary receipts, the depositary institution shall designate a domestic agent to submit the documents listed below to open a collective custody account at a securities firm on behalf of the holders of the overseas depositary receipts:
- Photocopy of the previous letter of approval to issue overseas depositary receipts issued by the competent authority.
- Photocopy of the meeting minutes of the demerged company's shareholders meeting that approved the demerger.
- Photocopy of the power of attorney executed by the depositary institution appointing the domestic agent.
- Photocopy of the national identity card, alien resident certificate, or company registration (or amendment registration) certification of the domestic agent or representative of the depositary institution. However, if such documentation for the same domestic agent or representative has already been submitted to and placed on file by the securities broker, it need not be resubmitted.
The trading account referred to in the preceding paragraph may not be used for any securities trading except the brokered sale of the listed company's stock obtained as a result of a demerger and capital reduction.
Domestic agents applying for account opening on behalf of overseas Chinese or foreign nationals that have invested in overseas depositary receipts and desire to redeem such depositary receipt into the underlying securities shall carry out registration and account opening in accordance with Article 77-4; provided, if approval has been obtained and an account opened prior to redemption of the overseas depositary receipts, it need not be done anew.
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| 77-2 | A mainland area person, juristic person, organization or other institution that obtains listed securities due to gift or succession shall apply to a securities broker for account opening with the following documents submitted:
- Proof of payment of estate tax or gift tax issued by a tax collection authority or other evidentiary documents, and the power of attorney for filing tax returns required by the tax collection authority.
- In the event of a natural person, identification documents or documents evidencing approval of his entry to Taiwan.
- The company registration certificate of a juristic person, organization or other institution denotes a juristic person or organization qualification certificate or registration certificate issued by the local government.
A mainland area person, juristic person, organization, other institution, or a company in which it invests in a third area, which has obtained the approval of the Investment Commission, Ministry of Economic Affairs, for investing in listed companies, shall apply to a securities broker for account opening with the following documents submitted:
- A photocopy of the written approval of sale, and power of attorney for filing tax returns required by the tax collection authority.
- In the event of a natural person, identification documents or documents evidencing approval of his entry to Taiwan.
- Qualification certificate of the juristic person, organization, other institution, or company in which it invests in a third area (as duly notarized, certified, legalized in accordance with the requirements of the Investment Commission, Ministry of Economic Affairs governing documents required for applications for investment in Taiwan by Mainland Area people).
The principal shall comply with the following provisions when engaging an agent to open an account on its behalf pursuant to the preceding two paragraphs:
- Where the principal is a natural person, the agent shall personally present the identification documents of the principal and the agent, power of attorney (must be notarized by a notary public office of the Mainland Area and legalized by the Straits Exchange Foundation), and the related documents specified in the preceding two paragraphs.
- Where the principal is a juristic person, organization, other institution, or company in which it invests in a third area, the agent shall personally present the identification documents of the principal, power of attorney (as duly notarized, certified, legalized in accordance with the requirements of the Investment Commission, Ministry of Economic Affairs governing documents required for applications for investment in Taiwan by Mainland Area people), and the related documents specified in the preceding two paragraphs.
The opening of a New Taiwan Dollar account by a mainland area person applying for account opening pursuant to subparagraph 1 of the preceding paragraph may be governed by Article 77, paragraph 2 mutatis mutandis, provided the identification documents and power of attorney must be notarized by a notary public office of the mainland area and legalized by the Straits Exchange Foundation.
Such account as mentioned in paragraphs 1 and 2 may only accept sale orders and may not accept purchase orders.
Listed securities acquired pursuant to paragraph 1 may be sold by the mutatis mutandis application of Article 82-1.
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| 77-3 | Where an overseas Chinese or foreigner who has made investment in overseas convertible corporate bonds and has requested exchange, conversion, or subscription of securities issued by a domestic issuing company through such foreign convertible corporate bonds appoints his local agent to open an account on his behalf, he shall carry out registration and account opening in accordance with Article 77-4; provided, if approval has been obtained and an account opened prior to exchange, conversion, or subscription for the overseas convertible corporate bonds, it need not be done anew.
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| 77-4 | To invest in domestic securities, onshore overseas Chinese and foreign nationals shall submit the relevant documents to a securities broker to carry out registration with the TWSE and obtain an identification number and submit the below-listed documents to the securities broker for purposes of opening an account for securities trading.
- Overseas Chinese and foreign natural persons: Alien Resident Certificate (or Overseas Compatriot Identity Certificate, or ROC passport with an Overseas Compatriot Identity Endorsement) and other identification with identifiable features (such as national health insurance card, passport, driver's license or student identity card etc.).
- Foreign institutional investor: Document evidencing company registration registered with the competent authority of the jurisdiction where it was incorporated, and National Identity Card (or Alien Resident Certificate or passport) of the responsible person.
Offshore overseas Chinese and foreign nationals shall carry out registration with the TWSE through their designated domestic agent or representative and obtain an identification number and submit photocopies of the domestic agent or representative's national ID card or alien resident certificate or a photocopy of the documentary proof following company registration (or amendment registration) to the securities broker for purposes of opening an account for securities trading (provided, if such documents, for the same domestic agent or representative and having identical content, have already been submitted to and placed on file by the broker, they need not be resubmitted).
If the domestic agent under this Article is a custodian institution approved by the Financial Supervisory Commission, and the custodian institution and the securities broker handling account opening both have network authentication mechanisms, the documents for account opening may be transmitted electronically to open the account.
If any of the circumstances in Article 11 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals is present with respect to a registration by an overseas Chinese or foreign national, the TWSE shall not carry out registration; if registration has already been performed, the registration shall be canceled, and the securities broker that has opened the account shall be notified that it may not accept purchase orders therefrom. However, this restriction shall not apply to a purchase made to return securities borrowed in a securities borrowing and lending transaction. After the balance of the account has been liquidated, the securities broker shall cancel the account.
The registration operations of this Article shall be handled pursuant to the Operation Directions for Registration Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors to Invest in Domestic Securities or Engage in Domestic Futures Trading submitted by the TWSE to the Competent Authority for approval.
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| 77-5 | When the overseas controlling or subordinate company, branch or office of a TWSE listed, Taipei Exchange listed, or emerging stock company issuing securities to its overseas foreign national employees pursuant to Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act or Articles 167-1, 167-2, 235-1, or 267 of the Company Act handles the assignment, subscription and allotment of securities on behalf of its overseas foreign national employees, and carries out registration of a "Segregated Collective Investment Account for Overseas Foreign National Employees" with the TWSE, it shall, in addition to the same registration documents duly required for offshore foreign institutional investors, submit the documents in the following subparagraphs, and keep a copy of the documents on record at its domestic agent or representative:
- Original affidavit stating that the overseas controlling or subordinate company, branch or office of the TWSE listed, Taipei Exchange listed, or emerging stock company has actually been authorized by the overseas foreign national employees.
- Photocopy of the evidentiary documents that the TWSE listed, Taipei Exchange listed, or emerging stock company has obtained the effective registration from the competent authority to issue new shares or employee stock warrants or to buy back its shares.
- Photocopy of the minutes of the TWSE listed, Taipei Exchange listed, or emerging stock company's board of directors meeting that approved the transfer of bought-back stocks to its employees pursuant to Article 167-1 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 of the Securities and Exchange Act, the issuance of employee stock warrants pursuant to Article 167-2 of the Company Act, or Article 28-3 of the Securities and Exchange Act, or the issuance of new shares pursuant to Article 235-1 and Article 267 of the Company Act.
When the domestic agent or representative of the overseas controlling or subordinate company, branch or office of a TWSE listed, Taipei Exchange listed, or emerging stock company applies with a securities broker to open an account, it shall, in addition to the documents required for account opening as in the preceding Article, affix the documents in the subparagraphs of the preceding paragraph to apply for account opening. Securities trading through that segregated account will be restricted to the sale of the following stocks; no other securities trading may be engaged in:
- Stock that those employees have obtained as a result of allotment, subscription or assignment.
- Stock of another TWSE or Taipei Exchange listed company, TWSE or Taipei Exchange primary listed company, or emerging stock company that those employees have obtained by duly participating in a public tender offer through an offer to sell, or by the issuer's participation in a merger or acquisition, or stock obtained as a result of allotment, subscription or assignment.
When a TWSE primary listed, Taipei Exchange primary listed, or emerging stock foreign issuer carries out registration procedures for a "Segregated Collective Investment Account for Overseas Foreign National Employees" with the TWSE for securities obtained by its overseas foreign national employees in accordance with the laws and regulations of the place of registration, it shall, in addition to the same registration documents duly required for offshore foreign institutional investors, submit the documents in the following subparagraphs, and keep a copy of the documents on record at its domestic agent or representative:
- Original affidavit stating that the TWSE primary listed, Taipei Exchange primary listed, or emerging stock foreign issuer has actually been authorized by the overseas foreign national employees.
- Photocopy of documentary proof that the TWSE primary listed, Taipei Exchange primary listed, or emerging stock foreign issuer has obtained effective registration from the competent authority to issue new shares or employee stock warrants or to buy back its shares.
When the domestic agent or representative of the TWSE primary listed, Taipei Exchange primary listed, or emerging-stock foreign issuer applies with a securities broker to open an account, it shall, in addition to the documents required for account opening as in the preceding Article, affix the documents in the subparagraphs of the preceding paragraph to apply for account opening. Such account may not be used for any securities trading other than the sale of securities obtained by the employees in accordance with the laws and regulations of the country of registration and as approved or authorized by Taiwan, or sale of stock of another TWSE or Taipei Exchange listed company, TWSE or Taipei Exchange primary listed company, or emerging stock company that the employees have obtained by duly participating in a public tender offer through an offer to sell, or have obtained by the issuer's participation in a merger or acquisition, or of stock obtained as a result of allotment, subscription or assignment.
Paragraphs 3, 4, and 5 of the preceding Article shall apply mutatis mutandis to the registration process under this Article.
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| 77-6 | Overseas Chinese and foreign nationals investing in stock issued overseas by a domestic public company, when entrusting their local agent to open an account with a securities broker on their behalf in accordance with paragraph 2 of Article 37 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals, shall carry out registration and account opening in accordance with paragraph 4 of Article 77, provided, if approval has been obtained and an account opened prior to the sale of the overseas stock, it need not be done anew.
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| 77-7 | A mainland area investor shall, after the investor's designated domestic agent or representative registers with the TWSE to obtain an ID number, submit to a securities broker a photocopy of the national ID card or alien resident certificate, or documentary proof of company registration (or amendment registration), of the domestic agent or representative to open an account to trade securities.
When the domestic agent of a mainland area qualified institutional investor opens an account at a securities broker, in addition to the documents for account opening of paragraph 1, it shall also submit documentary proof of identity of the mainland area qualified institutional investor and documentation stating the overseas investment limit approved by the mainland area competent authority for foreign exchange business and the letter of approval issued by the TWSE for the inward remittance amount to open an account to trade securities.
"Mainland area qualified institutional investor" in the preceding paragraph means an institutional investor with approval or permission under Article 3 of the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors.
The provisions of Article 77-4, paragraph 3 shall apply mutatis mutandis to account opening that is done by means of electronically transmitting the account opening documents.
If any of the circumstances of Article 8 of the Regulations Governing Securities Investment and Futures Trading in Taiwan by Mainland Area Investors exist at the time of registration by a mainland area investor, the TWSE will deny registration. If the investor is already registered, the TWSE will cancel the registration and notify the securities broker that opened the account that it may not accept purchase orders, and that, after liquidating the balance in that account, it shall cancel the account.
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| 77-8 | When the domestic agent or representative of a mainland nationality shareholder of a TWSE or Taipei Exchange primary listed company opens an account at a securities broker, in addition to the documents for account opening of paragraph 1 of the preceding Article, the domestic agent or representative shall also submit documentation issued by the foreign issuer's agent for stock affairs evidencing that the mainland nationality shareholder obtained the stock (or evidentiary certificate representing the stock) issued by that foreign issuer prior to its TWSE listing or Taipei Exchange listing in Taiwan, or the documentary proof that mainland nationality employees have been allotted, subscribed to or been assigned shares in accordance with the laws and regulations of the country of registration.
For a mainland nationality shareholder of a TWSE or Taipei Exchange primary listed company or a shareholder of a TWSE or Taipei Exchange primary listed company that is a company in which a mainland area person, juristic person, organization, or other institution invests in a third area, when such shareholder’s domestic agent or representative opens an account at a securities broker, in addition to the documents for account opening of paragraph 1 of the preceding Article, documentation shall also be submitted evidencing that the stock issued by the foreign issuer was obtained due to direct investment in private placement, cash capital increase, merger, acquisition and share conversion.
Securities trading through the accounts referred to in the preceding two paragraphs are restricted to sale of stock issued by such foreign issuer, sale of stock through duly made tender by participation in a public tender offer, and sale of stock of other TWSE or Taipei Exchange listed company or TWSE or Taipei Exchange primary listed company obtained through the issuer’s participation in a merger and acquisition, and sale of stock obtained as a result of allotment, subscription or assignment. No other securities trading may be engaged in through such accounts.
If a company whose stock is TWSE listed or Taipei Exchange listed, pursuant to Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act or Article 235-1 or Article 267 of the Company Act, awards securities to an employee or employees who are mainland nationals, the company's overseas subordinate company or branch office will conduct registration for a Collective Investment Account for Mainland Nationality Employees with the TWSE to obtain an ID number for purposes of handling the assignment, subscription or allotment of securities to such employee or employees. When the domestic agent or representative opens an account with a securities broker in such a case, in addition to the account opening documents required by paragraph 1, the documents in the following subparagraphs shall also be submitted, and a copy of the documents shall also be kept on record at the place of the domestic agent or representative for reference:
- An original copy of the undertaking stating that the overseas subordinate company or branch office of the company whose stocks are TWSE listed or Taipei Exchange listed is actually authorized by the employees that are mainland nationals.
- A photocopy of the documentation evidencing the Competent Authority's effective registration for the issuance of new shares or employee stock warrants, or the repurchasing of its own shares, by the company whose stock is TWSE listed or Taipei Exchange listed.
- A photocopy of the meeting minutes at which the board of directors of the company whose stock is TWSE listed or Taipei Exchange listed approved the current instance of repurchase of its own shares for a share transfer to employees pursuant to Article 28-2, paragraph 1, subparagraph 1 of the Securities and Exchange Act, or issuance of employee stock warrants pursuant to Article 28-3 of the Securities and Exchange Act, or issuance of new shares pursuant to Article 235-1 and Article 267 of the Company Act.
When a TWSE primary listed or Taipei Exchange primary listed foreign issuer carries out registration procedures for a "Segregated Collective Investment Account for Mainland Nationality Employees" with the TWSE for securities obtained by its mainland nationality employees in accordance with the laws and regulations of the place of registration, when the domestic agent or representative opens the account with a securities broker, in addition to the account opening documents in paragraph 1 of the preceding article, the documents in the following subparagraphs shall also be submitted, and a copy of the documents shall also be kept on record at the place of the domestic agent or representative for reference:
- Original affidavit stating that the TWSE primary listed or Taipei Exchange primary listed foreign issuer has actually been authorized by the mainland nationality employees.
- Photocopy of documentary proof that the TWSE primary listed or Taipei Exchange Primary listed foreign issuer has obtained effective registration from the competent authority to issue new shares or employee stock warrants or to buy back its shares.
The accounts of the preceding two paragraphs may be used only to sell stocks which such employees have obtained by exercising securities subscription rights or through assignment or allotment, or to sell stocks of another TWSE or Taipei Exchange listed company or TWSE or Taipei Exchange primary listed company that such shareholders have obtained by duly participating in a public tender offer through an offer to sell, or have obtained by the issuer's participation in a merger or acquisition, or stocks obtained as a result of allotment, subscription or assignment. Such accounts may not be used for any other securities trading.
The provisions of paragraphs 4 and 5 of the preceding Article shall apply mutatis mutandis to the registration operations of this Article.
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| 77-9 | For a securities broker to accept an application for account opening, a principal who is an overseas Chinese or foreigner or mainland area investor shall provide documents necessary for verification of identification as required under the Regulations Governing Anti-Money Laundering of Financial Institutions.
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| 78 | Securities firms engaging on their own or on behalf of others in securities trading margin purchases and short sales business shall handle it in accordance with the Regulations Governing the Conduct of Securities Trading Margin Purchase and Short Sale Operations by Securities Firms, Regulations Governing Securities Finance Enterprises, the Operating Rules for Securities Firms Handling Margin Purchases and Short Sales, or the Operating Rules for Securities Finance Enterprises Handling Margin Purchases and Short Sales.
If, after execution of a trading order through a securities firm that is engaged or acts on behalf of another to handle business under paragraph 1, or after execution of a sale of borrowed securities in accordance with the Taiwan Stock Exchange Corporation Securities Lending and Borrowing Rules, there is any change in the trading category, such change shall be handled in accordance with the provisions of the Directions for Securities Firms Handling Changes to Trading Category.
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| 79 | A securities firm may accept authorization from a juristic person, other institutions or specific natural persons to decide on its behalf the price and time of placement of an order within the range of the price limits specified by such juristic person, institution or natural person; when placing quotes for trades, the securities broker shall consider the market conditions and the supply-demand relationship, and take care not to damage the formation of fair prices in the market and the sound development of the market, and the securities broker shall retain the customer authorization record in accordance with regulations.
"Specified natural person" in the preceding paragraph means a natural person who simultaneously meets all of the following conditions:
- Provides proof of financial capacity of NT$50 million or more.
- Possesses adequate professional knowledge or trading experience with respect to financial products.
- Issues a signed statement specifying that a registered qualified associated person of the securities firm has explained in detail to him/her the rights, obligations, and risks requiring attention in connection with discretionary orders, and confirming that he/she has been fully advised of and understood the same and agrees to sign as a specified natural person.
"Possesses adequate professional knowledge or trading experience with respect to financial products" in subparagraph 2 of the preceding paragraph means that the person meets one of the following conditions:
- The person has in the past held a position at a securities, futures, financial, or insurance institution, or has other academic qualifications or work experience sufficient to prove possession of professional knowledge of securities.
- The person simultaneously meets all of the following conditions:
- At least six months have elapsed since the person opened the account.
- The person provides proof of the number of his/her trades on the securities market for the most recent year having reached 20; the same shall apply in the case where 1 year has not elapsed since the person opened the account.
- The person has never had any record of default in securities trading.
Securities brokers may accept an order specifying the term of validity.
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| 79-1 | When accepting sell orders for normal settlement in brokerage trading, a securities broker shall confirm that the volume of securities in the orders do not exceed the principal's custodial book-entry account balance, provided that this rule does not apply in any of the circumstances listed below:
- Settlement is handled by a custodian institution on behalf of the securities broker.
- Brokerage orders to sell securities short.
- Brokerage orders to sell securities to settle a margin purchase.
- Brokerage orders to sell securities that had been deposited as collateral for a margin trade that has already been liquidated.
- Brokerage orders to sell collateral that had been provided for borrowing of funds or for settlement financing.
- Brokerage orders to sell collateral that is eligible to be withdrawn in securities borrowing and lending.
- Brokerage orders to sell securities in special accounts set up for the handling of events of default.
- Brokerage orders to sell securities lent on the previous business day pursuant to Chapter 3 of the TWSE Securities Borrowing and Lending Rules.
- Brokerage orders to sell securities lent pursuant to the TWSE Securities Borrowing and Lending Rules, where the securities borrower has been notified to return the securities by the sale settlement date.
- Brokerage orders to sell securities the borrowing of which has been confirmed but that have not yet been remitted in.
- Brokerage orders to sell securities under pledge that are being disposed by the pledge.
- Brokerage orders to sell securities for which applications for exercise of call warrants were made on the previous business day, and for which the issuer has confirmed that the exercise will be implemented by means of delivery of the securities.
- Brokerage orders to sell ETF beneficial certificates or baskets of stocks evidenced by beneficial certificates, pursuant to Article 12 of the TWSE Rules Governing Trading of Beneficial Certificates.
- Brokerage orders to sell securities bought on the previous business day.
- Brokerage orders to sell securities pursuant to the Operational Rules Governing Day Trades of Securities.
- Brokerage orders to sell securities that are loaned and returned prior to the settlement date of their sale pursuant to the Operational Rules Governing Day Trades of Securities.
- Other exempted circumstances as announced by the TWSE.
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| 79-2 | When a securities firm is consigned to purchase securities at the TIB, its principal must be a qualified investor and the purpose is limited to a company repurchasing its shares pursuant to law.
For purpose of the preceding paragraph, a qualified invetor refers to a principal who meets one of the following conditions:
- Is a professional institutional investor, a high net worth corporate investor, or a juristic person or fund meeting certain criteria and having applied in writing to the trustee or sub-distributor for the status of a professional investor, as defined under Article 3, paragraph 3 of the Regulations Governing Offshore Structured Products.
- Is a venture capital enterprise established pursuant to laws.
- Is a natural person with two or more years of experiences of investment in trading in securities who has met one of the following conditions:
- Is able to prove a financial strength of NT$10 million or more.
- Has an average annual income of NT$1.5 million or more during the most recent two years.
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| 80 | Purchase or sale orders accepted by a securities broker shall be processed by registered and qualified associated persons.
When executing orders to trade in securities, the registered and qualified associated persons referred to in the preceding paragraph shall wear the registration pass issued by the TWSE. When accepting trading orders, the associated persons shall fill out order tickets in accordance with the provisions of subparagraph 8 of Article 75, assign serial numbers to the orders, and process them in the order in which they are received.
When a trading order has been matched, the securities broker shall produce a trade report. The format and the particulars to be specified on the report shall be in accordance with the regulations prescribed by the Competent Authority.
For orders received by telephone, the securities broker shall synchronously record the conversation and shall keep the telephone recording in its place of business.
The above-stated telephone recording shall be preserved for at least 1 year. Where there are disputes relating to a trading order, the recordings shall be preserved until the dispute has ended. In the event the securities broker suffers facilities breakdowns or it is remiss in its procedures, it shall within 2 days of the occurrence of the event report to the TWSE regarding the facts and causes and its remedial measures.
The telephone recordings preserved in accordance with the preceding paragraph shall be construed as a type of trade voucher. In case the securities firm avoids or refuses inspection, it shall be punished in accordance with paragraph 2 of Article 25 and the Standards for Determining Securities Firms Avoiding or Refusing Inspections and Handling Procedures Thereof.
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| 80-1 | No one shall enter the operating counter and trading room of a securities broker except its chairman, general manager, manager of the business department, internal auditing personnel, compliance personnel, and the registered and qualified associated persons referred to in paragraph 1 of the preceding Article.
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| 81 | After accepting a brokerage trading order, a securities broker may cancel or amend particulars of the order only if notified by the principal to do so, and only if the order has not yet been executed.
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| 82 | After accepting a brokerage trading order for normal settlement, a securities broker, following execution of the trade, shall collect the price payable for the securities bought, or collect the securities sold, pursuant to Article 12 of the Regulations Governing Brokerage Contracts, or collect the price difference after offsetting purchases and sales pursuant to the Operational Rules Governing Day Trades of Securities.
A securities broker filing a report of delayed settlement for an offshore overseas Chinese or foreign national, or for a mainland area investor, with the TWSE shall do so in compliance with the Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals, and shall notify the principal or the custodian institution pursuant to the agreement.
In the case of brokerage orders for margin trades, the securities broker shall collect from its principal the margin for the margin purchase or the margin for the short sale, as the case may be, pursuant to Article 12 of the Regulations Governing Brokerage Contracts.
Where the TWSE has taken any disciplinary measure against a specific securities in accordance with the "Regulations for Implementation of Stock Market Monitoring System" and other relevant operation rules, a securities broker shall, on the date it accepts the order, collect in advance from its principals the funds or securities, or the margin for margin purchases, or the margin for short sales.
Where a securities broker believes that there are any defect on the rights of the securities delivered by its principal for sale or there is legal dispute or other doubtful matter, it may decline to sell such securities; provided that the above shall not be applicable where its principal has provided adequate collateral as approved by the securities broker.
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| 82-1 | Where a securities broker accepts an order to sell registered securities that have never been transferred and its principal is not the owner of the securities, it shall handle the settlement in accordance with the Guidelines for Reporting by Securities Brokers of Sale of Securities Not Owned by the Principal as stipulated by the TWSE. The "owner" in the preceding sentence, unless otherwise provided, may not be an overseas Chinese or foreign national or mainland area investor.
The provisions of the preceding paragraph shall apply mutatis mutandis where a securities broker accepts an order to sell registered securities that have been transferred and for which transfer registration procedures have been carried out with the issuing company, and that meets any of the following conditions:
- Securities of a defaulting investor after the case is closed and withdrawal has been effected.
- Securities acquired through an inheritance or gift.
- Securities acquired through underwriting before November 1997.
- Collateral in the form of spot securities that a securities finance company or securities firm operating its own margin purchase and short sale operations has required an investor to deposit to offset a decline in the securities price to below the maintenance ratio.
- Securities that a bank has required a customer to pledge in the form of spot securities.
- Securities obtained through a final and unappealable court judgment.
- Other conditions reported to and approved by the TWSE.
When accepting a brokerage order to sell securities pursuant to this article, the securities broker shall confirm that the quantity of securities in the order does not exceed the quantity identified in the certifying document furnished by the principal.
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| 82-2 | Securities borrowing and lending by principals through the securities borrowing system of the TWSE shall be conducted in accordance with the provisions of Chapter 1 and Chapter 2 of the Securities Lending and Borrowing Rules of the TWSE.
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| 82-3 | A securities firm handling, or acting as an agent for, securities lending and borrowing business shall do so in compliance with the Regulations Governing Securities Lending by Securities Firms, Regulations Governing Securities Finance Enterprises, Operating Rules for Securities Lending by Securities Firms, or Operating Rules for Securities Finance Enterprises Offering Refinancing to Securities Firms.
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| 83 | A securities broker shall keep complete and true records and vouchers when receiving or delivering securities or payments in connection with brokerage trading.
The vouchers referred to in the preceding paragraph shall include receipts for funds and securities collected in advance, vouchers on securities delivered, and trade reports. The format thereof and the particulars to be entered therein shall conform to the regulations prescribed by the Competent Authority. Where a financial institution concurrently engages in the business of a securities broker and has opened specific accounts for depositing funds which can be verified, it need not use trade reports.
A securities broker shall handle the receipt of securities or funds from its principals or delivery of securities or funds to its principals referred to in paragraph 1 of this Article by book-entry through the central securities depository accounts opened by its principals or through the deposit accounts opened by its principals with financial institutions designated by the securities broker, except under any of the following circumstances:
- Where a securities investment trust fund, venture capital enterprises invested by the National Development Fund of the Executive Yuan, insurance enterprise, offshore overseas Chinese or foreign national, or an overseas Chinese or foreign national or mainland area investor who has converted overseas corporate bonds held by him into stock or has converted overseas depositary receipts held by him into the underlying securities, has a deposit account opened by the custodian institution on behalf thereof, the receipt and payment of the purchase prices may be effected by account transfer (or remittance) through such account.
- Fund collection or payment operations of centralized segregated trust asset accounts under the management of a trust enterprise that has the status of a central depository participant may be carried out by means of transfer (remittance).
- Where a depositary institution of overseas depositary receipts has been engaged by its principal to redeem the overseas depositary receipts and sell the stock, it may receive the proceeds thereof by way of account transfer (or remittance) through the deposit account maintained at the custodian institution.
- Where a principal places engages a securities investment consulting enterprise or a SITE to conduct discretionary securities trading, the principal may open and maintain a deposit account at the custodian institution, and the receipt and payment of the purchase prices may be effected by account transfer (or remittance) through such account. When processing trade settlement, it is prohibited to transfer payment funds or securities between separate discretionary investment accounts of the same principal.
- If a domestic bank or insurance company obtains a rating of twA- or higher from the Taiwan Ratings Corporation, or its rating by a credit rating institution approved or recognized by the Competent Authority meets or exceeds the qualification requirements of the Taiwan Ratings Corporation's twA- rating, its receipt and payment of purchase prices may be effected by account transfer (or remittance) during the period for which the aforementioned rating is valid.
- If government agencies conduct securities trading settlement through deposit accounts of such institutions in accordance with laws and regulations, the receipt and payment of the purchase prices may be effected by account transfer (or remittance) through such accounts.
- If a principal agrees to keep settlement money in dedicated accounts for settlement with a securities firm, an arrangement may be made with the securities firm to have the receipt and payment of the purchase prices be effected by account transfer (or remittance) through the principal's own deposit accounts.
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| 84 | (deleted)
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| 85 | A securities broker shall not accept any discretionary order to decide the type, volume, price or purchase or sale of securities on behalf of its principal.
A securities broker shall not purchase or resell for its own profit any securities it has accepted an order to trade, or guarantee to share profits with its principals, or accept trading orders by installment payments.
When recommending its principals or on website to buy or sell securities, a securities broker shall comply with the "Regulations Governing Securities Brokers' Practice on Recommending Principals to Buy and Sell Securities" as stipulated by the TWSE.
The website provided by securities brokers shall show, in a conspicuous manner, the risk disclosure statement and the alternative to be adopted in case of inability to execute electronic transmission, and the most up-to-date information shall be transmitted. The securities brokers shall carefully select hyperlink websites, and shall be responsible for the supervision and administration of their associates' use of electronic mail, group electronic mail, bulletin board system, website, etc. in activities associated with business operations.
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| 86 | A securities broker shall keep all matters in which it is engaged by the principal in confidence and shall not disclose them to others; provided that the above shall not be applicable if the TWSE makes enquiries of the securities broker.
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| 87 | A securities broker that has made a mistake when executing a trade shall report the out-trade and/or correct the account number in accordance with the TWSE Directions for the Handling of Out-Trades and Correction of Account Numbers by Securities Brokers.
A securities broker shall open a segregated error account in its own name, and shall assign it with an account number and fill its company profit seeking enterprise uniform invoice number therein, and said segregated error account shall be treated in the same manner as the account of its principals. All trades transacted through the said segregated error account shall be deemed as ordinary trades, for which securities transaction tax shall be paid. Gains and losses resulted from the said segregated error account shall be handled in accordance with the Principles Governing the Preparation of Financial Reports by Securities Firms.
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| 88 | Where a principal places an order to trade listed securities of a specified category whose volume is too large and it is believed that handling such trade as an ordinary trade would affect the normal market, the securities broker may in accordance with Article 74 report to the TWSE and consult with it about changing the method for execution of the order to price negotiation, auction, reverse auction, or other methods.
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| 89 | A securities broker and its branch offices shall not engage in the following activities:
- Offset purchase orders against sales orders for the same securities in whole or in part in private off-market trading.
- Engage in matched-order trading with another securities firm or firms outside the Exchange.
- Trade securities not listed by the TWSE, without the approval of the Competent Authority.
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| 90 | A securities broker may not violate brokerage contract when conducting brokerage trading. In the event that a securities broker breaches the brokerage contract, the principal may report the matter to the TWSE.
Any claim by the principal against the clearing and settlement fund deposited with the TWSE by a securities broker that arises out of breach of contract by the securities broker in brokered market trades shall have the second highest priority after that of the TWSE.
The principal may request the TWSE for payment from the clearing and settlement fund deposited with the TWSE by its contracted securities broker only if it has obtained the consent of the securities broker or a final adjudication of execution or of an arbitral award.
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| 91 | Where the principal fails to fulfill its settlement obligations on time, the principal is in default. In such an event, the securities broker shall report the default in accordance with the TWSE Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals , and shall simultaneously notify the principal.
When the principal is an offshore overseas Chinese or foreign national, or a mainland area investor, and a report of delayed settlement has been filed in accordance with Article 82, paragraph 2, if settlement is not completed in accordance with provisions and it is not an out-trade, the principal is in default. The securities broker shall handle the matter pursuant to the provisions in the preceding paragraph.
A securities broker which receives securities or consideration in accordance with paragraph 1 or paragraph 2 of this Article shall engage another securities broker to dispose of it on the Exchange no later than the first business day after the principal's default. Thereafter, the securities broker shall forthwith report to the TWSE and notify its principal in accordance with the Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals. However, those securities which belong to the same account and are of the same type and same volume may be offset against each other.
Where the aggregate number of [shares represented by] the share certificates of securities received by a securities broker under paragraph 1 and paragraph 2 during the period of a single default reaches 5 percent or more of the number of shares of the underlying securities already issued, and furthermore reaches or exceeds the average daily volume of the underlying securities during the 20 trading days prior to reporting of the default, the securities broker may adopt either of the following measures to handle the default:
- If handling of the default cannot be completed through reverse transactions during the 3 consecutive business days from the day next following the date of confirmation of the default by the principal, the securities broker, by reaching a mutual agreement with the principal or by notice to the principal, may, depending on market conditions, in accordance with the content of the agreement or the notice, complete handling of the default through reverse transactions within 180 days, and report the agreement or notice to the TWSE via letter for recordation.
- The securities broker may reach an agreement with the principal setting a price(s) to serve as the basis for calculating profit/loss, and submit the written agreement reached between the parties to the TWSE via letter for recordation.
Based on the report of a securities broker referred to in paragraph 1 or paragraph 2 of this Article, the TWSE will forthwith notify each securities broker, which shall act in accordance with paragraph 3 of Article 76 hereof.
In the event that the principal suffers losses or there is any other dispute arising out of the notification sent by the TWSE to each securities broker based on the report by a securities broker, the securities broker reporting the default shall be fully responsible therefor.
If a securities broker, for a reason not attributable to the broker, is unable in a timely manner to take measures pursuant to paragraphs 3 and 4, it shall prepare a handling record and keep it on file for inspection along with related documentary evidence.
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| 91-1 | Except under the circumstance prescribed in paragraph 2 below, if settlement is not completed on time for a discretionary investment account, the securities broker shall handle the matter in accordance with the provisions governing default by an ordinary principal.
If settlement is not completed on time for a discretionary investment account because of non-performance by the authorized discretionary trader of obligations arising from trading exceeding the discretionary trader's authorization, such event shall be handled as follows:
- The securities broker shall carry out settlement on behalf of the principal and notify the principal. Not later than 6:00 p.m. of the business day next following the trade day, the securities broker shall prepare written report on relevant facts with seals of both the company and its responsible person fixed thereon, together with photocopy of the notice of unauthorized trading issued by the custodian institution, and related trade vouchers and brokerage contract (including documents submitted for account opening), and fax the aforesaid to the TWSE and notify the TWSE by telephone before forwarding original copy of the said documents to the TWSE for reporting to the Competent Authority. However, those that meet the requirements of Article 42, paragraph 5 of the Regulations Governing the Conduct of Discretionary Investment Business may substitute a notice of unauthorized trading issued by a party authorized to do so under the relevant contract or legal opinion for the notice of unauthorized trading issued by the custodian institution.
- In connection with the discretionary investment account, the securities broker shall immediately suspend acceptance of trading orders for securities. Other accounts in the name of the same principal shall not be affected by restrictions under paragraph 3 of Article 76.
- In connection with the securities or consideration received by a securities broker through settlement on behalf of the principal, the securities broker shall engage another securities broker to dispose of it on the Securities Exchange Market of the TWSE starting on the next business day after the required reporting has been made, provided that the securities in the same account, and of the same type and quantity may be offset against each other.
- Upon completion of the process prescribed in preceding subparagraph 3, the securities broker shall prepare written report on how the process has been handled, with the seals of both the company and its responsible person fixed thereon, together with photocopy of related trade vouchers, and forward the said documents to the TWSE for reporting to the Competent Authority.
The TWSE shall promptly relay information reported per subparagraph 1 of paragraph 2 above to all securities brokers.
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| 92 | A securities broker accepting an order to trade securities shall immediately deliver to the principal the securities bought or the proceeds of the securities sold after it is transacted and settled and, in case it is not transacted, shall forthwith return to the principal the securities or funds received; provided that the securities broker may keep the settlement in funds in the settlement account of the securities firm subject to the consent of the customer, and shall comply with the TWSE Directions for the Creation of Customer Ledgers of Securities Firm Settlement Accounts.
A securities broker delivering the securities or funds referred to in the preceding paragraph, unless otherwise provided, shall request the principal to sign and seal on relevant vouchers so as to complete the procedures. A power of attorney shall be required in the event that the principal appoints another person to sign and seal on its behalf.
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| 93 | Before the principal settles the debt arising out of the brokerage trade, a securities broker may retain the property received from the principal and the sum payable to the principal in connection with the brokerage trade.
A securities broker shall prepare and send to each of its principals a monthly reconciliation statement; provided that the above shall not apply to case where there has not been any trade in that particular month and the principal does not request in writing for the statement.
The format and particulars to be specified in the statement referred to in the preceding paragraph shall be in accordance with the regulations prescribed by the Competent Authority.
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| 94 | After a brokerage trade has been executed, the securities broker may collect a processing fee from the principal. The fee schedule shall be formulated by the TWSE and approved by the Competent Authority.
A securities broker may at its sole discretion adopt a rate schedule, based on the customer transaction amount, for securities transactions fees that it collects, and may also adopt discounts and single-order minimum fees, and shall report such schedule, discounts, and fees to the TWSE for recordation through the One-Stop Window for Securities Firm Filings before implementation. After collecting transaction fees, a securities broker may settle accounts at regular intervals (e.g. monthly, weekly). Any amount refundable or deductible shall be transferred into the original customer's settlement account, and recorded in the customer's monthly reconciliation statement and the monthly accounting summary filed with the TWSE. If the fee adopted by a securities broker exceeds 0.1425 percent of the amount of a transaction, the securities broker shall notify the customer of this fact by an appropriate method before accepting the order, and retain a record of that notification, provided that offshore overseas Chinese and foreign nationals may be notified before settlement.
A securities broker shall not pay, in whole or in part, any processing fee receivable by it to any introducing person related to the trading as their remuneration; provided, this restriction shall not apply to any of the following circumstances:
- where it is paid under a contract to a foreign financial institution that is registered and permitted by the competent authority of the local country to operate securities business.
- where, under a contract entered into for cross-selling, it is paid to a subsidiary of a financial holding company.
The term "local country" in subparagraph 1 of the preceding paragraph shall be separately defined by the TWSE.
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| 95 | (deleted)
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