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Title:

Regulations Governing Responsible Persons and Associated Persons of Securities Firms  CH

Amended Date: 2020.10.26 

Title: Regulations Governing Responsible Persons and Associated Persons of Securities Firms(2008.06.09)
Date:
Article 1 These Regulations are prescribed in accordance with paragraph 2 of Article 54 and Article 70 of the Securities and Exchange Act (hereinafter "the Act").
Article 2 The term "responsible person" as used in these Regulations shall be defined in accordance with Article 8 of the Company Act.
The term "associated persons" as used in these Regulations means persons who engage in the following businesses for a securities firm:
1. securities investment analysis, internal auditing, or in-charge accountant;
2. liaison or execution of securities underwriting and trading;
3. securities proprietary trading, clearing and settlement, or agency for shareholder services;
4. account opening, credit search, solicitation, recommendation, brokerage order taking, filing, clearing, settlement, or receipt, payment, and safekeeping of cash and stocks, in connection with securities trading;
5. margin purchases or short sales in securities trading;
6. derivatives risk management or operations;
7. conducting other approved business.
Responsible persons and associated persons of the overseas branch of a securities firm shall abide by the local laws and regulations governing securities in the country where they conduct business. With the exception of Article 12, Article 13, and Article 18, paragraph 1, these Regulations shall not apply.
Article 3 Associated persons of securities firms are classified into the following two categories in accordance with the complexity and responsibility of their duties:
1.Senior agent: a person who manages a department or is a responsible person of a branch of a securities firm, or is engaged in investment analysis or internal auditing, as described in paragraph 1 of Article 8.
2.Agent: a person who engages in underwriting, proprietary trading, or brokerage trading of securities, or internal auditing, or is an in-charge accountant, as described in the subparagraphs of paragraph 2 of the preceding article.
Only a person who is trained and certified by the internal auditor training program held by an institution accredited by the Financial Supervisory Commission under the Executive Yuan (hereinafter "the Commission") can engage in internal auditing as provided in subparagraph 2 of the preceding paragraph.
Article 4 Associated persons of a securities firm shall be employed full time, provided that this restriction shall not apply if otherwise provided by the Commission.
The following associated persons of a securities firm shall not engage in business beyond the scope for which they are registered nor shall such business be concurrently performed by other associated persons, unless otherwise prescribed in other laws or regulations:
1. persons engaged in securities brokerage trading;
2. persons engaged in proprietary trading of securities;
3. internal auditors;
In the case of a futures commission merchant that concurrently operates securities business, if the brokerage trading business under subparagraph 1 of the preceding paragraph is performed by associated persons qualified as such for both securities and futures business, such persons may concurrently engage in brokerage securities trading and brokered futures trading; if the proprietary trading business under subparagraph 2 of the preceding paragraph is performed by associated persons qualified as such for both securities and futures business, such persons may concurrently engage in proprietary securities trading and proprietary futures trading; if the internal auditing under subparagraph 3 of the preceding paragraph is performed by associated persons qualified as such for both securities and futures business, such persons may concurrently engage in the internal auditing of securities and futures business activities.
In the case of a futures commission merchant that concurrently operates securities business, a managerial officer of its department handling futures brokerage trading business, who furthermore meets the qualifications set out in Articles 8 and 10 herein, may concurrently serve as a managerial officer of its department handling securities brokerage trading; a managerial officer of its department handling proprietary futures trading, who furthermore meets the qualifications set out in Articles 8 and 10 herein, may concurrently serve as a managerial officer of its department handling proprietary securities trading.
Except as otherwise provided by law or regulation, the provisions of paragraphs 3 and 4 shall apply mutatis mutandis to other financial institutions (financial institutions other than futures commission merchants) that concurrently operate securities business.
An agent of a securities firm shall not engage in or concurrently engage in the business engaged in by a senior agent.
Article 5 A senior agent of a securities firm shall have one of the following qualifications:
1. graduated from a college or university or above, and have been an agent of a securities institution for three years or more;
2. qualified as a securities investment analyst as prescribed in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises;
3. passed the securities firm senior agent exam held by the Securities and Futures Institute (hereinafter "SFI") at the request of the Taiwan Securities Association;
4. has already been registered as a securities firm senior agent in accordance with these Regulations, or already obtained a certificate for securities firm's senior agent issued by the Commission;
5. is currently an agent of a securities institution, and served one year or more as an agent before the June 18, 1991 amendment to these Regulations came into force, and further, after that amendment came into force, has served as an agent, cumulatively, for five years.
Article 6 An agent of a securities firm shall have one of the following qualifications:
1. qualified as a securities investment analyst as prescribed in the Regulations Governing Responsible Persons and Associated Persons of Securities Investment Consulting Enterprises;
2. passed the securities firm agent exam held by the SFI at the request of the Taiwan Securities Association;
3. has already been registered as a securities firm agent in accordance with these Regulations, or obtained a certificate of qualification as a securities firm agent issued by the Commission;
Article 7 If a person who has obtained a certificate of qualification as a securities firm associated person issued by the Commission has any need for reissuance of the certificate, the person shall file an application with the SFI.
The preceding paragraph shall come into force from January 1, 1999.
Article 8 In securities firms, the managers of departments engaged in underwriting, proprietary trading, brokerage trading, clearing and settlement, internal auditing, shareholder services, and financial affairs, and in branch units of securities firms, responsible persons and the managers of the brokerage trading and clearing and settlement departments, shall possess the qualifications of a senior agent; an exception to this requirement is made in the case of the managers of internal auditing departments and financial affairs departments of securities firms concurrently operated by a financial institution, for which separate provisions set out by this Commission may be followed.
In foreign securities firms' branch units within the ROC, the managers of departments engaged in underwriting, proprietary trading, brokerage trading, clearing and settlement, and internal auditing shall possess the qualifications of a senior agent; an exception too this requirement is made in the cases of responsible persons and the managers of the financial affairs and shareholder services department of such branch units of foreign securities firms.
Article 9 The general managers of securities firms shall be of upstanding character and possess the ability to effectively lead and manage a securities firm; with the exception of general managers of securities firms concurrently operated by financial institutions, which may otherwise be subject to the provisions of other acts and regulations, general managers shall possess at least one of the following qualifications:
1. Graduate of a local or foreign junior college recognized by the Ministry of Education, or an equivalent or higher degree, with five or more years of sales experience in securities, futures, finance, or insurance, and having held the position of assistant general manager or an equivalent position for one year or more at a securities or futures institution, or the position of manager or an equivalent position at a securities or futures institution for three years or more, with a good performance record.
2. Six years or more of work experience at a securities institution, and having served in the position of assistant general manager or an equivalent position at a securities or futures institution for one year or more or in the position of manager or an equivalent position at a securities or futures institution for three years or more, with a good performance record.
3. Other academic or work qualifications demonstrating possession of professional knowledge of securities and operations and management experience that would enable sound and effective management of securities firm business.
When hiring a general manager, a securities firm shall first submit documents verifying that the planned candidate meets the qualifications of the preceding paragraph to the stock exchange, the ROC Securities Dealers Association, or the GreTai Securities Market for their review and approval, after which they shall be forwarded to the Commission for its review and approval, before the candidate may fill that position.
The provisions of the preceding two paragraphs shall apply mutatis mutandis to responsible persons of foreign securities firms' branch units within the ROC.
Article 10 Managers of departments as set forth in Article 8, paragraph 1, and the assistant general managers, deputy assistant general managers, and managers of those departments, or who supervise those departments, and responsible persons of securities firms' branch units shall possess one of the following qualifications:
1. Graduate of a local or foreign junior college recognized by the Ministry of Education, or an equivalent or higher degree, with three years or more of business work experience in securities, futures, finance, or insurance, with a good performance record.
2. Four years or more of work experience at a securities institution, with a good performance record.
3. Other academic or work qualifications demonstrating possession of professional knowledge of securities and operations and management experience that would enable sound and effective management of securities firm business.
For a branch unit of a foreign securities firm within the ROC, managers of departments that engage in underwriting, proprietary trading, brokerage trading, clearing and settlement, and internal auditing shall possess the qualifications set forth in the preceding paragraph.
The provisions of paragraph 1 shall apply mutatis mutandis to positions that are equivalent to assistant general manager, deputy assistant general manager, or manager under other laws or the articles of incorporation of a securities firm.
Article 11 For those who, prior to the amendment of these Regulations, were already serving as the general manager of a securities firm or as department manager or responsible person of the branch unit of a securities firm as set forth under Article 8, paragraph 1, may continue to serve in their original position or for the duration of their original term, and will not be subject to the restrictions of the two preceding articles.
Where, following the amendment of these Regulations, a person is promoted or assigned to one of the positions referred to in the preceding paragraph, they shall possess or be in conformance with the qualifications set forth in these Regulations; those who do not meet those qualifications shall be dismissed.
Article 11-1 A responsible person of a securities firm may not serve as a responsible person of a bank, financial holding company, trust company, credit cooperative, credit department of a farmers' (fishermen's) association, bills finance company, futures enterprise, insurance enterprise, or another securities enterprise. However, this restriction shall not apply in the following circumstances:
1. Where it is for purposes of an investment relationship between the securities firm and such institutions, and there is no overlapping of the chairmen and/or managerial officers thereof.
2. Where it is for purposes of conducting a merger or consolidation, and this Commission has granted approval, a responsible person may serve as the chairman of such a finance-related enterprise.
3. Where a securities firm is a subsidiary of a financial holding company, a responsible person of the securities firm may serve as a responsible person of such financial holding company or of another of its subsidiaries; provided, that there may not be overlapping of managerial officers between the subsidiaries.
4. Where a securities firm is a juristic-person director or supervisor of a financial holding company, its responsible person, for purposes of serving as a responsible person of that holding company, may concurrently serve as a director or supervisor of a subsidiary of that holding company.
Where there is an investment relationship between a securities firm and a non-financial institution that is a public issuer, no responsible person of the securities firm may concurrently serve as the chairman or a managerial officer of such an investee company.
Any concurrent holding of positions by a responsible person of a securities firm shall be limited to the scope necessary for ensuring the effective execution of the responsible person's duties as such and duties in the concurrently held position, and for maintaining the business operations of the securities firm; it may not involve any conflict of interest or violation of securities regulations or the internal control system, and the rights and interests of shareholders shall be protected.
Article 11-2 A responsible person of a securities firm, or a spouse thereof, who serves as a director, supervisor, or managerial officer, or is a shareholder holding 5 percent or more of the total issued shares, of a public company, may not participate in any policy decision-making of the securities firm in the course of any operations relating to that public company.
The calculation of shares held by a person referred to in the preceding paragraph shall include shares held under the names of the person's spouse and minor children, and those held under the names of any other persons.
Article 12 A securities firm shall register with the stock exchange, securities dealers association, or over-the-counter stock exchange its responsible persons and associated persons before such persons may commence performing duties. No one shall perform his duties without registration.
A securities firm that employs any person, who has been dismissed from his or her position within the past three years by an order of the Commission pursuant to the Act, to engage in business other than that described in the subparagraphs of paragraph 2 of Article 2, shall report to the stock exchange for registration before the employment takes effect.
Under any of the following circumstances, the stock exchange, securities dealers association, or over-the-counter stock exchange shall refuse to grant registration, and shall void a registration if it has already been made:
1. a responsible person of a securities firm falls under any circumstance specified in Article 31 of the Company Act or Article 53 of the Act;
2. an associated person of a securities firm falls under any circumstance specified in paragraph 1 of Article 54 of the Act or fails to meet the qualifications prescribed in Articles 5 and 6.
The stock exchange, securities dealers association or over-the-counter stock exchange shall report the registration condition with regard to the registration referred to in the preceding three paragraphs for the previous month to the Commission for recordation by the fifteenth day of each month.
Article 13 In the event of any change of responsible person or associated person, the securities firm shall report to the stock exchange, securities dealers association, or over-the-counter stock exchange to carry out registration within five days after the change, as specified below. The securities firm shall not be released from liability with regard to the actions of such persons before completion of registration of the change.
1. To carry out amendment registration in the event of any job transfer or promotion of a responsible person or associated person of a securities firm.
2. To carry out cancellation registration in the event of any death, resignation, layoff, dismissal, severance, or retirement of a responsible person or associated person of a securities firm.
3. To carry out voidance registration in the event that a responsible person or associated person is ordered to be dismissed from his or her post by the Commission in accordance with the Act or the registration of said person falls under any circumstance specified in paragraph 3 of the preceding article.
In the case of registration of any change in a responsible person or associated person of the overseas branch of a securities firm, registration shall be performed within ten days after the change.
The stock exchange, securities dealers association or over-the counter stock exchange shall compile the particulars of changes to registrations as referred to in the preceding paragraph for the previous month and report them to the Commission for recordation by the fifteenth day of each month.
With regard to any change of internal auditing associated person of a securities firm described in paragraph 1, the securities firm shall file with the stock exchange, securities dealers association, or over-the-counter stock exchange for approval and recordation before any change shall take effect.
Article 14 In the event of leave, suspension of work duties, or other cause of absence of a responsible person or associated person of a securities firm, the securities firm shall appoint a person with equivalent qualification to act as a deputy.
With regard to deputies referred to in the preceding paragraph, the securities firm shall record the reason, period, name of the acting deputy, and his or her duties in a special-purpose book for reference.
Article 15 Associated persons of a securities firm shall participate in pre-service and in-service training held by the Commission or by an institution appointed by the Commission.
An associated person of a securities firm who is assuming the job for the first time, or who has resumed the job after an absence of three years shall participate in pre-service training within six months after reporting for work. Currently employed personnel shall participate in in-service training once every three years.
The Commission may specify the contents and periods for the training described in the preceding paragraph according to actual needs.
Article 16 The Commission or training institution shall issue a training certificate to associated persons who participate in and pass the pre-service or in-service training and shall submit the training performance evaluation to the employing institution for reference regarding the evaluation, promotion, and assignment of work. The Commission or training institution may reward those who are outstanding in performance.
Article 17 The Commission or training institution shall, by notice, disqualify an associated person who fails to participate in pre-service or in-service training or who fails the training and then still fails to pass after two chances at retraining within three years.
Article 18 Responsible persons and associated persons of a securities firm shall conduct business in accordance with the principles of honesty and good faith.
Unless otherwise provided in other laws and regulations, responsible persons and associated persons of a securities firm may not engage in the following conduct:
1. Engaging in the trading of exchange-listed or OTC-listed stocks with information learned on the job for the purpose of obtaining speculative profit;
2. Disclosing the information regarding a customer order or other secrets learned as a result of the job, other than in response to inquiries made in accordance with laws or regulations;
3. Accepting a customer's trading order with discretionary authority over the type, quantity, price, or purchase versus sale the securities;
4. Trading securities with a guarantee to the customer of earning profits or with a promise of sharing profits;
5. Trading securities under an agreement with the customer to jointly assume the losses or profits of the transaction;
6. Accepting orders from customers to buy or sell securities and concurrently buying or selling the same securities for his or her own account on the opposite side of the trade;
7. Subscribing or trading securities in the name of the customer or by using the customer's account;
8. Subscribing or trading securities for the customer in the names of other persons or relatives;
9. Borrowing or lending of money or securities to or from a customer, or acting as an intermediary for the borrowing or lending of money or securities to or from a customer;
10. Fraud, deception, or other misleading behavior when engaging in underwriting, proprietary trading, or brokerage trading of securities;
11. Safekeeping securities, cash, chops, or deposit books of customers, or misappropriating any of those things;
12. Trading securities for a customer that has not entered into a brokerage contract;
13. Trading securities other than in accordance with the particulars and instructions of the order placed by the customer;
14. Providing a customer or unspecified persons with information indicating that the price of certain securities will rise or fall in order to solicit the trading of securities;
15. Recommending trades in specific stocks to unspecified persons, except as necessary for purposes of securities underwriting;  
16. Accepting settlement by a customer by means of offsetting a purchase or sale of securities with a sale or purchase of securities of the same type through the same or a different account, provided that this restriction shall not apply to settlement through offsetting loans and securities in margin trading in accordance with laws and regulations;
17. Processing the opening of an account, or the subscription, trading, or settlement of securities, for a director, supervisor, or employee of the company on behalf of another person.
18. Processing the opening of an account for a person other than the principal for whom the account is being opened. However, this rule does not apply if the Commission has provided otherwise.
19. Processing an application for subscription, trading, or settlement of securities from a person who is not the customer or not an agent with a power of attorney from the customer;
20. Accepting a trading order despite being aware that the customer is using undisclosed information of a public company that will have a material impact on the stock price of the company or being aware that the customer intends to manipulate the market;
21. Any agreement between persons engaging in securities underwriting business and an issuing company or its relevant personnel for purposes of obtaining improper profit;
22. Soliciting, acting as an intermediary for, or promoting unapproved securities or derivative products thereof;
23. Other conduct in violation of securities laws or regulations or conduct prohibited by the rules prescribed by the Commission.
Persons referred to in the preceding paragraph additionally may not engage in any conduct prohibited by securities laws and regulations when conducting their duties.
The provisions of the two preceding paragraphs shall apply mutatis mutandis to other employees of a securities firm.
Article 19 In the event that a responsible person or associated person of a securities firm is alleged to be in violation of a securities law or regulation or in the event of any inquiry regarding the performance of the person's duties, the person shall, within the period set out by the Commission, appear before the Commission and explain or submit a written report.
Article 20 When engaging in the businesses described in any subparagraph of paragraph 2 of Article 2, the associated person of a securities firm shall be deemed to be acting under the authorization of the securities firm.
Article 21 The Commission will reward or commend a responsible person or associated person of a securities firm who has done any of the following:
1. Has contributed intellect and efforts to building securities market mechanisms with distinguished results;
2. Has done research or writing that contributed creative ideas to the development of the securities market or the implementation of securities business, and the ideas have been adopted and implemented;
3. Has reported any illegal matter that has been confirmed to be true;
4. Has served in the same securities firm for fifteen consecutive years or longer and is devoted to the job;
5. Has zealously worked for the public interest and exercised team spirit, as proven through concrete achievements;
6. Has made some other achievement deserving of commendation.
Article 22 These Regulations shall come into force from the date of promulgation.