|
Article 1
|
These Regulations are prescribed pursuant to Paragraph 4 of Article 44 of the Securities and Exchange Act.
|
|
Article 2
|
Securities firms accepting orders to trade foreign securities and exercising rights relating to the securities purchased on orders from principals shall do so in accordance with these Regulations, the laws and regulations of each local securities market, the bylaws of the securities exchange or self-regulating organization, and the contract with the principal.
Securities firms accepting orders to trade offshore funds shall do so in accordance with the Regulations Governing Offshore Funds prescribed under authority of Article 16, paragraph 3, of the Securities Investment Trust and Consulting Act; for matters on which those Regulations are silent, relevant provisions of these Regulations shall apply.
|
|
Article 3
|
Securities firms conducting the business of accepting orders to trade foreign securities shall possess the following qualifications, and shall be further approved by the Financial Supervisory Commission, Executive Yuan (hereinafter "the FSC") and the Central Bank of China.
1. The company itself, its subsidiaries, branch offices, or other securities institutions in which it has invested has the membership qualifications of a foreign stock exchange designated by the FSC.
2. Transmission facilities that are capable of quickly obtaining investment information and information necessary for brokerage trading in the foreign stock exchange referred to in the preceding subparagraph.
Those without the qualifications may directly or indirectly authorize securities firms referred to in the preceding Paragraph or a securities firm with the membership or trading qualifications of a foreign stock exchange designated by the FSC to engage in the trade of foreign securities; its handling procedures shall be drafted by the securities dealers association and sent to the FSC for its approval.
The invested relationship referred to in Subparagraph 1 of Paragraph 1 shall mean any person holding over 20 percent of the outstanding shares of any party.
|
|
Article 4
|
"Foreign stock exchange" as used in these Regulations means any organized market for securities trading subject to the management of the competent securities authority of the given country, including both stock exchanges and over-the-counter markets.
A securities firm accepting an order to trade foreign securities shall carry out the trade on a foreign stock exchange as defined in the preceding paragraph, except where regulations of the FSC provide otherwise.
|
|
Article 5
|
The types of foreign securities for which a securities firm is allowed to accept trading orders shall be limited to the following:
1. The stocks, warrants, beneficiary certificates, depositary certificates and other securities traded on a foreign stock exchange referred to in Article 3, Paragraph 1, Subparagraph 1.
2. Bonds with a rating of satisfactory or better from a credit rating agency recognized by the FSC. However, this requirement does not apply to orders for sale of foreign bonds.
3. Offshore funds for which approval or effective registration has been obtained from the FSC for public offering and sale in Taiwan.
4. Other securities approved by the FSC.
The bonds referred to in Subparagraph 2 of the preceding paragraph may not be denominated in New Taiwan Dollars and do not include the following securities:
1. Corporate bonds issued overseas by Taiwan enterprises.
2. Structured notes or structured bonds linked to any of the following underlying items:
(1) Securities issued by a domestic issuer within and outside the Republic of China, or a domestic stock price index listed on any exchange.
(2) A domestic money market interest rate benchmark or exchange rate benchmark.
(3) Offshore funds whose offering or sale has not been approved by the FSC or filed for effective registration.
Where an institutional investor has received approval from the relevant competent authority to invest in overseas securities, a securities firm may accept orders from it for trades in types of securities which, except for those securities listed in the preceding paragraph, shall not be subject to the restrictions of paragraph 1.
|
|
Article 6
|
Principals with which securities firms enter into brokerage contracts for trading of foreign securities shall be limited to the following parties:
1.Domestic and foreign natural persons.
2. Companies, businesses, or associations that have been approved and registered by the Government of the Republic of China or a foreign government.
3. Government funds establishment with the approval of the government of the Republic of China, securities investment trust funds, special ledger assets for investment-linked insurance, and discretionary investment accounts.
When any of the following circumstances apply to any of the parties referred to in the Subparagraphs of the preceding Paragraph, a securities firm shall not accept its account opening, and where an account has been opened, such account shall be cancelled:
1. The party is a minor acting without the representation of a statutory agent
2. The party has been adjudged bankrupt and not reinstated.
3. The party has been adjudicated interdicted, and the adjudication has not been revoked.
4. The party has been authorized by a juristic person to open an account, but is unable to produce a power of attorney from such juristic person authorizing the account opening.
5. The party has a record of breaching a securities trading contract, and the case has not been settled while less than five years have passed.
6. The party has been sentenced under the Securities and Exchange Act to a penalty of equal or greater severity to the imposition of a criminal fine, and three years have not elapsed since the completion of sentence execution, the expiration of suspension of sentence, or the pardon of such punishment.
|
|
Article 7
|
Securities firms accepting orders to trade foreign securities shall enter into a brokerage contract with the principal for the trading of foreign securities before it may accept orders to trade securities.
The contract referred to in the preceding paragraph shall contain the following particulars:
1. The procedures of executing the brokerage contract, and the period of validity of the contract.
2. The particulars that both parties to the brokerage trading shall observe.
3. The terms of the deposit of purchased foreign securities into a foreign depositary institution.
4. The particulars stated on relevant documents regarding the deposit of purchased foreign securities into a foreign depositary institution.
5. The time period for settlement of trades in foreign securities, the method of payment/acceptance of the settlement money, the currency, the exchange rate and its method of calculation, and matters agreed upon regarding the foreign exchange remittance authorization.
6. The method of handling breach of the settlement obligation.
7. The matters agreed to regarding the handling of dividends and exercise of shareholders rights.
8. The reporting of changes in the basic information of the principal, and indemnity in case of non-reporting.
9. The information and the services that shall be provided by the securities firm.
10. The scope of damages that arise from causes attributable to the other contracting party, arbitration, and the handling of related matters.
11. The method of handling losses not attributable to either party to the contract.
12. Matters regarding the notification regarding amendment to the contract.
13. Matters regarding the termination of the contract.
14. Other particulars that must be noted that are relevant to the rights and obligations of the parties.
Securities firms’ contracts for brokerage trading of foreign securities shall be reported to the securities dealers association for its record.
The matters to be recorded in a contract entered into between a securities firm and a professional institutional investor for brokerage trading of foreign securities shall be decided in accordance with the business needs of both parties, and Paragraph 2 shall not apply.
|
|
Article 8
|
Where the principal in a brokerage contract between the securities firm and the principal for the trading of foreign securities is a natural person, the principal shall provide an original of his/her National Identity Card, Alien Resident Certificate, or passport, and personally sign the brokerage contract and also provide a photocopy of the identification document; where the principal is a minor, the statutory agent shall personally appear and process the matter, and present his/her own and the principal's National Identity Cards, Alien Resident Certificates, or passports, and submit a photocopy thereof for recordation; where the principal is a juristic person, a copy of its juristic person registration documents and a legally effective power of attorney shall be enclosed and the appointee shall personally appear and process the matter, and carry his National Identity Card or the Alien Resident Certificate plus submit a photocopy thereof.
Upon signing the brokerage contract, the principal shall prepare a chop or signature specimen card for the securities firm, and process securities trading orders, settlement and other related procedures using the identical chop or specimen.
Where the principal is a domestic natural person with a specified maximum daily trading volume of NT$1 million or less, the securities firm may accept an account-opening application from the principal through the Internet, by letter, or by another method, and where the principal has signed a brokerage contract for trading of foreign securities, and after such contract is confirmed by the securities firm and takes effect, the principal shall not be subject to the restrictions of paragraph 1. The securities firm may determine what type of credit check shall be performed in connection with opening this type of account, provided that a new credit check must be carried out in accordance with relevant regulations at the time of any subsequent adjustment to the limit on daily trading volume.
|
|
Article 9
|
A securities firm accepting orders to trade foreign securities shall, at the time the principal opens the account, send an employee to explain the possible risks of various types of foreign securities and provide a copy of the risk disclosure statement (of the format described below) to the principal. Both the employee responsible for explaining the risks involved and the principal shall sign the risk disclosure statement for record.
The following items are the particulars to be contained and the format of the above referred risk disclosure statement:
1. the possible risks of various types of foreign securities differ with the investment target and the investment exchange market. The investor shall understand the differences and risks of the stocks, warrants, beneficiary certificates, bonds, and depositary certificates to be invested in.
2. Investing in foreign securities involves foreign securities exchange markets and hence requires following the local laws and exchange market regulations, which may differ from the Securities and Exchange Act of the R.O.C.
3. Investing in foreign securities involves foreign currency exchange. In addition to any actual losses from the transaction, there is the risk of fluctuating exchange rates.
4. In investing in foreign securities, the information securities firms provide to the investor according to Articles 21 and 22 of these Regulations, including research reports on the stock market or individual stocks, notification from the issuer of stock, or other information concerning the rights and benefits of the investor, are handled according to the procedures prescribed by foreign laws. The investor itself shall understand and judge accordingly.
5. To trade foreign securities, a brokerage contract for the trading of foreign securities shall be signed. The investor shall clearly understand the content regarding the currency used, exchange rates, and other items involving calculations for the settlement/clearance fund and other costs in the contract.
6. The warnings in the risk disclosure statement are extremely simplified and cannot convey the details of all the risks involved in investing and the factors influencing the market situation. Therefore, before the transaction, the principal, in addition to thoroughly analyzing the risk disclosure statement, must exhaustively deliberate on other possible influential factors and accurately estimate the risks involved, to prevent losses resulting from a transaction that he is unable to shoulder.
After receiving approval for brokerage trading in a foreign securities market, a securities firm shall provide a written a risk disclosure statement in accordance with the regulations of the competent authority governing the given foreign market for reference by customers.
|
|
Article 10
|
A securities firm accepting orders to trade foreign securities shall require the principal or its representative or agent to complete an order form face to face, or an associated person may complete a written or an electronic order form in accordance with the order given by the principal, or its representative or agent using letter, telegram, telephone or other electronic means, and shall retain a record of the customer's orders in accordance with regulations.
An order form referred to in the preceding Paragraph shall contain the following particulars:
1. Account number and account holder name.
2. Order method (face to face, letters, telephone, telegram or other electronic means).
3. Date, time, and valid period of the order.
4. The international stock code.
5. The type and the volume or total purchase amount of the securities.
6. Order price interval.
7. Currency of settlement.
8. Chop of the associated person.
9. Chop of the principal.
The format of the trading order shall be prescribed by the securities firm and submitted to the securities dealers association for its record.
The principal or its representative or agent may also use the Internet or other electronic forms of transaction to place orders; where orders are made by means of such media, the securities firm may be exempt from producing and filling out an order form, provided that it shall immediately print records of trading orders in the sequence received for the purpose of verification.
|
|
Article 11
|
The provisions of Paragraph 1 of Article 36 of the Regulations Governing Securities Firms shall apply mutatis mutandis to any securities firm that recommends foreign securities for which it accepts trading orders.
The regulations governing securities firms recommending trades in foreign securities shall be prescribed by the securities dealers association.
|
|
Article 12
|
Securities firms accepting orders to trade foreign securities shall not accept any authorization giving them discretion to determine on the principal’s behalf the type, volume, price, or purchase or sale of securities.
|
|
Article 13
|
Securities firms accepting orders to trade foreign securities shall not provide margin loans or stock loans.
|
|
Article 14
|
For securities firms accepting orders to trade foreign securities, upon confirmation by the foreign securities market that the transaction has been made, the confirmed transaction date shall be the first business day after the transaction date.
|
|
Article 15
|
A securities firm accepting orders to trade foreign securities shall prepare and submit a trade report to the principal after the transaction. Where the principal has signed a consent form, however, and it has been confirmed that the principal has been notified of the relevant trading information by telephone or e-mail on the confirmed transaction date, the securities firm may be exempt from the requirement for submitting a trade report to the principal.
The trade report referred to in the preceding Paragraph shall contain the following particulars:
1. Account number and account holder name.
2. Transaction date.
3. Settlement date.
4. International stock code.
5. Type of transacted securities.
6. Number of shares or par value thereof.
7. Unit price and total price
8. Service charges.
9. Taxation.
10. Amount of money to be received or paid.
11. Currency of settlement.
12. Exchange rate, applicable where settlement is made in New Taiwan Dollars.
13. Other matters to be recorded in accordance with the regulations of the foreign securities market.
The format of the trade report shall be prescribed by the securities firm and sent to the securities dealers association for its record.
|
|
Article 16
|
For securities firms accepting orders to trade foreign securities, the settlement of the principal's money/securities shall be conducted within the settlement period specified by the foreign securities market.
The settlement period of various foreign securities markets referred to in the preceding Paragraph shall be reported by the securities firm to the securities dealers association for its record; the same procedure shall apply with amendments.
|
|
Article 17
|
For securities firms accepting orders to trade foreign securities, the settlement of the principal's money/securities and the receipt/payment of fees may be conducted in New Taiwan Dollars or in a foreign currency agreed upon by the securities firm and the principal; further, deposit/withdrawal of the money shall be conducted through a New Taiwan Dollar account or a foreign currency deposit account opened by the principal at a bank designated by the securities firm or through a direct remittance of foreign currency to a local financial institution designated by the securities firm in the home country of the given securities market.
The procedures for conducting the settlement money remittance referred to in the preceding paragraph, where the principal designates New Taiwan Dollars or foreign currency, are as follows:
1. At the time of the transaction, the principal shall designate either New Taiwan Dollars or a foreign currency as the currency for conducting the settlement, provided that a foreign currency shall be designated as the currency for conducting the settlement where the principal is a foreign natural person under Article 6, paragraph 1, subparagraph 1, a foreign juristic person under subparagraph 2 thereof, or any party under subparagraph 3 thereof.
2. After buying foreign securities, the principal shall transfer the agreed upon amount, according to the purchase transaction report, into the securities firm's settlement amount before the settlement date.
3. After the principal sells the foreign securities, the securities firm shall transfer the agreed upon amount, according to the sales transaction report, into a New Taiwan Dollar deposit account opened by the principal at a financial institution designated by the securities firm or into the principal's foreign currency savings account at a bank designated by the securities firm.
4. When there are amounts receivable or payable because the principal, using the same account on the same day, has both buying and selling foreign securities transactions, or first sells foreign securities and then, prior to the settlement date, buys foreign securities, the securities firm may, according to the principal's instruction, combine and set off all the received (paid) money in the same currency and then transfer the net received (paid) amount into the account.
5. Where the principal has designated that foreign currency shall be used in settlement of the settlement money and overseas fees, the receipt/payment shall be carried out in a foreign currency, and may not be carried out in New Taiwan Dollars. Any required foreign exchange settlement shall be carried out by the principal with a banking enterprise in accordance with the Regulations for Receipt/Payment of Foreign Exchange or Report of Foreign Exchange Transactions and may use the foreign currency that the principal holds outside of the Republic of China for direct remittance to the financial institution designated by the securities firms at the location of the various securities exchange markets.
Where the principal remits foreign currency that the principal holds outside of the Republic of China directly to the financial institution designated by the securities firms at the location of the various securities exchange markets, and there are therefore amounts payable (including settlement money, distributable dividends, interest, funds for mandatory repurchase, and the processing fees refunded for an account change) to a principal by the securities firm, the securities firm may also remit the given amount into the principal's own designated account.
6. Where the principal has designated that settlement payments and foreign fees are to be paid in New Taiwan Dollars, remittance shall be carried out in New Taiwan Dollars, and may not be carried out in a foreign currency. Matters involving exchange settlement shall be carried out by the securities firm with a banking enterprise in accordance with the Regulations for Receipt/Payment of Foreign Exchange or Report of Foreign Exchange Transactions, and relevant regulations.
7. When the principal designates that payment/receipt of settlement payments and foreign fees is to be done in New Taiwan Dollars, calculation of exchange rates shall be negotiated between the principal and the securities firm on the basis of prevailing market rates.
|
|
Article 18
|
In accepting orders for trading of foreign securities, a securities firm may enter into a written agreement with the principal such that when the principal closes out an investment in some particular type of securities, the foreign securities institution that executes the order may reinvest the trading price in another type of currency market fund or bond fund conforming to the market regulations of the given country pursuant to a previous agreement with the principal.
The securities firm shall provide details in its monthly reconciliation statements of the principal's reinvestments in the currency market funds or bond funds referred to in the preceding paragraph.
|
|
Article 19
|
The foreign securities purchased by securities firms on orders from principals, except in the case of institutional investors, shall be deposited in the name of the securities firm or in the name of the agent of the securities firm in a depositary in the locale of the site of transaction. Further, such record shall be recorded in detail in the account of the principal and in the reconciliation statement to facilitate review by the principal.
The securities firm shall report the depositary referred to in the preceding Paragraph to the securities dealers association for its record.
|
|
Article 20
|
Securities firms accepting orders to trade foreign securities shall perform settlement with the principal on schedule, and shall not breach the brokerage contract.
Where the principal fails to settle on schedule, or fails to provide the settlement funds or settlement securities to the securities firm, such events shall be regarded as breach of contract.
In the event the principal breaches the contract, the securities firm shall handle the matter in accordance with the provisions of the contract for brokerage trading of foreign securities regarding breach of the obligation to settle, and it may further immediately terminate the brokerage contract.
In processing the matters referred to in the preceding Paragraph, the securities firm shall notify the FSC by letter for its record, and further provide a copy of such letter to the principal.
|
|
Article 21
|
For a securities firm accepting orders to trade foreign securities, information or research reports on the securities market, industries, or individual securities which securities firms provide to investors shall be limited to those which it has issued or those used by securities firms with prior authorization. Such materials shall be summarized and translated into Chinese in order to facilitate review by the investors, provided that with the written consent of the investor, summary and translation of the materials is not required.
The information and the research report referred to in the preceding Paragraph shall not contain any materials that are false, concealed, or fraudulent, or which would be in any other way sufficient to mislead others.
A securities firm may not claim exemption from liability with regard to the materials or research reports listed in paragraph 1 based on the fact that it did not itself approve those materials for issuance.
|
|
Article 22
|
For securities firms accepting orders to trade foreign securities, where the securities issuer provides to the securities firm any notification or other information relating to the rights of the principal, upon receipt, the securities firm shall as quickly as practical transmit such to the principal.
|
|
Article 23
|
Securities firms accepting orders to trade foreign securities shall prepare monthly reconciliation statements and send such to the principals for their review before the tenth day of the subsequent month.
|
|
Article 24
|
The rate of the service charge and other charges for securities firms accepting orders to trade foreign securities shall be provided by the securities dealers association to the FSC for its approval.
|
|
Article 25
|
The regulations governing contracts for securities firms accepting orders to trade foreign securities and the relevant regulations governing account opening, brokerage, and settlement shall be reported by the securities dealers associations to the FSC for approval.
|
|
Article 26
|
Securities firms and their responsible persons and employees may not refer investors to foreign securities firms to open accounts and engage in trading of foreign securities.
The act of making referrals by the responsible persons or employees of a securities firm as referred to in the preceding paragraph shall be deemed as having been authorized by the securities firm.
|
|
Article 27
|
For securities firms accepting orders to trade foreign securities, in addition to submitting on a daily basis to the securities dealers association a daily business report of its brokerage trading of foreign securities, it shall also submit to the FSC, the competent authority in charge of foreign exchange, and the securities dealers association a monthly business report on its brokerage trading of foreign securities before the fifth day of the subsequent month.
Securities firms accepting orders to trade offshore funds, in addition to complying with Article 13 of the Regulations Governing Offshore Funds, shall also comply with the provisions of the preceding paragraph.
|
|
Article 28
|
These Regulations shall come into effect on the date of issuance.
|