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Title:

Taiwan Stock Exchange Corporation Standards Governing the Places of Business and Facilities of Securities Firms and Securities Introducing Brokers  CH

Amended Date: 2019.04.16 
Categories: Market Supervision > Regulation of Securities Firms

Title: Taiwan Stock Exchange Corporation Standards Governing the Places of Business and Facilities of Securities Firms and Securities Introducing Brokers(2013.06.10)
Date:
1     Provisions regarding securities brokers:
  1. The place of business of a securities broker shall include the following:
    1. A trading room for accepting orders for securities trades (including a trading counter for over-the-counter trading).
    2. A settlement counter.
    3. An area for account opening.
    4. A securities information reading room.
    5. An area for collection of proxy forms.
    6. A trading room exclusively for processing orders not made in person.
    7. Other business areas.
    The sites for places of business referred to in (i) through (vi) of the preceding paragraph shall be limited to stand-alone structures, duplexes, connected structures, or adjacent independent structures joined by passageways built with approval from the building administration authority.
  2. Trading rooms shall be established within the confines of the place of business, and the floors on which the trading rooms are established shall have no partitioning walls except for support columns, elevators, and stairway exits.
  3. Trading rooms shall be equipped with the following:
    1. A market information display system or a trading information display system.
    2. A trading counter, with the following facilities and conditions:
      1. When two or more trading counters are set up on the same floor, there shall be no partitions between the counters, with the exception of support columns, elevators, or stairway exits.
      2. Telephones for use in authorized trading and auction terminals for authorized trading shall be installed.
      3. Over-the-counter trading and trading on the Taiwan Stock Exchange ("TWSE") centralized securities exchange market may be performed at the same counter.
    3. An announcement board for posting administrative orders issued by the competent authority, announcements by the TWSE, important information regarding securities firms’ operations, and disclosure of information relating to ex-dividend and ex-rights by listed companies.
    4. Terminals for the Market Observation Post System (MOPS) shall be installed for the use of investors.
    The facilities as in subparagraphs (i), (iii), and (iv) in the preceding paragraph may share the same information display equipment.
  4. If auxiliary trading information displays systems such as wall-mounted television displays or multi-function display systems are installed in operating areas other than the trading room, no authorized trading of securities may take place in any such operating area where such a system or display is installed.
  5. The settlement counter and the area for collection of proxy forms may be established at a different location than the trading room, and shall be prominently marked as such.
  6. All facilities of a securities broker's branch offices shall conform to the standards for the securities broker's head office.
  7. Computer facilities.
  8. The following shall apply to securities firms and branch offices:
    1. Prior to use, a newly established or relocated place of business shall be inspected by personnel dispatched from the Taiwan Stock Exchange Corporation (TWSE) (to assure that furnishings are complete and ready for immediate use); amendment of registration shall be completed; and re-issuance of the permit and certificate of license, where required, shall also be completed.
    2. Prior to use of an expanded or downsized place of business, or of a trading room, settlement counter, the area for account opening, the securities information reading room, the area for collection of proxy forms, and the trading room exclusively for processing orders not made in person, a report shall be filed for TWSE approval, including a floor plan and photographs; if amendment registration or re-issuance of the permit and certificate of license is required, the relevant matters shall also be completed prior to use.
    3. Other operating areas:
      1. Prior to use, of an operating area for a consulting business, a floor plan and photographs (and, for the initial establishment of such operating area, a photocopy of the competent authority's letter of approval for concurrent operation of a consulting business or a photocopy of a permit and certificate of license for the consulting business) shall be submitted to the TWSE for approval. In addition, prior to use of the operating area, amendments to registration shall also be filed, and re-issuance of the permit and certificate of license, where required, shall be completed.
      2. A securities firm that operates trust-type wealth management business shall file for recordation and approval with the TWSE prior to using an operating area; the provision of the preceding item shall apply mutatis mutandis to on-site inspection, amendments to registration, or re-issuance of the permits and certificate of license under the present item.
      3. For other operating areas, amendments to registration shall be filed within 15 days after use of the area begins. Re-issuance of the permit and certificate of license, where required, shall also be completed, and computerized information facilities already installed may not be provided for the use of investors [prior to re-issuance].
    A securities broker or its branch office shall notify the TWSE by letter when any alteration is made in the facilities or their use within the original place of business; with the exception of those not requiring amendment of registration or re-issuance of a permit and certificate of license, methods of handling for such shall be the same as in the preceding subparagraph.
  9. A securities firm may establish a securities information reading room (below, "reading room") in conformance with the following rules:
    1. The reading room shall be established within the securities broker's place of business.
    2. Within the reading room, the securities broker may not execute a contract for authorized trading of securities with a client, accept an order for a trade, carry out settlement of a securities trade, or engage in any other activity similar to securities firm business.
    3. A securities broker may not provide terminals for competitive bidding for use by clients within the reading room.
    4. A securities broker may not place restrictions on who may use the reading room or collect fees for its use.
    5. The TWSE may at any time dispatch personnel to inspect a securities broker's reading room, and the securities firm may not refuse or evade such inspection.
  10. The trading office specially set up for a securities broker to accept trading orders not made in person shall be equipped with computer facilities, telephones for use in accepting authorized trades, and auction terminals for authorized trading, and shall have access control in place.
  11. In addition to operating in conformance with the provisions of standards for places of business and facilities adopted by the Taiwan Futures Exchange and the Chinese National Futures Association, a securities firm that concurrently operates a futures business or a futures trading support business shall also observe the following regulations:
    1. Trading counter: A common trading counter may be used by a securities brokerage department and a futures department. Notwithstanding the above, however, the trading counter used by an associated person of a securities firm who is also qualified as an associated person of a futures commission merchant shall be clearly separated from the trading counter used by a person qualified only as an associated person of a securities firm or of futures commission merchant.
    2. Account-opening areas: Counters used by securities brokerage departments for opening client accounts shall be clearly separated from those that futures trading departments use for opening client accounts.
    3. Equipment: A securities brokerage department and a futures trading department may share their equipment.
  12. For a securities firm that concurrently operates a securities investment consulting business or a futures consulting business, in addition to complying with regulations governing securities investment consulting enterprise places of business and facilities or the provisions of standards for places of business and facilities adopted by the Federation of Futures Industry Associations, the head office's consulting department shall have an office area that is independent and separated from other departments, and shall have an access control system installed.
  13. The operating area for the wealth management business of a securities firm shall be segregated from other departments and clearly indicated, and a site access control shall be established. If the wealth management business can also be carried out on a trust basis, the department with exclusive responsibility for the trust business shall, if not located within the operating area of the wealth management business, also be segregated from other departments and clearly indicated, and a site access control shall be established.
    If a branch office of a securities firm handles business that involves merely receiving trust assets, the counter for that business shall be clearly indicated and segregated from other counters.
  14. A securities broker that undertakes the collection of proxy forms shall have a clearly marked area for the collection of proxy forms, which may not be set up within the trading counter.
  15. A securities firm may install automatic service equipment for use by investors, or install such equipment in the securities information/reading room where qualified associated persons designated by the securities firm assist investors in using such equipment, and the following rules shall be observed:
    1. The services provided by the automatic service equipment of a securities firm shall be limited to the following matters: placement of trading orders, purchases, changes of password, securities passbook updates, putting securities on hold, inquiries regarding securities, trading and personal information, or other matters approved by the competent authority.
    2. The automatic service equipment provided by a securities firm may not retain personal information such as the account numbers, passwords, electronic certificates, or trading records of investors; a securities firm shall implement information and communications security to ensure that the automatic service equipment provided can be operated normally and is not embedded with illegal malicious functions.
    3. When accepting transaction instructions from investors placing a securities trading order, the automatic service equipment of the securities firm shall allow investors to review and verify transaction details immediately; transaction details for investor review shall include the securities firm code, investor's account number, order date and time, order serial number, whether the transaction is a purchase or sale, the security's ticker code, name, quantity, order price (and conditions for its execution), and the transaction type (relevant cash, margin loan, or stock loan transactions).
    4. The automatic service equipment that a securities firm installs outside of its place of business or cross-selling services section shall only commence operations after the securities firm reports such installation for recordation by the TWSE.
      The equipment of the preceding paragraph shall be marked conspicuously with the name of the securities firm, an emergency contact number, the services provided, and the service hours, and employees may not be permanently posted on site to manage the equipment. The securities firm shall publish on its website details of the locations where the equipment of the preceding paragraph is installed.
    5. Placement of trading orders by investors through automatic service equipment provided by a securities firm is categorized as electronic trading, and shall be conducted pursuant to the TWSE regulations governing electronic trading.
    6. Where a securities firm installs automatic service equipment for use by investors, it shall make a synchronous video recording of the operation of the equipment during business hours for documentation purposes, which shall be retained in the place of business for a minimum of 1 month. On the automatic service equipment there shall be a clear indication to investors of the period of preservation of such video recordings. Where a dispute arises from a placement of trading orders, however, the video recordings shall be retained until the dispute is resolved.
    7. If any incidence of material defect or employee fraud occurs to the automatic service equipment of a securities firm, giving rise to a likelihood of affecting the market trading order and the rights and interests of investors, the TWSE may suspend or prohibit in part or in whole the use of the automatic service equipment.
2     Provisions regarding securities dealers:
  1. A securities dealers' place of business shall be equipped with terminal equipment for competitive bidding for proprietary trading.
  2. A securities dealer that concurrently conducts proprietary securities trading and proprietary futures trading may use the same equipment for both.
  3. The place of business for proprietary securities trading in a securities firm shall be clearly separated from the venue for securities brokerage.
  4. When a place of business is established or relocated, the TWSE shall be notified by letter to dispatch personnel for an on-site inspection. Operations may begin only after inspectors indicate conformance with the standards of the preceding paragraph; when a place of business is downsized or expanded, a report including a floor plan and photographs shall be submitted to the TWSE, and operations may begin only after approval and recordation by the TWSE.
3     Provisions regarding cross-selling and cooperative promotions by a securities firm:
  1. When a securities subsidiary of a financial holding company undertakes cross-selling with a subsidiary of the same financial holding company that engages in a different business, it may set up a cross-selling services section at its place of business and shall prominently and clearly indicate the name of each subsidiary involved in providing cross-selling services and the services it provides. The cross-selling services, however, may not be conducted at the business counter of the securities subsidiary.
    In setting up the cross-selling services section referred to in the preceding paragraph, the securities firm shall submit a report to the TWSE for recordation before it may use the cross-selling services section, to which it shall attach photos, a floor plan, a basic information report form for the cross-selling services section, and a photocopy of the competent authority's letter of approval for cross selling. When there is any change to such a cross-selling services section due to a change in the arrangement or use of the interior space of the original place of business, or when there is any change to or withdrawal of such a cross-selling services section due to a relocation of the place of business where the cross-selling services section is located, the securities firm shall report the fact to the TWSE for recordation within 15 business days after the change or withdrawal.
  2. A securities firm that meets the competent authority's conditions may engage in cooperative promotions of banking or insurance products or provide related services at its place of business. The name of each company involved in providing such cooperative promotions and the services it provides, however, shall be clearly indicated, and such cooperative promotions may not be conducted at the securities firm's business counter.
    Before a securities firm may begin any such cooperative promotions, it shall file a letter of report with the TWSE for recordation, attaching photos, a floor plan, the cooperative promotion agreement, and a photocopy of the letter of approval from the competent authority. When there is any change in the cooperative promotion services section due to a change in the interior arrangement or use of the original place of business, or when the cooperative promotion agreement is terminated, the securities firm shall report the fact to the TWSE for recordation within 15 business days after the change or the termination of the agreement.
    The provisions of the preceding paragraph shall also apply when the securities firm enters into a cooperative promotion with a new partner.
4     A futures commission merchant that concurrently operates securities brokerage business, or securities proprietary trading business, or that operates securities introducing broker business, unless otherwise provided by the Taiwan Futures Exchange or the Chinese National Futures Association, shall comply with the provisions of Points 1 and 2 of these Standards with respect to its place of business and facilities according to the requirements of its business.
5     The TWSE may each quarter dispatch personnel to conduct sampling and auditing of places of business that were reviewed by document review, and the securities firm may not refuse or evade such sampling and auditing.
6     No information facilities for business use may be installed at any area or facility outside the place of business of a securities firm but related to it, such as a parking lot, warehouse, employee housing facility, or employee training facility, and, except for rental of a parking lot, the TWSE shall be notified by letter prior to purchase, establishment, or rental of an area or facility, and any changes therein.
7     In the event that the competent building administration authorities of the county or city declare the place of business of a securities firm to be an unsafe structure or to be in violation of relevant codes and issue an order to discontinue use of the venue, or in the event the securities firm fails to effect improvement or undertake necessary measures following an order to effect improvement within a specified time period, the TWSE may handle the matter in accordance with Article 5 of the "Taiwan Stock Exchange Corporation Contract for Use of the Centralized Securities Exchange Market."