Chapter I General Principles
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| Article 1 | These Rules are adopted under Article 22, paragraph 2 of the Regulations Governing Custody and Investment of Funds by Securities Firms on Behalf of Customers. |
| Article 2 | A securities firm conducting business relating to custody and investment of funds on behalf of customers shall do so in accordance with securities and exchange laws and regulations, these Rules, as well as applicable rules, regulations, public notices, and circular letters of the Taiwan Stock Exchange Corporation (TWSE), the GreTai Securities Market (GTSM), and the Taiwan Depository & Clearing Corporation (TDCC). |
| Article 3 | For the proposes of theses Rules, reference to a securities firm conducting business relating to custody and investment of funds on behalf of customers means a securities firm engaging in business activities in which the securities firm, pursuant to an agreement with a customer, maintains custody of the customer's funds arising from securities business in a cash management account and pool the funds held in custody on behalf of the customer in that account for investing in the name of the securities firm on such instruments as agreed with the customer.
The term "cash management account" in the preceding paragraph means a special account opened and maintained by a securities firm for use in conducting business relating to custody and investment of funds on behalf of customers, where the funds and investments held in the special account are kept apart, separated, and segregated from the securities firm's own property. No fund or investment held in the special account may be used without proper authorization, nor may any creditor of the securities firm make any claim for attachment or otherwise exercise any right against the funds held in the special account to satisfy any liability or obligation incurred by the securities firms with respect to its own property. |
| Article 4 | To conduct business relating to custody and investment of funds on behalf of customers, a securities firm shall open a New Taiwan Dollar demand deposit account, to be used exclusively for receipt and payment of funds within the scope of that business, at a bank using the account name of "_______ Securities Firm's Customer Cash Management Account."
The bank under the preceding paragraph shall be one assigned a long term credit rating during the last year of at least 'twA-' by Taiwan Ratings Corporation, 'A-(twn)' by Fitch Ratings Limited, Taiwan Branch, 'A3.tw' by Moody's Taiwan Corporation, 'A-' by Fitch Ratings Ltd., 'A-' by Standard & Poor's Corp., or 'A3' by Moody's Investors Service.
When conducting business relating to custody and investment of funds on behalf of customers, a securities firm may only initiate or accept inter-account transfer for the transfer of funds. |
| Article 5 | To apply to conduct business relating to custody and investment of funds on behalf of customers, a securities firm shall fill out an application form and submit it to the TWSE, together with other relevant supporting documentation. When the TWSE has reviewed the application and found it in compliance with relevant eligibility conditions as well as the provisions of these Rules, the TWSE shall forward the application to the competent authority for final approval. Upon approval by the competent authority to conduct business relating to custody and investment of funds on behalf of customers, the securities firm shall, at least three business days before commencing such business, submit the following documents by mail to the TWSE for review of compliance with eligibility conditions and subsequent forwarding to the competent authority for recordation:
1. A photocopy of the approval document of the competent authority.
2. Documentation containing credit rating and regulatory capital adequacy ratio information, current as of the commencement date and covering the period from after the approval of the competent authority up to the reported commencement date.
3. Documentary proof of the cash management account established at a bank and documentation indicating the credit rating of the bank.
The securities firm under the preceding paragraph that has received the approval from the competent authority to conduct business relating to custody and investment of funds on behalf of customers may not commence such business unless an amendment to its securities business activity information has been registered with the TWSE. The associated persons of the securities firm performing services of custody and investment of funds on behalf of customers shall possess the qualifications specified in the Regulations Governing Responsible Persons and Associated Persons of Securities Firms as adopted by the competent authority. |
| Article 6 | After the commencement of business relating to custody and investment of funds on behalf of customers, a securities firm shall obtain updated credit rating information and file it with the TWSE each year. |
| Article 7 | After the commencement of business relating to custody and investment of funds on behalf of customers, if either of the following circumstances applies, a securities firm shall on its own initiative stop the operation of such business:
1. If its credit rating falls below the eligibility condition under the application requirement.
2. If its regulatory capital adequacy ratio falls below 200% for two consecutive months.
If a securities firm under either of the circumstances of the preceding paragraph does not stop the operations of the business contemplated herein, the TWSE shall notify the securities firm to promptly stop those operations.
A securities firm shall, on the next business day following its stop of business operations contemplated herein, transfer all customer funds held in custody in the cash management account to the account for book-entry transfer of securities and funds opened by each relevant customer for engaging in securities trading on the exchange or over-the-counter market, and shall within the next five business days close out all investments already made through the cash management account and transfer the resultant proceeds to the account for book-entry transfer of securities and funds opened by each relevant customer for engaging in securities trading on the exchange or over-the-counter market.
If the securities firm stops the business operations contemplated herein, it shall promptly send a notice letter to the TWSE to that effect and shall submit a regulatory filing to the TSEC on a daily basis reporting the progress and status of action taken under the preceding paragraph. |
| Article 8 | To apply to resume business operations relating to custody and investment of funds on behalf of customers, a securities firm shall submit an application to the TWSE when it meets the required eligibility conditions for both credit rating and regulatory capital adequacy ratio, and it may resume such business operations only when the application has been reviewed by the TWSE and then forwarded to and approved by the competent authority.
Article 5, paragraph 2 shall apply mutatis mutandis to a securities firm submitting a regulatory filing for the commencement of business for which it has received approval under the preceding paragraph. |
| Article 9 | A securities firm may only accept customer funds from any of the following sources in its conduct of business relating to custody and investment on behalf of customers:
1. Trading balance payable by the securities firm to the customer for execution of the customer's order to buy or sell securities on the exchange or OTC market.
2. Amount payable by the securities firm to the customer for exercise of a call/put warrant.
3. Trading balance payable by the securities firm to the customer for trading bonds or engaging in a repurchase or reverse repo transaction ("repo-style transaction") with the customer.
4. Trading balance payable by the securities firm to the customer for trading with the customer any of the financial instruments defined in the GreTai Securities Market Rules Governing Over-the-Counter Trading of Financial Derivatives by Securities Firms.
5. Trading balance payable by the securities firm to the customer for execution, either by the securities firm or by its sub-broker, of the customer's order to buy or sell foreign securities.
6. Such other sources as the competent authority may designate.
A securities firm shall, pursuant to its agreement with a customer specifying part or all of the sources/types of customer funds described in the preceding paragraph and the corresponding amount limit, transfer and attribute any balance of funds arising therefrom from time to time for inclusion within the business services performed hereunder.
Upon review of the settlement status of a customer's trade involving any of the agreed types of customer funds under the preceding paragraph, the securities firm shall forward the incurred balance of funds to the cash management account it maintains with a bank, on the same day on which it receives the balance transferred to it. |
| Article 10 | A securities firm conducting business relating to custody and investment of funds on behalf of customers shall, when the funds held in custody in the cash management account reach the minimum investment level as agreed with a customer, make use of the funds for investment in such instruments and in such investment priority as specified by the customer, in the name of "_______ Securities Firm's Customer Cash Management Account."
A securities firm may invest funds under the preceding paragraph only in instruments falling within the following scope:
1. Repo transactions in government bonds.
2. Repo transactions in exchange-listed or OTC-listed straight corporate bonds and general bank debentures with a rating of at least 'twBBB' by Taiwan Ratings Corporation, 'BBB(twn)' by Fitch Ratings Limited, Taiwan Branch, 'Baa2.tw' by Moody's Taiwan Corporation, 'BBB' by Fitch Ratings Ltd., 'BBB' by Standard & Poor's Corp., or 'Baa2' by Moody's Investors Service.
3. Money market funds.
4. Quasi-money market funds within the category of bond funds.
The term "general bank debentures" under the preceding paragraph shall have the same meaning as set forth in the Regulations Governing Issuance of Bank Debentures By Banks. |
| Article 11 | A securities firm shall distribute any loss or income incurred on any instrument in which it invests within the scope of paragraph 2 of the preceding article, among customers based on the percentage of their respective investment amount and other agreed terms and conditions, and in the case of income, shall either use the proceeds for further reinvestment together with other existing funds or otherwise return the proceeds to the customers.
A securities firm conducting business relating to custody and investment of funds on behalf of customers shall be fully responsible for any loss incurred as a result of its operational error and for that matter may not prejudice the interest of the customer. |
| Article 12 | A securities firm maintaining custody of customer funds arising from securities business in the cash management account may not keep the funds in the account for longer than three business days. If by the end of the period the custodied funds still do not reach the minimum investment level as agreed with the customer, the securities firm shall, by 12 noon on the next business day, return and transfer the funds in full to the account for book-entry transfer of securities and funds opened by the customer for engaging in securities trading on the exchange or over-the-counter market.
A securities firm shall return any bank interest accrued on customer funds it holds in custody in the cash management account to the customers based on the percentage of funds it holds in custody for each customer. |
| Article 13 | A securities firm conducting business relating to custody and investment of funds on behalf of customers may charge management fees at a rate determined between the securities firm and the customers.
Any bank interest accrued on customer funds held in custody by the securities firm in the cash management account, and any gains or income arising from any investment made by the securities firm in its name using the funds from the cash management account shall be the income of the customers. The securities firm shall, in the year in which the income is accrued, withhold tax from the payment of income to each customer entitled to such payment in accordance with the Income Tax Act and the associated regulatory provisions and issue a withholding certificate accordingly identifying the customer as the taxpayer.
With respect to the bank interest accrued on customer funds held in custody in the cash management account as described in the preceding paragraph, the securities firm shall, after deducting applicable fees and taxes, settle account on a half-yearly basis and return any remaining balances to each relevant customer by the end of January and July each year, and the funds so returned may only be transferred to the account for book-entry transfer of securities and funds opened by the customer for engaging in securities trading on the exchange or over-the-counter market.
With respect to the gains or income arising from any investment made by the securities firm in its name using the funds from the cash management account, the securities firm shall, after deduction of the management fee specified in paragraph 1 and any applicable taxes and other necessary fees, settle account on a yearly basis and return any remaining balances to each relevant customer by the end of December each year, and the funds so returned may only be transferred to the account specified in paragraph 3. If a customer terminates early the agreement for the business services contemplated herein, the securities firm may return early to the customer the portion of income earned on investment on the part of the customer. |
| Article 14 | A securities firm shall adopt an effective internal control system for the conduct of business relating to custody and investment of funds on behalf of customers.
The internal control system under the preceding paragraph shall specify matters relating to regulatory filing of the securities firm's credit rating information, the securities firm's operational procedures for commencement, suspension, and resumption of the business contemplated herein, regulatory filing of the monetary amount in which the securities firm conducts the business hereunder, methods of transfer from the various sources of funds for custody and investment, methods of transfer when funds do not reach the agreed minimum investment level, compliance matters for investment of funds, distribution and transfer of income or loss on investment, distribution and transfer of interest on custodied funds, treatment of management fees and government taxes and fees, treatment of funds for settlement of customers' trades, customers' funds withdrawal requests, early termination of agreement by customers, receipt, release/payment, and investment of customer funds, and other matters relating to account administration and information transmission, and any other matters required by the competent authority. |
Chapter II Sub-accounts Within the Cash Management Account
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| Article 15 | A securities firm conducting business relating to custody and investment of funds on behalf of customers shall, upon receipt of a customer's written request for the provision of such business services, first verify that the customer has established and maintains an account for book-entry transfer of securities and funds for the transactions specified in Article 9, paragraph 1, subparagraph 1 before it may accept the request and enter into an agreement with the customer for custody and investment of the customer's funds and subsequently provide such services to the customer.
The Taiwan Securities Association shall prepare and furnish a template of the agreement for custody and investment of funds on behalf of customers as specified in the preceding paragraph. |
| Article 16 | A customer shall give written notice to the securities firm of any change of name, national ID number, certificate ID number, government uniform invoice number on the profit-seeking enterprise registration certificate, and address or mailing address of the customer, agent, or representative, as supplied in the agreement for custody and investment of funds on behalf of the customer. |
| Article 17 | A securities firm conducting business relating to custody and investment of funds on behalf of customers shall set up a separate sub-account within its cash management account for each customer and record the following therein on a daily basis:
1. Transfer of customer funds from any specified source.
2. Transfer of funds not reaching the minimum investment level.
3. Transaction in investment instruments using pooled funds and the transfer of funds.
4. Transaction involving further reinvestment of funds as agreed with the customer and the transfer of funds.
5. Transfer of interest accrued on custodied funds and income arising from investing of funds.
6. Transaction conducted to meet the customer's need of settlement funds and the transfer of funds.
7. Transaction conducted to meet the customer's request for early withdrawal of funds and the transfer of funds.
8. Transaction conducted due to the customer's early termination of the agreement or non-renewal of the agreement upon expiration and the transfer of funds.
The securities firm shall retain all records and all receipt and payment vouchers relating to any receipt and release/payment of funds under the preceding paragraph and relevant investing activities, and shall prepare a reconciliation statement on a monthly basis based on daily account records and send it to the customer. The reconciliation statement shall additionally provide detailed information on the balance of investments, specifying at least, in the case of investing in a mutual fund, the name of the fund, total number of units, net asset value, and, in the case of engaging in a repo transaction, the counterparty, type of underlying bonds, monetary amount assigned for transaction, interest rate, and duration of agreement.
The securities firm shall obtain a letter of consent signed by each customer agreeing that the securities firm may provide the relevant information regarding its custody and investment of funds on behalf of the customer to the TWSE, the GTSM, and any institution designated by the competent authority for their collection, computerized processing, and international transmission or use of the information in accordance with applicable laws and regulations. |
| Article 18 | A securities firm shall keep detailed and accurate records for its conduct of business relating to custody and investment of funds on behalf of customers, and shall prepare the following statements on a daily basis:
1. Daily statement of receipt and payment of custodied funds through the cash management account.
2. Daily statement of transactions and transfers involving investment of funds through the cash management account.
3. Statement of funds custodied, invested, and transferred through the cash management account with respect to each customer.
The statements prepared and completed under the preceding paragraph may be stored in electronic form. The electronic statements shall be prepared and stored in a way that they cannot be edited or erased and can be readily converted into written form.
The securities firm shall at the end of each month transmit to the TWSE the current-month information regarding daily statements of receipt and payment of custodied funds, and daily statements of transactions and transfers involving investment of funds, through the cash management account.
All statements, vouchers, and documents relating to the business contemplated hereunder shall be preserved for a minimum of five years, or for a longer period if so required by any other applicable law or regulation regarding the period of preservation for such materials. Notwithstanding the foregoing, in the event of dispute, the materials shall be preserved until resolution of the dispute. |
| Article 19 | A securities firm investing in any of the eligible instruments specified in Article 10, paragraph 2 may further reinvest the funds received upon expiration or early termination of a repo transaction or upon redemption of a mutual fund investment, as the case may be, if so agreed with the customer.
With the exception of a subsequent repo transaction with the same counterparty or a switching of shares between mutual funds, any funds falling within the scope of the preceding paragraph shall be transferred to the cash management account before further reinvesting. |
| Article 20 | If a customer lacks sufficient funds to settle a trade, the securities firm shall on its own initiative cover the customer's settlement obligation with the custodied funds of the customer not yet reaching the minimum investment level, and, if still insufficient, then dispose of investment instruments in the order of priority as agreed with the customer to cover the settlement obligation.
For the purposes of transferring the needed settlement money under the preceding paragraph, the securities firm shall first forward the proceeds received on disposal of investment instrument to its cash management account, and then promptly transfer the proceeds to its relevant settlement account and settle the obligation on behalf of the customer.
The securities firm shall promptly give notice to the customer for clarification of responsibilities when it finds that the customer lacks sufficient funds for settlement of a trade even when action has been taken under paragraph 1, or when the proceeds from disposal of investment instruments cannot be timely transferred to the account by the due time for settlement of the customer's obligation.
For the purposes of paragraph 1, where further action is required due to a customer's lacking of sufficient funds to settle a trade, the account concerned may only be one that involves a source of funds specified in Article 9, paragraph 1 and as agreed between the securities firm and the customer. |
| Article 21 | To withdraw money, a customer shall complete and submit a Customer Request for Withdrawal of Custodied or Invested Funds on the date of the withdrawal request.
Upon request by the customer under the preceding paragraph, the securities firm shall transfer the requested withdrawal amount from the customer's custodied funds not yet reaching the minimum investment level, and, if still insufficient, then dispose of any investment instrument in the order of priority as agreed with the customer, to meet the customer's withdrawal request.
The securities firm processing transfer of funds under the preceding paragraph in response to the customer's withdrawal request shall, by the due time as agreed with the customer, forward the funds as transferred separately to the securities firm's cash management account, to the account for book-entry transfer of securities and funds opened by the customer for engaging in securities trading on the exchange or over-the-counter market. |
| Article 22 | For an early termination of agreement to become effective, the customer shall submit a completed Request for Termination of Agreement on the date of the request. Article 7, paragraph 3 shall apply mutatis mutandis with respect to the securities firm's processing of the customer's funds still held in custody in the cash management account and of any investment instrument involving the customer's funds and any subsequent transfer of funds upon the customer's request for early termination of the agreement or non-renewal of the agreement upon expiration. |
Chapter III Regulation of Classification for Investment Instruments
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Section 1 Repo transactions
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| Article 23 | A securities firm using funds from the cash management account to engage in repo transactions shall engage in these transactions with one or more counterparties as specified by the customer and for such investment periods for repo transactions as agreed with the customer, and shall obtain authorization from the customer granting discretionary power to decide the terms and conditions for each individual transaction during the investment period.
The securities firm having obtained authorization from the customer granting discretionary power to decide the terms and conditions for each individual repo transaction during the investment period, as described in the preceding paragraph, may not prejudice the interest of the customer when engaging in such repo-style transactions.
The securities firm using funds from the cash management account to engage in repo transactions may not engage in any single transaction that involves a period of more than 180 days. |
| Article 24 | For the purposes of a securities firm using funds from the cash management account to engage in repo transactions, the credit rating of "exchange-listed or OTC-listed straight corporate bonds and general bank debentures" as provided in Article 10, paragraph 2 refers to debt issue rating. If no debt issue rating is available, only senior bonds of an issuer are allowed, where the issuer shall be one as follows:
1. An issuer meeting the credit rating requirement in Article 10, paragraph 2.
2. An issuer whose stocks are normally traded on the TWSE or GTSM. Notwithstanding the foregoing, if the issuer is a banking subsidiary, insurance subsidiary, or securities subsidiary of a financial holding company, the criterion shall be that the stocks of the financial holding company are normally traded on the TWSE or GTSM. |
| Article 25 | A securities firm using funds from the cash management account to engage in repo transactions shall do so with counterparties that have been assigned a long-term credit rating as follows within the last year:
1. At least 'twA-' by Taiwan Ratings Corporation.
2. At least 'A-(twn)' by Fitch Ratings Limited, Taiwan Branch.
3. At least 'A3.tw' by Moody's Taiwan Corporation.
4. At least 'A-' by Fitch Ratings Ltd.
5. At least 'A-' by Standard & Poor's Corp.
6. At least 'A3' by Moody's Investors Service. |
| Article 26 | A securities firm using funds from the cash management account to engage in repo transactions may not engage in any transaction with one single counterparty resulting in a combined outstanding balance in excess of 100% of the counterparty's net worth as shown in its latest CPA-audited and attested financial report. |
| Article 27 | A securities firm may not use its proprietary positions in government bonds, exchange-listed or OTC-listed straight corporate bonds or general bank debentures to engage in repo transactions with its cash management account unless it has given express notice to its customers advising of relevant conflict of interest and control policies and has obtained written consent from the customers, and, in the case of such a transaction, shall by the end of the month following the transaction date disclose to the customers the average interest rate for repo transactions on the OTC market as published by the GTSM on the transaction date. |
| Article 28 | A securities firm using funds from the cash management account to engage in repo transactions may not enter into any new transaction with a counterparty whose credit rating no longer meets the requirement in Article 25. Notwithstanding the foregoing, if a repo transaction with the counterparty involves pooling of funds from two or more customers, as described in Article 29, and if the transaction is subject to early termination due to early termination of agreement by any of the customers involved, the securities firm may for and only for that transaction enter into a subsequent repo-style transaction agreement with the counterparty expiring on the same date as the original agreement. |
| Article 29 | When a securities firm uses funds from the cash management account to engage in repo transactions in government bonds, exchange-listed or OTC-listed straight corporate bonds or general bank debentures, if a repo transaction involves pooling of funds from two or more customers, and if the transaction is subject to early termination due to early termination of agreement by any of the customers involved, the securities firm shall obtain written consent from the counterparty to the transaction. In the case of a transaction involving partial termination of agreement, interest shall be paid, based on the original agreed interest rate, on the funds used to enter into in a subsequent repo transaction with the same counterparty to replace the original transaction. If a new repo-style transaction agreement is entered into for that purpose, it shall have the same expiry date and interest rate as the original agreement as if it were not terminated early. The same shall not apply, however, if without detriment to customer interests the securities firm otherwise reaches or has reached an agreement with the non-terminating customer(s).
The preceding paragraph shall also apply when a securities firm uses its proprietary positions in government bonds, exchange-listed or OTC-listed straight corporate bonds or general bank debentures to engage in repo transactions with customers in the conduct of custody and investment of funds on their behalf. |
| Article 30 | The agreement signed between a securities firm and a customer for the provision of business services relating to custody and investment of funds on behalf of the customer, shall contain a special clause to the effect that when an investment instrument involves any repo transaction in government bonds, exchange-listed or OTC-listed straight corporate bonds, or general bank debentures, if any single repo transaction involves pooling of funds from two or more customers, and if the transaction is subject to early termination due to early termination of agreement by any of the customers involved, it is agreed that in this circumstance the securities firm may on its own initiative terminate the agreement early and that the securities firm shall take further action as required in the preceding article. |
| Article 31 | A securities firm conducting business relating to custody and investment of funds on behalf of customers shall assign qualified associated persons to engage in bond repo transactions with counterparties.
If a securities firms uses its proprietary positions in government bonds, exchange-listed or OTC-listed straight corporate bonds, or general bank debentures to engage in repo transactions with its cash management account, the function of associated persons for the business described in the preceding paragraph may not be performed by associated persons engaging in proprietary trading operations for that business, and vice versa. |
| Article 32 | A securities firm using funds from the cash management account to engage in repo transactions may not use the bonds thus obtained for further outright sale to others, for further repo-style transactions, or for any other purposes.
A securities firm using funds from the cash management account to engage in repo transactions may not receive or keep the underlying bonds in physical form, and the bonds shall only be represented by means of a bond passbook issued by a custodian institution designated by the counterparty, a certificate for a repo-style book-entry central government bond transaction issued by a clearing bank for book-entry central government bonds, or a bond passbook otherwise issued following the requirement of the TDCC.
If a securities firms uses its proprietary positions in government bonds, exchange-listed or OTC-listed straight corporate bonds or general bank debentures to engage in repo transactions with its cash management account, the functions of associated persons performing clearing and settlement for those transactions may not be performed by associated persons performing clearing and settlement for proprietary trading operations for that business, and vice versa. |
| Article 33 | A securities firm shall in its internal control system specify manners relating to the method for preserving trade confirmation statements, delivery statements, payment and settlement statements, and other relevant trade and settlement vouchers with respect to repo-style transactions in bonds and the method for safe-keeping bond passbooks and certificates for repo-style book-entry central government bond transactions, and shall regularly check the bond passbooks or certificates for repo-style book-entry central government bond transactions thus held against the information on the bonds that underlie outstanding repo transactions, and prepare and maintain written verification records accordingly. |
Section II Money Market Funds and Quasi-Money Market Funds Within the Category of Bond Funds
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| Article 34 | A securities firm using funds from the cash management account to invest in mutual funds shall do so in compliance with the following:
1. Investment in beneficial certificate units of any single securities investment trust fund may not exceed 10% of the net asset value of that fund.
2. Investment in beneficial certificate units of securities investment trust fund(s) offered and issued by any single securities investment trust enterprise may not in total exceed 20% of the total amount of funds from the cash management account already invested as of the date of the investment.
3. Investment in quasi-money market funds within the category of bond funds may not in total exceed 10% of the total amount of funds from the cash management account already invested as of the date of the investment.
The "total amount of funds from the cash management account already invested as of the date of the investment" under the preceding paragraph does not include any income or loss incurred on investment. |
| Article 35 | A securities firm using funds from the cash management account to invest in beneficial certificate units shall obtain written consent from customers for matters that are required by law or regulation to be approved by the beneficial owners (or unitholders) of the fund but that exceed the scope of customer authorization stated in the agreement for the business contemplated hereunder. |
| Article 36 | A securities firm shall in its internal control system specify matters relating to the method for preserving trade confirmation statements, reconciliation statements, notices issued by fund companies, and any other relevant vouchers, records, and documents in relation to its investment in beneficial certificate units and the method for safe-keeping beneficial certificates, and shall regularly check the balance of beneficial units in mutual funds whose trading involves the use of funds from the cash management account against the number of beneficial units on hand, and prepare and maintain written verification records accordingly |
Chapter IV Risk Control
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| Article 37 | When a securities firm conducts business relating to custody and investment of funds on behalf of customers, the total amount of the funds handled for custody and investment by the securities firm may not exceed 200% of the securities firm's net worth. Any interest accrued on custodied funds and any income or loss incurred on investment, however, shall not be included in the calculation of the aggregate custody and investment amount.
The securities firm shall calculate the following information on each business day and transmit the same to the TWSE by the next business day:
1. The aggregate custody and investment amount described in the preceding paragraph.
2. Information on the credit rating of the counterparty to a repo transaction as described in Article 25 and on the combined outstanding balance in repo transactions with a single counterparty and the counterparty's net worth as described in Article 26.
3. The percentage of investment in beneficial certificate units of any single securities investment trust fund to the net asset value of the fund, as described in Article 34.
4. The percentage of investment in beneficial certificate units of securities investment trust fund(s) offered and issued by any single securities investment trust enterprise to the total amount of funds from the cash management account already invested as of the date of the investment, as described in Article 34.
5. The percentage of the total investments in quasi-money market funds within the category of bond funds to the total amount of funds from the cash management account already invested as of the date of the investment, as described in Article 34. |
| Article 38 | A securities firm conducting business relating to custody and investment of funds on behalf of customers shall set aside an operation bond in the amount of 1% of the total amount of funds entrusted by customers for custody and investment, current as of the end of each month. Any interest accrued on custodied funds, and any income or loss incurred on investment, shall not be included in the calculation of the total amount of funds entrusted by customers for custody and investment.
The securities firm shall at the end of each month calculate the total amount of funds entrusted for custody and investment as referred to in the preceding paragraph and shall by the 10th business day of the next month either set aside an additional amount of operation bond or, as the case may be, withdraw any surplus amount upon approval by the competent authority. |
Chapter V Supplementary Provisions |
| Article 39 | Upon violation of these Rules by a securities firm or any of its responsible persons or employees, either the TWSE or the GTSM may take corresponding action pursuant to its rules. |
| Article 40 | These Rules, and any amendments hereto, shall be jointly prepared by the TWSE and GTSM, and announced and implemented after submission to and final approval by the competent authority. |