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Regulations Governing Securities Firms Trading in Securities on a Fixed-Term, Fixed-Amount Basis(2016.12.23) |
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Article 1
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These Regulations are established for compliance by securities firm when trading in securities on a fixed-term, fixed-amount basis.
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Article 2
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A securities firm trading in securities on a fixed-term, fixed-amount basis (the "Fixed-Term, Fixed-Amount Trading") shall act in accordance with securities and exchange laws and regulations, these Regulations, and applicable policies, guidelines, public notices and official letters issued by Taiwan Stock Exchange Corporation (the "Securities Exchange"), Taipei Exchange ("TPEx") and Taiwan Securities Association (the "Association").
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Article 3
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When conducting the Fixed-term, Fixed-amount Trading, a securities firm may conduct the trading via two ways, i.e. brokerage and wealth management.
When conducting business in the preceding paragraph, a securities firm may report purchases through omnibus trading account for Fixed-Term, Fixed-Amount Trading and make reconciliations and allocations.
When conducting business in the first paragraph and making allocations and sales through reconciliation account, a securities firm shall always maintain the allocation and trading records.
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Article 4
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In conducting the Fixed-Term, Fixed-Amount Trading, a securities firm shall submit a letter, enclosed with the minutes of its board of directors' meeting and information stating the trading start date, how trading will be conducted, and reconciliation account and trust property account to the Securities Exchange for recordation prior to the start date, with copy to TPEx.
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Article 5
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A securities firm conducting the Fixed-Term, Fixed-Amount Trading shall establish its internal control system for each trading method under Article 3.
The internal control system in the preceding paragraph shall state the following information:
- Step-by-step procedure for the Fixed-Term, Fixed-Amount Trading and related control method.
- Other required information specified by the competent authority.
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Article 6
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A securities firm conducting the Fixed-Term, Fixed-Amount Trading shall enter into a contract with its client. The contract shall specify the following:
- Underlying investments.
- How the securities firm conducts trading pursuant to Article 3.
- Fund deduction date, deduction method and calculation of deducted amount.
- Fees to be borne by client.
- Actions to be taken by the securities firm in case of failure to purchase a sufficient quantity of shares.
- Contract effective date, and how to amend and terminate the contract.
- Resolution of disputes.
In case of a securities firm conducting the Fixed-Term, Fixed-Amount Trading by way of brokerage, its contract template shall be drafted by the Association. For a securities firm conducting the Fixed-Term, Fixed-Amount Trading by way of wealth management services, the securities firm shall establish its own terms and conditions.
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Article 7
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For purpose of conducting the Fixed-Term, Fixed-Amount Trading, a securities firm shall follow the principle of purchasing and selling securities for mid- and long-term investment, and the securities trading shall be limited to shares and exchange-traded fund (ETF) beneficiary certificates. The securities firm shall establish the criteria for selecting underlying investments.
The underlying investments in the preceding paragraph shall exclude leveraged and inverse ETF Securities Investment Trust Fund (SITF) beneficiary certificates and leveraged and inverse ETF Futures Trust Fund (FTF) beneficiary certificates.
When selected underlying investments are announced by the Securities Exchange or TPEx to be traded in a different way or listed as alerted securities pursuant to the applicable policies, the securities firm shall suspend its purchase of the securities on the day of the Fixed-Term, Fixed-Amount Trading.
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Article 8
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A securities firm may only conduct the Fixed-Term, Fixed-Amount Trading which is normal trading, odd-lot trading, or after-market fixed-price trading.
No day trades, margin transactions or sales of borrowed securities may be allowed in the Fixed-Term, Fixed-Amount Trading in the preceding paragraph.
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Article 9
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A securities firm conducting the Fixed-Term, Fixed-Amount Trading may open a reconciliation account with its head office for reconciliation of numbers of securities purchased through omnibus trading account for Fixed-Term, Fixed-Amount Trading.
A securities firm shall not report securities purchased through the reconciliation account in the preceding paragraph. Instead, it may only report securities purchased and allocated through omnibus trading account for Fixed-Term, Fixed-Amount Trading.
After purchasing securities through omnibus trading account for Fixed-Term, Fixed-Amount Trading, a securities firm may only allocate odd lots of securities of the same type to the reconciliation account. Excessive securities shall be resold via the reconciliation account no later than the second business day after the trading day.
A securities firm conducting the Fixed-Term, Fixed-Amount Trading by way of both brokerage and wealth management may open separate reconciliation accounts for each method.
The reconciliation account of head office of domestic securities firm shall have a securities trading account number in the format of 9899XX-Inspection Code. The reconciliation account of the Taiwan branch of a foreign securities firm shall have a securities trading account number in the format of 99899X-Inspection Code.
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Article 10
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The provisions of Article 5, paragraph 2 of the Securities Exchange's and TPEx's Rules Governing Securities Firms Recommending Trades in Securities to Customers shall not apply to a securities firm trading in securities on a fixed-term, fixed-amount basis or selling securities through reconciliation account.
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Article 11
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A securities firm conducting the Fixed-Term, Fixed-Amount Trading shall collect advance payment or reserve certain funds as prepayment on the deduction date in accordance with contract.
The provisions of the Operation Directions for the Advance Collection of Funds and Securities by Securities Brokers in Brokerage Trading shall apply mutatis mutandis to collection of advance payment in the preceding paragraph. Reservation of funds shall follow the applicable terms and conditions under the contract between the securities firm and its client.
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Article 12
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A securities firm conducting the Fixed-Term, Fixed-Amount Trading may open two omnibus trading accounts for Fixed-Term, Fixed-Amount Trading in the name of its head office, with one account designated for domestic clients (securities trading account number in the format of 847777-Inspection Code), and the other for foreign clients (securities trading account number in the format of 947777-Inspection Code).
A domestic securities firm's ID code for omnibus trading account for Fixed-Term, Fixed-Amount Trading is 600. A foreign securities firm's branch in Taiwan has the ID code as 403.
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Article 13
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A securities firm conducting the Fixed-Term, Fixed-Amount Trading shall not use its omnibus trading account for Fixed-Term, Fixed-Amount Trading for day trades in securities. For transactions through omnibus trading account for Fixed-Term, Fixed-Amount Trading, neither the transactions after allocation nor the transactions with an updated account number after allocation may be offset.
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Article 14
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A securities firm's head office shall report the details of transaction allocations through omnibus trading account for Fixed-Term, Fixed-Amount Trading based on individual securities on the trading date. In the report, the total trading amount and total number of securities traded for each client of the head office and of the branch, the securities firm's trust asset account and reconciliation account shall all match the total trading amount and total number of securities traded through the omnibus trading account for Fixed-Term, Fixed-Amount Trading for individual securities on the same day. The post-allocation transaction details shall be prepared in the required electronic format and reported to the Securities Exchange or TPEx between 3 p.m. and 6 p.m. on the same day. No part of allocation details or all reconciliations and allocations may be reported after the trading day.
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Article 15
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Securities a securities firm trades in through an account other than omnibus trading account for Fixed-Term, Fixed-Amount Trading as requested shall not be combined to the total trading amount or total number of securities through the omnibus trading account for Fixed-Term, Fixed-Amount Trading for reporting of allocations.
Securities a securities firm trades in through omnibus trading account for Fixed-Term, Fixed-Amount Trading shall not be reported to a different account number belonging to an account other than omnibus trading account for Fixed-Term, Fixed-Amount Trading before being reported for allocation details.
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Article 16
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A securities firm purchasing securities with its omnibus trading account for Fixed-Term, Fixed-Amount Trading may be exempt from the obligations to report details of trading requests from individual clients and service providers under the Securities Exchange's for TPEx's Operational Guidelines for Omnibus Trading Accounts.
The Securities Firm or TPEx may, as needed for business, notify a securities firm to provide real-time information about transactions and trading requests through omnibus trading account for Fixed-Term, Fixed-Amount Trading.
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Article 17
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For reporting transaction details after allocation through omnibus trading account for Fixed-Term, Fixed-Amount Trading on the trading day, if the omnibus trading account for Fixed-Term, Fixed-Amount Trading has an account number in the format of 847777-Inspection Code, allocations may only be made to domestic clients. If the omnibus trading account for Fixed-Term, Fixed-Amount Trading has an account number in the format of 947777-Inspection Code, allocations may only be made to foreign clients.
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Article 18
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For matters relating to omnibus trading account for Fixed-Term, Fixed-Amount Trading not provided for under these Regulations, the provisions of the Securities Exchange and TPEx Operational Guidelines for Omnibus Trading Accounts shall govern.
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Article 19
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When conducting the Fixed-Term, Fixed-Amount Trading by way of brokerage, a securities firm may only purchase securities with omnibus trading account for Fixed-Term, Fixed-Amount Trading.
In case a client purchases securities by the method in the preceding paragraph, the amount of the purchase shall not count toward his/her/its maximum daily trading amount.
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Article 20
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When conducting the Fixed-Term, Fixed-Amount Trading by way of wealth management, a securities firm shall conduct its trust business only for purpose of non-discretionary individual management to be handled via its trust property account.
For the trust property account in the preceding paragraph, the securities firm shall create client-specific ledgers to record details on a daily basis, and prepare the detailed trading records for the previous month to be submitted to the Securities Exchange or TPEx for recordation by the fifth business day after the end of the month.
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Article 21
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These Guidelines shall be published and implemented upon reporting to the competent authority for recordation. Subsequent amendments thereto shall be effected in the same manner.
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