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Regulations Governing Responsible Persons and Associated Persons of Securities Firms(2013.12.30) |
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Article 2
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The term "responsible person" as used in these Regulations shall be defined in accordance with Article 8 of the Company Act.
The term "associated persons" as used in these Regulations means persons who engage in the following businesses for a securities firm:
- Securities investment analysis, internal auditing, self-auditing, legal compliance, or in-charge accountant.
- Liaison or execution of securities underwriting and trading.
- Proprietary securities trading, clearing and settlement, or agency for shareholder services.
- Account opening, credit searches, solicitation, recommendation, brokerage order taking, filing, clearing, settlement, or receipt, payment, and safekeeping of cash and stocks, in connection with securities trading.
- Margin purchases or short sales in securities trading.
- Derivatives trading.
- Risk management.
- Conducting other approved business.
Responsible persons and associated persons of the overseas branch of a securities firm shall abide by the local laws and regulations governing securities in the country where they conduct business. With the exception of Article 12, Article 13, and Article 18, paragraph 1, these Regulations shall not apply.
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Article 3
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Associated persons of securities firms are classified into the following two categories in accordance with the complexity and degree of responsibility of their duties:
- Senior agent: A person who supervises a department or who is a responsible person of a securities firm's branch unit, or is engaged in investment analysis or internal auditing, as described in Article 8, paragraph 1.
- Agent: A person who engages in underwriting, proprietary trading, or brokerage trading of securities, or who is an internal auditor or an in-charge accountant, as described in the subparagraphs of paragraph 2 of the preceding article.
Only a person who is trained and certified by the internal auditor training program of an institution accredited by the Financial Supervisory Commission (FSC) may engage in internal auditing as provided in subparagraph 2 of the preceding paragraph.
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Article 4
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Associated persons of a securities firm may not concurrently hold any position at another securities firm either domestically or in a foreign country. This, however, does not apply to internal auditors, risk management personnel, or in-charge accountant of the securities firm concurrently holding a position of the same nature at a securities affiliate enterprise in a foreign country.
An affiliate enterprise as referred to in the preceding paragraph shall be governed by the Affiliated Enterprises chapter of the Company Act.
The following associated persons of a securities firm may not engage in business beyond the scope for which they are registered, nor may their business be concurrently performed by associated persons, unless so prescribed in other laws or regulations:
- Associated persons engaged in proprietary trading of securities.
- Internal auditors.
- Risk management personnel.
Persons engaged in the business of brokerage trading of securities, and persons charged with consulting in connection with asset allocation or financial planning or services in connection with the sale of financial products, may not concurrently handle services that involve account opening for securities trading, clearing and settlement, receipt, payment, and safekeeping of cash and stocks, margin purchases or short sales, underwriting, serving as in-charge accountant, or agency for shareholder services.
In the case of a futures commission merchant that concurrently operates securities business, if any of its associated persons possesses the qualifications for both securities and futures business, then those an associated person, when engaging in the business of account opening, brokerage trading, proprietary trading, clearing and settlement, internal auditing, risk management, and in-charge accountant within the scope for which the person is registered, may concurrently handle securities business and futures business of the same nature.
In the case of a futures commission merchant that concurrently operates securities business, a managerial officer of the department that handles brokerage trading, proprietary trading, or clearing and settlement business, who furthermore meets the qualifications set out in Articles 8 and 10 herein, may concurrently serve as a managerial officer of the futures department that handles business of the same nature.
Except as otherwise provided by law or regulation, the provisions of paragraph 3 and the preceding paragraph shall apply mutatis mutandis to financial institutions other than futures commission merchants that concurrently operate securities business.
An agent of a securities firm shall neither execute nor concurrently engage in the business of a senior agent.
A securities firm shall establish internal audit and control mechanisms for any concurrent holding of positions by its associated persons, to ensure that the concurrent holding of positions and concurrent conducting of services by any of its associated persons are limited to the scope necessary for the effective execution of the associated person's principal duties and concurrently held duties or concurrently handled services, and for maintaining the business operations of the securities firm. The concurrent holding of positions and concurrent handling of services may not involve any conflict of interest or any violation of applicable securities regulations or internal control system provisions, and the rights and interests of customers and shareholders shall be protected.
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Article 18
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Responsible persons and associated persons of a securities firm shall conduct business in accordance with the principles of honesty and good faith.
Except where otherwise provided by law or regulation, responsible persons and associated persons of a securities firm may not engage in the following conduct:
- Engaging in the trading of exchange-listed or OTC-listed stocks with information learned on the job for the purpose of obtaining speculative profit.
- Disclosing information regarding a customer order or other secrets learned as a result of the job, other than in response to inquiries made in accordance with laws or regulations.
- Accepting a customer's trading order with discretionary authority over the type, quantity, price, or purchase or sale of the securities.
- Trading securities with a guarantee to the customer of earning profits or with a promise of sharing profits.
- Trading securities under an agreement with the customer to jointly assume the losses or profits of the transaction.
- Accepting orders from customers to buy or sell securities and concurrently buying or selling the same securities for his or her own account on the opposite side of the trade.
- Subscribing or trading securities in the name of the customer or by using the customer's account.
- Subscribing or trading securities for the customer in the names of other persons or relatives.
- Borrowing or lending of money or securities to or from a customer, or acting as an intermediary for the borrowing or lending of money or securities to or from a customer.
- Fraud, deception, or other misleading behavior when engaging in underwriting, proprietary trading, or brokerage trading of securities.
- Safekeeping securities, cash, chops, or deposit books of customers, or misappropriating any of those things.
- Trading securities for a customer that has not entered into a brokerage contract;
- Trading securities other than in accordance with the particulars and instructions of the order placed by the customer.
- Providing a customer or unspecified persons with information indicating that the price of certain securities will rise or fall in order to solicit the trading of securities;
- Recommending trades in specific stocks to unspecified persons, except as necessary for purposes of securities underwriting.
- Accepting settlement by a customer by means of offsetting a purchase or sale of securities with a sale or purchase of securities of the same type through the same or a different account, provided that this restriction shall apply neither to settlement by mutually offsetting margin purchases and short sales in margin trading, nor to accepting settlement by a customer by means of mutual offsetting of an equal quantity of securities purchased and sold in trading in which, after execution of the cash purchase of the securities, spot securities of the same type are then sold through the same account on the same business day in accordance with laws and regulations.
- Processing the opening of an account, or the subscription, trading, or settlement of securities, for a director, supervisor, or employee of the company on behalf of another person.
- Processing the opening of an account for a person other than the principal for whom the account is being opened. However, this rule does not apply if the FSC has provided otherwise.
- Processing an application for subscription, trading, or settlement of securities from a person who is not the customer or not an agent with a power of attorney from the customer.
- Accepting a trading order despite being aware that the customer is using undisclosed information of a public company that will have a material impact on the stock price of the company or being aware that the customer intends to manipulate the market.
- Any agreement between persons engaging in securities underwriting business and an issuing company or its relevant personnel for purposes of obtaining improper profit.
- Soliciting, acting as an intermediary for, or promoting unapproved securities or derivative products thereof.
- Other conduct in violation of securities laws or regulations or conduct prohibited by the rules prescribed by the FSC.
Persons referred to in the preceding paragraph also may not engage in any conduct prohibited by securities laws and regulations when conducting their duties.
The provisions of the two preceding paragraphs shall apply mutatis mutandis to other employees of a securities firm.
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Article 22
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These Regulations shall enter into force from the date of issuance, with the exception of Article 18, paragraph 2, subparagraph 16 amended and issued on 30 December 2013, which shall enter into force from 6 January 2014.
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