| Title： |
Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities(2008.01.22) |
| Date： |
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Article 5
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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.
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Article 6
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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.
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Article 8
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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.
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Article 17
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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.
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Article 21
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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.
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Article 26
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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.
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Article 27
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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.
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