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Article 4
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A securities broker shall comply with the following provisions in brokerage trading of securities:
A broker must receive an order placed by a principal or principal's agent by means of letter, telegraph, telephone, the Internet, dedicated line, closed dedicated network, other or electronic trading method approved by the TWSE, or placed in person, before the broker may fill out and print the trading order form prescribed under Article 87 of the Securities and Exchange Act in order to execute a trade. The term "electronic trading" means trading by use of telephone voice menu system, the Internet, dedicated line, closed dedicated network, or other electronic trading method approved by the TWSE.
When a principal or principal's agent places a securities trading order by letter, telegraph or telephone, the securities broker's officer managing the trade shall fill out the trading order form in either written or electronic form, print the trading order, and stamp it. When the principal places a trading order by an electronic trading method such as voice, the Internet, dedicated line, or closed dedicated network, the securities firm may be exempt from the requirement to produce and fill out the trading order form; however, it shall print a record of requests for trades trading orders in the chronological order received, and for requests for trades made trading orders placed by an electronic trading method such as voice, the Internet, dedicated line, or closed dedicated network, or where trading order forms were filled out in electronic form and not printed out one by one, the officer processing the trade and the department manager, or the employee receiving the trading order, shall add their signatures to the record of requests for trades trading orders. The record of requests for trading orders shall include the principal's name and account number, the time of the order, the type, number, and face value of the securities, the order's price limit, the period of validity, the name or code number of the trader, and the method of request how the order was placed. Orders made in person shall be signed and stamped by the principal or the principal's agent.
When the principal makes a trading request places a trading order over the Internet, the record of requests orders referred to in the preceding paragraph shall also include the principal's Internet address (IP) and digital signature. When the request is made order is placed by phone, the broker shall make use of the telecommunications provider's caller ID service to record the caller's telephone number. When the immediate record of orders is printed, the items listed above may be omitted. An agent must first obtain a power of attorney from the principal before trading on his behalf or signing trading documents. The securities broker shall not be liable for errors that occur when the principal or his agent makes places a trading order by telephone when such errors are not attributable to the fault of the broker.
A securities broker is prohibited from using computer-assigned group codes to handle securities trading orders, and is required to prepare order tickets and trading records in one of following ways, depending on how the trading order is placed:
1. Non-electronic trading methods
(1) Where a securities trading order is placed in person, it shall be done by either principal or by an agent or authorized person of the principal, who shall fill out a letter of authorization and stamp it.
(2) When a principal or principal's agent places a trading order by letter, telegraph, or telephone, the securities broker's associated person handling the trade shall fill out the order ticket in either written or electronic form, print out a record of the trading order, and stamp it. Where order tickets are filled out using an electronic trading method, the securities broker need not print out every single order ticket if it is able to implement delegation of responsibility for the handling of trading orders, and to identify which account executives are responsible for which orders.
2. Electronic trading methods
(1) Where a principal places an order using an electronic trading method, the securities broker need not prepare an order ticket and fill it out on the principal's behalf, but it shall print out records of such trading orders in chronological sequence.
(2) The record of a trading order shall include the principal's name or account number, time of the order, type of securities, number or par value of shares, limit price, expiration time, name or code of the associated person handling the trade, and manner in which the order is placed.
(3) When the principal places a trading order over the Internet, the record of the trading order shall also include the principal's Internet Protocol (IP) address and digital signature. When a trading order is placed by phone, the broker shall make use of the telecommunications provider's caller ID service to record the caller's telephone number.
(4) Where procedures for the storage of records of trading orders placed by an electronic trading method satisfy the following provisions, such records need not be printed out:
(i) Electronic storage media are used, and preparation of the records is completed on the day of the trade's execution.
(ii) The records are fully indexed, and management procedures are in place.
(iii) A specific person(s) is responsible for records management, and it is possible at any time to convert the electronically stored data to hardcopy format.
Where order tickets placed by an electronic trading method or filled out electronically are not printed out immediately, they shall be stored on electronic media that cannot be edited or erased, and a record of each trading order shall be stamped after market close by a responsible staff member and a department supervisor or the associated person who handled the trade.
With the exception of orders placed by voice, for orders between securities brokers and principals using electronic trading methods, electronic signatures issued by a certification authority shall be used to differentiate and verify documents transmitted during placement of orders, order confirmation, and transaction confirmation. This restriction shall not apply, however, under the following circumstances:
1. When an order confirmation or transaction confirmation is delivered by telephone, facsimile, text messaging, or webpage program.
2. When the network access points between a securities broker and a principal that places an order through a Direct Market Access system are located outside the Republic of China and the network connections comply with the laws and regulations of the country in which they are located.
However, this restriction shall not apply for orders placed between a principal and securities broker electronically over a dedicated line if the connection access points are all located outside the Republic of China and the connection method complies with the local laws and regulations of the country(ies) in which they are located. With the exception of orders placed by telephone voice menu system, electronic signatures issued by a certification authority shall be used to identify and confirm order tickets, order confirmations, execution reports, and other such electronic documents transmitted between securities brokers and principals that place orders by an electronic trading method. However, this requirement does not apply if all the network access points between a securities broker and principals that place orders by Direct Market Access are located outside the Republic of China and the network connections comply with the local laws and regulations of the country(ies) in which they are located.
Where records of trading orders placed by electronic trading methods such as voice, the Internet, dedicated line, or closed dedicated network are saved in accordance with the following provisions, the broker may be exempt from the requirement to print out a record of requests for trades:
1. Use of a digital data storage medium that allows neither modification nor deletion, with complete records produced on the date of transaction.
2. Establishment of a comprehensive directory and procedures for management.
3. Personnel solely responsible for management of the storage medium, and the capability to convert electronic data files to printed format at any time.
Trading order forms which are filled out electronically and not printed one by one shall be stored in an electronic form that cannot be altered or deleted.
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