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Amendments

Title:

Taiwan Stock Exchange Corporation Regulations Governing Brokerage Contracts of Securities Brokers  CH

Amended Date: 2019.07.11 
Categories: Basic Laws and Regulations
Market Supervision > Regulation of Securities Firms

Title: Taiwan Stock Exchange Corporation Regulations Governing Brokerage Contracts of Securities Brokers(2014.11.04)
Date:
Article 2     Where any of the following conditions apply, securities brokers shall refuse to open an account for a principal; if an account has already been opened, the securities broker shall refuse to accept trading orders or subscriptions for securities:
  1. The principal has either no legal capacity or limited legal capacity, and is acting without the representation of a statutory agent.
  2. The principal is an officer or employee of the competent securities authority.
  3. The principal is an employee of the Securities and Futures Bureau under the competent authority and has not submitted a letter of consent from the agency.
  4. The principal has been declared bankrupt and restoration of rights has not been effected.
  5. The principal has been declared by a court to be placed under guardianship where such declaration has not yet been voided, provided that this restriction shall not apply where the guardian disposes of the securities for the interests of the person under guardianship.
  6. The principal has been declared by a court to be placed under assistance, where such declaration has not yet been voided, provided that when a court or the person providing assistance to the person subject to the declaration grants permission, this restriction shall not apply.
  7. The principal is opening an account for a juristic person but cannot provide evidence of authorization.
  8. The principal is a securities broker that has not received approval from the competent authority or the stock exchange.
  9. The principal has engaged a director, supervisor, or employee of a securities firm to act as agent in opening an account at said firm.
  10. The principal is applying or applied to convert an account it originally opened as a discretionary investment account to a brokerage account for the principal's own trading use.
    Where any of the following conditions apply, securities brokers shall refuse to open an account for a principal and shall refuse to accept orders for trades or subscriptions to securities on an already-opened account:
  1. When the TWSE or the GreTai Securities Market has sent a general notice to securities brokers that the principal is in default through failure to perform settlement obligations on time, and less than 5 years have passed while conclusion of the case is still pending. However, after a securities broker's receipt of the notice, this provision does not apply to brokerage trades made for purposes of offsetting margin purchases or short sales that were already executed for the same principal on the same day and are of the same type and same quantity of securities, nor does it apply to opposite offsetting brokerage trades made on the same day in accordance with the Operational Rules Governing Day Trades of Securities.
  2. An indictment has been issued against the principal by the public prosecutor for violation of the Securities and Exchange Act or for forgery or alteration of listed or OTC securities, where a judgment is still pending or where not more than five years have passed following issuance of a final and conclusive judgment by the court.
  3. Where the principal is in default of its futures trading contract and less than five years have passed while conclusion of the case is still pending, or where the principal has violated regulations for management of futures trading and not more than five years have passed since the issuance of a final and conclusive criminal judgment by the judicial authorities.
Article 3     Securities brokers accepting orders for securities trades must first execute a brokerage contract with the principal, and shall not effect securities trades on behalf of those who have not yet executed such a contract. Securities brokers shall abide by the following provisions when executing a brokerage contract with a principal:
  1. Where the principal is a natural person, with the exception of the following circumstances, that person shall bring their National Identity Card, personally place their seal on the brokerage contract, open an account, and place a photocopy of their National Identity Card on file:
    1. Where the principal has limited or no disposing capacity, or has been declared by a court to be placed under assistance, the principal's statutory agent, guardian, or assistant shall bring his/her own and the principal's National Identity Card, open an account, personally place their seal on the brokerage contract, and place a photocopy of their own and the principal's National Identity Card on file. Where the principal has not yet obtained a National Identity Card, a household membership certificate may be used; a statutory agent acting as guardian shall also supply proof of guardianship.
    2. Where the principal is a person working overseas for a juristic person, the principal may engage an agent to open an account by personally bringing their own and the principal's National Identity Cards, a power of attorney notarized by an ROC overseas representative office or other authorized institution, and documents provided by the juristic person evidencing the fact of employment overseas.
    3. (Deleted)
  2. When the principal is a juristic person, procedures shall be carried out by an authorized person holding copies of evidentiary documents, including a copy of the juristic person's registration, a copy of the tax authority notice for issuance of a uniform serial number and establishment of a withholding entity, a legally valid power of attorney and a copy of the authorized person's National Identity Card.
  3. If the principal is a non-juristic person organization, an account shall be opened in the name of the organization's responsible person, with the organization's name listed as part of the account holder's name; the responsible person shall append a photocopy of the registration certificate for the organization issued by the competent authority (or its establishment approval, filing for recordation, or other registration document), a photocopy of the notice from the tax authority of the establishment of a tax withholding entity and the assignment of a uniform serial number (if the organization is exempt from income tax withholding, it must also submit one copy of the "income tax withholding exemption certificate"), and a photocopy of the responsible person's national ID. When the account is opened, a central securities depository book-entry account shall also be opened, and the organization's securities deposited in it; only sale orders may be placed through the account, however, and not purchase orders, and when accepting a sale order, the securities broker shall first collect the full quantity of securities necessary before making a sale quote.
    When the principal, the principal's statutory agent, or other authorized person executes a brokerage contract, a sample signature card or seal impression card for the principal, the principal's statutory agent, or another authorized person shall be kept on file, and an identical signature or seal shall be used when appearing in person to place orders to trade or subscribe to securities, or complete settlements and related procedures. The principal or the principal's statutory agent shall issue a power of attorney when engaging an agent to handle on its behalf any procedures relating to brokerage trading, subscription to securities, or settlement, and a signature specimen card or seal impression card of the agent shall be kept on record for handling such matters.    The brokerage contract shall provide evidence that these Regulations, and the TWSE Operating Rules, public announcements, and circular letters as well as the regulations of the ROC Securities Dealers Association, are recognized as a part of the contract, and shall further specify the following matters:
  1. If the principal is a natural person, the contract shall specify the principal's name, gender, age, place of family origin, occupation, residential address, and national ID number. If the principal has an agent, the contract shall specify the agent's name and national ID number.
  2. If the principal is a juristic person, the contract shall specify the juristic person's appellation, address, uniform serial number, telephone number, statutory representative, and authorized representative.
    The broker shall engage in securities trading on behalf of the principal only after the principal opens a central securities depository account and a deposit account at the principal's designated financial institution.
    The requirement in the preceding paragraph concerning the opening of a deposit account shall not be applicable to those specified in the following subparagraphs:
  1. Offshore overseas Chinese or foreign nationals, securities investment trust funds, venture capital enterprises invested by the National Development Fund of the Executive Yuan, insurance enterprises, and overseas Chinese or foreign nationals converting holdings of convertible corporate bonds into stocks or overseas depository receipts into the underlying securities, on whose behalf a custodian institution has opened a deposit account, may receive or deliver the price by account transfer (remittance).
  2. A trust enterprise with depository participant status may receive or deliver the price by account transfer (remittance) through the collective investment trust fund account managed by the trust enterprise.
  3. A depository institution of overseas depository receipts, when accepting orders for redemption and sale of shares held, may receive the price by account transfer (remittance) through the deposit account at its custodian institution.
  4. A securities investment consulting enterprise (SICE) or a securities investment trust enterprise (SITE) that has been engaged by a principal to conduct discretionary trading of securities may receive or deliver the price by account transfer (remittance) through a deposit account opened with the custodian institution.
  5. A domestic bank or insurance company, if it has obtained a rating of twA- or above from Taiwan Ratings Corporation, or a rating, from a credit rating institution approved or recognized by the competent authority, that is equivalent to twA- or above from Taiwan Rating Corporation, may receive or deliver the price by account transfer (remittance) during the valid period of the above-mentioned rating.
  6. Government agencies that conduct monetary settlement of securities trades through deposit accounts of the agencies in accordance with laws and regulations, may carry out the receipt and payment of the prices by transfer (or remittance) through their accounts.
Article 18     A securities firm which violates the TWSE Operating Rules, or any related announced regulations in accepting trading orders shall be deemed in violation of the brokerage contract. Upon the principal (or principal's agent)'s report of such violation to the TWSE, the TWSE may investigate and handle such violation.