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Establishing Information Security Inspection Mechanisms for Securities Firms  CH

Amended Date: 2024.05.15 (Articles 1, 4, 7, 10, 12 amended,English version coming soon)
Current English version amended on 2022.12.28 
Categories: Market Supervision > Regulation of Securities Firms

Title: Establishing Information Security Inspection Mechanisms for Securities Firms(2022.09.06)
2     Information Security Policy: (CC-12000, annual audit)
  1. The company shall adopt an information security policy and set information operations security standards in accordance with its business needs and applicable laws and regulations.
  2. The following content shall be included in the information security policy:
    1. A definition of information security, information security objectives, and scope of information security.
    2. An explanation and description of the information security policy, information security principles and standards, and rules the employees must comply with.
    3. A description of the organizational unit in charge of the information security work, the unit's authority and duties, and segregation of said duties.
    4. Emergency procedures for reporting and handling an information security incident, along with related regulations.
  3. The information security policy adopted by the company shall be approved by its management, formally issued, observed by all of its employees, and notified to and observed by public and private authorities / institutions and providers of information services with network connection with the company.
  4. The company's information security policy shall be evaluated at least once per year to reflect the latest developments in laws, regulations, bylaws, technology, and business etc., and to ensure the efficacy of the company's information security operations. Records of the above evaluations shall also be retained.
  5. Information security policy evaluations shall be conducted in an independent and objective manner either internally or through an outsourced professional institution.
  6. The company shall have its chief information security officer or highest officer responsible for information security, and its board chairperson, general manager and chief audit officer jointly issue an internal control system statement on overall implementation of the information security measures during the previous year, in accordance with Article 24 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets, which will be submitted to the board of directors for approval. The statement shall be disclosed at the Market Observation Post System (MOPS) within three months after the closing of a fiscal year.
  7. The company shall take the required measures for tiered protection of information security by referring to the Establishing Information Security Inspection Mechanisms for Securities Firms – Schedule for Required Measures under Tiered Protection.
  8. The company shall introduce the core system to the information security management system according to its information security level, and this system must be validated by an impartial third party and the validity of validation should continue to be maintained. (Introduction to become effective by end of January 2022, and validation to become effective by end of January 2023.)
7     Management of Communications and Operations (CC-17000)
  1. Management of network security (CC-17010, applicable to securities firms placing orders via the Internet; items a, b and e are applicable to all securities firms, subject to monthly audit):
    1. Evaluating the security of network systems:
      1. The company shall regularly evaluate the security of its own network systems (e.g., its operating system, network servers, browsers, firewall, and anti-virus software) and retain related records.
      2. Security gaps in the network operating environment and operating system (including servers, portables, personal terminals, and computers available on business premises to investors for shared use) shall be repaired regularly or timely. The related documentation shall be retained.
      3. Matters bearing on computer network security (including the promotion of awareness of the information security policy, prevention of hacking, and anti-virus measures) shall be internally announced at any time and from time to time.
      4. A specially appointed employee shall be designated to be responsible for computer servers and important software and hardware.
      5. The company’s network shall be categorized, according to purpose of use, as DMZ, operating environment, testing environment and other environment, and there shall be an appropriate division mechanism between these environments (e.g. firewall, virtual local area network, and physical separation).
      6. Personal information and confidential and sensitive information shall be stored in a secured network area, and shall not be stored on the Internet or other non-secured areas.
      7. Only necessary services and programs may be available in the system, and unused services and functions should be made unavailable.
      8. The company shall establish the guidelines for remote connection management to control the internal operation within the organization through remote connection via the external network, keep the relevant maintenance records to be regularly reviewed by the proper supervisor.
      9. The company shall prevent use of the internal network from an unauthorized device.
    2. Managing firewall security:
      1. A firewall shall be established.
      2. A specially appointed employee shall be responsible for managing the firewall.
      3. Records of firewall entries, exits, and backup copies shall be retained for at least three years.
      4. Important website and server systems (e.g. online order placing systems) shall be isolated from the Internet by the firewall.
      5. The firewall system configuration shall be approved by the proper supervisor.
      6. The company shall regularly examine and maintain the setup of control of access to firewall on a yearly basis and keep the relevant examination records.
      7. No products that may jeopardize the national information security may be used on the equipment directly connecting to the networks used for the company’s transactions.
    3. Managing network transmission and connection security:
      1. Online order placing pages shall be protected by encryption (e.g. SSL).
      2. The company shall monitor and analyze on a daily basis records of log-in failures in connection with core system accounts and attempts to log in to non-customer accounts etc., promptly ascertain the reasons for any irregular log-ins upon discovery (e.g., three wrong attempts when entering a password, mass log-in failures within a certain time, irregular downloads by an account of applications for certificates or updated certificates), and retain the relevant records.
      3. When providing online order service, the company shall, upon login to place an order, implement multi-factor authentication, e.g., order certification, device identifier, OTP, biometric system etc.), to ensure login by the customer itself.
    4. Managing CA authentication and certificates:
      1. A securities firm placing orders online shall adopt certificate delivery procedures to prevent certificates from being obtained by persons other than their intended owners. When a customer downloads an application for a certificate or downloads updated certificate, multi-factor authentication must be performed (such as order certification, device binding, OTP, biometric and SIM authentication etc.), using factors different from those for log-in to identify the customer, and the relevant records must be retained..
      2. A securities firm placing orders online shall use an authentication system for all orders.
    5. Protecting against computer viruses and malicious software:
      1. Anti-virus software shall be installed. Its programs and virus definitions shall be given timely updates.
      2. Computer systems and data storage media (including emails) shall be regularly scanned for viruses.
      3. Anti-virus protection shall cover personal terminals (including portables and computers available on business premises to investors for shared use) and network servers.
      4. Emails from unknown sources shall not be opened. Special care shall be used in opening emails with attachments containing executable files.
      5. To prevent computer viruses from spreading and affecting computer security, the company shall adopt security rules governing email use and establish an email filter system.
      6. The company shall have online use control measures in place to prevent download of malware.
      7. The company shall detect links that connect to phishing websites and malicious websites and remind clients to be cautious about online phishing.
      8. The company is advised to conduct regular social engineering exercises on a yearly basis, and provide coaching to personnel who have opened an email or clicked a link they have been advised against opening or clicking, and keep relevant records.
    6. Inspecting the functions of online ordering systems:
      1. The functions provided by online ordering systems shall be inspected regularly and inspection records shall be kept.
      2. To monitor, record and notify changes to web pages and programs enabling online ordering systems to the related staff.
    7. Regulations governing the company's provision of API services:
      The application procedure, approval standards and relevant control measures and operations in regard to the company's provision of API services to customers are governed by the Directions for the Provision of Application Programming Interface (API) Service by Securities Firms to Customers
    8. Quality standards for services for placing orders via the Internet:
      When providing services for placing orders via the Internet, the company needs to maintain the quality of customer services by establishing quality standards for placing orders via the Internet, which shall cover the key elements such as transaction security, stability and system availability, and customer services.
    9. Introduction of cyber-attack prevention system and security tests:
      1. The company shall perform infiltration tests on the core system that provides the Internet services regularly according to its information security level, and make improvements based on the test results. (To become effective by end of January 2022.)
      2. The company shall conduct regular information and communication security checkups according to its information security level, which should include inspection of network structure, inspection of malicious cyber activities, inspection of malicious activities at a user’s computer, inspection of malicious activities at the server, setup of directory server, and inspection of setup of firewall connection. (To become effective by end of January 2023.)
      3. The company shall establish an information and communication security threat detection management system according to its information security level, which should include collection of events, analysis of irregularities, detection of attacks, and determination of attack acts. (To become effective by end of January 2023.)
      4. The company shall establish an invasion detection and prevention system according to its information security level. (To become effective by end of January 2023.)
      5. The company shall set up firewalls for its applications according to its information security level. (To become effective by end of January 2023.)
      6. The company shall implement advanced prevention measures against continuous threats and attacks according to its information security level. (To become effective by end of January 2023.)
    10. Notice of log-in or irregularity (to become effective as of 28 February 2023):
      It is advisable that the company give notice upon the log-in of a customer's account. In the event of the following irregularities, immediate notice shall be given to the customer, and relevant records retained, to prevent log-in by persons other than the customer:
      1. a wrong password is entered or the account is blocked
      2. an application for a certificate is made or a certificate is updated
      3. particulars are amended
      4. a log-in is attempted by an irregular source or act
      5. an application for changing or replacing the password is made
    11. Monitoring and warning of irregular IP log-ins (to become effective as of 30 September 2022)
      The company shall, according to its information security level, monitor, analyze, and document irregular IP connections and IP connections from unknown sources. If the following circumstances are discovered, it shall develop an alert mechanism and inspect it regularly to confirm its effective operation:
      1. Different accounts are logged in from an IP from the same source for a certain number of times.
      2. IThe same account is logged in from different countries within a certain time.
      3. An attempt at log-in from an irregular source (e.g. as blacklisted by the Financial Information Sharing and Analysis. Center (F-ISAC) or an overseas IP) is found.
  2. Computer system and operation safety management (CC-17020, semi-annual audit)
    1. Managing computer equipment:
      The company shall enter into a written maintenance agreement with the maintenance service provider to establish the content of computer equipment maintenance work. A maintenance log shall be retained after the completion of maintenance. The information unit shall appoint personnel to conduct inspection together with the maintenance personnel from the maintenance service provider.
    2. Environment configuration and use authorization settings of the operating systems of computers:
      1. The environment configuration and use authorization settings of the operating systems of computers shall be approved by the relevant supervisor and implemented by system administrators.
      2. Appropriate backup measures shall be in place with respect to files in the computer system before and after they are modified.
      3. The company shall establish the guidelines for management of accounts with the highest system authorization level, covering both operating system and application system, and the approval of the proper supervisor is required for use of an account with the highest authorization level, and relevant records shall be retained.
      4. The company shall create and diligently implement the security configuration basis for personal computers, servers and network communication devices (e.g. length of a password, and how frequently a password may be changed).
      5. The company shall adopt a multiple-factor authentication method when using the administrator’s account to log in an important system via the Internet.
    3. Security management of computer media:
      1. Backup copies of important software, related documents, and inventory lists shall be made and stored in a separate safe location.
      2. If important backup files and software are stored in the same building that houses the computer center, they shall be kept locked in a fireproof room or in a cabinet that is both fireproof and earthquake-proof.
      3. Storage media used for backup materials shall be labeled with the name of the materials and their retention period.
      4. Handling procedures shall be established for media used to store confidential and sensitive information so as to prevent leaking or improper use of the information.
      5. To build a testing mechanism for data saving to verify integrity of backups and environmental suitability.
    4. Management of computer operation:
      1. Computer operators shall strictly adhere to prescribed operating procedures.
      2. Complete and accurate records shall be provided in an operating log, which shall be inspected and approved daily by a supervisor. The operator and the supervisor may not be the same person.
      3. Specially appointed personnel shall be responsible for inspecting information in the logs of the system console and for regularly submitting the information to a supervisor for inspection and approval.
    5. The securities broker shall have a computer system that has adequate capacity and is capable of meeting the needs of its business.
    6. The securities broker shall adopt mechanisms and procedures for regular evaluations (at least once a year) of the capacity of and security measures for its computer system, to be carried out either internally or outsourced to a professional institution. The system capacity shall be stress-tested regularly and records of the testing retained.
8     Access Control (CC-18000, monthly audit)
  1. The company shall adopt rules governing controlled access of the information system and request the employees to abide by the rules in writing, electronically, or via other means.
  2. Authorization management:
    1. There shall be a detailed written description of the controls on the access to and use of programs.
    2. In the event of a personnel change, their use authorization shall be promptly updated.
    3. Access to and use of programs and files shall be granted on the basis of authorization.
    4. Authorization for computer access and use by outsourcers shall be subject to appropriate control, and the authorization shall be promptly reclaimed at the end of the outsourcing period.
    5. Outsourcers deployed to the company's premises shall be subject to the company's security management, and security control measures shall be applied if they wish to use internal network resources (e.g., where such personnel use a proxy server or establish a separate network, it is advisable that such sever or network be physically isolated from the internal network).
    6. Regular examination (at least semi-annually) and reconsideration shall be conducted with regard to the authorization of users who have not used the system for a long time (excluding users who are customers).
  3. Password Management:
    1. Users making use of the system for the first time may not operate the system until they have changed their initial password.
    2. Passwords should be generated and saved encrypted using publicly secure and uncracked algorithms (e.g., irreversible algorithms such as hashing algorithms).
    3. A user or customer who forgets his password shall go through a rigorous identity check of the company (such as verification of particulars with customer service, OTP, over-the-counter service etc.) before being allowed to use the system again.
    4. Initial passwords shall be generated randomly and have no connection with the user's or customer's identity. (This item is not applicable in the case of delivery of an electronic password slip by customized means.)
    5. The login session shall be terminated, the account blocked, and relevant records retained, when a password is inputted incorrectly three times. Upon receipt from a customer of an application for unlocking, the company shall verify the customer's identification (such as by verifying its particulars with customer service, OTP, over-the-counter service etc.) and retain relevant records before the company may entertain the application.
    6. Except for voice-mail ordering systems, the company shall use strong passwords (at least six characters in length with alphanumeric characters or other symbols) and exercise control, and further encourage customers to change their passwords at least once every three months. The company shall take proper measures if a customer's password has not been changed for over a year or the password changed is the same as the previous set. Except for customers, other users in the company must change their passwords at least once every three months. (To become effective as of 30 November 2022)
    7. The company's current website, servers, Network Neighborhood, routers, switches, operating systems, databases, and other software and hardware equipment shall be password-protected. Default settings (e.g. "administrator," "root," "sa") or simple strings (e.g. "1234") shall be avoided as passwords. The company shall not fail to set administrator access privileges.
    8. Where a customer applies for electronic trading, the company may deliver an electronic password slip by general or customized electronic means by following the description below:
      1. In the case of delivery of an electronic password slip by general electronic means, it shall send an OPT (One Time Password) to the mobile phone number left by the customer when the customer opens an account, and shall send an encrypted electronic password slip by electronic means to the electronic mailbox advised by the customer. With respect to such procedure, records of the relevant systems shall be retained.
      2. In the case of delivery of an electronic password slip by customized means, the operating procedure for determination of delivery of electronic transaction password and the security control method shall be established, and the identification of the person to whom the electronic transaction password is delivered shall be verified to be the intended person, and relevant records shall be retained.
  4. Management of computer audit logs:
    1. Audit logs for important systems (like server login systems and online order systems) shall include user ID numbers, login dates and times, computer identification information, and IP addresses etc.
    2. Specially appointed personnel shall be assigned to regularly inspect the computer audit logs of important systems above.
    3. With respect to the relevant records retained, there should be appropriate procedures to ensure collection and protection of digital evidence, and the records shall be kept for at least three years.
  5. Data Input Management:
    1. The inputting or alteration of high-security or important data may be undertaken only with approval from the supervisor with proper authority.
    2. A log shall be kept of the data that is input or altered along with the names and job titles of the people who perform the inputting or alteration.
    3. Important data (e.g. password files) that are highly confidential shall be saved in a randomized format.
    4. If the company is a public company, it shall incorporate the Guidelines for Online Filing of Public Information by Public Companies into its internal control system and carry out information reporting in accordance with those directions.
    5. Where an electronic certificate, IC card, other form of certificate chip card, or other certificate carrier is used to represent the company in transmitting signatures (e.g. the Market Observation Post System, the Securities Firm Filings Window, or Official-Document Exchange Center), specially appointed personnel shall be responsible for maintaining custody of the certificate carriers and establishing a log book. Procedures governing the use and custody of account numbers and passwords shall be adopted and implemented.
    6. When a certificate carrier is used to represent the company in transmitting signatures, if the server side is a security firm application system (e.g. Electronic Reconciliation Statement System), a computer audit log shall be kept for the same period as the data in each operation.
    7. The personal information of customers and the company's internal personnel shall be properly handled in accordance with the Personal Information Protection Act.
    8. The company shall at regular or irregular intervals audit the management of information defined as personal information by the Personal Information Protection Act.
    9. Any updates, edits, or strike-outs of the aforementioned personal information shall be reported for recordation, and a complete and accurate log shall be maintained showing the content of the updates, edits, strike-outs, the names of the persons making them and the times at which they were made.
    10. As the company needs to collect, process, and transmit internationally personal data for business purposes, the company shall adopt "The Partition of Rights and Liabilities with Regard to Maintenance of Secrecy and Damages with Software/Hardware Manufacturers."
  6. Management of Data Output:
    1. Whether statements are generated and delivered to the user units in a timely manner.
    2. Whether appropriate control procedures are in place for the printing out or browsing of confidential or sensitive statements.
    3. There shall be an encrypted transmission mechanism (e.g. SSL) for investors searching personal information on the company website.
    4. With regard to the transmission of reports on execution of electronic and non-electronic trades, the company shall handle the names, account numbers, credit account numbers and other confidential and sensitive information in accordance with the Principles of the Classification and Concealment of Confidential and Sensitive Information.
9     Systems Development and Maintenance (CC-19000, semi-annual audit)
  1. The information security requirements shall be included in the analysis and specifications when an application system is being planned and analyzed.
  2. Whether input s are verified to confirm their accuracy.
  3. Legal copyrighted software shall be used.
  4. Contracts shall be entered into for outsourced work. The terms of contracts entered into for outsourced work shall include an information security agreement and the right to audit the outsourcer's information security.
  5. When a completed program requires maintenance, it must be carried out in accordance with formally approved procedures.
  6. All documents and handbooks shall be properly maintained and controlled.
  7. Specially appointed personnel shall be responsible for maintaining application systems.
  8. Management of changes to application systems:
    1. Files that contain programs, data, and job control commands for formal and test operations shall be stored separately.
    2. When a program is modified, its documentation shall be promptly updated.
  9. The company shall regularly (at least semi-annually) scan its information system for vulnerabilities. When potential vulnerabilities are identified, it shall evaluate the associated risks or install software patches and retain a record (applicable to securities firms placing orders online, but not applicable to those doing so via telephone or in the traditional manner).
  10. Source code security regulations (applicable to securities firms placing orders on the Internet, not those placing voicemail or traditional orders):
    1. Malware and other security holes shall be avoided in a program.
    2. A program shall use a comprehensive validation mechanism that is both appropriate and valid to ensure completeness.
    3. A corresponding updated version of a program shall be made available in the event of an update to the library cited.
    4. A program shall conduct security checks and provide a protection mechanism against injection attacks in respect of character strings entered by users.
    5. Where a mobile application developed by an outsourcer involves transmission of sensitive data (such as a customer's account and password or transaction data etc.), the company shall check and verify whether the parties to which the data are transmitted are appropriate and shall retain relevant records.
    6. The provider of a program shall be requested to comply with the security measures in the preceding five paragraphs ((a), (b), (c), (d), €) if no source code of the program is available.
  11. Mobile application security control (applicable to securities firms placing orders on the Internet, not those placing voicemail or traditional orders):
    1. Launch of a mobile application:
      1. A mobile application shall be launched in a mobile application store or on a mobile application website with a reliable source. The sensitive information to be accessed, mobile device resources, and proclaimed rights and purposes shall be specified upon said launch.
      2. The name, version and download location of a mobile application shall be provided on the official website.
      3. A fake mobile application detection mechanism shall be in place to protect customers’ rights and interests.
      4. Conformance of authority required for a mobile application to services offered shall be ascertained before launch. The initial launch or a change of authority is subject to consent of the data security and legal compliance units and shall be documented, to facilitate general assessment as to whether the duty to notify under the Personal Data Protection Act is satisfied.
    2. Protection of sensitive information:
      1. When a mobile application transmits and stores sensitive data, a certification, hash or encryption mechanism shall be in place to ensure safe transmission and storage, and the data in shall be appropriately de-identified when in use. Relevant access logs shall be protected to prevent unauthorized access.
      2. A risk alert shall be issued to users if a detection mobile device is allegedly unlocked (such as by rooting, jailbreaking, USB debugging etc.) upon activation of a mobile application.
    3. Mobile application testing:
      1. In respect of mobile applications used by investors, data security testing shall be conducted by a third-person testing laboratory accredited by the Taiwan Accreditation Foundation, and shall be passed, before initial launch and each year. Such testing shall cover items listed in the guidelines for vetting the security of mobile applications published by the Mobile Application Security Alliance, the testing unit commissioned by the Industrial Development Bureau, Ministry of Economic Affairs. If it is necessary to update the launch within a year after laboratory testing is passed, material updates are subject to outsourced or self testing prior to each launch. Material updates refer to functional changes to “trading order,” “account inquiries,” “identification” and “material customer rights and interests.” The testing is based on OWASP Mobile Top 10 and shall be documented.
      2. The company shall have in place a reexamination mechanism with regard to the test reports provided by a third-person testing laboratory, to ensure the testing items and contents are consistent. Such reexaminations shall be documented.