| Title： |
Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers(2016.05.26) |
| Date： |
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Article 5
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A securities firm concurrently operating securities proprietary trading or securities underwriting business shall maintain the independence of its recommendation business, to avoid impairing fair price formation of the securities it recommends, and to avoid damaging the rights and interests of customers to whom it makes recommendations.
A securities firm shall establish an internal control system to prevent conflicts of interest and, upon its confirmation by the compliance officer or responsible officer and audit officer, present the same to the board of directors for adoption. After the release of a research report by the brokerage department recommending trades in securities to customers, neither the securities firm nor its personnel may conduct any trade in the objects recommended in the report within two hours of the commencement of the trading hours of the market; if said report is released within the trading hours of the market, no such trade may be conducted until two hours after the commencement of the trading hours of the market on the following business day.
The securities firm's proprietary trading division may trade securities in order to meet the hedging needs for the issuance of call (put) warrants or trading of financial derivative products, and in order to subscribe or redeem the beneficial certificates of exchange-traded fund (ETF), without being subject to the restrictions in the preceding paragraph.
A securities firm shall not recommend that a customer trade in any security in which the securities firm conducts stabilization operation trading.
When the underwriting department [of a securities firm] underwrites securities, the brokerage department shall not recommend trading in such securities during the period from the signing of the underwriting agreement with the listed company to the deadline for payment.
When the underwriting department [of a securities firm] acquires securities on a firm commitment basis, the brokerage department shall not recommend purchase of such securities before the [firm commitment underwriting obligations] have been completed in accordance with regulations.
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Article 7
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In recommending trade in securities to customers, a securities firm shall, after having the research report signed by the responsible person of the securities firm or the head of the authorized and responsible department, have the recommendations thereunder made by an associated person who handles securities brokerage trading business.
The research report may be delivered directly to the customer through a system or network under the name of the securities firm's overseas parent company (or headquarters) or of an affiliated enterprise of the overseas parent company (or headquarters), without being subject to the requirement of approval by the responsible person or the head of the authorized and responsible department under the preceding paragraph.
If the securities firm delivers the research report by the method under the preceding paragraph, it shall simultaneously deliver the report to the responsible person or the head of the authorized and responsible department and to at least one associated person who handles brokerage trading business and is responsible for making the recommendations, to handle relevant matters.
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Article 7-1
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The research report may be provided to the following non-customers:
- professional institutional investors
- TWSE or TPEx listed companies, upstream and downstream vendors, and specialists that offer or seek advice
- potential customers with an actual need for business development
A securities firm providing a research report to any of the above-mentioned non-customers shall agree with the non-customer that no provision of the content of the report to a third party or conflict of interest is allowed. Said firm must further establish an internal control system with regard to the provision of research reports and, upon its confirmation by the compliance officer or responsible officer and audit officer, present the system to the board of directors for adoption.
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Article 11
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When recommending a trade in securities to a customer, a securities firm shall retain a record, and shall keep the record at its place of business.
A securities firm shall retain records referred to in the previous paragraph for no less than two years; provided that where there is any dispute, it shall retain them until the dispute is eliminated.
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Article 12
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After recommending trade in securities to customers, research reports and cited materials shall be retained for no less than five years.
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