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Regulations Governing Securities Firms(2006.08.25) |
| Date： |
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Article 13
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Unless a securities firm is concurrently operated by a financial institution and subject to other relevant acts or regulations, its total debts to other parties shall not be more than 4 times its capital net worth. The total amount of its current liabilities shall not exceed the total amount of its current assets; provided that, unless otherwise provided by the Commission, the total amount of debts to other parties of a securities firm trading securities for customers' accounts or for its own account shall not exceed its capital net worth.
In calculating the total amount of liabilities referred to in the preceding Paragraph, the reserve for trading losses, reserve for breach of contract losses referred to in the preceding two Articles and liabilities arising from trading of government bonds may be deducted.
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Article 14
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A securities firm, unless concurrently operated by a financial institution and subject to other relevant acts or regulations, shall set aside a 20% special reserve from the annual after-tax profit. The special reserve of a securities firm concurrently engaging in securities-related futures business shall be increased to 30%. However, if the accumulated amount reaches the paid-in capital amount, no further fund needs to be set aside.
The special reserve referred to in the preceding Paragraph shall not be used for purposes other than covering the losses of the company or, when the special reserve reaches 50% of the amount of paid-in capital, half of it may be used for capitalization.
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Article 15
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A securities firm, unless concurrently operated by a financial institution and subject to other relevant acts or regulations, shall not act as a guarantor of any nature, make endorsement for transfer of negotiable instruments, or provide its property as security for other persons without the approval of the Commission.
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Article 16
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The sum of the total amount of fixed assets used for operating purposes and the total amount of real property used for non-operating purposes of a securities firm, unless it is concurrently operated by a financial institution and subject to other relevant acts or regulations, shall not be more than 60% of the total amount of its assets.
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Article 18
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Unless a securities firm is concurrently operated by a financial institution and subject to other relevant acts or regulations, its funds not required for business operation shall not be loaned to other persons or used for other purposes; the funds shall be used for the following purposes only:
1. Bank deposits;
2. Purchase of government bonds or financial bonds;
3. Purchase of treasury bills, transferable certificates of deposit, or commercial papers;
4. Purchase of Commission-approved securities of a specific ratio, or transfer of investment in an Commission-approved securities, futures, banking, finance or other related institution of a specific ratio; and
5. Other purposes approved by the Commission.
The total combined amount of funds utilized under Subparagraph 4 and Subparagraph 5 of the preceding paragraph shall not exceed 40 percent of the firm's capital net worth, and the total amount of equity investments of such funds shall not exceed 40 percent of the firm's paid-in capital, unless approved by the Commission.
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Article 19
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A securities firm trading securities for its own account, unless it is concurrently operated by a financial institution and subject to other relevant acts or regulations, shall not hold more than 10% of the total issued shares of any company. The total amount of the cost of the securities issued by any company held by such securities firm shall not be more than 20% of its capital net worth, and the total amount of the cost of the OTC Second Board stocks held by such securities firm shall not be more than 10% of its capital net worth. However, this provision shall not apply if the Commission provides otherwise.
If the aggregate of the securities acquired by a securities firm through underwriting and those traded for its own account by such firm exceeds the limit referred to in the preceding Paragraph, the portion in excess shall be sold within 1 year after its acquisition in accordance with Article 75 of the Act.
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Article 19-3
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A securities firm may operate derivative financial product trading business at its business premises, and shall do so in accordance with the provisions of the GreTai.
"Derivative financial product trading" in the preceding paragraph includes convertible bond asset swaps, structured notes, equity derivatives, interest rate derivatives, and bond derivatives transactions.
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Article 19-5
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A securities firm operating derivative financial product trading business at its place of business may not make any use derivatives trading to carry out mergers or acquisitions or unlawful trades on its own behalf or in cooperation with its clients.
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Article 30-1
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A securities firm operating derivative financial product business may not damage fair market price formation or investor rights and interests when conducting hedging operations or when calculating product gains or carrying out settlement upon cancellation or expiration.
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Article 57
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(deleted)
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Article 59
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A securities firm, unless concurrently operated by a financial institution and subject to other acts or regulations, shall maintain an appropriate ratio between its regulatory capital and its operational risk equivalent, except as approved by the Commission.
The appropriate ratio referred to in the preceding paragraph is called the regulatory capital adequacy ratio and its calculation method is the net amount of the eligible regulatory capital divided by the operational risk equivalent.
For those foreign securities firms having Taiwan branches, if their home-country head office have already calculated their regulatory capital adequacy ratio under their local laws with the operation risk of their Taiwan branch office already entered into the calculation, and have met the standard, they may send those documents and information relating to the said regulatory capital adequacy ratio which have met the standard to the Commission to apply for a waiver of application of the provisions in this Chapter. However, unless specifically approved by the Commission, a monthly report on the head offices' regulatory capital adequacy ratio shall still be reported according to Paragraph 3 of Article 21.
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