| Title： |
Regulations Governing Securities Firms(2011.01.11) |
| Date： |
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Article 11
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(deleted)
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Article 12
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(deleted)
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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 FSC, 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 liabilities arising from trading of government bonds may be deducted.
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Article 40
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A securities firm accepting orders to trade securities shall not place the securities deposited by the customers under its custody. It shall deliver such securities to the centralized securities depository on the same day; provided that the securities firms which are located in areas other than Taipei City and New Taipei City may deliver the securities for centralized custody on the following business day.
The provisions in the preceding paragraph shall also apply to any of the following conditions:
1. Where a customer that indicates when placing a buy order that he/she will withdraw the securities for his/her own custody fails to do so on the day on which the securities firm is to deliver the securities;
2. Where a customer places a sell order but no transaction is consummated, and the securities have been previously delivered to the securities firm but not been claimed;
3. Where a customer engages the securities firm to deliver the securities to the centralized depository for custody; or
4. Where a customer engages the securities firm to withdraw securities deposited in the centralized depository but fails to take delivery as scheduled.
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Article 60
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The net amount of eligible regulatory capital referred to in the simple calculation of the regulatory capital adequacy ratio is the balance of the sum total of the Tier 1 capital and Tier 2 capital items as set out below minus the following items on the balance sheet: financial assets reported at fair value with changes in fair value included in "profit or loss - noncurrent, available-for-sale financial assets - current and noncurrent, held-to-maturity financial assets - current and noncurrent, bond portfolios that include no active market bonds - current and noncurrent, prepayments, special funds, long-term equity investments under equity method, long-term equity investments held for disposal, fixed assets, intangible assets, operating bonds, clearing and settlement funds, refundable deposits, deferred debits, assets leased to others, idle assets, deferred income tax assets - noncurrent, restricted assets - noncurrent:
1. Tier 1 capital: the total of capital stock (common stock, perpetual non-cumulative preferred stock), capital reserve, retained earnings or accumulated losses, unrealized losses on financial products, accumulated translation adjustment, treasury stock, net loss not recognized as pension cost, and the profit/loss of the current year up to the current month.
2. Tier 2 capital: the total of capital stock (perpetual cumulative preferred stock) and unrealized gains on financial products.
Deduction amounts for deductible assets under the preceding paragraph shall be prescribed by the Commission.
Where the amount of Tier 2 capital exceeds that of Tier 1 capital, calculation shall be based on the amount of Tier I capital.
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Article 62-3
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For the advanced calculation method for the regulatory capital adequacy ratio, the scope of Tier 2 capital is the sum total of perpetual cumulative preferred stock, cumulative subordinated bonds without maturity dates, 45 percent of the unrealized gains from financial instruments, convertible bonds, long-term subordinated bonds, and non-perpetual preferred stock, minus the amount that shall be deducted from Tier 2 capital as required by the FSC.
For purposes in connection with Tier 2 capital, "perpetual cumulative preferred stock," "cumulative subordinated bonds without maturity dates," and "convertible bonds" shall meet the following requirements:
1. The entire amount of any given issue must be collected in full.
2. The securities firm or its affiliate enterprises have not provided any guarantees or collateral to advance the seniority ranking of the holders.
3. When the securities firm's regulatory capital adequacy ratio is lower than the minimum ratio requirement of the time of issuance due to interest payment, the payment of dividends and interest shall be deferred, and no interest may further be accrued on the deferred dividends and interests.
4. If a securities firm's regulatory capital adequacy ratio is lower than the minimum ratio requirement of the time of issuance, and the deficit that needs to be covered exceeds the sum of legal reserve and capital reserve, and the securities firm fails to meet the requirement within a period of 6 months, all cumulative subordinated bonds without maturity dates and convertible bonds must be converted in full to cumulative perpetual preferred stock; or else it shall be stipulated that at any time when the aforementioned minimum ratio has not yet been met or the deficit to be covered still exceeds the sum of legal reserve and capital reserve, the payment of principal and interest shall be deferred, and that during the course of the securities firm's rehabilitation or liquidation, the seniority ranking of the holders of such bonds shall be the same as that of cumulative perpetual preferred stock shareholders.
5. Five years after issuance, if the calculation of the securities firm's regulatory capital adequacy ratio after redemption meets the minimum ratio requirement of the time of issuance and the FSC grants its approval, early redemption is permitted. For any not redeemed early, the securities firm may increase, once, the stipulated interest rate thereupon. The maximum limit of this increase shall be one percentage point annual interest rate or 50 percent of the additional point margin stipulated for the interest rate in the original contract.
6. The convertible bonds are subordinated bonds with an issue period of less than 10 years.
7. The convertibles bonds shall be converted to common stock or perpetual preferred stock on the maturity date, and before the maturity date may be converted only to common stock or perpetual preferred stock; any other conversion method shall require approval by the FSC.
If any long-term subordinated bonds or non-perpetual preferred stock as referred to in paragraph 1 are listed in Tier 2 capital, the sum total thereof shall not exceed 50 percent of Tier 1 capital, and shall meet the following requirements:
1. The entire amount of any given issue must be collected in full.
2. The securities firm or its affiliate enterprises have not provided any guarantees or collateral to advance the seniority ranking of the holders.
3. The issue period is 5 years or longer.
4. The amount included in the calculation of the eligible regulatory capital must decrease progressively by at least 20 percent each year during the final 5 years of the issue period.
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