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GreTai Securities Market Rules Governing Over-the-Counter Trading of Financial Derivatives by Securities Firms(2009.02.19) |
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Article 13
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A securities firm applying to conduct or that registers OTC trading of financial derivatives at its places of business pursuant to Articles 6 through 8 shall submit the documents shown in Appendices 1-1 and 1-2.
The directions for GTSM review and approval of securities firms' applications or registrations are as given in Appendices 2-1 and 2-2.
A foreign securities firm trading financial derivatives products shall issue an undertaking stating that the transaction prices it receives at the beginning of the transaction period will not be remitted out of Taiwan until after the transaction matures. This restriction, however, shall not apply to remittance of any transaction prices as required for instruments linked to foreign financial products.
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Article 35
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A securities firm that engages in structured instruments business shall hedge the structured instruments with securities, derivatives products, or hedging outsourced to another institution, on the basis of the market risk associated with the underlyings. Hedging positions for a given instrument may be calculated in the aggregate.
A securities firm shall adopt rigorous internal control rules and strengthen its internal auditing with respect to its structured instrument hedging operations, and shall perform related examinations and analyses on a regular basis which shall be kept on record for future reference.
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Article 40
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A securities firm shall draft a set of criteria for utilization of funds, to govern utilization of transaction prices received through structured instrument transactions. Those criteria, and any amendments thereto, shall first be passed by a resolution of the board of directors and then submitted by letter to the GTSM for recordation.
The content of the criteria for utilization of funds under the preceding paragraph shall include principles and instruments for fund utilization, scope of utilization, operating procedures, liquidity control measures, and the department in charge of execution and its authorities.
The securities firm shall adopt rigorous standards for internal control and enhanced internal auditing based on the standards for utilization of funds of the preceding paragraph. It shall undertake regular review and analysis, and produce records for future audit or inspection.
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