| Title： |
Rules Governing the Proprietary Trading of Foreign Bonds by Securities Firms(2013.10.16) |
| Date： |
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Article 1
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This Policy was established pursuant to Article 19-1, Paragraph 2 of Regulations Governing Securities Firms.
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Article 2
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Except where otherwise stipulated by the competent authority, securities firms are bound to comply with this policy when engaging in the proprietary trading of foreign bonds or any derivative-based hedging activities that arise in association of which; for matters not covered by this policy, the GreTai Securities Market Rules Governing Securities Trading on the GTSM and other relevant rules shall apply.
The scope of products and limits permitted for the abovementioned activities are governed by Regulations Governing Securities Firms.
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Article 3
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The term "competent authority" mentioned in this policy shall refer to the Financial Supervisory Commission.
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Article 5
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Securities firms are required to submit formal documentation to GreTai Securities Market and seek approval before engaging in the proprietary trading of foreign bonds. In addition, the following eligibility criteria are applicable:
- The applicant must be an eligible proprietary securities inter-dealer.
- Capital adequacy ratio may not fall below 200% at anytime in the last 6 months; or the adjusted monthly net capital ratio may not have fallen below 40% in the last 6 months.
- The applicant must be free of the following:
- Penalties imposed under Article 66, Paragraph 1 of the Securities and Exchange Act or Article 100, Paragraph 1, Subparagraph 1 of the Futures Trading Act in the last 3 months.
- Penalties imposed under Article 66, Paragraph 2 of the Securities and Exchange Act or Article 100, Paragraph 1, Subparagraph 2 of the Futures Trading Act in the last 6 months.
- Penalties involving suspension of business activities in the last year.
- Penalties involving partial revocation of business license in the last 2 years.
- Penalties imposed under the Operating Rules of GreTai Securities Market, Taiwan Stock Exchange Corporation or Taiwan Futures Exchange Corporation, which involved the suspension or restriction of trading activities.
Failure to meet Subparagraph 3 of the previous Paragraph may be disregarded if the securities firm has made rectifications to the satisfaction of the competent authority.
Securities firms may proceed to carry out their requested activities if GreTai Securities Market (GTSM) does not express any objections to their applications within 5 days of making the official submission.
The term "adjusted net capital ratio" mentioned in Subparagraph 2, Paragraph 1 herein refers to the monthly simple arithmetic mean of the adjusted net capital of the futures commission merchant as a percent of the total margins required for uncovered positions of futures traders.
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Article 6
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Proprietary trading of foreign bonds may be traded at the securities firm's business premise or through the GTSM's trading system.
Securities firms shall first apply to the GTSM for registration of a foreign bond and receive approval from the GTSM before trading said foreign bond with qualified institutional investors at its business premises. However the preceding provision does not apply to foreign bonds that have been registered by other securities firms.
Where there is a change to the registration data of a foreign bond mentioned in the preceding paragraph, the registering securities firm shall complete the update of registration data in five (5) days after the change has occurred.
The term "qualified institution investors" mentioned in Paragraph 2 hereof shall mean the qualified institutional investors referred to in Paragraph 1, Article 4 of the Financial Consumer Protection Act.
The foreign bonds mentioned in Paragraph 2 hereof may not be structured notes or RMB-denominated bonds. Items to be registered for a foreign bond shall include its issuer, place of issue, International Securities Identification Number (ISIN), long-term credit rating, denominated currency, date of issue, coupon rate, maturity date, terms for interest and principal repayment, and other early call (put) provisions.
Before the 10th of each month, the GTSM shall compile relevant information on foreign bonds it has approved for registration in the previous month and submit a report to the competent authority for recordation.
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