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Guidelines Governing the Creation of Customer Ledgers of Securities Firms' Settlement Accounts(2016.07.14) |
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Article 3
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A securities firm that retains customers' settlement funds in the securities firm's Settlement Account with customers' consent shall set up a separate account ledger for each customer, record therein the itemized receipts and payments of funds on a daily basis, and retain the record.
A securities firm that retains customers' settlement funds in the securities firm's Settlement Account with customers' consent shall open a special NTD current account in the name of its head office, and may open only one such account with the same bank.
The contract between the securities firm and the bank for the retention of customers' settlement funds in the Settlement Account shall state the following:
- No cash withdrawal from the Settlement Account is permitted. Transfers of funds are limited to accounts with account numbers agreed upon in advance between the securities firm and the bank and, if to be made to a customer, are limited to securities book-entry accounts opened by the customer for TWSE or TPEx securities trading ("Securities Book-entry Accounts") or one savings account of the customer itself as agreed upon with the customer ("Customer Savings Account"). With the exception of a customer's Securities Book-entry Accounts and the Customer Savings Account, all agreed accounts and account numbers shall be reported in writing to the TWSE and TPEx in advance; changes shall be notified to the TWSE and TPEx immediately by the securities firm and the bank.
- Where the total amount transferred from the Settlement Account to the Securities Book-entry Account or Customer Savings Account of the same customer in one day reaches NTD50 million, the bank shall immediately notify the TWSE and TPEx. The bank shall also notify the TWSE and TPEx immediately if withdrawal against the preceding subparagraph is involved in a transfer of funds, in addition to refusing to pay.
- No overdraft, pledge, or exercise of other rights in respect of the Settlement is permitted.
- The securities firm agrees the bank may furnish information concerning transactions in the account mentioned in the preceding paragraph as required by the Financial Supervisory Commission, TWSE and TPEx for the inspection of the securities firm's business.
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Article 7
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Where the head office of a securities firm has trading halted or restricted by the TWSE pursuant to the Operating Rules or by the TPEx pursuant to the TPEx Trading Rules, the securities firm shall immediately cease to retain customers' settlement funds and shall, before the following business day, transfer the funds back to the customers' Securities Book-entry Accounts or Customer Savings Account for ledger settlement.
When the securities firm ceases to retain customers' settlement funds, it shall give immediate notice to the TWSE and TPEx in writing, reporting on how the circumstance in the preceding paragraph is handled.
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Article 9
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A securities firm may, subject to the customer's instructions, use the Settlement Account to receive and pay the business payments listed below, in NTD only:
- Accept orders to trade in securities on the TWSE
- Accept orders to trade in securities at its place of business
- Margin purchase and short sale of securities
- Exercise call (put) warrants
- Consignment and re-consignment trading of foreign securities
- Agency service regarding trading in foreign bonds
- Securities lending
- Securities business money lending
- Wealth management
- Securities dealing at the securities firm's place of business
- Securities underwriting
- Discretionary investment by way of authorization or trust
- Other business as approved by the competent authority
The securities firm shall be responsible for the amount of losses arising out of operational negligence in conducting the above businesses, without prejudicing the customer's rights and interests.
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Article 11
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A securities firm that retains customers' funds in the Settlement Account with customers' consent shall establish an effective internal control system and, upon confirmation of the legal compliance supervisor and audit supervisor, present said system to the board of directors for approval.
The above-mentioned internal control system shall specify the responsible departments of the securities firm, procedures whereby the securities firm ceases to retain customers' settlement funds and resumes retention, transfer of sources of customers' funds, term of settlement and payment of interest, the handling of management fees and taxes, management of customers' receipts and payments and debits and credits (including review and operating procedures for payment, deposit and and reclaim of funds for customers, Settlement Account risk control procedures,and review and operating procedures for agreement and amendment with respect to the Customer Savings Account), notification and audit mechanism regarding customers' reclaim of funds, records required to be retained of customers' enquiries about their funds, premature termination of contract by customers, account management and data transmission regarding receipt and payment of funds, and other matters required by the competent authority to be included.
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Article 15
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A securities firm that retains funds in the Settlement Account with customers' consent shall keep detailed records and prepare the following report and statement on a daily basis:
- Daily report on the receipts and payments of funds in the customer's ledger in the securities firm's Settlement Account
- Statement of receipts and payments of funds in individual customer ledgers in the securities firm's Settlement Account
The above report and statement may be stored in electronic media after completion. Such media must be equipped with functions disallowing alteration and cancellation and enabling conversion into written form at any time.
The securities firm shall send the daily report mentioned in the first paragraph of the previous day to the TWSEbefore 10 A.M. each day.
Reports and statements, supporting documents and other documents relating to the creation of customer ledgers in a securities firm's Settlement Account shall be retained for at least five years or for any longer period of time prescribed by other applicable laws and regulations, provided in the event of a dispute, they shall be retained until the dispute is eliminated.
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Article 18
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A securities firm shall retain the relevant record when a customer applies in the agreed manner for reclaim of its funds retained.
When the securities firm is to transfer the customer's funds above, it shall transfer themwithin the agreed period to the customer's Securities Book-entry Account or Customer Savings Account only.
In the event of a change to the Customer Savings Account in the preceding paragraph, the customer shall make an application for change by himself.
A securities firm shall, on a daily basis, notify customers that applyon the day for reclaim of funds totaling NTD1 million or above in a lump sum or cumulatively, by text, or by telephone with the audio recording retained; a text notice shall state that an immediate reply is requested in the event of queries.
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Article 20
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Where the regulatory capital adequacy ratio of a securities firm that retains funds in the Settlement Account with customers' consent has fallen below 120% for two consecutive months, the TWSE shall request the securities firm to cease to retain customer funds, in which event the securities firm shall transfer the retained funds back to the customers' Securities Book-entry Accounts or Customer Savings Accounts to settle the customer ledgers. Only when it has reported a regulatory capital adequacy ratio of 150% or above for three consecutive months may the securities firm make a report to the TWSE in writing, with a copy furnished to the TPEx, according to Article 6, and then resume the retention.
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