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Guidelines Governing the Creation of Customer Ledgers of Securities Firms' Settlement Accounts(2022.09.05) |
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Article 3-1
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Subject to customer consent, a securities firm may purchase R.O.C. government bonds and treasury bills with funds in a Settlement Account or transfer the funds to other banks in the form of time deposits, and conduct sale and purchase transactions or transfers in the name "ΟΟSecurities Firm Ledger Account," provided the amount of Settlement Account funds deposited by the securities firm in a bank savings account may not be lower than 20% of the total amount of funds of the Settlement Account.
The amount of transfer mentioned in the preceding paragraph to other banks is limited to the portion of time deposits in the Settlement Account exceeding $1 billion.
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Article 3-2
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The trading of R.O.C. government bonds or treasury bills by a securities firm in accordance with the preceding article shall be handled in the following manner:
- Transaction proceeds shall not be withdrawn in cash and shall be made by transfer.
- The selection, allocation ratio, and term of the purchase should be set forth in the operating procedures expressly stipulating relevant control measures, and a specialist should be assigned to control the liquidity and security of the account.
- The receipt and payment of funds, records, and certification of receipt and payment in regard to each sale and purchase transaction shall be entered fully and accurately on a daily basis.
The transfer of time deposits to other banks by a securities firm in accordance with the preceding article shall be conducted in the following manner:
- Funds shall be moved by way of account transfer. No cash withdrawal, overdraft, pledge, or other rights may be exercised in respect of the funds.
- Time deposits transferred into other banks may be terminated at any time, in which case all funds may only be transferred back to the original securities firm's Settlement Account by way of account transfer, and cannot be used for other purposes.
- The accounts and account numbers of other banks designated for deposit transfer shall be reported to the TWSE and TPEx in writing in advance, with any changes to be notified immediately to the TWSE and TPEx.
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Article 4
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Customers' settlement funds retained in a securities firm's Settlement Account may not be utilized for purposes other than paying monies due from customers, purchasing R.O.C. government bonds and treasury bills, or transfer the funds to other banks in the form of time deposits, and shall be separated from and independent of the securities firm's own assets.
No creditor of a securities firm's liabilities in said firm's own assets may claim to attach or exercise other rights in customers' settlement funds retained in the securities firm's Settlement Account and the relevant investment objects.
Customers' settlement funds retained in a securities firm's Settlement Account are account-specific trust assets held for the benefit of customers and shall be immediately returned to customers when the securities firm petitions for bankruptcy or commences liquidation.
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Article 10
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A securities firm that retains funds in the Settlement Account with customers' consent may charge a management fee from customers at a rate to be determined by it with the customers.
The ownership of interest that is incurred from funds retained in the Settlement Account with customers' consent is expressly set out in the contract for the retention of customers' funds in the Settlement Account. The securities firm shall withhold taxes and issue withholding statements according to the Income Tax Act and applicable provisions with the customers as the taxpayer, in the year in which the income occurs.
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Article 11
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A securities firm that, with customers' consent, retains customers' funds in the Settlement Account and uses such account for purchasing R.O.C. government bonds and treasury bills or transfers the funds to other bank in a form of time deposits 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 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 12
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A template of the contract shall be created by the TSA, presented to the competent authority for reference, and state the following:
- Scope of retention of the customer funds
- Scope of payment service provided to the customer and the order in which it is rendered
- Terms of settlement and payment of interest
- Procedures for the customer's reclaim of its funds
- Ways for the customer to inquire about its funds
- The securities firm shall retain receipt and payment records regarding funds in the customer's ledger
- Schedule of the securities firm's management fees
- Manner of handling matters pertaining to the profit and loss from the sale and purchase of R.O.C. government bonds and treasury bills
- Effective date of the contract and ways to handle amendments and termination of the contract
- Pursuant to the Personal Information Protection Act and relevant laws and regulations, the customer agrees the securities firm may furnish information pertaining to the customer's ledger to the TWSE, TPEx, TDCC and other institutions designated by the competent authority
- Dispute resolution
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Article 14
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A securities firm that retains funds in the Settlement Account with customers' consent shall set up a separate account ledger for each customer and record therein the following for each item on a daily basis:
- Transfers of sources of the customer's funds to such account
- Transfers of interest and profit and loss incurred from funds in the customer's ledger
- Transfers for the customer of monies payable by the customer
- Transfers of funds reclaimed by the customer
- Transfers of funds in the event of premature termination of the contract by the securities firm or customer
The securities firm shall retain records of receipts and payments of the above-mentioned funds and the relevant supporting documents, and prepare and send to the customer on a monthly basis a statement for reconciliation according to the detailed daily account entries.
The securities firm shall disclose the utilization of funds in the Settlement Account to the customer on a monthly basis and fully disclose in the financial reports the funds in the Settlement Account and their utilization (including information such as the overall balance of the securities firm's Settlement Account, objects invested in with the funds and amounts utilized for such investments, market values of the objects, and investment profits and losses, etc.).
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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
- Daily report on the sales and purchases of R.O.C. government bonds and treasury bills, or transfer of funds to other banks in a form of time deposits from 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 TWSE before 10 A.M. each day. The TWSE will then forward the data on the daily reports in subparagraphs 1 and 2 of the first paragraph to the TDCC to be made available to customers for consultation.
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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