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Article 6-1
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To provide services to high-asset customers for brokering trades in foreign securities, a securities firm shall meet the following conditions and shall submit the required documentation to the securities dealers association for review and further forwarding to the FSC for approval before conducting such brokerage trading:
- Regulatory capital adequacy ratio: its regulatory capital adequacy ratio reported for the half-year prior to the application shall exceed 200 percent.
- Its financial position shall meet any of the following conditions:
- Its CPA audited and attested financial report for the most recent period shows a net worth of NT$10 billion or more and also not less than its paid-in capital.
- Its CPA audited and attested financial report for the most recent period shows a net worth of NT$7 billion or more and also not less than its paid-in capital, and it makes specific promises to increase substantive investments, business size, and number of employees in Taiwan in the next 3 years, and the overall implementation plan is approved by the FSC.
- Legal compliance:
- It has not been subject to any penalty imposed under Article 66, subparagraph 1 of the Securities and Exchange Act or Article 100, paragraph 1, subparagraph 1 of the Futures Trading Act in the last 3 months.
- It has not been subject to any penalty imposed under Article 66, subparagraph 2 of the Securities and Exchange Act or Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act in the last 6 months.
- It has not been subject to any penalty involving suspension of business activities imposed by the FSC in the last year.
- It has not been subject to any penalty involving partial revocation or voidance of business permission imposed by the FSC in the last 2 years.
A securities firm's failure to meet the conditions of subparagraph 3 of the preceding paragraph may be disregarded if it has made corrections as demonstrated by specific evidence.
If a securities firm that conducts the business under paragraph 1 with the approval of the FSC has failed to meet any of the applicable requirements for regulatory capital adequacy ratio or net worth set out in paragraph 1, subparagraph 1 or 2 for 2 consecutive months, it shall suspend the conduct of that business and may resume the business only after its regulatory capital adequacy ratio or net worth, as the case may be, has complied with the applicable requirement for 3 consecutive months and approval has been obtained from the FSC.
A securities firm granted with approval based on paragraph 1, subparagraph 2, item B to provide services to high-asset customers for brokering trades in foreign securities, shall, after the end of a 3-year period starting from the date of approval, report to the FSC within 5 business days on the implementation of its promised plan to increase substantive investments, business size, and number of employees in Taiwan. If the securities firm fails to fulfill its promises and the failure is of material nature, then unless there is a legitimate reason, the FSC may void its approval to conduct brokerage trading in foreign securities for high-asset customers.
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Article 6-2
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A securities firm brokering trades in offshore structured products for high-asset customers may perform review procedures in accordance with its own internal guidelines for review by category adopted for such purposes, with each category covering offshore structured products with the same issuer and the same product structure or the same product risk rating, without having to be subject to the requirements of the Taiwan Financial Services Roundtable prescribed under Article 20, paragraph 1 of the Regulations Governing Offshore Structured Products.
An offshore structured product issued by an overseas investee subsidiary or branch of a securities firm or domestic bank that meets the following conditions may be traded by a securities firm brokering for high-asset customers, without being subject to the requirements of Chapter 2 of the Regulations Governing Offshore Structured Products with respect to the issuer or master agent:
- The issuer shall be a subsidiary company of a securities firm meeting the qualifying requirements of Article 4, paragraph 1 of the Regulations Governing the Issuance of Exchange Traded Notes by Securities Firms, in which the securities firm holds more than 50 percent of the shares through direct or indirect overseas equity investment, or an overseas branch of a domestic bank granted approval by the FSC under the Regulations Governing Banks Conducting Financial Products and Services for High-Asset Customers or a subsidiary bank of such a domestic bank in which the domestic bank holds more than 50 percent of the shares through direct or indirect equity investment.
- The securities firm or domestic bank shall serve as the domestic agent of the offshore structured product, agreeing to be jointly and severally liable with the issuer or guarantor for the obligations of the offshore structured product or otherwise to serve as the guarantor.
- The offshore structured product shall meet the requirements of Article 17, paragraph 1, subparagraphs 1 to 3 of the Regulations Governing Offshore Structured Products. However, the credit rating required under subparagraph 1 thereof may be substituted by the long-term debt credit rating of the securities firm or domestic bank to which the issuer belongs.
A securities firm meeting the conditions required under the preceding article may broker trades in any offshore structured products meeting the requirements of the preceding paragraph for professional institutional investors or high net worth juristic person investors.
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Article 6-3
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To broker trades in an offshore structured product for high-asset customers under paragraph 2 of the preceding article, a securities firm shall agree with or obtain written confirmation from the domestic agent on the following matters:
- During the term of the financial product, in addition to providing product information and marketing materials in English, relevant financial product information, such as the product's material characteristics, risk profile, and reference prices, shall also be provided in Chinese to investors needing to receive such information in Chinese.
- Upon occurrence of an investment dispute involving any liability of the issuer or guarantor, the domestic agent shall assist the securities firm in handling relevant matters and act as the agent for service of process and all other document correspondences with respect to the investment dispute.
- Upon occurrence of an event with respect to the offshore financial product materially affecting the rights and interests of investors, the domestic agent shall produce a plan to address the issue and shall report the plan to the securities firm within 3 days from its occurrence for forwarding to all relevant high-asset customers.
The relevant reporting requirements of Article 10 of the Regulations Governing Offshore Structured Products shall apply mutatis mutandis to a securities firm or domestic bank serving as the domestic agent of an offshore structured product under paragraph 2 of the preceding article.
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Article 6-4
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To broker trades in offshore structured products for high-asset customers, a securities firm shall establish an appropriate product suitability system, which shall at least include a set of product characteristic assessments, know-your-customer procedures, and customer characteristic assessments, to ascertain whether a product is suitable for brokered trading by a customer.
To broker trades in offshore structured products for high-asset customers, a securities firm shall establish review standards of its product review panel for the launch of products, review procedures, and monitoring and control mechanisms, and submit them to the board of directors for approval. The monitoring and control mechanisms shall include risk identification, measurement, monitoring and control operations, and handling of product investment disputes.
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