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Relevant Laws

Title:Operating Rules of the Taiwan Stock Exchange Corporation (2020.05.05)
Article 25     A securities firm shall maintain all accounts and related trading certificates, vouchers, books and statements, and contracts at its business location. However, if a brokerage contract between a securities broker and a principal is stored on electronic media that cannot be edited or erased and the original of which can be provided anytime, the place to keep the hard copy of the contract will not be restriced to the business location.
    The TWSE may send personnel to examine and review the trading certificates, vouchers, books and statement, and contracts referred to in the preceding paragraph, and securities firms shall not avoid or refuse such examinations; the securities firm shall consent that the TWSE may query the Joint Credit Information Center for information concerning the securities firm's credit with financial institutions.
    The TWSE Determination Standards and Handling Procedures for the Avoidance or Refusal of Examinations by Securities Firms shall be separately prescribed by the TWSE.
    Except as otherwise provided in the Business Accounting Act, the number of years that the books and accounts and relevant trading certificates, vouchers, books and statements, and contracts under paragraph 1 shall be kept shall be in accordance with the Required Periods for Preservation of Accounting Statements and Vouchers by Securities Firms prescribed by the TWSE.
    For brokerage contract not maintained at the business location as provided in the first paragraph, a securities broker should pay attention to the safety of the locatation, environment and facilities of the storage, enhance the security measures of access and maintance, and establish relevant internal control system.
    When deemed necessary, the TWSE may request securities firms to provide their financial and business information, and disclose them to the public.
    Government bonds which are in bearer form that are obtained by securities firms by utilizing their assets pursuant to Article 18 of the Regulations Governing Securities Firms shall be deposited with a custodian institution.
Article 26     The financial reports produced by a securities firm in accordance with the regulations prescribed by the Competent Authority shall be audited and attested by a CPA, approved by the board of directors, recognized by the supervisor, and then publicly announced in a newspaper.
    Where they are semi-annual in nature, two copies of the financial report referred to in the preceding paragraph (including assets and liabilities statement, statement of comprehensive income, statement of change in equity, cash flow statement and its notes or attachments), minutes of board of directors meeting, supervisor's review report, and public announcements shall be sent to the TWSE within 2 months of the end of each semi-annual fiscal year, with one copy sent to the Competent Authority by the TWSE. Where they are annual in nature, two copies of the above shall be sent to the TWSE within 3 months of the end of each fiscal year, with one copy sent to the Competent Authority by the TWSE. In addition, TWSE (or Taipei Exchange) listed securities firms, and securities subsidiaries of a financial holding company that are public companies, also shall, within 45 days from the end of the first and third quarters of each fiscal year, submit two copies each of the CPA-audited financial report, the minutes of the board of directors meeting, and newspapers containing the public announcement to the TWSE, and the TWSE shall then submit one copy of the said documents to the Competent Authority.
    When sending financial reports within the time-limit as prescribed in the preceding paragraph, a securities firm shall report, through Internet transmission to the TWSE, basic information regarding its investments in other enterprises, numbers of TWSE listed or Taipei Exchange listed securities at the end of the reporting period respectively held by the securities firm and its invested enterprises, respective cost of shareholding, derivatives trading of TWSE listed or Taipei Exchange listed securities, and acquisition and disposal of major assets. The increase, decrease, and changes of shareholding in invested enterprises of a securities firm shall also be reported to the TWSE through Internet transmission.
    The shareholders meeting of a securities firm shall be convened within 6 months after the end of the fiscal year. Within 20 days of their recognition by the shareholders meeting, the minutes of the shareholders meeting and the business report shall be sent to the TWSE in triplicate. Where the annual financial report recognized by the shareholders meeting differs from the financial report publicly announced and sent to the TWSE, within 2 days of its occurrence, it shall be publicly announced and reported to the TWSE for its ultimate transmittal to the Competent Authority.
    Securities firms shall prepare a monthly accounting summary, income statement, itemized statements of bank deposits, and all attachments (each including the information for all branch offices), and file it with the TWSE by electronic media within 7 days from the start of the next month.
    One copy of the various financial reports and monthly accounting summaries of securities firms shall be made available for public inspection in print or electronic medium.
    Securities firms shall prepare the monthly capital sufficiency statement, and file it with the TWSE by electronic media within 10 days from the start of the next month; compilation and calculation regarding the capital sufficiency statement shall be handled in accordance with the Regulations Governing Securities Firms. The TWSE shall furthermore make quarterly disclosures thereof itemized as provided by the Competent Authority.
    Securities dealers shall prepare the monthly securities inventory report, and file it with the TWSE by electronic media within 7 days from the start of the next month.
    The various financial reports, forms, and monthly capital sufficiency statement to be reported via electronic media shall be announced by the TWSE.
    The procedures for said reporting shall be separately prescribed by the TWSE.
    Where the Competent Authority has provided otherwise than as set forth in the provisions of paragraph 1 and paragraph 2 concerning public announcement by newspaper and submission of the newspaper announcement, the provisions of the Competent Authority shall prevail.
    The TWSE may, depending on operational needs, notify securities firms to send additional copies of the various materials required to be submitted under paragraph 4. The TWSE may, depending on operational needs, notify securities firms to send paper copies of the various materials required to be filed by electronic media under paragraphs 5, 7, and 8. The securities firms shall deliver such materials to the TWSE within the time limit.
Article 58     The validity of trading orders relating to the automated computer trading system shall be limited to the day on which the order is placed.
    Unless otherwise provided, trading orders for the automated computer trading system may be keyed-in 30 minutes prior to the opening of the market trading by the participating securities brokers or dealers. Such orders shall include the code of the securities firm, serial number of the brokerage order ticket (or serial number of the proprietary trading order), type of order ticket (margin purchase, short sale, securities lending, central depositary, self-custody), account number of the principal (or of the dealer), code of the securities, type of trade (normal, block, odd-lot), price (limit order or market order), volume, sale/purchase, and period of validity (valid on the current day, canceled if not immediately satisfied, or canceled if not all order is immediately satisfied). Upon acceptance by the computer of the TWSE, a trade confirmation slip shall be printed. When a matching trade is made, an execution report will be printed on the printer of the participating securities firms. The items printed on the trading order confirmation slip or the execution report may be adjusted by the TWSE depending on actual need.
    The serial number of the brokerage order ticket to be keyed-in by the participating securities brokers as referred to in the preceding paragraph shall be sequentially assigned in the order that the orders were received. The serial number of proprietary trading orders by securities dealers shall be sequentially numbered in the order that the orders were placed.
    The price of the trading orders shall be within the daily price fluctuation limit placed in accordance with paragraphs 1 and 2 of Article 63.
    Thirty minutes before market opening (i.e. the commencement of trading hours) and a certain period of time before market closing (i.e. the close of trading hours), the TWSE shall disclose on a real-time basis the computed execution prices and volumes, and the computed prices and volumes of the five highest unexecuted buy orders and five lowest unexecuted sell orders. In addition, the TWSE shall disclose, on a real-time basis during trading hours, the executed trade prices and volumes, and the prices and volumes of the five highest unexecuted buy orders and five lowest unexecuted sell orders. As to the prices and volumes of other trading orders, however, the TWSE may make appropriate disclosures based on market needs.
    Application of securities firms for changes to the trading orders that are valid on the current day, except in the following circumstances, shall be accomplished by first canceling the original trading order, and then placing new trading orders.
  1. Reduction of the volume in the order; or
  2. Change of the price of a limit order, in which case the time of the order shall be the time of entry of the updated order, unless otherwise provided by the TWSE.
Article 75     Securities brokers conducting brokerage trading of securities shall comply with the following provisions:
  1. When accepting an account opening for processing, a securities broker shall first enter into a brokerage contract with the principal, recognizing these Operating Rules, the TWSE Regulations Governing Brokerage Contracts of Securities Brokers (hereinafter, the "Regulations Governing Brokerage Contracts"), public announcements, circular letters, and the regulations of the Taiwan Securities Association as integral parts of the contract, and specify the date of account opening and the following matters:
    1. For a principal that is a natural person: name, gender, age, occupation, address, telephone number, and National Identity Card number; if there is an agent, the agent's name and National Identity Card number.
    2. For a principal that is a juristic person: the juristic person's name, address, government uniform invoice number, phone number, representative, and authorized person.
  2. For a principal that is a person of no legal capacity or limited legal capacity, or who has been declared by a court to be placed under assistance, his/her statutory agent, guardian, or assistant shall sign/seal the brokerage contract and indicate the kinship relationship. All business vouchers for brokerage trading of securities, subscription of securities, and settlement matters shall be signed/sealed by the statutory agent, guardian, or assistant.
  3. For a principal that is a juristic person, such juristic person and its representative shall sign/seal the brokerage contract, and a power of attorney shall be provided. All business vouchers for brokerage trading of securities and settlement matters shall be signed/sealed by the authorized person.
  4. A director, supervisor, or employee of a securities firm may not open an account, engage in the brokerage trading of securities, purchase securities, or handle settlement-related matters on behalf of any other person, unless he/she is the statutory agent or guardian of the principal.
  5. When the principal or his/her/its statutory agent or authorized person signs the brokerage contract, a seal specimen card or signature card of the principal or the principal's statutory agent or authorized person shall be kept, and that same seal or signature shall be used for any orders placed in person for brokerage trading or subscription of securities and for the procedures for carrying out settlement, provided when the principal cancels an authorization, he/she/it may do so by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent; where the Taiwan agent and custodial institution of an offshore overseas Chinese or foreign national are the same person, the agent account-opening and settlement seal of the custodian institution may be taken as the specimen seal.
  6. When a principal or his/her/its statutory agent authorizes an agent to engage in brokerage trading, purchase securities or process settlement-related matters, a power of attorney shall be issued, and the seal specimen or signature card of such agent shall be kept for handling, provided when the principal cancels his/her/its authorization, he/she/it may do so according to the proviso in the preceding subparagraph .
  7. Where settlement of the principal's payment and securities is to be made by the book entry method, and where a letter of consent is signed, signature/seal of the settlement slips (order tickets for non face-to-face orders, trade reports, etc.) may be waived. However, before settlement, information relevant to the brokerage trade shall be given to the principal and a confirmation record shall be kept on file. Where, pursuant to law or regulation, the principal may effect receipt or payment of the purchase price by account transfer (or remittance), signature/seal of the settlement slips (order tickets for non face-to-face orders, trade reports, etc.) may be waived. However, before settlement, the securities firm shall give notice of information relevant to the brokerage trade to the principal and the custodian institution to be the agent for trade settlement, and shall keep a confirmation record on file.
  8. A securities broker may not use computer-set groups in handling securities trading orders. The order ticket and trading order record shall record information pursuant to Articles 4 and 12 of the Regulations Governing Information to be Published in Order Tickets, Trade Reports, and Reconciliation Statements Prepared by Securities Brokers Upon Receiving Orders to Buy or Sell Securities of the Competent Authority, and be prepared in accordance with the following provisions:
    1. Trading through non-electronic media:
      1. For trading orders placed in person: the principal or its agent or authorized person that places trading orders for securities in person shall fill out an order ticket and affix their signature/seal thereto.
      2. For trading orders placed via telephone, in writing, by telegraph, or by another method approved by the TWSE: if the principal, or its agent or authorized person places an order for trading of securities by one of the above methods, the associated person handling the order at the securities broker that accepts the order shall fill out the order ticket by hand or electronic means; with the exception of orders placed by telephone, the letter, telegram, or relevant documents shall be attached to the back of the order ticket.
      3. Where the securities broker fills out the order ticket by electronic means, if delegation of responsibility for the execution of the trading order can be implemented and the employee handling that trading order confirmed, order tickets need not be printed out individually, provided that they shall be stored using a non-revisable, non-erasable electronic medium.
    2. Trading through electronic media:
    3. Means that a principal uses voice mail, the Internet, dedicated line, closed private network, or other electronic means approved by the TWSE to place a trading order, which the securities broker shall handle in accordance with the following provisions:
      1. Where a trading order is placed through an electronic medium, the securities broker need not prepare or fill out an order ticket on the client's behalf.
      2. If a trading order is placed via the Internet, the internet protocol (IP) address and electronic signature thereof shall be recorded. If a trading order is placed via voice mail, through coordination with the telecommunications institution the caller-end number display function shall be enabled, and the number of the incoming call recorded.
    4. When a securities broker accepts a trading order through non-electronic media, and uses electronic media to fill out the order ticket, or accepts a trading order through electronic media, it shall print trading order records in chronological order, and after close of market, have them signed/sealed by the brokerage personnel handling the order. However, if the storage operations of the trading order record meet the following requirements, the trading order record need not be printed out and signed:
      1. A non-revisable, non-erasable electronic storage medium is used, and preparation of trading order records is completed on the day the trade is executed.
      2. Comprehensive indexing and management procedures are set up.
      3. Management responsibility is assigned to designated personnel, and electronic data files can be converted into print format at any time.
  9. The brokerage trading of securities, order confirmation, and execution report between a securities broker and a principal shall be conducted in accordance with the following provisions:
    1. Trading through non-electronic media:
    2. The execution report may be given by electronic mail, telephone, facsimile, text message, voice message, or the Internet.
    3. Trading through electronic media:
    4. The transmission of the brokerage order for purchase/sale of securities, order confirmation, execution report, and other electronic documents between a securities broker and the principal who uses an electronic trading method other than voice mail shall carry the electronic signature issued by the institution providing vouchers for identification and confirmation; however, this restriction shall not apply in the following circumstances:
      1. Order confirmation and execution report are conducted by telephone, facsimile, text message, voice menu system, or the Internet.
      2. The conditions for exemption are met under the Operational Guidelines for the Implementation of Direct Market Access by Futures Brokers.
  10. The order ticket referred to in subparagraph 8 shall be numbered in the order it is received. Its format and particulars to be recorded shall be as prescribed by the Competent Authority. When there is any dispute in connection with a trade, the order ticket shall be kept until the dispute is resolved. When there is no dispute, order tickets shall be kept in accordance with the following provisions:
    1. For unexecuted trades: destroy after one week; however, if an order ticket is filled out by hand, it shall be stamped "Unexecuted".
    2. For executed trades: if there is no dispute, keep for 5 years together with other business vouchers.
  11. If, after an order from a principal to trade within 30 minutes prior to the commencement of market trading hours or within a certain period of time prior to the close of market trading hours as accepted by a securities broker is reported to the TWSE, there occurs a massive revocation or amendment to the report, the TWSE may request the securities broker to collect in advance from its principal, upon accepting the trading order, the funds or securities, margin for margin purchases, or margin for short sales.
Article 75-1     A securities broker opening an account for a principal shall comply with the following:
  1. Except the following situation, if the principal is a natural person, he/she shall open the account against the original identity card and put signature/affix seal personally:
    1. where the principal is of no legal capacity or limited legal capacity, or has been declared by a court to be placed under assistance, his statutory agent, guardian, or assistant shall open the account against the original identity cards of the statutory agent, guardian, or assistant and that of the principal and put the signature/affix seal personally. If the principal has not received an identity card yet, a household registration certificate may be supplied instead. The guardian or assistant shall also provide documentary evidence that he or she is the guardian or assistant.
    2. where the principal is a person dispatched by a juristic person to work overseas, he may entrust an agent to open the account against the original identity cards of the agent and the principal as well as the power of attorney and certificate of employment overseas issued by the said juristic person, both legalized by an ROC representative office or an institution entrusted by such office. (3) where the principal specifies NT$1 million as the maximum daily trading volume and has not opened a margin trading account, the securities broker may open an account for him/her/it by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent, and the principal may determine at his/her/its sole discretion the manner in which credit check is to be performed, provided a new credit check must be carried out according to the relevant requirements if the maximum daily trading volume is to be adjusted.
    3. Where the principal handles account opening by written correspondence or electronic means, the TWSE Standards Governing Principal Identification and Management of Credit Line Categorization in the Processing by Securities Firms of Account Opening will govern.
  2. Where the principal is a juristic person, the authorized person shall provide a copy of the registration document of the juristic person, a copy of the notice of issuance of uniform number for taxable entities issued by the tax authorities (a profit-seeking enterprise may be exempt from submitting such copy of notice), the power of attorney, and photocopies of the identification cards of the responsible person of the juristic entity and that of the authorized person for processing. The securities broker shall confirm in writing that the account is opened through authorization.
  3. If the principal has engaged a custodian institution to open the account on its behalf, or submits proof that settlement is to be handled on its behalf by a custodian institution, it is not necessary to confirm in writing that the account is opened through authorization.
  4. Where the principal is a group that is not incorporated as a juristic person, it shall open the account in the individual name of its responsible person, and include the group name side-by-side therewith in the account name. To open the account, the responsible person shall submit a photocopy of certification that the group has been registered with the competent authority (or of its approval for establishment, recordation, or other evidentiary document of its registration), photocopy of the notice of issuance of a uniform number for tax withholding entities issued by the tax authorities (if exempt from income tax withholding, one copy of the Certificate of Exemption from Tax Withholding must also be submitted), and a photocopy of the National Identity Card of the responsible person.
  5. Except for certain account numbers that it may handle as an account without a number under exceptional circumstances for which reasons have been noted, the securities broker shall assign an account number sequentially to each account in the order opened; provided that numbers canceled in (calendar) years other than the current year may be used sequentially.
    A securities broker shall ensure that the items supplied on the applications are error free and complete. It shall not accept any order to trade in or subscribe to securities from the principal unless it completes the account opening process and the written confirmation procedures referred to in subparagraph 2 of the preceding paragraph and keys-in the account information and account number into the computer system of the TWSE.
    A securities broker to cancel an account for a principal may do so by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent.
Article 75-2     When a securities broker processes an application for opening of an account made by a custodian institution representing a principal in discretionary investment, the name of both the principal and the authorized discretionary trader shall be specified in the account name, an Account Opening and Brokerage Contract for Discretionary Investment Trading of Securities shall be signed, the custodian institution shall be stipulated as the agent for settlement payment and delivery, information required for account opening shall be entered into the computer file of the TWSE as instructed online, and the following documents shall be submitted:
  1. Photocopy of written agreement signed by the principal, the authorized discretionary trader, and the custodian institution regarding respective rights and obligations. However, under the circumstances in which a Chinese-language legal opinion issued by a lawyer is permitted to be substituted for the tripartite agreement of discretionary investment as set out in Article 17, paragraph 7 of the Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises of the Securities Investment Trust and Consulting Association of the ROC ("Regulations Governing the Conduct of Discretionary Investment Business"), those provisions shall govern.
  2. Where the principal is a natural person, photocopy of his/her National Identity Card shall be submitted; provided that where the said principal is of no legal capacity or with limited legal capacity, or has been declared by a court to be placed under assistance, a photocopy of the National Identity Card of his/her statutory representative, guardian, or assistant shall also be submitted. Where the principal is a juristic person or other institution, photocopy of the registration document of the juristic entity, photocopy of the notice of issuance of uniform number for taxable entities issued by the tax authorities (a profit-seeking enterprise may be exempt from submitting such copy of notice), and photocopy of the National Identity Card of the responsible person of the juristic entity shall be submitted.
  3. Photocopy of the corporate registration document of the authorized discretionary trader, and photocopy of the National Identity Card of the responsible person of such company.
  4. Photocopy of the National Identity Card of the investment manager (including any deputy thereof) or any other person authorized to execute trades, and the original power of attorney issued by the authorized discretionary trader to the aforesaid personnel.
  5. When a foreign professional institutional investor, under Article 17, paragraph 10 of the Regulations Governing the Conduct of Discretionary Investment Business, applies to convert an original brokerage trading account into a discretionary investment account, or to revert that discretionary investment account into a brokerage trading account for its own trading, or applies to cancel the discretionary investment account because of allocation of a portion of the assets to another mandatary, the investor's instruction letter shall be submitted.
    A securities broker may accept orders for trading of securities through a discretionary investment account referred to in the preceding paragraph only after the procedures for opening the account have been completed and the required information has been entered into the computer files of the TWSE. In case of any change, after account-opening, in the investment manager (including any deputy thereof) or any other person authorized to execute trades, orders for trading of securities may not be accepted unless and until the documents under subparagraph 1 of paragraph 4 have been replaced.
Article 77-4     To invest in domestic securities, onshore overseas Chinese and foreign nationals shall submit the relevant documents to a securities broker to carry out registration with the TWSE and obtain an identification number and submit the below-listed documents to the securities broker for purposes of opening an account for securities trading.
  1. Overseas Chinese and foreign natural persons: Alien Resident Certificate (or Overseas Compatriot Identity Certificate, or ROC passport with an Overseas Compatriot Identity Endorsement) and other identification with identifiable features (such as national health insurance card, passport, driver's license or student identity card etc.).
  2. Foreign institutional investor: Document evidencing company registration registered with the competent authority of the jurisdiction where it was incorporated, and National Identity Card (or Alien Resident Certificate or passport) of the responsible person.
    Offshore overseas Chinese and foreign nationals shall carry out registration with the TWSE through their designated domestic agent or representative and obtain an identification number and submit photocopies of the domestic agent or representative's national ID card or alien resident certificate or a photocopy of the documentary proof following company registration (or amendment registration) to the securities broker for purposes of opening an account for securities trading (provided, if such documents, for the same domestic agent or representative and having identical content, have already been submitted to and placed on file by the broker, they need not be resubmitted).
    If the domestic agent under this Article is a custodian institution approved by the Financial Supervisory Commission, and the custodian institution and the securities broker handling account opening both have network authentication mechanisms, the documents for account opening may be transmitted electronically to open the account.
    If any of the circumstances in Article 11 of the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals is present with respect to a registration by an overseas Chinese or foreign national, the TWSE shall not carry out registration; if registration has already been performed, the registration shall be canceled, and the securities broker that has opened the account shall be notified that it may not accept purchase orders therefrom. However, this restriction shall not apply to a purchase made to return securities borrowed in a securities borrowing and lending transaction. After the balance of the account has been liquidated, the securities broker shall cancel the account.
    The registration operations of this Article shall be handled pursuant to the Operation Directions for Registration Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors to Invest in Domestic Securities or Engage in Domestic Futures Trading submitted by the TWSE to the Competent Authority for approval.
Article 77-5     When the overseas controlling or subordinate company, branch or office of a TWSE listed, Taipei Exchange listed, or emerging stock company issuing securities to its overseas foreign national employees pursuant to Article 28-2, paragraph 1, subparagraph 1 or Article 28-3 of the Securities and Exchange Act or Articles 167-1, 167-2, 235-1, or 267 of the Company Act handles the assignment, subscription and allotment of securities on behalf of its overseas foreign national employees, and carries out registration of a "Segregated Collective Investment Account for Overseas Foreign National Employees" with the TWSE, it shall, in addition to the same registration documents duly required for offshore foreign institutional investors, submit the documents in the following subparagraphs, and keep a copy of the documents on record at its domestic agent or representative:
  1. Original affidavit stating that the overseas controlling or subordinate company, branch or office of the TWSE listed, Taipei Exchange listed, or emerging stock company has actually been authorized by the overseas foreign national employees.
  2. Photocopy of the evidentiary documents that the TWSE listed, Taipei Exchange listed, or emerging stock company has obtained the effective registration from the competent authority to issue new shares or employee stock warrants or to buy back its shares.
  3. Photocopy of the minutes of the TWSE listed, Taipei Exchange listed, or emerging stock company's board of directors meeting that approved the transfer of bought-back stocks to its employees pursuant to Article 167-1 of the Company Act or Article 28-2, paragraph 1, subparagraph 1 of the Securities and Exchange Act, the issuance of employee stock warrants pursuant to Article 167-2 of the Company Act, or Article 28-3 of the Securities and Exchange Act, or the issuance of new shares pursuant to Article 235-1 and Article 267 of the Company Act.
    When the domestic agent or representative of the overseas controlling or subordinate company, branch or office of a TWSE listed, Taipei Exchange listed, or emerging stock company applies with a securities broker to open an account, it shall, in addition to the documents required for account opening as in the preceding Article, affix the documents in the subparagraphs of the preceding paragraph to apply for account opening. Securities trading through that segregated account will be restricted to the sale of the following stocks; no other securities trading may be engaged in:
  1. Stock that those employees have obtained as a result of allotment, subscription or assignment.
  2. Stock of another TWSE or Taipei Exchange listed company, TWSE or Taipei Exchange primary listed company, or emerging stock company that those employees have obtained by duly participating in a public tender offer through an offer to sell, or by the issuer's participation in a merger or acquisition, or stock obtained as a result of allotment, subscription or assignment.
    When a TWSE primary listed, Taipei Exchange primary listed, or emerging stock foreign issuer carries out registration procedures for a "Segregated Collective Investment Account for Overseas Foreign National Employees" with the TWSE for securities obtained by its overseas foreign national employees in accordance with the laws and regulations of the place of registration, it shall, in addition to the same registration documents duly required for offshore foreign institutional investors, submit the documents in the following subparagraphs, and keep a copy of the documents on record at its domestic agent or representative:
  1. Original affidavit stating that the TWSE primary listed, Taipei Exchange primary listed, or emerging stock foreign issuer has actually been authorized by the overseas foreign national employees.
  2. Photocopy of documentary proof that the TWSE primary listed, Taipei Exchange primary listed, or emerging stock foreign issuer has obtained effective registration from the competent authority to issue new shares or employee stock warrants or to buy back its shares.
    When the domestic agent or representative of the TWSE primary listed, Taipei Exchange primary listed, or emerging-stock foreign issuer applies with a securities broker to open an account, it shall, in addition to the documents required for account opening as in the preceding Article, affix the documents in the subparagraphs of the preceding paragraph to apply for account opening. Such account may not be used for any securities trading other than the sale of securities obtained by the employees in accordance with the laws and regulations of the country of registration and as approved or authorized by Taiwan, or sale of stock of another TWSE or Taipei Exchange listed company, TWSE or Taipei Exchange primary listed company, or emerging stock company that the employees have obtained by duly participating in a public tender offer through an offer to sell, or have obtained by the issuer's participation in a merger or acquisition, or of stock obtained as a result of allotment, subscription or assignment.
    Paragraphs 3, 4, and 5 of the preceding Article shall apply mutatis mutandis to the registration process under this Article.
Article 80     Purchase or sale orders accepted by a securities broker shall be processed by registered and qualified associated persons.
    When executing orders to trade in securities, the registered and qualified associated persons referred to in the preceding paragraph shall wear the registration pass issued by the TWSE. When accepting trading orders, the associated persons shall fill out order tickets in accordance with the provisions of subparagraph 8 of Article 75, assign serial numbers to the orders, and process them in the order in which they are received.
    When a trading order has been matched, the securities broker shall produce a trade report. The format and the particulars to be specified on the report shall be in accordance with the regulations prescribed by the Competent Authority.
    For orders received by telephone, the securities broker shall synchronously record the conversation and shall keep the telephone recording in its place of business.
    The above-stated telephone recording shall be preserved for at least 1 year. Where there are disputes relating to a trading order, the recordings shall be preserved until the dispute has ended. In the event the securities broker suffers facilities breakdowns or it is remiss in its procedures, it shall within 2 days of the occurrence of the event report to the TWSE regarding the facts and causes and its remedial measures.
    The telephone recordings preserved in accordance with the preceding paragraph shall be construed as a type of trade voucher. In case the securities firm avoids or refuses inspection, it shall be punished in accordance with paragraph 2 of Article 25 and the Standards for Determining Securities Firms Avoiding or Refusing Inspections and Handling Procedures Thereof.
Article 81     After accepting a brokerage trading order, a securities broker may cancel or amend particulars of the order only if notified by the principal to do so, and only if the order has not yet been executed.
Article 82     After accepting a brokerage trading order for normal settlement, a securities broker, following execution of the trade, shall collect the price payable for the securities bought, or collect the securities sold, pursuant to Article 12 of the Regulations Governing Brokerage Contracts, or collect the price difference after offsetting purchases and sales pursuant to the Operational Rules Governing Day Trades of Securities.
    A securities broker filing a report of delayed settlement for an offshore overseas Chinese or foreign national, or for a mainland area investor, with the TWSE shall do so in compliance with the Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals, and shall notify the principal or the custodian institution pursuant to the agreement.
    In the case of brokerage orders for margin trades, the securities broker shall collect from its principal the margin for the margin purchase or the margin for the short sale, as the case may be, pursuant to Article 12 of the Regulations Governing Brokerage Contracts.
    Where the TWSE has taken any disciplinary measure against a specific securities in accordance with the "Regulations for Implementation of Stock Market Monitoring System" and other relevant operation rules, a securities broker shall, on the date it accepts the order, collect in advance from its principals the funds or securities, or the margin for margin purchases, or the margin for short sales.
    Where a securities broker believes that there are any defect on the rights of the securities delivered by its principal for sale or there is legal dispute or other doubtful matter, it may decline to sell such securities; provided that the above shall not be applicable where its principal has provided adequate collateral as approved by the securities broker.
Article 82-1     Where a securities broker accepts an order to sell registered securities that have never been transferred and its principal is not the owner of the securities, it shall handle the settlement in accordance with the Guidelines for Reporting by Securities Brokers of Sale of Securities Not Owned by the Principal as stipulated by the TWSE. The "owner" in the preceding sentence, unless otherwise provided, may not be an overseas Chinese or foreign national or mainland area investor.
    The provisions of the preceding paragraph shall apply mutatis mutandis where a securities broker accepts an order to sell registered securities that have been transferred and for which transfer registration procedures have been carried out with the issuing company, and that meets any of the following conditions:
  1. Securities of a defaulting investor after the case is closed and withdrawal has been effected.
  2. Securities acquired through an inheritance or gift.
  3. Securities acquired through underwriting before November 1997.
  4. Collateral in the form of spot securities that a securities finance company or securities firm operating its own margin purchase and short sale operations has required an investor to deposit to offset a decline in the securities price to below the maintenance ratio.
  5. Securities that a bank has required a customer to pledge in the form of spot securities.
  6. Securities obtained through a final and unappealable court judgment.
  7. Other conditions reported to and approved by the TWSE.
    When accepting a brokerage order to sell securities pursuant to this article, the securities broker shall confirm that the quantity of securities in the order does not exceed the quantity identified in the certifying document furnished by the principal.
Article 83     A securities broker shall keep complete and true records and vouchers when receiving or delivering securities or payments in connection with brokerage trading.
    The vouchers referred to in the preceding paragraph shall include receipts for funds and securities collected in advance, vouchers on securities delivered, and trade reports. The format thereof and the particulars to be entered therein shall conform to the regulations prescribed by the Competent Authority. Where a financial institution concurrently engages in the business of a securities broker and has opened specific accounts for depositing funds which can be verified, it need not use trade reports.
    A securities broker shall handle the receipt of securities or funds from its principals or delivery of securities or funds to its principals referred to in paragraph 1 of this Article by book-entry through the central securities depository accounts opened by its principals or through the deposit accounts opened by its principals with financial institutions designated by the securities broker, except under any of the following circumstances:
  1. Where a securities investment trust fund, venture capital enterprises invested by the National Development Fund of the Executive Yuan, insurance enterprise, offshore overseas Chinese or foreign national, or an overseas Chinese or foreign national or mainland area investor who has converted overseas corporate bonds held by him into stock or has converted overseas depositary receipts held by him into the underlying securities, has a deposit account opened by the custodian institution on behalf thereof, the receipt and payment of the purchase prices may be effected by account transfer (or remittance) through such account.
  2. Fund collection or payment operations of centralized segregated trust asset accounts under the management of a trust enterprise that has the status of a central depository participant may be carried out by means of transfer (remittance).
  3. Where a depositary institution of overseas depositary receipts has been engaged by its principal to redeem the overseas depositary receipts and sell the stock, it may receive the proceeds thereof by way of account transfer (or remittance) through the deposit account maintained at the custodian institution.
  4. Where a principal places engages a securities investment consulting enterprise or a SITE to conduct discretionary securities trading, the principal may open and maintain a deposit account at the custodian institution, and the receipt and payment of the purchase prices may be effected by account transfer (or remittance) through such account. When processing trade settlement, it is prohibited to transfer payment funds or securities between separate discretionary investment accounts of the same principal.
  5. If a domestic bank or insurance company obtains a rating of twA- or higher from the Taiwan Ratings Corporation, or its rating by a credit rating institution approved or recognized by the Competent Authority meets or exceeds the qualification requirements of the Taiwan Ratings Corporation's twA- rating, its receipt and payment of purchase prices may be effected by account transfer (or remittance) during the period for which the aforementioned rating is valid.
  6. If government agencies conduct securities trading settlement through deposit accounts of such institutions in accordance with laws and regulations, the receipt and payment of the purchase prices may be effected by account transfer (or remittance) through such accounts.
  7. If a principal agrees to keep settlement money in dedicated accounts for settlement with a securities firm, an arrangement may be made with the securities firm to have the receipt and payment of the purchase prices be effected by account transfer (or remittance) through the principal's own deposit accounts.
Article 91     Where the principal fails to fulfill its settlement obligations on time, the principal is in default. In such an event, the securities broker shall report the default in accordance with the TWSE Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals , and shall simultaneously notify the principal.
    When the principal is an offshore overseas Chinese or foreign national, or a mainland area investor, and a report of delayed settlement has been filed in accordance with Article 82, paragraph 2, if settlement is not completed in accordance with provisions and it is not an out-trade, the principal is in default. The securities broker shall handle the matter pursuant to the provisions in the preceding paragraph.
    A securities broker which receives securities or consideration in accordance with paragraph 1 or paragraph 2 of this Article shall engage another securities broker to dispose of it on the Exchange no later than the first business day after the principal's default. Thereafter, the securities broker shall forthwith report to the TWSE and notify its principal in accordance with the Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals. However, those securities which belong to the same account and are of the same type and same volume may be offset against each other.
    Where the aggregate number of [shares represented by] the share certificates of securities received by a securities broker under paragraph 1 and paragraph 2 during the period of a single default reaches 5 percent or more of the number of shares of the underlying securities already issued, and furthermore reaches or exceeds the average daily volume of the underlying securities during the 20 trading days prior to reporting of the default, the securities broker may adopt either of the following measures to handle the default:
  1. If handling of the default cannot be completed through reverse transactions during the 3 consecutive business days from the day next following the date of confirmation of the default by the principal, the securities broker, by reaching a mutual agreement with the principal or by notice to the principal, may, depending on market conditions, in accordance with the content of the agreement or the notice, complete handling of the default through reverse transactions within 180 days, and report the agreement or notice to the TWSE via letter for recordation.
  2. The securities broker may reach an agreement with the principal setting a price(s) to serve as the basis for calculating profit/loss, and submit the written agreement reached between the parties to the TWSE via letter for recordation.
    Based on the report of a securities broker referred to in paragraph 1 or paragraph 2 of this Article, the TWSE will forthwith notify each securities broker, which shall act in accordance with paragraph 3 of Article 76 hereof.
    In the event that the principal suffers losses or there is any other dispute arising out of the notification sent by the TWSE to each securities broker based on the report by a securities broker, the securities broker reporting the default shall be fully responsible therefor.
    If a securities broker, for a reason not attributable to the broker, is unable in a timely manner to take measures pursuant to paragraphs 3 and 4, it shall prepare a handling record and keep it on file for inspection along with related documentary evidence.
Article 91-1     Except under the circumstance prescribed in paragraph 2 below, if settlement is not completed on time for a discretionary investment account, the securities broker shall handle the matter in accordance with the provisions governing default by an ordinary principal.
    If settlement is not completed on time for a discretionary investment account because of non-performance by the authorized discretionary trader of obligations arising from trading exceeding the discretionary trader's authorization, such event shall be handled as follows:
  1. The securities broker shall carry out settlement on behalf of the principal and notify the principal. Not later than 6:00 p.m. of the business day next following the trade day, the securities broker shall prepare written report on relevant facts with seals of both the company and its responsible person fixed thereon, together with photocopy of the notice of unauthorized trading issued by the custodian institution, and related trade vouchers and brokerage contract (including documents submitted for account opening), and fax the aforesaid to the TWSE and notify the TWSE by telephone before forwarding original copy of the said documents to the TWSE for reporting to the Competent Authority. However, those that meet the requirements of Article 42, paragraph 5 of the Regulations Governing the Conduct of Discretionary Investment Business may substitute a notice of unauthorized trading issued by a party authorized to do so under the relevant contract or legal opinion for the notice of unauthorized trading issued by the custodian institution.
  2. In connection with the discretionary investment account, the securities broker shall immediately suspend acceptance of trading orders for securities. Other accounts in the name of the same principal shall not be affected by restrictions under paragraph 3 of Article 76.
  3. In connection with the securities or consideration received by a securities broker through settlement on behalf of the principal, the securities broker shall engage another securities broker to dispose of it on the Securities Exchange Market of the TWSE starting on the next business day after the required reporting has been made, provided that the securities in the same account, and of the same type and quantity may be offset against each other.
  4. Upon completion of the process prescribed in preceding subparagraph 3, the securities broker shall prepare written report on how the process has been handled, with the seals of both the company and its responsible person fixed thereon, together with photocopy of related trade vouchers, and forward the said documents to the TWSE for reporting to the Competent Authority.
    The TWSE shall promptly relay information reported per subparagraph 1 of paragraph 2 above to all securities brokers.
Article 92     A securities broker accepting an order to trade securities shall immediately deliver to the principal the securities bought or the proceeds of the securities sold after it is transacted and settled and, in case it is not transacted, shall forthwith return to the principal the securities or funds received; provided that the securities broker may keep the settlement in funds in the settlement account of the securities firm subject to the consent of the customer, and shall comply with the TWSE Directions for the Creation of Customer Ledgers of Securities Firm Settlement Accounts.
    A securities broker delivering the securities or funds referred to in the preceding paragraph, unless otherwise provided, shall request the principal to sign and seal on relevant vouchers so as to complete the procedures. A power of attorney shall be required in the event that the principal appoints another person to sign and seal on its behalf.
Article 94     After a brokerage trade has been executed, the securities broker may collect a processing fee from the principal. The fee schedule shall be formulated by the TWSE and approved by the Competent Authority.
    A securities broker may at its sole discretion adopt a rate schedule, based on the customer transaction amount, for securities transactions fees that it collects, and may also adopt discounts and single-order minimum fees, and shall report such schedule, discounts, and fees to the TWSE for recordation through the One-Stop Window for Securities Firm Filings before implementation. After collecting transaction fees, a securities broker may settle accounts at regular intervals (e.g. monthly, weekly). Any amount refundable or deductible shall be transferred into the original customer's settlement account, and recorded in the customer's monthly reconciliation statement and the monthly accounting summary filed with the TWSE. If the fee adopted by a securities broker exceeds 0.1425 percent of the amount of a transaction, the securities broker shall notify the customer of this fact by an appropriate method before accepting the order, and retain a record of that notification, provided that offshore overseas Chinese and foreign nationals may be notified before settlement.
    A securities broker shall not pay, in whole or in part, any processing fee receivable by it to any introducing person related to the trading as their remuneration; provided, this restriction shall not apply to any of the following circumstances:
  1. where it is paid under a contract to a foreign financial institution that is registered and permitted by the competent authority of the local country to operate securities business.
  2. where, under a contract entered into for cross-selling, it is paid to a subsidiary of a financial holding company.
    The term "local country" in subparagraph 1 of the preceding paragraph shall be separately defined by the TWSE.
Article 113-1     Where default by any principal causes a securities firm to default on its obligations for settlement and the securities firm has reported such to the TWSE, the TWSE may notify other securities firms to temporarily suspend delivery to the defaulting principal of securities receivable by it for settlement, and that the securities owned by the defaulting principal and placed in custody with the central securities depository shall not be withdrawn or delivered. After the money and securities of the defaulting securities firm or the defaulting principal have been balanced, the TWSE shall notify other securities firms to proceed with settlement, and remove the said restriction on securities withdrawal or delivery.
    The preceding paragraph shall apply to any principal whose connection with the defaulting principal has been verified by the TWSE on evidence from defaulting securities firm(s) and consultation with the securities firm(s) to which the TWSE has intended to notify the suspension of settlement.
    Upon receiving court order of attachment execution to suspend settlement for the defaulting principal, a securities firm shall immediately notify the TWSE.
Article 135     Where any securities firm violates Article 13, Article 16, paragraph 2 of Article 21, Article 23, paragraph 1 or 6 of Article 25, paragraph 3 of Article 28-1, paragraph 1 of Article 29, Article 33, Article 40, Article 68, subparagraph 1, 2, 3, 6, 8, or 11 of Article 75, paragraph 1 of Article 75-1, paragraph 1 of Article 75-2, Article 75-7, Article 76, Article 77-9, Article 79-1, paragraph 2, or 3 of Article 80, Article 80-1, paragraph 4 of Article 82, paragraph 3 of Article 85, Article 87, paragraph 2 of Article 93 or Article 95 hereof, the TWSE may notify it to make correction or improvement within a prescribed time frame, or, in addition thereto, impose a breach penalty of not more than NT$100,000.
    Where any securities firm violates these Operating Rules, the Regulations Governing Brokerage Contracts, or other bylaws, rules, regulations, announcements, and circular letters of the TWSE, unless otherwise provided, the TWSE may notify it to make correction or improvement within a prescribed time frame, or, in addition thereto, impose a breach penalty of not more than NT$100,000.