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Article 28
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A securities brokerage firm shall not deposit its funds in an institution other than one engaged in the banking business.
Without the approval of the Competent Authority, a securities brokerage firm shall not use its own funds to invest in securities that are not listed on the TWSE; where its own funds are invested into TWSE listed securities, the amount of investment shall not exceed the limit set by the Competent Authority.
When the regulatory capital adequacy ratio of a securities broker is less than 100 percent, it may not use its own funds to purchase TWSE listed (or Taipei Exchange listed) stocks, and may make only sell trade dispositions. The standards and measures relating to the lifting of these restrictions after corrections have been made shall be governed, mutatis mutandis, by the provisions of Article 28-1, paragraph 2.
Unless otherwise prescribed by the TWSE, a securities brokerage firm shall not use its own funds or securities, or funds or securities borrowed from others to process securities trading settlement for its principals.
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Article 85
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A securities broker shall not accept any discretionary order to decide the type, volume, price or purchase or sale of securities on behalf of its principal.
A securities broker shall not purchase or resell for its own profit any securities it has accepted an order to trade, or guarantee to share profits with its principals, or accept trading orders by installment payments.
When recommending its principals or on website to buy or sell securities, a securities broker shall comply with the "Regulations Governing Securities Brokers' Practice on Recommending Principals to Buy and Sell Securities" as stipulated by the TWSE.
The website provided by securities brokers shall show, in a conspicuous manner, the risk disclosure statement and the alternative to be adopted in case of inability to execute electronic transmission, and the most up-to-date information shall be transmitted. The securities brokers shall carefully select hyperlink websites, and shall be responsible for the supervision and administration of their associates' use of electronic mail, group electronic mail, bulletin board system, website, etc. in activities associated with business operations.
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Article 113
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Securities firms and securities finance enterprises may not default on their settlement obligations.
Where any securities firm violates the preceding paragraph, in addition to the TWSE designating another securities firm to effect delivery on its behalf in accordance with Article 153 of the Securities and Exchange Act, the TWSE shall also retain the sum and securities receivable; provided that in respect of the sum and securities that have been actually paid and delivered, the defaulting securities firm may engage the designated securities firm to collect the retained sum and securities equivalent thereto before making computation of the offsetting in accordance with paragraph 3 hereof.
The designated securities firm shall compute and offset the sum and securities that have not been paid and delivered at the respective due date by the defaulting securities firm against the retained sum and securities. The balance thereof shall, after being verified with the TWSE to be correct and beginning from the following business date, be cleared off through purchases or sales on the Exchange on behalf of the defaulting securities firm. In case it is unable to clear off through purchases or sales, the TWSE may notify the designated securities firm to clear it through auction, price negotiation, reverse auction, or other trading methods; provided, however, that, in case auction or reverse auction approach is adopted, it may be exempted from the restrictions on volume applied for, pricing, period of public announcement, and transacted volume as specified in relevant regulations.
The base price for handling the clearing off in auction, price negotiation, reverse auction or other trading methods referred to in the preceding paragraph shall be determined by the TWSE based on the closing price for the most recent business day plus or minus 10 percent.
The defaulting securities firm shall not raise any objection in respect of the base price determined pursuant to the preceding paragraph.
The difference on pricing and all expenses incurred from handling the clearing off pursuant to paragraph 3 hereof shall be borne by the defaulting securities firm.
In the event that securities finance enterprises violate their obligations for settlement, the TWSE shall report to the Competent Authority for actions on a case by case basis.
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Article 114
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In the event that there is any sum payable by a defaulting securities firm, the TWSE shall forthwith offset said sum against its clearing and settlement funds and other interests. the case of any deficit after offsetting, the TWSE shall seek indemnification from the defaulting securities firm.
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