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Article 25
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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.
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Article 28-1
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Where the total of brokerage or dealer trading orders placed by a securities firm in a single day exceeds twenty times its net funds available for use, the TWSE may suspend the placing of additional trading orders.
Where the net worth of a securities firm is less than its paid-in capital but more than 50 percent thereof, the multiple referred to in the preceding paragraph may be adjusted to ten times. Where the net worth is less than 50 percent of the paid-in capital, the multiple may be adjusted to five times. Where the net worth is less than 50 percent of the paid-in capital for 3 consecutive months, the multiple may be adjusted to two times. If a securities firm uses a capital reduction to raise the ratio of its net worth to its paid-in capital, it must meet and maintain for 3 months the required conditions for the multiple that it wishes reinstated for its brokerage trading before that multiple may be adjusted pursuant to the preceding provisions.
If the regulatory capital adequacy ratio of a securities firm meets the requirements of Article 65 of the Regulations Governing Securities Firms, the multiple referred to in the preceding paragraph may be adjusted to 15 times. If the regulatory capital adequacy ratio of the securities firm falls into the circumstances specified in Article 66 of the Regulations Governing Securities Firms, further downward adjustment may be made. The adjustment standards shall be separately prescribed by the TWSE.
If the monthly statements filed by a securities firm show that the cause for an adjustment under paragraph 2 or paragraph 3 to some degree ceases to exist, successive adjustments to the multiple may be made according to the degree to which the cause ceases to exist.
The method of calculation of the net funds available for use referred to in paragraph 1 shall be prescribed by the TWSE.
If for 3 consecutive months, the financial ratio as shown in the monthly accounting summaries of a securities firm fails to satisfy the requirements of Article 13 or Article 16 of the Regulations Governing Securities Firms, and the Competent Authority issues the first notice of improvement to be made within a time period, but no improvement is made, the TWSE may adjust the multiple referred to in paragraph 1 to fifteen times; upon the second notice of the Competent Authority to improve within a time period, but no improvement is made, the multiple may be adjusted to ten times; for each additional notice by the Competent Authority to improve within a time period, but no improvement is made, the multiple may be adjusted to half the previous multiple as the total limit on trading for customers' account and its own account. After the above adjustments, the highest allowable amount shall not exceed four times the net worth. Once improvement is made, the original multiple shall be restored.
In the event any securities firm falls within any of the categories under Article 3 of the Rules for Assistance to and Examination of Securities Firm of the TWSE, or subsequent to assistance, improvements cannot be made, the TWSE may lower the multiple referred to in paragraph 1. Where improvement has been made, the original multiple shall be restored.
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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 140
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Where any securities firm violates paragraph 1 or paragraph 3 of Article 28, paragraph 2 of Article 85, or Article 113, the TWSE may suspend trading by it for a period of not less than 3 months but not more than 6 months.
Where any securities firm has been halted from trading two times in any one year for violation of the provisions of Article 113, or has failed to meet the deadline for payment prescribed in accordance with Article 114, the TWSE may terminate its market usage contract.
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