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Article 3
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To conduct wealth management business by means of trusts, a securities firm shall apply for approval to concurrently operate money trusts and securities trusts pursuant to these Directions and the Regulations Governing the Concurrent Operation of Trust Business by Securities Investment Trust Enterprises, Securities Investment Consulting Enterprises, and Securities Firms (hereinafter, "the Regulations Governing the Concurrent Operation of Trust Business").
When conducting wealth management business by means of trusts, a securities firm shall comply with the Trust Enterprise Act, the Regulations Governing the Concurrent Operation of Trust Business, and these Directions, and shall also comply with the Securities and Exchange Act, Trust Act, and other relevant regulations.
If wealth management business conducted by a securities firm by means of trusts involves the operation of foreign exchange business, the Central Bank's approval shall also be obtained.
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Article 4
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A securities firm may conduct wealth management business by means of trusts, and apply to concurrently operate money trusts and securities trusts. Except as provided by applicable laws or regulations or as otherwise provided by the Financial Supervisory Commission (FSC), the types of trust business shall be limited to the following:
- non-discretionary individual management.
- non-discretionary collective management.
- semi-discretionary individual management for which the principal designates the scope or method of use.
- semi-discretionary collective management for which the principal designates the scope or method of use.
A securities firm shall manage trust assets separately from its proprietary assets and other trust assets. When a securities firm accepts, uses, and manages trust assets, the trust assets shall be represented under the name of trust assets of the securities firm. If the trust asset is money, the securities firm shall deposit it in a bank meeting the following qualifications:
- In the case of a domestic bank (including any subsidiary organized and registered by a foreign bank in the Republic of China pursuant to the Banking Act ), the common equity ratio, tier-one capital ratio, and capital adequacy ratio shall meet the following requirements:
- They may not be less than the minimum ratios specified under Article 5, paragraph 1, subparagraphs 1 and 2 of the Regulations Governing the Capital Adequacy and Capital Category of Banks.
- If any minimum ratio under the preceding item is raised by the FSC pursuant to Article 5, paragraph 2 of the Regulations Governing the Capital Adequacy and Capital Category of Banks, the bank's ratio may not be less than the raised ratio.
- In the case of a foreign bank's branch in the Republic of China, the credit rating of its head office shall meet the standard set out in Attachment 1.
A securities firm conducting the type of business under paragraph 1, subparagraphs 3 and 4, and accepting NT$10 million or more from the customer in original trust assets, shall, pursuant to the Regulations Governing the Concurrent Operation of Trust Business, Standards Governing the Establishment of Securities Investment Consulting Enterprises, and Regulations Governing the Conduct of Discretionary Investment Business by Securities Investment Trust Enterprises and Securities Investment Consulting Enterprises (hereinafter, "Regulations Governing the Conduct of Discretionary Investment Business"), apply to concurrently operate a securities investment consulting enterprise (SICE) that conducts discretionary investment business by means of trusts.
A securities firm shall conduct the type of business under paragraph 1, subparagraph 4 in accordance with the Regulations Governing Collective Management and Utilization of Trust Funds, and related laws and regulations.
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Article 5
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A securities firm applying to conduct the business under point 2, paragraph 1, subparagraph 1 shall meet the following conditions and qualifications, and shall obtain approval from the FSC:
- Regulatory capital adequacy ratio: its regulatory capital adequacy ratio reported for the half-year prior to the application date exceeds 150 percent.
- Financial position meets any of the following conditions:
- Its CPA audited or reviewed financial report for the most recent period shows no accumulated deficit, and its financial position meets the provisions of Articles 13, 14, 16, 18, 18-1 and 19 of the Regulations Governing Securities Firms.
- The holding company that directly or indirectly holds 100 percent of the shares of the securities firm provides an unconditional and irrevocable guaranty securing the liabilities of the securities firm.
- Legal compliance
- Has not, within the past three months, been sanctioned under Article 66, subparagraph 1 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 1 of the Futures Trading Act.
- Has not, within the past six months, been sanctioned under Article 66, subparagraph 2 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act.
- Has not, within the past one year, had a sanction imposed by the FSC to suspend its business.
- Has not, within the past two years, had a sanction imposed by the FSC to void any part of its business permit.
- Has not, within the past one year, had a sanction of suspended or restricted trading imposed on it by the Taiwan Stock Exchange Corporation (TWSE), Taipei Exchange (TPEx), or Taiwan Futures Exchange (TAIFEX), under the operating rules or bylaws thereof.
- Has established a legal compliance unit and a person in charge thereof pursuant to the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets (hereinafter "Regulations Governing Internal Control").
After a securities firm has been approved by the FSC to conduct the aforementioned business, if its regulatory capital adequacy ratio is non-compliant with the requirement of the preceding paragraph for two consecutive months, the securities firm shall suspend the aforementioned business. It may resume such business only after the regulatory capital adequacy ratio has met the requirement for three consecutive months and approval has been filed for and granted by the FSC.
A securities firm that fails to meet the compliance requirements in subparagraph (3) of paragraph 1 may be exempted from restriction under that subparagraph if has already corrected the infraction and provide specific documentary proof thereof.
An ROC branch of a foreign securities firm applying to conduct business under paragraph 1 shall comply with paragraph 1, subparagraphs 3 and 4, and the regulatory capital adequacy ratio, financial position, and the long-term credit rating of its head office shall comply respectively with subparagraphs 1 and 2 of paragraph 1, and Attachment 2.
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Article 6
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A securities firm applying to conduct the business under point 2, paragraph 1, subparagraph 2 shall meet the below-listed conditions and qualifications, and obtain the approval of the FSC:
- Regulatory capital adequacy ratio: The regulatory capital adequacy ratio reported for the half-year prior to the application date exceeds 150 percent.
- The financial condition meets one of the following conditions:
- The CPA-audited and attested financial report for the most recent period states net worth of not less than NT$10 billion and not lower than the paid-in capital.
- The CPA-audited and attested financial report for the most recent period states total assets of not less than NT$20 billion, net worth of not less than NT$6 billion and not less than paid-in capital, and a profit in each of the past three years.
- A holding company that directly or indirectly holds 100 percent of the shares of the securities firm, or a financial holding company that has a controlling interest in the securities firm, meets the conditions in one of the two preceding subparagraphs, and issues an unconditional and irrevocable guaranty securing the liabilities of the securities firm.
- Legal Compliance
- Has not, within the past three months, been sanctioned under Article 66, subparagraph 1 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 1 of the Futures Trading Act.
- Has not, within the past six months, been sanctioned under Article 66, subparagraph 2 of the Securities and Exchange Act or under Article 100, paragraph 1, subparagraph 2 of the Futures Trading Act.
- Has not, within the past one year, had a sanction imposed by the FSC to suspend its business.
- Has not, within the past two years, had a sanction imposed by the FSC to void any part of its business permit.
- Has not, within the past one year, had a sanction of suspended or restricted trading imposed on it by the TWSE, TPEx, or TAIFEX, under the operating rules or corporate thereof.
- Has not, within the past 6 months, been given an official reprimand or ordered to take corrective action under Article 44 of the Trust Enterprise Act.
- Has not, within the past 2 years, been sanctioned under Article 44, subparagraph 1, 2, or 3 of the Trust Enterprise Act.
- Has established a legal compliance unit and a person in charge thereof pursuant to the Regulations Governing Internal Control.
After a securities firm has been approved by the FSC to conduct the business under the preceding paragraph, if its regulatory capital adequacy ratio or net worth for two consecutive months fail to meet the requirements of the preceding paragraph, it shall suspend conducting the business under the preceding paragraph, and may resume it only after its regulatory capital adequacy ratio or net worth have met the requirements for three consecutive months, and it has reported to and received approval from the FSC.
A securities firm failing to meet a condition in subparagraph 3 of paragraph 1 may be exempted from restriction under that subparagraph if has already corrected the infraction and provides specific documentary proof thereof.
An ROC branch of a foreign securities firm applying to conduct business under paragraph 1 shall comply with paragraph 1, subparagraphs 3 and 4, and the regulatory capital adequacy ratio, financial condition, and long-term credit rating of its head office shall comply respectively with subparagraphs 1, and 2 of paragraph 1, and Attachment 3.
A securities firm that has been approved to conduct wealth management business by means of trusts and that furthermore meets certain conditions, after reporting for review by the TWSE and forwarding to and approval by the FSC, may be exempted from the restrictions set out in Point 24, paragraph 2 hereof with respect to the utilization of trust assets of high-asset customers in offshore structured products as set out in Article 6-2 of the Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities, and with respect to the credit rating of foreign bonds in which it entrusts investment by high-asset customers or by high net worth corporate investors as defined in Article 3, paragraph 3 of the Regulations Governing Offshore Structured Products.
The provisions of Article 3-1 and Articles 6-1 to 6-4 of the Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities shall apply mutatis mutandis to the following matters under the preceding paragraph: the definitions of "a securities firm that…meets certain conditions" and "high-asset customers," the conditions for and review of the offshore structured products, the content on which the securities firm shall agree with or obtain written confirmation from the domestic agent with respect to the entrusted investment, the reporting requirements, the establishment of a product suitability system, and the product review panel system.
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Article 7
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If wealth management business conducted by a securities firm involves another financial business for which special approval is required, permission for concurrent conduct of such business and the qualification requirements for personnel to engage in the business shall be handled in accordance with legal provisions governing the business in question.
If wealth management business conducted by a securities firm involves offshore structured products or any other financial products for which a distinction exists between professional investor and non-professional investor, the securities firm shall additionally conduct the business pursuant to the regulations applicable thereto.
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Article 8
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A securities firm conducting wealth management business shall, acting in accordance with laws and regulations governing the products and services that it provides, adopt the following management policy and working procedures, which shall be implemented after they have been approved by the board of directors (or, in the case of an ROC branch of a foreign securities firm, such approval may be given by a person authorized by the head office):
- Management policy: Shall at least include wealth management business objectives and strategies, market positioning, customer segmentation, products and services, organizational structure, and segregation of duties.
- Working procedures: Shall contain at least the following items:
- Personnel administration rules for the associated persons handling wealth management business ["wealth managers"].
- Working procedures for "Know Your Customers" evaluating.
- Working procedures for monitoring unusual and suspicious transactions.
- Procedures for using customer data, maintaining its confidentiality, and handling customer comments.
- Working procedures for business promotion and risk management of customer accounts.
- Mechanisms to prevent insider trading and conflicts of interest.
- An internal control and internal audit system, and a risk management system.
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Article 9
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To conduct wealth management business, a securities firm that conducts wealth management business shall establish a dedicated department in its head office, and charge the department with the duties of business planning and execution, and management of personnel.
The personnel of a securities firm's head office or branch unit conducting wealth management business shall meet the conditions and qualifications required for associated persons conducting wealth management business. Persons failing to meet such conditions and qualification may neither sell products in the name of wealth management nor carry on business in the name of wealth managers.
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Article 12
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The personnel administration rules for wealth managers adopted by a securities firm shall at least include personnel qualification requirements, professional training and prerequisites, a code of professional ethics, and a salary, reward, and performance evaluation system.
To enhance the competence of wealth managers, a securities firm shall on an ongoing basis administer education and training for such personnel and shall, for all working procedures and rules, adopt standard operating procedures for compliance by wealth managers.
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