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Article 5
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A securities firm shall adopt an internal control system pursuant to the provisions relating to fund brokerage business set out in the Standard Directions for the Internal Control Systems of Securities Firms adopted by the TPEx and submit it for approval by its board of directors and shall comply with Articles 21 to 24 and Article 36-2, paragraph 2 of the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets.
A securities firm's operation of the business under these Rules shall comply with laws and regulations, its articles of incorporation, and the internal control system referred to in the preceding paragraph.
Whenever the TPEx gives notice to make any amendments to the internal control system referred to in paragraph 1, the securities firm shall make the amendments within the specified time limit.
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Article 8
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A securities firm shall, on a customer-by-customer basis, establish mechanisms for the collection, payment, transfer, and custody of money and mechanisms for the recordation, transfer, and custody of funds, and incorporate them into its internal control system.
The securities firm shall sign a contract with the centralized securities depositary enterprise, and on a daily basis transmit data including the itemized details of trades and exchanges of funds over the trading platform to the information reporting system designated by the centralized securities depositary enterprise, and the centralized securities depositary enterprise shall save backups of the data and make it available for querying and reference by investors. If any discrepancy is discovered, the securities firm and the centralized securities depositary enterprise shall jointly investigate and determine the cause and correct the discrepancy.
The itemized data that the securities firm shall transmit under the preceding paragraph shall be confined to funds for which the collection and payment of money for subscription and redemption is done through a segregated bank account designated for this purpose by the centralized securities depository enterprise.
Matters relating to information transmission, handling of irregularities, and fees shall be handled in accordance with the provisions of the centralized securities depositary enterprise.
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Article 10
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The securities firm's chief officer for and personnel executing fund brokerage business and its internal audit officer and internal auditors shall possess the qualification of securities agent and shall participate in pre-service and in-service training as required by the TPEx.
In the case of a securities firm operating only fund brokerage business, the board of directors shall appoint one senior officer to serve as the chief AML/CFT compliance officer.
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Article 11
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The internal auditors of a securities firm shall perform regular or unscheduled internal audits of its finances, business, and information security, prepare internal audit reports, and keep them available for auditing.
The internal audit reports under the preceding paragraph shall include whether the finances and business of the securities firm comply with relevant laws and regulations and its internal control system.
A securities firm shall file with the TPEx, in the prescribed format by the end of each fiscal year, its annual audit plan for the next fiscal year, and within 2 months from the end of each fiscal year, it shall file with the TPEx in the prescribed format its report on the execution of its previous fiscal year's annual audit plan.
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Article 12
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A securities firm shall keep records of its handling of fund brokerage business and keep them available for auditing.
The records under the preceding paragraph shall be kept for at least 15 years. In the event of any dispute, however, they shall be kept until the dispute is resolved.
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Article 13
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A securities firm that operates only fund brokerage business shall, within 3 months after the end of each fiscal year, file with the TPEx and publicly announce its annual financial report audited and attested by CPAs. The auditing and attestation of the aforesaid financial report shall be performed by practicing CPAs of a joint accounting firm approved by the FSC in accordance with the Regulations Governing Approval of Certified Public Accountants to Audit and Attest to the Financial Reports of Public Companies.
The financial reports under the preceding paragraph shall be prepared in accordance with applicable laws and regulations. For matters on which applicable laws and regulations are silent, they shall be prepared in accordance with generally accepted accounting principles.
A securities firm that operates only fund brokerage business shall, by the 7th day of each month, file with the TPEx in the prescribed format its monthly accounting summary and income statement for the preceding month.
The periods for which a securities firm keeps its accounting reports, account books, and accounting documents shall comply with the Business Entity Accounting Act, and additionally shall comply with the Required Periods for Preservation of Accounting Statements and Vouchers by Securities Firms Trading on the TPEx adopted by the Taipei Exchange.
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Article 17
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A securities firm and its responsible persons, managers, and employees shall conduct fund brokerage business in accordance with the duties of care and loyalty of a good fiduciary and the principles of honesty and good faith.
A securities firm and its personnel may not do any of the following when executing fund brokerage business:
- Agree to or provide any specific interest or sharing of losses, or provide any judgment regarding whether a certain fund will rise or fall in price, or provide any investment recommendation, or provide investment consulting service, to induce investors to trade or exchange.
- Misappropriate any fund or money owned by a customer or kept under the custody of the securities firm in the course of business.
- Conceal or omit important financial or business information of a fund that is traded or exchanged on the issuer's trading platform, or of a fund's securities investment trust enterprise or an offshore fund's manager or master agent.
- Forge, conceal, or make any false entry regarding any record of collection, payment, or transfer of money.
- Anything else injurious to the rights and interests of investors or in violation of any relevant law or regulation.
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Article 22
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The securities firm shall adopt procedures for reviewing funds prior to launching them on the trading platform and conduct pre-launch reviews.
The review procedures under the preceding paragraph shall include at least the following:
- The investment objectives and policies, operational strategies, risk and return, and past performance of the fund.
- The reasonableness of the fees associated with the fund.
- Types of customers suitable for the fund.
- The adequacy of disclosure of information in documents including the fund prospectus and the investor information summary.
The net asset value of a fund under paragraph 1 must be NT$300 million or greater.
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Article 23
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If the net asset value of a fund is lower than that specified in the preceding paragraph, the securities firm may not newly accept customer orders for trades or exchanges of that fund.
Only once the net asset value of a fund under the preceding paragraph has recovered to NT$400 million or greater may the securities firm resume accepting customer orders for trades or exchanges of that fund.
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Article 24
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The securities firm shall disclose information about the fund including its basic information, risk-return rating, and net asset value, for convenient query and reference by investors.
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Article 25
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The securities firm shall adopt fair and reasonable trading rules for fund brokerage trading and publish them on its trading platform and incorporate them into its internal control system.
The trading rules under the preceding paragraph shall include the trading hours, methods of trading and reporting of trades, trade procedures, trade price determination methods, trade execution principles, restrictions on currencies used in trades, method for collection and payment of money, clearing and settlement method, and times for payments and receipts. The trading rules, and any amendments thereto, shall be filed with the TPEx.
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Article 26
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A customer who is engaging in fund brokerage trading with the securities firm for the first time shall submit their identity document(s) and carry out account opening procedures on the trading platform and sign an account opening contract.
Before a customer engages in fund brokerage trading with the securities firm for the first time, the customer shall designate a deposit account or accounts opened in the investor's own name at a financial institution and agree and authorize the securities firm to pay and receive money through that account.
A customer's deposit account or accounts under the preceding paragraph shall be limited to one New Taiwan dollar account and one foreign currency account. When there is any change to a customer's deposit account, it shall enter into a new agreement with the securities firm.
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Article 27
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A securities firm shall thoroughly get to know a customer before it may agree to open an account for the customer.
A securities firm shall adopt principles for the acceptance of customers and working procedures for know-your-customer reviews. The securities firm shall keep a customer's basic information on record, including the customer's identity, financial background, income and source of funds, risk preference, past investment experience, and investment objectives and demands, and give overall consideration to the following items, to distinguish a customer's risk tolerance rating:
- The customer's funds utilization status and professional competence.
- The customer's investment attributes, understanding of risk, and risk tolerance.
- Suitability of customer services and suitable range of investment recommendations.
The content of a customer's basic information and the results of the analysis under the preceding paragraph shall be presented to the customer for their confirmation, and the same shall be done when there is any change thereto.
When there is any change to a customer's basic information under paragraph 2, the securities firm shall reevaluate the customer's risk tolerance rating.
The securities firm shall fulfill its duty of due diligence with respect to the basic information on record for a customer. When necessary, it may require the customer to provide relevant supporting documents.
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Article 28
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A securities firm shall, based on the customer risk tolerance rating classifications and fund risk-return rating classifications it has adopted, formulate a method for suitable matching of customer risk tolerance ratings with fund risk-return ratings. When accepting a customer order for fund brokerage trading through the trading platform, it shall make an evaluation of suitability, and confirm that the customer is capable of bearing the risk associated with the fund in which it intends to invest and shall keep a record of the evaluation.
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Article 29
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With respect to the itemized account ledgers set up by a securities firm for customer money under Article 8, and to money of the customer that is kept in custody, the securities firm shall enter into a contract with the customer, specifying the following:
- Nature of the account, and the scope within which money is kept for the customer.
- Scope of payment services provided to the customer.
- Ownership and method for settlement and distribution of bank interest accruing on money kept for the customer.
- Procedures for the customer's withdrawal of money and termination of deposit of money.
- Method for the customer to inquire about its money.
- The securities firm shall keep records of all payments and receipts of customer money on the itemized customer account ledger.
- Schedule of the securities firm's management fees.
- Effective date of the contract and methods for handling amendment and termination of the contract
- Pursuant to the Personal Data Protection Act and relevant laws and regulations, the customer agrees the securities firm may furnish information pertaining to the customer's account ledger to the competent authority, the TPEx, and other institutions designated by the TPEx.
- The matters under Article 9, paragraph 6, subparagraph 4.
- The handling of disputes.
- Other matters relating to the rights and interests of the customer.
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Article 30
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The securities firm shall each day make itemized entries of each of the following items in the itemized account ledger of customer money that it sets up under Article 8:
- Transfers of sources of the customer's funds to the account
- Transfers of interest accrued on money kept for the customer.
- Transfers for the customer of money payable by the customer
- Transfers of money withdrawn by the customer
- Transfers of funds in the event of termination of the contract by the securities firm or customer.
The securities firm shall retain records of receipts and payments of money under the preceding paragraph and retain the payment and receipt documents and shall prepare and send the customer a monthly reconciliation statement based on the itemized daily account entries.
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Article 31
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The securities firm shall provide daily to the trustee financial institution under Article 9, subparagraph 3 information including the basic information of a customer and the monetary balance in the customer's itemized ledger.
When the securities firm instructs the trustee financial institution under the preceding paragraph to pay or transfer money, the securities firm shall be solely liable, and may not prejudice the rights or interests of the customer, in the event any monetary loss is incurred because of operational error by the securities firm.
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Article 32
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Before conducting a fund trade or exchange transaction based on a customer order accepted through the trading platform, the securities firm shall collect the relevant money or securities in full, and only then may it proceed with the transaction.
The securities firm shall deliver relevant documents including the prospectus and the risk disclosure statement before accepting a customer's application to engage in a trade or exchange transaction and before delivery is made of any money or securities.
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Article 33
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When a customer has completed a fund trade or exchange transaction, the securities firm shall prepare and issue to the customer a trade confirmation or trade report, and immediately perform settlement. Additionally, it shall prepare and deliver trade reconciliation statements to the customer on a monthly basis.
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