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Amended Article

Title：

Directions for Reporting and Handling of Out-Trades and Account Number Corrections by Securities Brokers  CH

Amended Date： 2019.01.07 
Categories： Securities Exchange Market > Out-trade
Article Content Content Search Article No. Search Legal Basis Amended Article Legislative History Chinese
1     These Directions are promulgated pursuant to Article 87, paragraph 1 of the Operating Rules of the Taiwan Stock Exchange Corporation (TWSE). Reporting and correction of out-trades and account number corrections by securities brokers shall be undertaken in accordance with these Directions.
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4     Procedures for reporting account number corrections for which an investor is liable:
  1. A securities broker processing an application for correction of an account number from the investor who originally placed the order shall do so, at the latest, by 10 a.m. of the second business day after the trade date; in the case of an on-market tender offer transaction that is executed and settled on the same day, it shall do so, at the latest, by 6 p.m. of the first business day after the trade date.
  2. A securities broker shall report correction of an account number in accordance with the investor's instructions regarding account numbers before and after correction and the "Application for account number correction" agreed upon between the investors. If the account number prior to correction was the number of a vacated account, the securities broker shall provide verification of such fact.
  3. A professional institutional investor requesting an account number correction in a manner consistent with the requirements on method of brokerage trading under Article 75 of the Operating Rules may not be required to submit the application in the preceding paragraph, in which case the securities firm shall keep the related information. If, however, the agent authorized for old account number is different from the agent authorized for corrected account number, or the corrected account number is for a different professional institutional investor for which not the same agent is authorized, the securities firm shall keep the agreement information showing the above expression of intent by both parties for the old and the new corrected account number.
  4. A securities firm shall retain the records about account number correction requested in accordance with paragraphs 2 or 3 above for a minimum of five years.
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5     Guidelines for handling of reporting of out-trades and account number corrections:
  1. A securities broker shall only report out-trades and account number corrections based on real errors and shall not have the following circumstances:
    1. To report an account number correction when an out-trade should have been reported, and vice versa.
    2. To report out-trades or account number corrections because investors have failed to complete share transfers in accordance with the procedures required for insiders.
    3. To report out-trades or account number corrections because investors are in violation of the regulations prohibiting sellout during the period of buyback of treasury stock by insiders or interested parties.
    4. To report out-trades or account number corrections because investors are in violation of the requirements on insider's right of claim for the recovery.
    5. To avoid regulatory compliance that should be complied with, or to facilitate investors to report inappropriate or false out-trades or account number corrections for their trades not because of an error attributable to the securities broker.
    6. To report out-trades or account number corrections based on other unreal errors.
  2. The securities broker shall bear liability for its encroachment on the rights and interest of the investor or for disputes arising out of the reporting and handling of out-trades or account number corrections.
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6     Handling of violations:
  1. Given the occurrence of any of the circumstances listed below in the reporting of out-trades or correction of account numbers by a securities broker, the TWSE, pursuant, mutatis mutandis, to Article 135 of the Operating Rules, may notify the securities broker to improve its practices, or, in addition thereto, a default penalty of not more than NT$100,000 may be imposed:
    1. Failure by a broker to action in accordance with Point 2, paragraphs 1, 2, 7 and 9, or Points 3 and 4, except for with reasonable cause and with the approval of the TWSE.
    2. Failure to report or handle a case in accordance with Point 2, paragraph 3 or 4.
    3. Violation of any of the subparagraphs in paragraph 1 of Point 5.
  2. When the circumstances of a securities broker's reporting of out-trades or correction of account numbers in violation of paragraph 1 of Point 5 are severe, the TWSE may issue a warning pursuant, mutatis mutandis, to Articles 136, 141 and 145 of the Operating Rules, or a default penalty of not more than NT$300,000 may be imposed, or restrict or suspend its trading or terminate its use of the market contract, and the TWSE may, pursuant, mutatis mutandis, to Article 144 of the Operating Rules, also notify the securities broker to issue a warning to or suspend its employees from executing business activities for one to six months.
  3. Where a securities broker has reported out-trades or account number corrections based on real errors but the errors are material or the securities broker is found by the TWSE to have committed apparent negligence in its operation, the TWSE may issue a warning pursuant, mutatis mutandis, to Article 136 of the Operating Rules, or a default penalty of not more than NT$300,000 may be imposed, and the TWSE may, pursuant, mutatis mutandis, to Article 144 of the Operating Rules, also notify the securities broker to issue a warning to or suspend its employees from executing business activities for one to six months.
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