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Article 3
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A securities firm that retains customers' settlement funds in the securities firm's Settlement Account with customers' consent shall set up a separate account ledger for each customer, record therein the itemized receipts and payments of funds on a daily basis, and retain the record.
A securities firm that retains customers' settlement funds in the securities firm's Settlement Account with customers' consent shall open a special NTD account in the name of its head office, and may open only one such account with the same bank.
The contract between the securities firm and the bank for the retention of customers' settlement funds in the Settlement Account shall state the following:
- No cash withdrawal from the Settlement Account is permitted. Transfers of funds are limited to accounts with account numbers agreed upon in advance between the securities firm and the bank and, if to be made to a customer, are limited to securities book-entry accounts opened by the customer for TWSE or TPEx securities trading ("Securities Book-entry Accounts") or one savings account of the customer itself opened on real-name basis, as agreed upon with the customer ("Customer Name-Based Account"). All accounts and account numbers agreed upon between the securities firm and the bank shall be reported in writing to the TWSE and TPEx in advance; changes shall be notified to the TWSE and TPEx immediately by the securities firm and the bank.
- Where the total amount transferred from the Settlement Account to the Securities Book-entry Account or Customer Name-Based Account of the same customer in one day reaches NTD 50 million, the bank shall immediately notify the TWSE and TPEx. The bank shall also notify the TWSE and TPEx immediately if withdrawal against the preceding subparagraph is involved in a transfer of funds, in addition to refusing to pay.
- No overdraft, pledge, or exercise of other rights in respect of the Settlement Account is permitted.
- The securities firm agrees the bank may furnish information concerning transactions in the account mentioned in the preceding paragraph as required by the Financial Supervisory Commission, TWSE and TPEx for the inspection of the securities firm's business.
After having stated the following in the contract as referred to in the preceding paragraph, a securities firm may deposit partial funds from the account under term deposit:
- No funds from the Settlement Account ledger deposited under term deposit may be deposited from the account in the form of certificate of deposits or under other arrangement.
- The securities firm shall agree with the financial institution with which funds from the Settlement Account ledger are deposited under term deposit that these funds may be released at any time.
- Upon early termination or expiration of the term of contract in respect of funds from the Settlement Account ledger deposited under term deposit, all principals and interests shall be transferred back to demand deposit through fund transfer.
Where a securities firm is acting in accordance with the preceding paragraph, the percentage ratio of deposited funds shall be kept at such level at which an adequate liquidity of the account is maintained, and the securities firm shall appoint designated staff to control and manage liquidity and security of the account.
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Article 3-3
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For the purposes of Article 3, Paragraph 3, Subparagraph 1 of these Guidelines, Customer Name-Based Accounts are limited to the following accounts of the customer itself that are KYC (Know Your Customer) compliant:
- New Taiwan dollar savings accounts opened with a bank.
- Electronic payment accounts registered and opened with a specialized electronic payment institution that has entered into a contracted institution contract with a securities firm.
- Other accounts approved by a competent authority.
When a securities firm agrees with a customer on the transfer of funds using the latter’s electronic payment account, the securities firm shall complete the verification of identity process in regard to the specialized electronic payment institution which has entered into the contract, to validate the authenticity of the account and the customer’s ownership of the account number.If a securities firm enters into the contract mentioned in Paragraph 1, Subparagraph 2 or other like agreement with a specialized electronic payment institution, a report shall be made to the TWSE and TPEx and a filing made with the single window for securities firm filings. Changes shall also be reported, and the following shall be confirmed before the contract or agreement is signed:
- The specialized institution has obtained the approval of the competent authority for operating the relevant businesses described in Article 4, paragraph 1 of the Act Governing Electronic Payment Institutions.
- There is no record of the institution having been subject to a disposition as in Article 38, Paragraph 1, Subparagraphs 1 to 6, Article 39, Subparagraph 2, or Article 40, Paragraph 1 of the aforementioned act, or subject to punishment that a competent authority imposed in accordance with Articles 46 to 54 of said act.
A securities firm may not additionally include Paragraph 1, Subparagraph 2 as an agreed option until after agreeing on the transfer of funds in Paragraph 1, Subparagraph 2 with the customer, provided the order of accounts shall be pre-designated, and a note added in the event of subsequent changes.
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Article 7
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Where the head office of a securities firm has trading halted or restricted by the TWSE pursuant to the Operating Rules or by the TPEx pursuant to the TPEx Trading Rules, the securities firm shall immediately cease to retain customers' settlement funds and shall, before the following business day, transfer the funds back to the customers' Securities Book-entry Accounts or Customer Name-Based Account for ledger settlement.
When the securities firm ceases to retain customers' settlement funds, it shall give immediate notice to the TWSE and TPEx in writing, reporting on how the circumstance in the preceding paragraph is handled.
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Article 11
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A securities firm that, with customers' consent, retains customers' funds in the Settlement Account and uses such account for purchasing R.O.C. government bonds and treasury bills or transfers the funds to other bank in a form of time deposits shall establish an effective internal control system and, upon confirmation of the legal compliance supervisor and audit supervisor, present said system to the board of directors for approval.
The above-mentioned internal control system shall specify the responsible departments of the securities firm, procedures whereby the securities firm ceases to retain customers' settlement funds and resumes retention, transfer of sources of customers' funds, term of settlement and payment of interest, the handling of management fees and taxes, management of customers' receipts and payments and debits and credits (including review and operating procedures for payment, deposit and transfer of funds for customers, Settlement Account risk control procedures, and review and operating procedures for agreement and amendment with respect to the Customer Savings Account), records required to be retained of customers' enquiries about their funds, premature termination of contract by customers, account management and data transmission regarding receipt and payment of funds, and other matters required by the competent authority to be included.
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Article 12
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A template of the contract shall be created by the TSA, presented to the competent authority for reference, and state the following:
- Scope of retention of the customer funds
- Scope of payment service provided to the customer and the order in which it is rendered
- Terms of settlement and payment of interest
- Procedures for the customer's transfer of funds
- Ways for the customer to inquire about its funds
- The securities firm shall retain receipt and payment records regarding funds in the customer's ledger
- Schedule of the securities firm's management fees
- Manner of handling matters pertaining to the profit and loss from the sale and purchase of R.O.C. government bonds and treasury bills
- Effective date of the contract and ways to handle amendments and termination of the contract
- Pursuant to the Personal Information Protection Act and relevant laws and regulations, the customer agrees the securities firm may furnish information pertaining to the customer's ledger to the TWSE, TPEx, TDCC and other institutions designated by the competent authority
- Dispute resolution
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Article 14
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A securities firm that retains funds in the Settlement Account with customers' consent shall set up a separate account ledger for each customer and record therein the following for each item on a daily basis:
- Transfers of sources of the customer's funds to such account
- Transfers of interest and profit and loss incurred from funds in the customer's ledger
- Transfers for the customer of monies payable by the customer
- Transfers of funds of the customer
- Transfers of funds in the event of premature termination of the contract by the securities firm or customer
The securities firm shall disclose the utilization of funds in the Settlement Account to the customer on a monthly basis and fully disclose in the financial reports the funds in the Settlement Account and their utilization (including information such as the overall balance of the securities firm's Settlement Account, objects invested in with the funds and amounts utilized for such investments, market values of the objects, and investment profits and losses, etc.).
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Article 18
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A securities firm shall retain the relevant record when a customer applies in the agreed manner for reclaim of its funds retained.
When the securities firm is to transfer the customer's funds above, it shall transfer them within the agreed period to the customer's Securities Book-entry Account or Customer Name-Based Account only.
In the event of a change to the Customer Savings Account in the preceding paragraph, the customer shall make an application for change by himself.
A securities firm shall, on a daily basis, notify customers that apply on the day for transfer of funds totaling NTD 1 million or above in a lump sum or cumulatively, by text, or by telephone with the audio recording retained; a text notice shall state that an immediate reply is requested in the event of queries.
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Article 20
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Where the regulatory capital adequacy ratio of a securities firm that retains funds in the Settlement Account with customers' consent has fallen below 120% for two consecutive months, the TWSE shall request the securities firm to cease to retain customer funds, in which event the securities firm shall transfer the retained funds back to the customers' Securities Book-entry Accounts or Customer Name-Based Accounts to settle the customer ledgers. Only when it has reported a regulatory capital adequacy ratio of 150% or above for three consecutive months may the securities firm make a report to the TWSE in writing, with a copy furnished to the TPEx, according to Article 6, and then resume the retention.
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