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Article NO. Content

Title:

Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities  CH

Amended Date: 2017.10.06 
Article 21     A securities firm that operates the business of brokered trades of foreign securities shall establish an account for their settlement with its correspondent bank.
     With the consent of the principal, a securities firm may keep settlement money for purchase orders and from sale orders that the principal has designated be made in a foreign currency, or receivables yielded by foreign securities held by the principal, in a segregated foreign currency account opened with the securities firm's correspondent designated foreign exchange bank in the Republic of China (hereinafter "customer foreign currency account").
     The required qualifications, operational procedures, and related controls for a securities firm conducting the matters under the preceding paragraph will be prescribed by the FSC in consultation with the Central Bank.
    When a securities firm accepts orders to trade foreign securities, the settlement of the principal's money/securities and the receipt/payment of fees, if not done through a customer foreign currency account, may be conducted in New Taiwan Dollars or in a foreign currency agreed upon by the securities firm and the principal; further, deposit/withdrawal of the money shall be conducted through a New Taiwan Dollar account or a foreign currency deposit account opened by the principal at a designated foreign exchange bank designated by the securities firm or through a direct remittance of foreign currency to a local financial institution designated by the securities firm in the home country of the given securities market.
    The procedures for conducting the settlement money remittance referred to in the preceding paragraph, where the principal designates New Taiwan Dollars or foreign currency, are as follows:
  1. At the time of the transaction, the principal shall designate either New Taiwan Dollars or a foreign currency as the currency for conducting the settlement, provided that a foreign currency shall be designated as the currency for conducting the settlement if the principal is a foreign natural person, a foreign juristic person, or a government fund established with the approval of the government of the Republic of China, a securities investment trust fund, assets in a special ledger account for investment-linked insurance, or a discretionary investment account.
  2. After buying foreign securities, the principal shall transfer the agreed upon amount, according to the purchase transaction report, into the securities firm's settlement amount before the settlement date.
  3. After the principal sells the foreign securities, the securities firm shall transfer the agreed upon amount, according to the sales transaction report, into a New Taiwan Dollar deposit account opened by the principal at a financial institution designated by the securities firm or into the principal's foreign currency savings account at a designated foreign exchange bank designated by the securities firm. This restriction, however, shall not apply if the laws or regulations of the local market provide otherwise.
  4. When there are amounts receivable or payable because the principal, using the same account on the same day, has both buying and selling foreign securities transactions, or first sells foreign securities and then, prior to the settlement date, buys foreign securities, the securities firm may, according to the principal's instruction, combine and set off all the received (paid) money in the same currency and then transfer the net received (paid) amount into the account.
  5. Where the principal has designated that foreign currency shall be used in settlement of the settlement money and overseas fees, the receipt/payment shall be carried out in a foreign currency, and may not be carried out in New Taiwan Dollars. Any required foreign exchange settlement shall be carried out by the principal with a designated foreign exchange bank or with the same securities firm that handles spot foreign exchange trading business, in accordance with the Regulations for Receipt/Payment of Foreign Exchange or Report of Foreign Exchange Transactions, and may use the foreign currency that the principal holds outside of the Republic of China for direct remittance to the financial institution designated by the securities firms at the location of the various securities exchange markets. Where the principal remits foreign currency that the principal holds outside of the Republic of China directly to the financial institution designated by the securities firms at the location of the various securities exchange markets, and there are therefore amounts payable (including settlement money, distributable dividends, interest, funds for mandatory repurchase, and the processing fees refunded for an account change) to a principal by the securities firm, the securities firm may also remit the given amount into the principal's own designated account.
  6. Where the principal has designated that settlement payments and foreign fees are to be paid in New Taiwan Dollars, remittance shall be carried out in New Taiwan Dollars, and may not be carried out in a foreign currency. Matters involving exchange settlement shall be carried out by the securities firm with a designated foreign exchange bank or with the same securities firm that handles spot foreign exchange trading business, in accordance with the Regulations for Receipt/Payment of Foreign Exchange or Report of Foreign Exchange Transactions, and relevant regulations.
  7. When the principal designates that payment/receipt of settlement payments and foreign fees is to be done in New Taiwan Dollars, calculation of exchange rates shall be negotiated between the principal and the securities firm on the basis of prevailing market rates.
     If funds and fees that are designated by a principal to be settled in foreign currency are received and paid through a customer foreign currency account, the settlement and remittance procedures shall be handled in accordance with the following provisions:
  1. After a principal's order to buy foreign securities is executed, the principal may settle the purchase with foreign currency, or with foreign currency converted from New Taiwan Dollars through a designated foreign exchange bank or the same securities firm that handles spot foreign exchange trading business in accordance with the Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions, that is on deposit in the customer foreign currency account. Settlement money and foreign fees shall be paid in foreign currency, and may not be paid in New Taiwan Dollars.
  2. When a principal buys foreign securities, the amount payable according to the purchase transaction report shall be paid with the principal's funds on deposit in the customer foreign currency account.
  3. When a principal sells foreign securities, the securities firm shall deposit the amount receivable according to the sales transaction report in the customer foreign currency account.
  4. When there are amounts receivable or payable because the principal, using the same account on the same day, has both buying and selling foreign securities transactions, or first sells foreign securities and then, prior to the settlement date, buys foreign securities, the securities firm may, according to the principal's instructions, combine and set off all the received (paid) money in the same currency and then transfer the net received (paid) amount into the account.
  5. Funds retained on deposit in the customer foreign currency account may, in accordance with the customer's instructions, be transferred to the customer's personal bank deposit account that is agreed upon in advance between the securities firm and the customer, to a settlement account for securities brokerage trading established by the securities firm under Article 38 of the Regulations Governing Securities Firms, or to the customer's personal ledger of a custodial account established under Article 22-4, paragraph 1, subparagraph 5 of the Offshore Banking Act. If the funds must be converted into New Taiwan Dollars, the principal shall make the conversion through a designated foreign exchange bank or the same securities firm that handles spot foreign exchange trading business in accordance with the Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions.
     If a securities firm transfers a net received (paid) amount in accordance with subparagraph 4 of paragraph 5 or subparagraph 4 of the preceding paragraph, it shall additionally file foreign exchange receipt, disbursement, or transaction statistical information in accordance with Central Bank regulations.