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Article NO. Content

Title:

Taiwan Stock Exchange Corporation Regulations Governing Brokerage Contracts of Securities Brokers  CH

Amended Date: 2019.07.11 
Categories: Basic Laws and Regulations
Market Supervision > Regulation of Securities Firms
Article 3     Securities brokers accepting orders for securities trades must first execute a brokerage contract with the principal, and shall not effect securities trades on behalf of those who have not yet executed such a contract. Securities brokers shall abide by the following provisions when executing a brokerage contract with a principal:
  1. Where the principal is a natural person, with the exception of the following circumstances, that person shall bring their National Identity Card, personally place their seal on the brokerage contract, open an account, and place a photocopy of their National Identity Card on file:
    1. Where the principal has limited or no disposing capacity, or has been declared by a court to be placed under assistance, the principal's statutory agent, guardian, or assistant shall bring his/her own and the principal's National Identity Card, open an account, personally place their seal on the brokerage contract, and place a photocopy of their own and the principal's National Identity Card on file. Where the principal has not yet obtained a National Identity Card, a household membership certificate may be used; a statutory agent acting as guardian shall also supply proof of guardianship.
    2. Where the principal is a person working overseas for a juristic person, the principal may engage an agent to open an account by personally bringing their own and the principal's National Identity Cards, a power of attorney notarized by an ROC overseas representative office or other authorized institution, and documents provided by the juristic person evidencing the fact of employment overseas.
    3. Where the principal handles account opening by correspondence or electronic means, the TWSE Standards Governing Principal Identification and Management of Credit Line Categorization in the Processing by Securities Firms of Account Opening will govern.
  2. When the principal is a juristic person, procedures shall be carried out by an authorized person holding copies of evidentiary documents, including a copy of the juristic person's registration, a copy of the tax authority notice for issuance of a uniform serial number and establishment of a withholding entity, a legally valid power of attorney and a copy of the authorized person's National Identity Card.
  3. If the principal is a non-juristic person organization, an account shall be opened in the name of the organization's responsible person, with the organization's name listed as part of the account holder's name; the responsible person shall append a photocopy of the registration certificate for the organization issued by the competent authority (or its establishment approval, filing for recordation, or other registration document), a photocopy of the notice from the tax authority of the establishment of a tax withholding entity and the assignment of a uniform serial number (if the organization is exempt from income tax withholding, it must also submit one copy of the "income tax withholding exemption certificate"), and a photocopy of the responsible person's national ID..
    When the principal, the principal's statutory agent, or other authorized person executes a brokerage contract, a sample signature card or seal impression card for the principal, the principal's statutory agent, or another authorized person shall be kept on file, and an identical signature or seal shall be used when appearing in person to place orders to trade or subscribe to securities, or complete settlements and related procedures, provided when the principal cancels an authorization, he/she/it may do so by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent.
    The principal or the principal's statutory agent shall issue a power of attorney when engaging an agent to handle on its behalf any procedures relating to brokerage trading, subscription to securities, or settlement, and a signature specimen card or seal impression card of the agent shall be kept on record for handling such matters, provided when the principal cancels an authorization, he/she/it may follow the proviso of the preceding paragraph.
    A securities broker accepting an order to cancel an account may do so by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent.
    The brokerage contract shall provide evidence that these Regulations, and the TWSE Operating Rules, public announcements, and circular letters as well as the regulations of the ROC Securities Dealers Association, are recognized as a part of the contract, and shall further specify the following matters:
  1. If the principal is a natural person, the contract shall specify the principal's name, gender, age, place of family origin, occupation, residential address, and national ID number. If the principal has an agent, the contract shall specify the agent's name and national ID number.
  2. If the principal is a juristic person, the contract shall specify the juristic person's appellation, address, uniform serial number, telephone number, statutory representative, and authorized representative.
    The broker shall engage in securities trading on behalf of the principal only after the principal opens a central securities depository account and a deposit account at the principal's designated financial institution.
    The requirement in the preceding paragraph concerning the opening of a deposit account shall not be applicable to those specified in the following subparagraphs:
  1. Offshore overseas Chinese or foreign nationals, securities investment trust funds, venture capital enterprises invested by the National Development Fund of the Executive Yuan, insurance enterprises, and overseas Chinese or foreign nationals converting holdings of convertible corporate bonds into stocks or overseas depository receipts into the underlying securities, on whose behalf a custodian institution has opened a deposit account, may receive or deliver the price by account transfer (remittance).
  2. A trust enterprise with depository participant status may receive or deliver the price by account transfer (remittance) through the collective investment trust fund account managed by the trust enterprise.
  3. A depository institution of overseas depository receipts, when accepting orders for redemption and sale of shares held, may receive the price by account transfer (remittance) through the deposit account at its custodian institution.
  4. A securities investment consulting enterprise (SICE) or a securities investment trust enterprise (SITE) that has been engaged by a principal to conduct discretionary trading of securities may receive or deliver the price by account transfer (remittance) through a deposit account opened with the custodian institution.
  5. A domestic bank or insurance company, if it has obtained a rating of twA- or above from Taiwan Ratings Corporation, or a rating, from a credit rating institution approved or recognized by the competent authority, that is equivalent to twA- or above from Taiwan Rating Corporation, may receive or deliver the price by account transfer (remittance) during the valid period of the above-mentioned rating.
  6. Government agencies that conduct monetary settlement of securities trades through deposit accounts of the agencies in accordance with laws and regulations, may carry out the receipt and payment of the prices by transfer (or remittance) through their accounts.
  7. Where the principal agrees to leave the settlement money in the securities firm's settlement account, the principal may agree with the securities firm to receive or deliver the price by account transfer (remittance) through his deposit account.