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Article 3
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- General risk indexes:
A securities firm shall be rated based on its operational information for the current period according to the following indexes.
- Monthly scoring indexes:
- Debt to net worth ratio:
Total liabilities (excluding collected payment of shares underwritten) divided by net worth.
- Current ratio:
Current assets divided by current liabilities.
- Ratio of real estate and equipment and non-commercial real estate to total assets:
Real estate and equipment and non-commercial real estate divided by total assets.
- Ratio of error account occurrence:
With regard to the current period, number of error accounts occurred divided by total number of orders.
- Ratio of losses from error accounts to trading amount:
With regard to the current period, amount of losses from error accounts divided by total trading amount.
- Return on net worth:
With regard to the current period, accumulated after-tax income divided by the average total net worth.
- Ratio of average daily turnover to net worth:
With regard to the current period, average daily dollar amount of transactions undertaken divided by net worth, provided, however, that trading with the National Financial Stabilization Fund and government funds, and also local life insurance companies, banks and investment trust companies (investment trust funds) of a certain size or above, shall be excluded.
- Operating ratio of selected stocks:
With regard to the current period, dollar amount of stock trading undertaken under Articles 2 and 4 of the Taiwan Stock Exchange ("TWSE") or GreTai Securities Market ("GTSM") Directions for Announcement or Notice of Attention to Trading Information and Disposition divided by total dollar amount of trading undertaken.
- Business dispersion ratio:
With regard to the current period, dollar amount of trading undertaken for top five stocks with the largest trading amount divided by total dollar amount of trading undertaken, provided, however, that trading with the National Financial Stabilization Fund and government funds, and also local life insurance companies, banks and investment trust companies (investment trust funds) of a certain size or above, shall be excluded. Where the index score is lower than sixty, it is adjusted by the ratio of the stocks in the top five stocks that are covered by TWSE Taiwan 50 Index to the trading amount of the top five stocks.
- Ratio of concentration of trading counterparties:
With regard to the current period, dollar amount of trading undertaken of top 20 clients with the largest trading amount divided by total dollar amount of trading undertaken; provided, however, that trading with the National Financial Stabilization Fund and government funds, and also local life insurance companies, banks and investment trust companies (investment trust funds) of a certain size or above, shall be excluded.
- Ratio of losses or gains on valuation of operating securities to net worth:
Sum of adjustments in valuation of financial assets below divided by net worth. If the sum is credit balance (losses on valuation), the ratio is negative; and if the sum is otherwise debit balance (gains on valuation), the ratio is positive:
- Adjustments in valuation of operating securities-underwriting.
- Adjustments in valuation of operating securities-dealing.
- Ratio of the dollar amount of operating securities to net worth: The dollar amount of operating securities (including operating securities-underwriting and operating securities-dealing) divided by net worth.
- Ratio of the dollar amount of the lending auction/negotiation and settlement borrowing caused by short selling for same day offsetting to the dollar amount of that business: The monetary volume of the lending auction/lending negotiation and settlement borrowing caused by short selling for same day offsetting divided by the total dollar amount of the short selling for same day offsetting.
- Weekly scoring indexes:
- Ratio of average daily turnover to net worth:
With regard to the current period, average daily dollar amount of transactions undertaken divided by net worth.
- Operating ratio of selected stocks:
With regard to the current period, dollar amount of stock trading undertaken under Articles 2, 4 and 6 of the TWSE or GTSM Directions for Announcement or Notice of Attention to Trading Information and Dispositions divided by total dollar amount of trading undertaken.
- Business dispersion ratio:
With regard to the current period, dollar amount of trading undertaken for top five stocks with the largest trading amount divided by total dollar amount of trading undertaken .
- Ratio of concentration of trading counterparties:
With regard to the current period, dollar amount of trading undertaken for top 20 clients with the largest trading amount divided by total dollar amount of trading undertaken.
- Amount of penalties for delayed settlement:
Penalties under Article 137 of the Operating Rules of the Taiwan Stock Exchange Corporation (the "Operating Rules") for violation of the provisions of Article 104 of the Operating Rules, or penalties under Article 94-1 of the GTSM Rules Governing Securities Trading on the GTSM for violation of the provisions of Article 6 of the GTSM Directions Governing Clearing and Settlement Operations for Securities Traded on the GTSM.
- Special risk indexes:
A securities firm engaging in bonds, underwriting or dealing business shall be rated based on the following indexes on a monthly basis:
- Ratio of bonds business:
Balance of Repo － (Balance of Buyout/Selloff + Balance of Reverse Repo)
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Balance of Buyout/Selloff + Balance of Reverse Repo
- Ratio of risk equivalent of money trust and securities trust under wealth management to net self-owned capital: Sum of money trust and securities trust under wealth management multiplied by 12% and then divided by net self-owned capital.
- Ratio of risk equivalent in OTC derivatives market to net self-owned capital: risk equivalent in OTC derivatives market divided by self-owned capital.
- Ratio of total dollar amount of firm underwriting that remains available to net worth: Total amount of firm underwriting that remains available divided by net worth.
- Ratio of balance of funds and securities loans and margin transactions by securities firm to net worth: Combined amount of monthly loans for securities, balance of securities loans, and balance of margin purchases and short sales divided by net worth of securities firm.
- Ratio of balance of subject small-cap stocks in funds and securities loans and margin transactions by securities firm to total balance: Combined amount of monthly loans for securities, balance of securities loans, and balance of margin purchases and short sales, excluding stocks covered by TWSE Taiwan 50 Index, TWSE Taiwan Mid-Cap 100 Index and Taipei Exchange 50 Index, divided by total balance.
- Ratio of balance of subject securities whose price is too volatile or trading volume is excessively abnormal in funds and securities loans and margin transactions by securities firm to total balance: Shares whose price is too volatile or trading volume is excessively abnormal shall refer to the monthly balance of funds and securities loans and margin transactions that meets the selection standards under Articles 29 and 30 of the TWSE Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities; provided, however, that the selection period is changed to "three consecutive business days" or "any four of the last 10 business days" of the subject securities when their share price is too volatile or trading volume is excessively abnormal.
- Ratio of amount of monthly loss on valuation of issue of call (put) warrants to balance of issued call (put) warrants by end of month: Amount of monthly loss on valuation of issue of call (put) warrants divided by number of issued call (put) warrants that are outstanding at month end, where the amount of loss on valuation shall include profits and losses from issue of warrants, profits and losses for hedging, transaction taxes and operating expenses.
- Ratio of risk equivalent in client's funds and securities in securities firm's custody to net self-owned capital: Total amount of client's funds and securities in securities firm's custody multiplied by 15% and then divided by net self-owned capital.
- Ratio of profits and losses to net worth of invested businesses: Share of profits and losses of associated enterprises (including subsidiaries) and joint ventures entered by the equity method, divided by net worth.
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