Except under the circumstance prescribed in paragraph 2 below, if settlement is not completed on time for a discretionary investment account, the securities broker shall handle the matter in accordance with the provisions governing default by an ordinary principal.
If settlement is not completed on time for a discretionary investment account because of non-performance by the authorized discretionary trader of obligations arising from trading exceeding the discretionary trader's authorization, such event shall be handled as follows:
The TWSE shall promptly relay information reported per subparagraph 1 of paragraph 2 above to all securities brokers.
- The securities broker shall carry out settlement on behalf of the principal and notify the principal. Not later than 6:00 p.m. of the business day next following the trade day, the securities broker shall prepare written report on relevant facts with seals of both the company and its responsible person fixed thereon, together with photocopy of the notice of unauthorized trading issued by the custodian institution, and related trade vouchers and brokerage contract (including documents submitted for account opening), and fax the aforesaid to the TWSE and notify the TWSE by telephone before forwarding original copy of the said documents to the TWSE for reporting to the Competent Authority. However, those that meet the requirements of Article 42, paragraph 5 of the Regulations Governing the Conduct of Discretionary Investment Business may substitute a notice of unauthorized trading issued by a party authorized to do so under the relevant contract or legal opinion for the notice of unauthorized trading issued by the custodian institution.
- In connection with the discretionary investment account, the securities broker shall immediately suspend acceptance of trading orders for securities. Other accounts in the name of the same principal shall not be affected by restrictions under paragraph 3 of Article 76.
- In connection with the securities or consideration received by a securities broker through settlement on behalf of the principal, the securities broker shall engage another securities broker to dispose of it on the Securities Exchange Market of the TWSE starting on the next business day after the required reporting has been made, provided that the securities in the same account, and of the same type and quantity may be offset against each other.
- Upon completion of the process prescribed in preceding subparagraph 3, the securities broker shall prepare written report on how the process has been handled, with the seals of both the company and its responsible person fixed thereon, together with photocopy of related trade vouchers, and forward the said documents to the TWSE for reporting to the Competent Authority.