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Article NO. Content


Directions for Internal Control of Securities Firms Using Modelling in Management Operations  CH

Amended Date: 2016.04.08 
Categories: Market Supervision > Regulation of Securities Firms
Article 5     In order to conduct management operations that use modelling, a securities firm shall establish internal audit systems according to the following requirements and execute the relevant internal audit procedures:
  1. A securities firm shall establish an internal audit unit under the board. The audit manager shall have the power to lead and effectively supervise the audit work, meet the qualifications requirements in the "Regulations Governing Responsible Persons and Associated Persons of Securities Firms," rank at least as high as an assistant general manager or assistant vice president, and may not hold a concurrent position that is in conflict with or may impede audit operations.
  2. A securities firm shall have computer auditor to assist internal auditor in auditing the use of modelling in management operations.
  3. The internal audit unit shall regularly assess whether there is appropriate internal control over the use of modelling in management operations.
  4. The internal audit unit shall propose an audit plan for the review of the use of modelling in management operations, regularly and irregularly perform internal audit operations, produce an audit report including the working papers and relevant data, and keep relevant audit records.
  5. Situations discovered through the audit procedures described above shall be accurately revealed in the audit report and irregularities shall be reported to the board of directors. The internal auditor shall regularly follow and re-examine the deficiencies and irregularities mentioned in the report to ensure that the related units have taken timely and appropriate measures for improvement.
  6. The reporting procedures of the internal audit unit shall be independent of trading activities, back office operations and the risk management system. The depth, breadth, and frequency of internal audits shall be strengthened where irregularities are found or there is a material change in the product types, use of modelling, or internal control of the securities firm.