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Article NO. Content

Title:

Guidelines Governing the Creation of Customer Ledgers of Securities Firms' Settlement Accounts  CH

Amended Date: 2020.05.27 (Articles 2, 12, 15, 22 amended,English version coming soon)
Current English version amended on 2017.12.25 
Categories: Market Supervision > Regulation of Securities Firms
Article 6     A securities firm that retains customers' settlement funds in the Settlement Account with customers' consent shall conform to the following conditions and qualification requirements except where, in the event of non-compliance with Subparagraph 2, it has made specific improvement and obtained the approval of the competent authority:
  1. The net value specified in the latest financial reports duly audited or approved by the CPA may not be lower than the paid-in capital.
  2. Legal compliance:
    1. Not having been subject to the disposition in Article 66, Subparagraph 1 of the Securities and Exchange Act or in Article 100, Paragraph 1, Subparagraph 1 of the Futures Exchange Act in the last three months.
    2. Not having been subject to the disposition in Article 66, Subparagraph 2 of the Securities and Exchange Act or in Article 100, Paragraph 1, Subparagraph 2 of the Futures Exchange Act in the last six months.
    3. Not having been subject to the disposition of the competent authority in the form of business termination in the past year.
    4. Not having been subject to the disposition of the competent authority in the form of revocation or nullification of the business permit in the last two years.
    5. Has established a legal compliance unit and supervisor in accordance with the internal control system establishment guidelines of various service enterprises in the securities and futures markets.
  3. The regulatory capital adequacy ratio reported in the half-year period prior to application has been over 150%.
    Prior to retaining customers' settlement funds, the securities firm shall submit the following documents with the commencement date stated to the TWSE, with a copy to the TPEx. The TWSE is deemed to agree to the retention if it does not indicate any disagreement within 10 business days:
  1. Minutes of the directors' meeting where it is resolved that the securities firm may retain customers' settlement funds.
  2. A written description of the internal control system through which the proposal for the securities firm to retain customers' settlement funds is raised to and approved by the board of directors.
  3. Contract for the opening of a special account for the securities firm to retain customers' settlement funds.
  4. Ledger account contract executed between the securities firm and each bank.
  5. Latest CPA-audited or -approved financial reports.
  6. Documents relevant to legal compliance.
  7. Regulatory capital adequacy ratio reported in the last half-year period.
  8. Affidavit that the bank receiving and paying the retained settlement funds of customers satisfies all qualification requirements set forth in the preceding article.
    Any addition of or change in the information in Subparagraph 4 of the preceding paragraph after the securities firm begins to retain customers' settlement funds shall immediately be reported to the TWSE in writing, with a copy provided to the TPEx.