Important Measures
Important Measure May 2021
2021-07-19
1. An Order Issued Regarding Article 3, Paragraph 3 and Article 4, Paragraph 3 of the Securities Investment Trust and Consulting Act, to Allow SITEs and SICEs to Sell to and Advise High-Asset Customers on Offshore Funds Not Having the Nature of a Securities Investment Trust Fund
The Financial Supervisory Commission (FSC) in 2014 allowed securities investment trust enterprises (SITEs) and securities investment consulting enterprises (SICEs) to sell offshore funds not having the nature of a securities investment trust fund (“non-SITF offshore funds”) to, and only to, qualified institutional investors under Article 4 of the Financial Consumer Protection Act. Now, considering the financial service needs of the high-asset customer group, the FSC on 31 May 2021 issued an order to further allow SITEs and SICEs to sell to and advise high-asset customers (with a financial capacity of NT$100 million or more) on non-SITF offshore funds.
2. Securities Firms Allowed to Accept Orders to Trade Foreign Securities on a Fixed-Term, Fixed-Amount Basis
To provide investors with diversified and convenient trading methods, and to meet investors’ needs for diversified selection of financial products and those of retail investors for global allocation of assets, the FSC on 4 May 2021 approved recordation of relevant amended provisions of the Taiwan Securities Association Rules Governing Securities Firms Accepting Orders to Trade Foreign Securities, thereby allowing securities firms to accept customer orders to trade foreign securities on a fixed-term, fixed-amount basis (“systematic investment plan”). In principle, an investment under a systematic investment plan must be made with a goal of mid- or long-term investing and be limited to stocks and exchange traded funds (ETFs) not having a leveraging or short-selling effect, for which the securities firm shall adopt its own appropriate selection criteria. Further, the trade price shall be the weighted average price calculated based on the total quantity and dollar amount of all trades executed by the securities firm on the trade date with the fixed amount designated for the fixed term under the systematic investment plan. The securities firm shall also, at its business premises or on its website, disclose relevant information on the trading of foreign securities using a systematic investment plan, such as markets of trading, scope of investment, and associated fees.
3. To enact legal/regulatory adjustment to facilitate financial technology (FinTech) enterprises in materializing their projects under Fintech sandbox experimentation so as to promote the development of the FinTech industry, and, in response to FinTech innovative investment and trading activities, the FSC amended the Standards Governing the Establishment of Securities Firms, the Regulations Governing Securities Firms, and the Regulations Governing Responsible Persons and Associated Persons of Securities Firms (“Personnel Management Regulations”) to allow securities firms to conduct “fund trading and exchange brokerage business” (“fund brokerage business”), and to allow FinTech sandbox experimentation applicants that have been approved to conduct securities related business to apply for permission to convert into a securities firm. In addition, in line with the market maker system to be implemented at the end of June 2021, the FSC also amended the Regulations Governing Securities Firms to lift the restriction on the selling price of borrowed securities for market makers (limited to securities dealers). The main points of the amendments are as follows:
(1) Allowance of securities firms to conduct fund brokerage business:
< The Standards Governing the Establishment of Securities Firms were amended to add that, for a securities broker that only operates fund brokerage business, the minimum paid-in capital shall be NT$50 million, the deposit for establishment shall be NT$10 million, and the internal control system shall be handled in accordance with the rules of the Taipei Exchange (TPEx). (Amendment to Articles 3, 7 and 11)
< The Regulations Governing Securities Firms were amended to add that for a securities broker that only operates fund brokerage business, the business deposit shall be NT$10 million; to require a securities firm that operates this business to establish a separate deposit account with a bank for the receipt and payment of relevant funds, which funds may not be used for other purposes; and to specify that a securities firm that only operates this business shall deliver investors’ funds to a trust; to exclude the application of certain provisions of these Regulations, and to authorize the TPEx to administer and adopt relevant rules. (Amendment to Articles 9, 38-1 and 45-1)
< The Personnel Management Regulations were amended to stipulate that the responsible persons and associated persons of a securities firm that only operates fund brokerage business shall meet the associated personnel qualification and registration requirements set out in these Regulations, that the remaining requirements of these Regulations with respect to managerial officer qualifications, personnel training, and other relevant matters do not apply to the securities firm, and that the TPEx is authorized to administer and adopt relevant personnel management rules. (Amendment to Article 21-1)
(2) Allowance of FinTech sandbox experimentation applicants to convert into a securities firm: An application for permission of conversion may be submitted if the innovation experiment is innovative in nature and can improve the efficiency of financial services, reduce operating costs, or advance the rights and interests of financial consumers, and if the applicant is furthermore a company limited by shares with net worth not less than the amount specified in Article 3 of the Standards Governing the Establishment of Securities Firms and also not less than two-thirds of the company’s paid-in capital, and the applicant does not engage in any business operations not allowed for a securities firm. As to the applicant’s qualification, required deposit, and documentation and procedures required to apply for permission of conversion and issuance of permit license, the current provisions of these Standards with respect to applications for establishment of securities firms shall apply mutatis mutandis. (Amendment to the Standards Governing the Establishment of Securities Firms by adding Article 10-2)
(3) Lifting of restriction on the selling price of borrowed securities for market makers (limited to securities dealers): The Regulations Governing Securities Firms were amended to exempt a securities firm, in its capacity as a market maker needing to provide trading quotes or hedge risks, from the restriction that the selling price of borrowed securities may not be lower than the closing price of the previous business day. (Amendment to Article 32-1)
The Financial Supervisory Commission (FSC) in 2014 allowed securities investment trust enterprises (SITEs) and securities investment consulting enterprises (SICEs) to sell offshore funds not having the nature of a securities investment trust fund (“non-SITF offshore funds”) to, and only to, qualified institutional investors under Article 4 of the Financial Consumer Protection Act. Now, considering the financial service needs of the high-asset customer group, the FSC on 31 May 2021 issued an order to further allow SITEs and SICEs to sell to and advise high-asset customers (with a financial capacity of NT$100 million or more) on non-SITF offshore funds.
2. Securities Firms Allowed to Accept Orders to Trade Foreign Securities on a Fixed-Term, Fixed-Amount Basis
To provide investors with diversified and convenient trading methods, and to meet investors’ needs for diversified selection of financial products and those of retail investors for global allocation of assets, the FSC on 4 May 2021 approved recordation of relevant amended provisions of the Taiwan Securities Association Rules Governing Securities Firms Accepting Orders to Trade Foreign Securities, thereby allowing securities firms to accept customer orders to trade foreign securities on a fixed-term, fixed-amount basis (“systematic investment plan”). In principle, an investment under a systematic investment plan must be made with a goal of mid- or long-term investing and be limited to stocks and exchange traded funds (ETFs) not having a leveraging or short-selling effect, for which the securities firm shall adopt its own appropriate selection criteria. Further, the trade price shall be the weighted average price calculated based on the total quantity and dollar amount of all trades executed by the securities firm on the trade date with the fixed amount designated for the fixed term under the systematic investment plan. The securities firm shall also, at its business premises or on its website, disclose relevant information on the trading of foreign securities using a systematic investment plan, such as markets of trading, scope of investment, and associated fees.
3. To enact legal/regulatory adjustment to facilitate financial technology (FinTech) enterprises in materializing their projects under Fintech sandbox experimentation so as to promote the development of the FinTech industry, and, in response to FinTech innovative investment and trading activities, the FSC amended the Standards Governing the Establishment of Securities Firms, the Regulations Governing Securities Firms, and the Regulations Governing Responsible Persons and Associated Persons of Securities Firms (“Personnel Management Regulations”) to allow securities firms to conduct “fund trading and exchange brokerage business” (“fund brokerage business”), and to allow FinTech sandbox experimentation applicants that have been approved to conduct securities related business to apply for permission to convert into a securities firm. In addition, in line with the market maker system to be implemented at the end of June 2021, the FSC also amended the Regulations Governing Securities Firms to lift the restriction on the selling price of borrowed securities for market makers (limited to securities dealers). The main points of the amendments are as follows:
(1) Allowance of securities firms to conduct fund brokerage business:
< The Standards Governing the Establishment of Securities Firms were amended to add that, for a securities broker that only operates fund brokerage business, the minimum paid-in capital shall be NT$50 million, the deposit for establishment shall be NT$10 million, and the internal control system shall be handled in accordance with the rules of the Taipei Exchange (TPEx). (Amendment to Articles 3, 7 and 11)
< The Regulations Governing Securities Firms were amended to add that for a securities broker that only operates fund brokerage business, the business deposit shall be NT$10 million; to require a securities firm that operates this business to establish a separate deposit account with a bank for the receipt and payment of relevant funds, which funds may not be used for other purposes; and to specify that a securities firm that only operates this business shall deliver investors’ funds to a trust; to exclude the application of certain provisions of these Regulations, and to authorize the TPEx to administer and adopt relevant rules. (Amendment to Articles 9, 38-1 and 45-1)
< The Personnel Management Regulations were amended to stipulate that the responsible persons and associated persons of a securities firm that only operates fund brokerage business shall meet the associated personnel qualification and registration requirements set out in these Regulations, that the remaining requirements of these Regulations with respect to managerial officer qualifications, personnel training, and other relevant matters do not apply to the securities firm, and that the TPEx is authorized to administer and adopt relevant personnel management rules. (Amendment to Article 21-1)
(2) Allowance of FinTech sandbox experimentation applicants to convert into a securities firm: An application for permission of conversion may be submitted if the innovation experiment is innovative in nature and can improve the efficiency of financial services, reduce operating costs, or advance the rights and interests of financial consumers, and if the applicant is furthermore a company limited by shares with net worth not less than the amount specified in Article 3 of the Standards Governing the Establishment of Securities Firms and also not less than two-thirds of the company’s paid-in capital, and the applicant does not engage in any business operations not allowed for a securities firm. As to the applicant’s qualification, required deposit, and documentation and procedures required to apply for permission of conversion and issuance of permit license, the current provisions of these Standards with respect to applications for establishment of securities firms shall apply mutatis mutandis. (Amendment to the Standards Governing the Establishment of Securities Firms by adding Article 10-2)
(3) Lifting of restriction on the selling price of borrowed securities for market makers (limited to securities dealers): The Regulations Governing Securities Firms were amended to exempt a securities firm, in its capacity as a market maker needing to provide trading quotes or hedge risks, from the restriction that the selling price of borrowed securities may not be lower than the closing price of the previous business day. (Amendment to Article 32-1)
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- Update： 2021-07-19
