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〈Application for Foreign Exchange Derivatives Business〉 Article 12
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An authorized bank that has been approved by the Bank to engage in foreign
exchange derivatives business may offer the following foreign exchange
derivatives without application:
1.Foreign exchange forward (excluding New Taiwan dollar (NTD) non-deliverable
forward).
2.Foreign exchange swap.
3.Combinations of foreign exchange derivatives not involving NTD exchange rate
that the authorized bank may engage in according to rules and that are linked
to the underlying asset with the same risk and combined through the same
transaction contract, but excluding complex high-risk products involving
foreign exchange that are offered to customers other than professional
institutional investors and high net worth corporate investors.
4.Foreign exchange derivatives transactions not involving NTD exchange rate
between domestic authorized banks and between a domestic authorized bank and
a foreign bank.
5.Domestic and foreign futures contracts not involving NTD exchange rate traded
by a futures trader.
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An authorized bank that has been approved by the Bank to engage in foreign
exchange derivatives business shall apply to the Bank for approval or report to
the Bank for record based on the following criteria if it intends to offer the
following foreign exchange derivative products:
1.Application for approval before commencing:
(1)Foreign exchange derivatives not yet approved by the Bank or have been
approved for less than six months, and foreign exchange derivatives
linked thereof.
(2)NTD non-deliverable foreign exchange forwards.
(3)Foreign derivatives involving NTD exchange rate.
(4)Discretionary foreign currency margin trading.
2.Reporting for record before commencing: The service of recommending those
foreign exchange derivative products by the designated branch of an authorized
bank under the authorization of its head office.
3.Reporting for record after commencing:
(1)Foreign exchange derivative products approved by the Bank for over six
months and not involving NTD exchange rate.
(2)Foreign exchange derivative products offered to professional institutional
investors and high net worth corporate investors without involving NTD
exchange rate and not yet approved by the Bank or approved for less than
six months, which comply with the relevant rules of the competent authority.
(3)Information and consulting services on offshore financial derivatives under
the approval of the competent authority. The underlying asset shall not
involve domestic interest rates, exchange rates, equities, indices,
commodities, credit events, fixed-income or other interests.
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Where a professional institutional investor accepts trading orders,
signs a trust agreement, discretionary services agreement,
investment-linked insurance contract or offers privately placed fund,
and carries out transactions provided in Items 2 and 3, Subparagraph 3
of the preceding paragraph in its name, the trustors/mandatories,
policyholders or subscribers shall also be a professional institutional
investor or high net worth corporate investor.
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〈Application for Engaging in Non-discretionary Money Trust Business〉 Article 16
An authorized bank concurrently conducting the trust business that engages in
the NTD or foreign currency non-discretionary money trust business investing in
foreign-currency denominated securities shall submit the following documents to
the Bank for approval:
1.Approval documents from the competent authority;
2.Minutes with the resolution of the board of directors to engage in the NTD or
foreign currency non-discretionary money trust business for a domestic bank
and Agricultural Bank or a letter of authorization from the head office or a
regional headquarters of a foreign bank;
3.A regulatory compliance statement;
4.Descriptions of the designated currency for receipts and disbursements and
foreign exchange settlement procedures; and
5.Other documents specified by the Bank.
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〈Application for foreign currency denominated collective investment trust account and foreign currency denominated collective trust fund business 〉 Article 17
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An authorized bank concurrently conducting the trust business that engages in
the foreign currency denominated collective investment trust account business
or offers and issues foreign currency denominated collective trust funds inside
the ROC shall submit the following documents to the Bank for approval before
establishing or offering such fund for the first time:
1. Approval documents from the competent authority. Exemptions:
(1)Banks that establish foreign currency denominated collective investment
trust accounts which accept funds from professional investors referred to
in the Regulations Governing Offshore Structured Products (it should be
stated in the application letter) only ; or
(2)Banks that offer and issue the foreign currency denominated collective
trust fund;
2. A management and utilization plan for the foreign currency denominated
collective investment trust account established for the first time or an
offering and issuance plan for the collective trust fund offered for the
first time;
3. A resolution of the board of directors for a domestic bank and Agricultural
Bank to engage in the foreign currency denominated collective investment
trust account business or a letter of authorization from the head office or
the regional headquarters of a foreign bank;
4. A regulatory compliance statement; and
5. Other documents required by the Bank.
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An authorized bank that has obtained approval from the Bank to engage in the
business mentioned in the preceding paragraph is not required to apply to the
Bank for approval on a case-by-case basis subsequently.
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〈Application for other foreign currency trust businesses〉 Article 17-1
An authorized bank concurrently conducting the trust business that engages in
foreign currency trust businesses other than those under the preceding two
articles shall submit the following documents to the Bank for approval:
1. Approval documents from the competent authority or relevant supporting
documents that meet the requirements under Article 5 of the Regulations
Governing the Scope of Business, Restrictions on Transfer of Beneficiary
Rights, Risk Disclosure, Marketing, and Conclusion of Contract by Trust
Enterprises;
2. Description of operations (exempted for applications for engaging in the
foreign currency money trust or foreign currency securities trust), which
should include the following particulars:
(1) Name of business (according to the business activities and classification
provided in Article 16 of the Trust Enterprise Act and Articles 6 ~ 8 of
the Enforcement Rules of the Trust Enterprise Act);
(2) Introduction of business;
(3) Operation process; and
(4) Description of receipts and payments of funds;
3. A resolution made by the board of directors of a domestic bank or the
Agricultural Bank of Taiwan to engage in the business or a letter of
authorization from the head office or the regional headquarters of a foreign
bank;
4. A regulatory compliance statement; and
5. Other documents required by the Bank.
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〈Foreign Exchange Derivatives Not Involving NTD Exchange Rate〉 Article 32
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Authorized banks shall comply with the following rules when engaging in the
foreign exchange derivative transactions not involving NTD exchange rate:
1.Foreign currency margin trading:
(1)Shall not be conducted with foreign currency loans.
(2)Without the approval of the Bank, authorized banks shall not conduct
transactions under this subparagraph by the discretionary account service
nor "joint account". Regulations governing the discretionary account service
will be separately prescribed by the Bank.
(3)Authorized banks shall not accept term deposits or other collaterals under a
third party's name as the collateral for foreign currency margin trading.
2.In carrying out foreign exchange forward and swap transactions between foreign
currencies, when the contract is rolled over, the price shall be reset based on
the current market exchange rate rather than the original contract rate.
3.In carrying out foreign exchange swaps and cross currency swap transactions
between foreign currencies, the appropriate "remittance classification and code
number" shall be indicated on the other relevant transaction certificates and
included in the daily transaction report at the time of settlement.
4.Credit default swap and credit default option:
(1)Counterparties shall be limited to legal entities who are also professional
customers.
(2)Where the counterparty is a domestic customer, unless the competent
authority agrees it could be a protection seller, the domestic customer
should be the protection buyer in a credit derivatives transaction.
(3)Where a domestic customer is the protection seller in a credit derivatives
transaction, the reference entity shall meet the requirements set out by its
competent authority and shall not be a government or company in Mainland
China Area or any company directly or indirectly owned by which with at
least 30% shares.
(4)Where the authorized bank itself is the protection seller and the reference
entity is an interested party, the terms of the transaction shall not be
more favorable than those offered to other counterparties in the same
category, and shall comply with the relevant regulations.
(5)Where the products under this subparagraph are combined into a structured
product, the counterparties shall be limited to professional institutional
investors and foreign legal entities who are also professional customers.
5.Where the contracts under this subparagraph are combined into a structured
product, restrictions and rules applicable to individual products and
underlyings shall be followed.
6.An authorized bank shall not switch the foreign exchange derivatives business
originally offered by itself to providing information and consulting services
on offshore financial derivatives.
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Unless it is otherwise provided by the Bank, foreign exchange derivative products not involving NTD exchange rate offered by an authorized bank shall not be linked to the
following:
1.Asset securitization related securities or products.
2.Unlisted individual stocks, stock indices or exchange-traded funds in Mainland
China Area.
3.Securities privately placed domestically or abroad.
4.Certificates of beneficial interest that are issued overseas by domestic
securities investment trust enterprises and are not listed for trading on a
securities market.
5.Any Taiwan stock index compiled by a domestic or foreign institution and
related financial products, but this restriction shall not apply to an index
compiled by TPEX or TWSE, either singly or in collaboration with another
institution.
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〈Foreign currency trust business〉 Article 40
When an authorized bank concurrently conducting the trust business engages in
the businesses provided in Article 17 and Article 17-1 herein, the authorized
bank shall abide by the following provisions, unless it is otherwise stipulated
or approved by the Bank:
1. The delivery and return of trust assets and the receipts and payments of
other related funds shall be made in foreign currency or foreign currency
denominated property.
2. The receipts and payments of trustee related funds shall be effected through
a foreign currency trust asset account opened by the trustee at an authorized
bank.
3. The utilization of trust assets shall comply with the provisions set forth by
the competent authority and be limited to foreign currency denominated
products, and in addition, shall not involve or be linked to NTD interest
rate or exchange rate index.
4. Reports shall be submitted in accordance with the Bank-prescribed format.
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