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Ⅱ. Application and Management
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Section 1: Financial institutions
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17.Financial institutions participating in the "CBC Interbank Funds Transfer
System" shall first submit by mail two copies of the "Application for
Participation in the CBC Interbank Funds transfer and Settlement System"
(Form 1) to the Department of Banking of the Bank.
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18.After the Bank has issued a letter of approval, the institution shall proceed with the
following preparatory measures:
(1) Designation of staff responsible for an operation plan.
(2) Drafting a schedule for the implementation of the online operation plan.
(3) Preparation of hardware and software for online operations as per specifications of the
Department of Information Management of the Bank.
(4) Application to arrange online operation tests in accordance with testing plan outlined
by the Department of Information Management of the Bank.
(5) Consultation with the Department of Information Management of the Bank on other matters
relating to the establishment of online connections.
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19.A financial institution shall become an online institution when the Department of
Information Management of the Bank has confirmed the completion of error-free tests; the
Department of Banking of the Bank will notify the official date for the commencement of
operations.
The Department of Banking of the Bank will notify all other online Institutions when an
institution becomes a new online institution in accordance with the preceding Paragraph.
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20.An online institution shall appoint the following employees to perform work set
forth in these Directions:
(1) One operations director and one deputy operations director, responsible for
assigning duties, security control and connections with
the Bank.
(2) A team of two to ten authorized transmission staffs, responsible for the
verification and transmission of various fund transfers and corrections, as
well as deposit, pledge, and cancellation of collateral.
(3) A certain number of data entry personnel, responsible for entering fund
transfer data, corrections, and information for inquiries.
No personnel may concurrently serve in both the authorized transmission and data
entry positions, nor can personnel in either of these two positions undertake
security control.
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21.An online institution shall submit the title, name, service unit, telephone
number, and sample seal impression of the designated operation director and
the deputy operation director referred to in Direction 20 in writing to the
Department of Banking of the Bank; the same procedure shall be followed at
the time of any change in the above positions.
The operation director referred to in the preceding Paragraph shall be issued
a user ID and an initial password by the Department of Banking of the Bank,
for the exclusive purpose of canceling the registrations of authorized
transmission personnel. The operations director shall himself/herself transfer
the user ID and password when a new operation director assumes the position.
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22.An online institution shall compile and submit the titles, names, and service
units of all authorized transmission personnel referred to in Direction 20 to
the Bank in writing to apply for the issuance of an individual user ID and
initial password for each employee; the said user ID and password shall be
cancelled when an authorization is revoked.
Authorized transmission personnel issued with individual user IDs and passwords
as specified in the preceding paragraph and the second paragraph of preceding
Drection shall access the "update user password" field at an online
institutions' workstation to change their passwords.
Where authorized transmission personnel leave the institution or are transferred
to another post, cancellations of user IDs and passwords for such personnel
shall be carried out by the online institution operations director by accessing
the "cancel authorized transmission personnel" field on the online institution's
workstation.
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23.In carrying out the procedures regulated under these Directions, all online
institutions shall establish rigorous security control and instruction manuals
in order to prevent abuse.
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Section 2: Clearing Institutions
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24.A Clearing Institution applying to the Bank to handle settlement of net credit or net
debit positions of the Participant Entities shall submit a letter with the following
documents attached for the Bank's approval:
(1) A license or document showing the competent authority's approval for
establishment.
(2) The articles of institution.
(3) The institution's operating rules.
(4) A description of its clearing system (including computer hardware and software,
network structure, security control, and business continuity plan).
(5) A corporate governance statement: including ownership structure, composition of
the board of directors /supervisors, powers and responsibilities of the management
and the board of directors, checks and balances for decision making (such as
internal control improvement, risk management and audit system) and mechanisms
which make the management responsible for its performance (such as business goals
and how to achieve such goals, how to disclose the achievement of goals to the
shareholders, users and the competent authority on behalf of public interests).
(6) A commitment to abide by these Directions and other relevant provisions. An
application will be rejected if any of the documents listed in the preceding
paragraph or information required therein is incomplete. An application will also
be rejected if the incomplete documents or information are not supplemented within
a specified time period.
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25.The operating rules referred to under Subparagraph 3, Paragraph 1, Direction 24,
shall include the following:
(1) Standards for the review and acceptance of Participant Entities.
(2) The rights and obligations existing between Participant Entities and between
Participant Entities and Clearing Institutions.
(3) Items of business and operating hours.
(4) Settlement methods, times, and operational flows.
(5) Risk management measures for payment and settlement.
(6) Procedures for dealing with errors or negligence in the transmission of
payment information.
(7) Disaster preparedness measures.
(8) Other matters related to information exchange between financial
institutions.
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26.The Bank may withhold approval when a Clearing Institution applying to handle
settlement lacks any of the following qualifications:
(1) Sound and effective operating rules.
(2)Transparency in information sufficient to allow Participant Entities to
understand related risks and responsibilities.
(3) Clear risk management procedures.
(4) An system designed to ensure the smooth completion of each day's settlement
procedures.
(5) Fair and open standards for participation.
(6) Security and back up measures to ensure the stability of operations.
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27.The risk management procedures of a Clearing Institution applying to the Bank
to employ deferred net settlement procedures shall include the following:
(1) Risk limit: including the establishment of a bilateral credit limit between
Participant Entities and maximum net-debit limit for each Participant Entity.
(2) Risk collateral: including the standardization of guarantees or collateral
items to be deposited by Participant Entities and a mechanism for shared
distribution or liability for loss.
(3) Follow-up procedures: including procedures for the completion of clearance
after the occurrence of the risk event and for sharing any loss.
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27-1.Where a Clearing Institution needs to open a special settlement account at the Bank,
it shall apply in the same manner as stated in Direction 17 stated after the Bank
has agreed to handle settlements of net credit or net debit positions between the
Participant Entities.
The special settlement account mentioned in the preceding paragraph is used only for
a Clearing Institution’s intraday payments or receipts of settlement funds, and the
balance at the end of the day shall be cleared. If the balance has not been
cleared, the Bank may list such balance as other payables temporarily to match with
the ledger -closing of the CBC Interbank Funds Transfer System.
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28.A Clearing Institution may apply to the Bank for using the "CBC Interbank Funds Transfer
System" to carry out real-time interbank funds settlement for the following payment
transactions :
(1) Electronic fund transfers for transactions above a specified amount.
(2) Securities transactions settled with delivery-versus-payment.(3) Foreign exchange
transactions involving a foreign currency and New Taiwan Dollar settled with
delivery-versus-payment. The specific amount for transactions referred to in the first
subparagraph of the preceding paragraph shall be separately prescribed by the Bank.
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29.A Clearing Institution shall notify the Bank of any addition to, deletion of,
or change in the business matters it handles; in addition, the Bank shall also
be notified when there is a change in any item included in the submissions
required under Direction 24.
Prior approval from the Bank is required before a Clearing Institution, as
referred to in the preceding Paragraph, may engage in any of the following
acts:
(1) Any changes in the Articles of Incorporation or organization;
(2) Suspension of business operation;
(3) Merger or dissolution;
(4) Transfer of the whole or any part of its business or assets;
(5) Acceptance of transfer of another’s business or assets in whole or in part;
(6) Engagement or investment in other businesses;
(7) Establishment or closure of a branch office or other business sites; and
(8) Other matters as prescribed by the Bank.
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29-1.If settlements carried out by the Bank are still required after the merger
of a Clearing Institution with other institution(s), a merger application,
in the names of such Clearing Institution and other institution(s) jointly,
with the following documents, shall be submitted to the Bank for approval:
(1) merger plan: specifying the preliminary assessment of the decision to
merge, the merger organization structure, the scheduled timing for the
merger, the description of the business differences (description of
differences in scope of business, principles and concrete matters
concerning performance before the merger as distinguished from business
conduct after the merger as well as the synergy of the merger), Computer
system operation models and the impacts on Participant Entities and
financial system.
(2) A corporate governance statement： including ownership structure,
composition of board of directors /supervisors, powers and
responsibilities of the management and the board of directors,
decision making process, system of checks & balances, separation of
powers (such as internal control improvement, risk management and audit
system) and mechanism which make the management responsible for its
performance (such as business goals and how to achieve such goals, how
to disclose the achievement of goals to the shareholders, users and the
competent authority on behalf of public interests).
(3) A business continuity plan of system operations (including backup
facilities, risk management and contingency planning in response to
different emergency conditions).
(4) Other documents as prescribed by the Bank.
The institution, whose merger has been approved by the Bank in accordance
with the preceding Paragraph, shall prepare a letter with the relevant
documents attached for the Bank's approval to handle settlement.
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30.A Clearing Institution shall conscientiously apply a sound system of internal controls and
auditing with respect to check clearance, electronic payments or securities operations
between Participant Entities, and shall attend to improving the assessment of employees'
ethical standards.
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31.A Clearing Institution shall provide information online as required by the Bank
; the Clearing Institution shall also prepare statistical statements on a
regular basis for submission to the Bank.
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32.The Bank may, whenever necessary, dispatch personnel to inspect business functions with
respect to the clearance of checks, electronic payments or securities between Clearing
Institutions; a Clearing Institution shall cooperate during such inspections.
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33.A Participant Entity shall open a deposit account at the Bank or an agent bank
designated by the Bank for settlement; provided that if a Participant Entity is
unable to open a deposit account at the Bank or an agent bank designated by the
Bank, such Entity may apply to a Clearing Institution to entrust a Clearing Bank
to use the deposit account at the Bank opened by such Clearing Bank for
settlement.
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34.A Participant Entity shall seek to enhance the maintenance and management of
computer and information facilities in order to ensure the smooth operation of
the system; the Participant Entity shall also adopt concrete and effective
safety and back up measures in order to avoid affecting the rights and interests
of clients due to system breakdowns or service interruptions.
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35.A Participant Entity providing check clearance, electronic payments or securities fund-leg
transfer services for financial institutions may not violate the relevant consumer
protection regulations.
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36.If the conduct of a Participant Entity violates these Directions or the operating rules of a
Clearing Institution, resulting in the disruption of clearing systems for checks, electronic
payments or securities, a Clearing Institution may take the necessary measures as warranted
by the particulars of the Participant Entity's violation.A Clearing Institution shall
clearly set forth the measures referred to in the preceding paragraph in the relevant
agreement between itself and the Participant Entity.
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37.If a Clearing Institution's conduct is in violation of these Directions or if the Bank
determines that other matters have disrupted clearing systems for checks, electronic
payments or securities, the Bank may, as warranted by the particulars of the situation,
terminate or suspend for a given period the provision of settlement services or take other
appropriate measures.
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