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[Law Basis]
[Print]
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III. Exchange of Negotiable Instruments and Clearance of Accounts
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〈Application for Participation in exchange of Negotiable Instruments〉
Article 14
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All financial institutions that have been approved to conduct checking deposit business
may apply to a clearinghouse to participate in the clearing of negotiable instruments
as a clearing entity. Branches of clearing entities shall without exception participate
in their local clearinghouse [operations], provided that negotiable instruments received
by credit cooperatives, farmers' associations or fishermen's associations shall, as
instructed by the Bank, be cleared through the Taiwan Cooperative Bank, Ltd. or other
clearing entities.
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Any financial institution that has not applied to participate in the clearing of
negotiable instruments in accordance with the preceding paragraph may engage a
clearing entity as its agent for the clearing of negotiable instruments. The engaged
financial institution is required to apply to the clearinghouse for its consent
before providing the aforementioned service.
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〈Responsibility of a Clearing Agent〉
Article 15
A clearing entity engaged as an agent for the clearing of negotiable instruments shall
assume on behalf of the represented entity all liability with respect to clearing.
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〈Types of Negotiable Instruments〉
Article 16
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Types of negotiable instruments covered under these Regulations are as follows:
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1.Bank drafts (including bank acceptance);
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2.Cashier's checks (including cashier's checks with a bank as paying agent);
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3.Checks (including treasury (public) checks); and
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4.Other payment vouchers approved by the Bank for exchange.
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Negotiable instruments mentioned in the preceding paragraph can be in written or
electronic form.
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〈Settlement of Receivable and Payable Balances〉
Article 17
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A clearing entity shall open a deposit account with the Bank or a correspondent bank of
the Bank. Payable or receivable clearing balances of the clearing entity shall be paid
or collected through the aforementioned account.
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Where there is a necessity for a clearing entity that has not opened a deposit account
with the Bank to pay or collect payable or receivable clearing balances through the Bank,
the clearing entity shall first apply to the clearinghouse for permission to transact the
payments or collections through another clearing entity's deposit account with the Bank.
The clearinghouse shall report the same to the Bank for recordation.
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〈Operation in the Circumstances of Insufficient Deposit Balance for Settlement〉
Article 18
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Where the balances in a clearing entity's deposit account mentioned in the foregoing
article are insufficient to pay a given day's clearing balances, the clearing entity
shall make up the shortfall within the time period prescribed by the Bank or a
correspondent bank of the Bank.
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A clearinghouse shall draft a response mechanism on how to complete the clearing
operation on the same day when a clearing entity violates the provisions of the
preceding paragraph and becomes unable to pay its clearing balance for the day,
and report the same to the Bank for recordation.
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Where a clearing entity is unable to pay a given day’s clearing balance that might
seriously undermine the clearing operation, the clearinghouse may, with approval of
its board of directors, temporarily suspend such entity’s clearing operation and
report the same to the Bank for recordation. The Bank in turn will forward the
information to the Financial Supervisory Commission.
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