Laws and Regulations Database of the Central Bank of the Republic of China(Taiwan)

III.　　Exchange of Negotiable Instruments and Clearance of Accounts

Article 8
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.  
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.

Article 9
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.

Article 10
Types of negotiable instruments covered under these Regulations are as follows:  
1. Bank drafts (including bankers’ acceptances);  
2. Promissory notes (including cashier's checks);  
3. Checks (including treasury (public) checks); and  
4. Other payment certificates approved by the Bank for exchange.  
Negotiable instruments mentioned in the preceding paragraph can be in written or 
electronic form.

Article 11
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.  
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 record.

Article 12
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.  
A clearinghouse shall prescribe 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 record.  
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 record. The Bank in turn will forward the information 
to the Financial Supervisory Commission.