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[Law Basis]
[Print]
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Chapter 3 Management of Foreign Exchange Business
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Article 31
Banking enterprises engaging in foreign exchange business shall first verify
the identity or primary registration data of the customer, and ensure that
supporting documents comply with regulations.
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Article 32
Banking enterprises shall accept a customer's request for purchasing and
selling of foreign exchanges in accordance with regulations provided by the
Bank.
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Article 33
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The exchange rates used for foreign exchange transactions between a banking
enterprise and a customer may be solely determined by the banking enterprise.
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The exchange rate for a single non-cash foreign exchange transaction with a
customer for an amount of less than ten thousand United States dollars (
US$10,000) shall be posted at the banking enterprises' business premises before
9:30 AM on each business day. The bid/ask spread shall be reported to the Bank
for record. Any change to the spread shall also be reported.
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Article 34
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When submitting reports and forms prescribed in these Regulations, banking
enterprises shall attach relevant supporting documents and appendices.
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The Department of Foreign Exchange of the Bank may request banking
enterprises to fill out additional reports and forms if necessary.
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The formats, contents, and completion instructions of the reports and forms
prescribed in the previous two paragraphs shall conform to the "Directions
Governing Banking Enterprises in Conducting Foreign Exchange Business"
separately provided by the Bank, as well as other relevant regulations.
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Article 35
With regard to the review of reports and forms submitted by authorized
banks, the Bank may dispatch personnel to inspect the relevant account books
and documents of banking enterprises, or may request banking enterprises to
provide truthful financial reports or other relevant information within a
prescribed period of time if deemed necessary.
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Article 36
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Where an authorized bank operates foreign exchange derivatives business
involving the New Taiwan dollar exchange rate, the following rules shall
apply:
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1.Delivery foreign exchange forward business "between the New Taiwan
dollar and foreign currency"
(1)Actual for demand foreign exchange receipts or disbursements, but
one receipt or disbursement of foreign exchange may not be used in
multiple contracts.
(2)Entering into contracts or processing settlements with clients,
either transaction documents supporting actual for demand foreign
exchange receipts or disbursements, or a written approval from the
competent authorities shall be verified.
(3)Maturity: determined according to actual for demand foreign exchange
receipts or disbursements.
(4)The price of a rollover transaction shall be based on the current
market exchange rate rather than the rate of the original contracts.
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2.Foreign exchange swaps business "between the New Taiwan dollar and foreign
currency"
(1)In swaps transactions, when entering into spot foreign exchange
settlement or a forward sale (forward purchase) of foreign exchange, the
authorized bank shall enter into a foreign exchange forward contract with
the same amount in the opposite direction at the same time.
(2)Counterparties:
Domestic legal entities: no documents required.
Foreign legal entities and natural persons: documents of approval issued
by the competent authorities shall be verified.
(3)In the settlement of swaps transactions, the Declaration Statement shall
be filled out pursuant to the "Regulations Governing the Declaration for
Foreign Exchange Receipts and Disbursements or Transactions" (hereinafter
referred to as the Regulations for Declaration). Column 4 of the
Declaration Statement "Nature of Foreign Exchange Receipts and
Disbursements or Transactions" shall be filled out according to the nature
of the actual transaction, and also noted as "foreign exchange swaps
transaction'. In addition, the "remittance classification and code number"
provided by the Department of Foreign Exchange of the Bank shall be
indicated on the foreign exchange memo, and included in the daily foreign
exchange transaction report along with the Declaration Statement.
(4)The swap transaction amount need not be included in the foreign exchange
settlement and remittance aggregate amount as specified in subparagraph 3,
Paragraph 1, Article 4 of the Regulations for Declaration.
(5)The prices of rollover transactions shall be based on the current market
exchange rates rather than the rates of the original contracts.
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3.Non-Delivery New Taiwan dollar foreign exchange forward business (NDF):
(1)Counterparties are limited to domestic authorized banks and the overseas
branches or head offices of authorized banks.
(2)The format, content, and accounting treatment of contracts shall be
segregated from those of delivery foreign exchange forward (DF) business.
(3)Contracts under this item may not be rolled over or terminated before
maturity.
(4)Net cash settlement shall be applied uniformly upon maturity.
(5)Transactions do not allow margin trade.
(6)Without the approval of the Bank, contracts may not be structured to
combine with other foreign exchange derivatives products, New Taiwan
dollar deposits, foreign currency deposits, or other products.
(7)For non-delivery New Taiwan dollar foreign exchange forward
transactions of United States dollars 5 million or above, the
Department of Foreign Exchange of the Bank shall be notified
immediately by telephone.
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4.New Taiwan dollar exchange rate option business:
(1)Counterparties are limited to domestic and foreign legal entities.
(2)Both net amount settlement and gross amount settlement upon maturity
are allowed, but the settlement method shall be specified in the
contracts.
(3)The currency used for option premium and settlement if the option is
exercised may be either in the denominated foreign currency or New
Taiwan dollar, but shall be specified in the contract.
(4)Only "plain vanilla" options may be transacted. Without the approval
of the Bank, contracts may not be structured to combine with options
or other foreign exchange derivatives products, New Taiwan dollar
deposits, foreign currency deposits, or other products.
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5.Cross currency swaps business "between the New Taiwan dollar and foreign
currency":
(1)Counterparties are limited to domestic and foreign legal entities.
(2)For cross currency swaps involving the exchange of principal both at
inception and maturity, domestic legal entities are not required to
submit transaction documents. Both the principal and interest need not
be included in the remittance aggregate amount as specified in
Subparagraph 3, Paragraph 1, Article 4 of the Regulations for
Declaration.
(3)For other types of cross currency swaps, the bank shall request its
customer to submit documents evidencing actual demand at the time of
transaction, the transaction amount shall be included in the remittance
aggregate amount as specified in Subparagraph 3, Paragraph 1, Article 4
of the Regulations for Declaration. However, if the foreign exchange
receipts and disbursements or transactions are for the export or import
of goods, providing services, or other uses approved by the competent
authorities, they need not be included in the remittance aggregate amount.
(4)In the settlement of cross currency swaps transactions, the Declaration
Statement shall be filled out pursuant to the Regulations for Declaration.
Column 4 of the Declaration Statement "Nature of Foreign Exchange Receipts
and Disbursements or Transactions" shall be filled out according to the
nature of the actual transaction, and also noted as "cross currency swaps
transaction". In addition, the "remittance classification and code number"
provided by the Department of Foreign Exchange of the Bank shall be shown
on the foreign exchange memo, and included in the daily foreign exchange
transaction report along with the Declaration Statement.
(5)The exchange of principal or interest in each term in the future is deemed
as a foreign exchange forward contract, and shall be reported on the daily
foreign exchange forward transaction report when entering into contract.
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Article 37
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[Related Regulations]
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Authorized banks shall comply with the following regulations when engaging in
foreign exchange derivatives business not involving the New Taiwan dollar exchange
rate:
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1.Foreign currency margin trading business:
(1)May not be conducted with foreign currency loans, and the bank shall set a
separate line of credit for each customer.
(2)Without the approval of the Bank, authorized banks may neither provide full
discretionary account management nor "joint account" in conducting the
business. Regulations governing full discretionary account management shall
be separately provided by the Bank.
(3)Certificates of deposit or other collateral not under the name of the
customer may not be pledged to the authorized bank as collateral for foreign
currency margin trading.
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2.Foreign exchange derivatives business involving stock prices or stock indices:
(1)The "underlying products" shall mean foreign currencydenominated, foreign
market related stock prices, stock beneficiary certificates, or stock
indices.
(2)The underlying products shall not include any stock indices, stock prices,
or stock beneficiary certificates listed on any stock exchange in Taiwan or
Mainland China.
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3.Forward and swaps business between foreign currencies:
The prices of rollover transactions shall be based on the current market
exchange rates rather than the rates of the original contracts.
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4.Cross currency swaps business between foreign currencies:
When providing this service, after settlement, the appropriate "
remittance classification and code number" shall be indicated on other
transaction certificates and included in the foreign exchange
transaction daily report.
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5.Structured products business linked to deposits:
(1)When providing "structured deposits" linked to foreign exchange
derivatives products with principal protection, or "structured
products" linked to foreign exchange derivatives products without
principal protection, the underlying targets are limited to foreign
exchange derivatives products already approved by the Bank.
(2)The business shall be conducted in compliance with the respective
restrictions or regulations governing each type of businesses that
have been structured into this business.
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6.Structured business linked to loans:
(1)For "structured loans" linked to foreign currency loans, the underlying
targets are limited to foreign exchange derivatives products already
approved by the Bank.
(2)The business shall be conducted in compliance with provisions of the "
Directions Governing Banking Enterprises for Operating Foreign Exchange
Business", as well as the respective restrictions or regulations governing
each type of businesses that have been structured into this business.
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Article 38
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For a new foreign exchange derivatives business that has not yet been
approved, an authorized bank shall apply for approval pursuant to the
procedures set forth in Article 13; the relevant guidelines concerning the
business shall be specified in the letter of approval issued by the Bank.
The Bank may authorize the "Taipei Foreign Exchange Market Development
Foundation" (" the Foundation") to coordinate with "R.O.C. Bankers
Association" ("BA") to formulate guidelines for contract signing, transaction
and settlement methods, the contents of risk disclosure statements, accounting
principles, formats of financial statements and reports, information disclosure
methods, methods for dispute resolution, procedure for reporting incompliance
to the Bank and other related matters. Such guidelines will become effective
after the Bank's approval. The same procedure shall be followed for any
amendments.
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An authorized bank shall act in accordance with relevant regulations and
the above guidelines when conducting the foreign exchange derivatives
business.
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Article 39
An authorized bank may accept the entrustment of the offshore banking unit
(OBU) of the same bank to engage in OBU business. The scope and relevant
regulations governing the business shall be separately provided by the Bank.
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Article 40
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For foreign currency deposits business, an authorized bank shall follow
international business practice in determining and posting its own
minimum deposit interest rates. The applicable interest rates for
maturities not posted shall be negotiated between the authorized bank and
its customer with reference to other posted rates with similar maturities.
Interest rates that are subject to negotiation shall be announced publicly.
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The announcement in the preceding paragraph shall be displayed in the
business hall, and also posted on a publicly accessible website or
disclosed to the general public through other means.
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Article 41
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An authorized bank may purchase or sell foreign exchange on the foreign
exchange market or with the Bank, and may also hold long or short positions
within the limits set by itself.
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An authorized bank participating in the inter-bank foreign exchange market
shall comply with the rules formulated by the Foundation after coordination
with BA, and with reference to international customs and had reported to the
Bank.
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Article 42
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An authorized bank shall set its total position limits for transactions
between the New Taiwan dollar and foreign currency, which shall be submitted
along with its board resolution (the Taiwan branches of foreign banks shall
submit documentation of approval issued by their head offices) to the
Department of Foreign Exchange of the Bank.
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The combined position of non-delivery New Taiwan dollar forward contracts
and New Taiwan dollar exchange rate options may not exceed one-third of the
afore-mentioned total position limit.
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Article 43
An authorized bank shall determine its position limits including "
transaction positions for individual currencies" and "overnight positions
for each trader". All its offices shall abide by these position limits and
make auditing regularly.
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Article 44
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Authorized banks shall fill out "Foreign Exchange Position Daily
Reports" for all foreign exchange transactions involving the New Taiwan
dollar on a daily basis, and submit the reports to the Department of
Foreign Exchange of the Bank on the following business day. Foreign
exchange positions recorded on internal books of authorized banks shall
be identical to those submitted to the Foreign Exchange Department.
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Authorized banks shall report the estimated foreign exchange positions
for the day to the Department of Foreign Exchange of the Bank by
telephone at the end of each business day.
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Article 45
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Authorized banks, when engaging in large spot or forward transactions
with clients over the counter, shall use the "Large Spot, Forward, and
Cross Currency Swap (CCS) Transactions Information Online Transmitting
System" under the "Online Civil Outward/ Inward Remittances Declaration
Yearly Aggregate Settlement Amount Query System" to transmit relevant
data to the Department of Foreign Exchange of the Bank pursuant to the
following regulations:
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1.Data on foreign exchange purchase or sale of United States dollars
1 million or above or its equivalent in other foreign currencies by
a company or firm (excluding transactions from the export or import
of goods processed with documentary bills), or of United States
dollars 500,000 or above or its equivalent in other foreign currencies
by an individual or an association shall be transmitted immediately on
contract day.
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2.Data on forward contracts transactions, and cross currency swap (CCS)
transactions involving the conversion of New Taiwan dollars against
foreign curriencies for United States dollars 1 million or above or its
equivalent in other foreign currencies shall be transmitted before 12:00
noon on the business day following the contract.
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3.Relevant transmitting operations shall be processed in accordance with
the "Manual for the Online Data Transmitting System on Large Spot,
Forward, and Cross Currency Swap (CCS) transactions" prescribed by the
Department of Foreign Exchange of the Bank.
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Authorized banks, when engaging in large spot or forward transactions
involving the conversion of the New Taiwan dollars through their internet
bank network, shall first pass the Bank's requirments of the "Internet Bank's
Large Spot and Forward Transactions Information of Internet Bank Online
Transmitting System"; they shall use the "Large Spot and Forward Transactions
Information Online Reporting and Transmitting System", which is linked under
the "Outward/Inward Remittances yearly Aggregate Settlement Amount Online Query
System", to transmit relevant data to the Department of Foreign Exchange of the
Bank pursuant to the following regulations:
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1.After verifying the relevent transaction documents, data on foreign exchange
purchase or sale of United States dollars 1 million or above or its equivalent
in other foreign currencies by a company or firm (excluding transactions from
the export or import of goods processed with documentary bills), or of United
States dollars 500,000 or above or its equivalent in other foreign currencies
by an individual or an association, shall be transmitted immediately on the
contracting day.
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2.After verifying the relevent transaction documents, data on forward contracts
transactions involving the conversion of New Taiwan dollars against foreign
currencies for 1 million or above or its equivalent in other foreign
currencies shall be transmitted immediately on the contract day.
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Article 46
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The relevant timetable for the authorized banks to transmit reports to the
Department of Foreign Exchange of the Bank:
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1.Daily Report: Before 12:00 noon of the following business day.
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2.Monthly Report: Within ten (10) days after the end of each month.
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The scope of the daily report and monthly report described in the preceding
Paragraph shall be separately regulated by the Bank.
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Article 47
(repealed)
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Article 48
Non-authorized banks, credit cooperatives, and credit departments of farmer's
or fishermen's associations shall submit daily reports of purchasing and selling
foreign currency cash and traveler's check to the Department of Foreign Exchange
of the Bank before 12:00 noon on the following business day.
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Article 49
(repealed)
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Article 50
The Chunghwa Post Co., Ltd. shall submit daily details tables for inward and
outward international remittances to the Department of Foreign Exchange of the
Bank before 12:00 noon on the following business day.
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