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

Section 2　　Spot Foreign Exchange Transactions in Connection with Securities Business

Article 46  
The scope of spot foreign exchange transactions that a DSF may carry out with 
its customers is limited to the following: 
1.The DSF is handling a business with the same customer under any subparagraph 
　other than Subparagraph 2 of Paragraph 1, Article 4 herein that has been 
　approved by the Bank;
2.The same securities firm acts as an recommending securities firm for an 
　emerging stock company and has foreign exchange settlement needs in order to 
　subscribe the stocks of foreign issuers as required by the competent 
　authority; and
3.The same securities firm acts as the lead underwriter, paying agent or 
　registrar agent for NTD denominated securities issued by a foreign issuer 
　in Taiwan under the approval of the competent authority and has related 
　foreign exchange settlement needs.
When carrying out spot foreign exchange transactions under Subparagraph 1 and 2 
of the preceding paragraph, a DSF shall also observe the following rules:
1.The amount of spot foreign exchange transaction shall not exceed the 
　transaction amount and fees of the related securities business;
2.The spot foreign exchange transaction shall be carried out only after the 
　customer concluding the transaction of related securities business and shall 
　be completed prior to the settlement date of the related securities business 
　transaction; 
3.The transaction is not on a leveraged, margined or financed basis; and 
4.When the business involves repo trade of foreign currency securities with 
　customers, only spot foreign exchange transaction between foreign currencies 
　may be carried out.

Article 47 
Only securities firms that are concurrently a securities underwriter, a 
securities dealer, and a securities broker provided under Article 16 of the 
“Securities and Exchange Act” may apply to engage in spot foreign exchange 
transaction business.
A securities firm that intends to engage in spot foreign exchange transaction 
business shall apply to the Bank for approval by submitting the following 
documents:
1.Documents provided under Article 7 herein;
2.Description of operations, including business hours and cutoff time for 
　accounting dates and ways to reconcile the “Daily Foreign Exchange Position 
　Report” submitted to the Bank’s Department of Foreign Exchange pursuant to 
　Paragraph 1 of Article 52 herein; 
3.Documents evidencing that the securities firm has been approved by the Bank 
　to engage in any business under the subparagraphs other than Subparagraph 2 
　of Paragraph 1, Article 4 herein and having a solid record of conducting such 
　business;
4.The net worth shown in the latest CPA audited or certified financial statement 
　meets the criteria prescribed by the FSC for a securities firm that applies 
　for the setup of an OSU in Taiwan to engage in all of the businesses provided 
　in the subparagraphs of Paragraph 1, Article 22-4 of the Offshore Banking Act; 
5.Documents evidencing compliance and sound operation: Free of sanction due to 
　serious violation of rules during the preceding three years before 
　application, or the securities enterprise with sanctioned violation has 
　effected specific improvement and has satisfied the competent authority or 
　the Bank; and
6.Documents evidencing that its operations and auditing personnel meet the 
　following qualification requirements:
(1)An operations personnel must have at least three months of working experience 
　 in relevant foreign exchange business, or have completed at least 12 hours of 
　 foreign exchange regulations related courses (including regulations on 
　 foreign exchange business and reporting of foreign exchange receipts, 
　 disbursements or transactions by securities enterprises and foreign exchange 
　 risk management) given by domestic financial training institutions and 
　 received certificates therefor and also have at least 20 business days of 
　 practical training in relevant foreign exchange business at an authorized 
　 bank.
(2)A controlling personnel must have at least six months of working experience 
　 in relevant foreign exchange business, or have attended courses provided in 
　 the preceding item and also have at least 40 business days of practical 
　 training in relevant foreign exchange business at an authorized bank.
A securities firm that has been approved by the Bank to engage in spot 
transactions between foreign currencies may apply to the Bank for approval to 
expand the business to spot foreign exchange transactions involving NTD by 
submitting the following documents:
1.A resolution of the board of directors resolving to apply for the business;
2.A statement of regulatory compliance; and
3.Documents provided in Subparagraphs 2 and 5 of the preceding paragraph.
Changes to the description of operations mentioned in Subparagraph 2 of 
Paragraph 2 herein shall be reported to and agreed by the Bank in advance.
The head office of a DSF that applies for its branches to engage in spot 
foreign exchange transaction business shall observe the following rules:
1.The head office of a DSF shall apply the business after it has been approved 
　by the Bank to engage in the business and has a solid record of conducting 
　such business; and
2.The head office shall apply to the Bank for approval by submitting a photocopy 
　of the branch’s license and documents evidencing the qualifications of its 
　operations and controlling personnel as provided in Subparagraph 6 of 
　Paragraph 2 hereof.  

Article 48 
A DSF shall set its total position limit for transactions between NTD and 
foreign currency which shall be submitted along with the resolution of the
board of directors to the Bank’s Department of Foreign Exchange for approval.
The position of NTD exchange rate options shall not exceed one-fifth of the 
afore-mentioned total position limit.

Article 49 
A DSF that intends to participate in the interbank foreign exchange market 
involving NTD shall first make sure that it is free of the situations in 
Subparagraphs 2 ~ 5, Paragraph 1 of Article 9 herein and apply to the Bank 
for approval by submitting the following documents:
1.A statement of regulatory compliance;
2.Document evidencing that the DSF has been approved to engage in business 
　under Subparagraph 2, Paragraph 1 of Article 4 herein and a solid record of 
　conducting such business;
3.Document evidencing that the DSF is free of any sanction imposed by the FSC 
　pursuant to Subparagraphs 2 ~ 4, Article 66 of the “Securities and Exchange 
　Act” in the preceding one year; and
4.Document evidencing that the DSF has not been suspended or restricted from 
　trading by TWSE, TPEx or Taiwan Futures Exchange pursuant to their operating 
　rules or bylaws in the preceding one year.

Article 50 
A DSF may, in the capacity of a customer, purchase/sell foreign currency from/to 
selected cooperating authorized banks to cover its long or short foreign 
currency positions against NTD.
DSFs that have been approved by the Bank to carry out position covering in 
accordance with the preceding article may purchase or sell foreign currencies 
in the interbank foreign exchange market and be a counterparty to each other 
in the transactions of foreign currency position covering provided in 
Paragraph 1 of Article 13 herein and in raising foreign currency funds provided 
in Subparagraphs 1 and 3, Paragraph 1 of Article 14 herein.
A DSF may hold long or short positions within the total position limit mentioned 
in Paragraph 1 of Article 48 herein. 
A DSF participating in the interbank foreign exchange market shall comply with 
the trading rules formulated by the Taipei Foreign Exchange Market Development 
Foundation with reference to international practices after coordinating with 
the Bankers Association of the Republic of China and reported to the Bank for 
record.

Article 51 
A DSF shall draw up its position limits such as "transaction positions for 
individual currencies" and an "overnight position for each trader". All its 
units shall abide by these limits, and carry out audits regularly.

Article 52 
DSFs shall fill out a "Foreign Exchange Position Daily Report" for all foreign 
exchange transactions involving NTD on a daily basis. The reported foreign 
exchange positions shall be consistent with those recorded on the internal 
books or foreign exchange transaction datafile, and reconciled and checked on a 
daily basis.
DSFs shall report the estimated foreign exchange positions for the day to the 
Bank’s Department of Foreign Exchange by telephone at the end of each business 
day.

Article 53 
When the foreign exchange business provided in Subparagraph 2, Paragraph 1 of 
Article 4 herein conducted by a DSF involves exchange settlement against NTD or 
conversion between foreign currencies, the DSF shall handle the matter in 
accordance with the “Regulations for Declaration” and “Directions for 
Domestic Securities Firm Approved to Conduct Foreign Exchange Business while 
Assisting Customers to Declare Foreign Exchange Receipts and Disbursements or 
Transactions.”

Article 54 
A DSF shall issue a foreign exchange purchase (sale) memo for foreign exchange 
receipts and disbursements or transactions involving exchange settlement against 
NTD from its foreign exchange business and shall issue other transaction 
certificates if exchange settlement against NTD is not involved, and deliver 
such memo/certificate to customers or process them in a manner as agreed with 
the customer.
The “purchase (sale) memo or other transaction certificates” mentioned in the 
preceding paragraph may be made in electronic form.
DSFs shall transmit relevant data mentioned in Paragraph 1 hereof and the Daily 
Foreign Exchange Receipts (Disbursements) Transaction Report of the previous day 
to the Bank’s Foreign Exchange Data Processing System before 12:00 noon on the 
following business day.

Article 55  
When DSFs engage in large NTD spot, swap or cross currency swap transactions 
with customers, they shall transmit relevant data to the Bank’s Foreign 
Exchange Data Processing System pursuant to the following regulations:
1.When a DSF engages in foreign exchange purchase or sale with a company, 
　limited partnership or firm with the amount no less than an equivalent of 
　US$ 1,000,000 or with an individual or association with the amount no less 
　than an equivalent of US$500,000, the DSF shall transmit the data immediately 
　on the contract day after verifying relevant supporting documents.
2.When a DSF engages in a NTD swap or cross currency swap transaction with a 
　customer with the amount no less than an equivalent of US$1,000,000, the DSF 
　shall transmit the data before 12:00 noon on the next business day following 
　the contract day after verifying the relevant supporting documents.

Article 56 
The exchange rates used for foreign exchange transactions between a DSF and a 
customer may be solely determined by the DSF.
The NTD exchange rate for a single foreign exchange transaction with a customer
for an amount of less than US$10,000 shall be posted at the DSF's business 
premises before 9:30 AM on each business day and disclosed on a publicly
accessible website or made through other public means.

Article 57   
If a relocation or a name change is made by a DSF that has been approved to 
engage in spot foreign exchange transaction business, the securities 
enterprise shall report the change to the Bank for record within seven (7) days 
after the receipt of a new business license or permit from the competent 
authority. In the case of a relocation, the securities enterprise shall also 
submit the qualification documents of its operations and auditing personnel as 
provided in Subparagraph 6, Paragraph 2 of Article 47 herein.

Article 58 
To engage in electronic transaction business involving currency conversion with 
customers, the DSF shall apply to the Bank for approval by submitting a 
description of relevant operations related to the declaration of foreign exchange 
receipts and disbursements or transactions. 
The term "electronic transaction" referred to in the preceding paragraph shall 
mean transactions carried out with customers not over the counter but through 
various electronic and communications equipments.
A DSF that engages in the business mentioned in Paragraph 1 hereof with 
customers over the Internet shall observe the following provisions:
1.The Internet system shall be capable of performing computerized verification 
　of transaction details such as classification of foreign exchange receipts 
　(disbursements).
2.Before offering services in foreign exchange receipts and disbursements or 
　transactions over the Internet, a DSF shall verify the customer's 
　identification documents or basic registration information.
3.When applying to the Bank to engage in NTD exchange settlement with values 
　equal to or over an equivalent of NT$500,000, or large exchange settlement 
　transactions, the DSF’s Internet system shall conform to the provisions of 
　Article 59 herein.

Article 59 
The computer equipment and relevant operating environment of a securities firm 
must be capable of properly handling operations regulated in Articles 54 and 55 
herein and the query of the aggregate settlement amount of the current year, and 
must pass the test of connection with the Bank’s Foreign Exchange Data 
Processing System before the securities firm applies to engage in the spot 
foreign exchange transaction business.
A securities firm shall connect with the Bank’s Foreign Exchange Data 
Processing System by one of the means below and comply with “Directions 
Concerning Financial Institutions Using the Bank’s Foreign Exchange Data 
Processing System”：
1. If the securities firm opts to develop its own server for server-to-server 
　 connection, it shall follow the inter agency specifications for connection 
　 operation of the Foreign Exchange Data Processing System.
2. If the securities firm opts to use the Bank’s Foreign Exchange Data 
　 Reporting System, it shall follow the user manual of the Foreign Exchange 
　 Data Reporting System software and comply with“Directions Concerning  
　 Financial Institutions Using the Bank’s Foreign Exchange Data Reporting 
　 System”.