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

Chapter 2　　Appointment and Management of Clearing Banks

12.
A bank may apply to the Bank for appointment as a clearing bank in accordance 
with these Directions by meeting the following requirements: 
(1) Net worth after the accounting books were closed at the end of the most 
　　recent year is at least NT$15 billion. 
(2) The ratio of regulatory capital to risk-weighted assets for the most recent 
　　half year reviewed by a certified public accountant (CPA) is above the 
　　minimum requirement set forth by the competent authority.
(3) Average return on equity before taxes for the most recent three years audited
　　by a CPA is above 6%.   
Under any of the following conditions, a bank may also apply to the Bank for
being appointed as a clearing bank:
(1) A surviving bank or a newly established bank on account of merger/ consolidation
　　of a clearing bank. 
(2) A recipient bank acquiring the clearing business from a clearing bank or a 
　　transferee bank acquiring shares from a clearing bank.
(3) In case of merger/consolidation, a non-clearing bank subsidiary proposed to 
　　be a clearing bank by the financial holding company.

13.

A bank shall apply for appointment as a clearing bank by filling out an 
“Application for Book-Entry Central Government Securities Clearing Bank” (Form 6) 
for submission to Department of the Treasury along with a copy of its financial 
statements and other documents required.

Applications may be approved by the Bank based on need as determined by bond market 
developments.

14.
A clearing bank having been appointed by the Bank, shall contact the Department of 
Information Management of the Bank (hereinafter referred to as “Department of 
Information Management”) to set up online connections, and shall complete online 
tests within one year from the date of appointment. Otherwise, the Bank may revoke 
the status of a clearing bank.
Following the successful completion of various tests as set out in the preceding 
paragraph, which shall be undertaken jointly with the Department of Information 
Management and Department of the Treasury, Department of the Treasury will issue a 
letter informing the clearing bank of the date upon which it may commence operation.

15.
A clearing bank shall establish rigorous internal controls and exercise the diligence of 
a good custodian with regard to performing registrations, clearing funds, transmitting 
trading messages, and issuing, cancelling and cancelling with ownership transfer of repo 
certificates. Except for the information duly provided under relevant laws, a clearing bank 
may not divulge any customer information.

16.
Under any of the following circumstances, the Bank may issue a letter notifying a 
clearing bank to effect improvement:
(1) Failure to perform book-entry securities operations in accordance with these 
　　Directions.
(2) Failure to effect transfers of funds in accordance with the CGSS data handling
　　protocols.
(3) Occurrence of any other events hindering smooth operation of the CGSS.

17.
Under any of the following situations, and where warranted by the circumstances, 
the Bank may terminate a clearing bank’s appointment, suspend its appointment for 
a specific period of time, or disallow new branches of the bank to carry out 
clearing bank  junctions:
(1) Failure to effect improvement following a notification in accordance with the 
　　preceding Direction.
(2) Violation of relevant regulations or material negligence resulting in severe 
　　hindrance to the operations of the CGSS.
(3) Suspension of any department’s operations by the central competent authority, 
　　resulting in inability to perform operations of book-entry CGS.
(4) Appointment of a receiver or conservator by the central competent authority.
(5) An order from the central competent authority to cease operations.

18.
When requesting for exit from the CGSS, a clearing bank shall give advance written 
notice to Department of the Treasury one month prior to the scheduled exit date.

19.
Where a clearing bank’s appointment is suspended by the Bank, the clearing bank 
shall pay off relevant transfer fees and clear any outstanding balance in the 
securities account.
Where a clearing bank withdraws from the CGSS or it’s license is terminated by the 
Bank, in addition to effecting clearing procedures as set forth in the preceding 
paragraph, it shall close its securities account as well.