Laws and Regulations Database of the Central Bank of the Republic of China

Title:

Announced Date:July 23, 2003

Date:

Article 37
 Authorized banks shall comply with the following regulations when engaging in 
foreign exchange derivatives business not involving the New Taiwan dollar exchange
rate:
 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.
 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.
 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.
 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.
 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.
 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.