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

I.　　 General Provisions

Article 1
These Regulations are prescribed pursuant to Article 32 of the Central
Bank of the Republic of China (Taiwan) Act.

Article 2
"Business of negotiable instruments exchange and clearance of accounts among 
banks” as used in these Regulations refers to the exchange of negotiable 
instruments between financial institutions, the clearance of amounts receivable 
or payable among financial institutions and relevant businesses.

II.　　Establishment and Operation of Clearinghouse

Article 3
Institutions that engage in the business of negotiable instruments exchange 
and clearance of accounts among banks shall be called clearinghouses. The 
establishment of a clearinghouse shall obtain the approval of the Central Bank 
of the Republic of China (Taiwan) (hereafter referred to as "the Bank") and a 
clearinghouse must be an incorporated foundation.

Article 4

In applying under the provisions of the preceding Article for incorporation of a 
foundation, the entire group of persons who have stated a willingness to serve 
as director must apply to the Bank for approval of incorporation, submitting three 
copies of each of the following documents:

1.Application for approval of incorporation as a foundation;

2.Articles of incorporation (original document)

3.Inventory of donated properties, and documentation there of;

4.Statements by contributors that they agree to transfer ownership of donated properties 
　to the foundation once the registration of the foundation has bee approved;

5.Minutes of contributor meetings;

6.A list of directors and supervisors, and photocopies of their national identity 
　certificates;

7.Statements of agreement from persons who have agreed to serve as director or 
　supervisor;

8.A specimen impression of the foundation’s seal, and either specimen seal 
　impressions or specimen signatures of the directors;

9.Minutes of the board of directors’ founding meeting;

10.A document explaining the foundation’s operations plan; and

11.Other documents designated by the Bank.

Article 5

The articles of incorporation shall set forth the following particulars:

1.The foundation’s name and purpose, and the location of its main office and any branch 
　offices;

2.The type and monetary value of donated properties, and methods of safekeeping and 
　utilization  thereof;

3.Operations and methods of management thereof;

4.The number and term length of directors and supervisors, and the method of their 
　appointment;

5.The organizational structure, and the duties of the board of directors and the 
　supervisors;

6.Ownership of any property remaining after the foundation is dissolved or the 
　competent authority voids its approval of incorporation; and

7.The duration (if limited) of the foundation.

Article 6

After approval has been granted for incorporation of a foundation registration papers shall be 
filed with the court of jurisdiction within 30 days of receipt of the approval document, and a 
photocopy of the registration certificate shall be reported to the Bank for record within 30 
days of receipt of notice that registration has been completed.

When any item subject to the incorporation approval process is amended, application for 
approval of amendment shall be submitted, together with related documents, to the Bank within 
30 days of occurrence of the amendment. The provisions of the preceding paragraph shall apply 
mutandis to procedures for recording the registration amendment with the court of jurisdiction 
and with the Bank.

Article 7

The board of directors of a clearinghouse shall meet at least once every three months, 
and minutes of each meeting shall be reported to the Bank for recordation within one 
month after the conclusion of the meeting.

Resolutions adopted by the board of directors must be approved by a majority vote at a 
meeting attended by more than one-half of the directors. Where the articles of 
incorporation have more stringent provisions, said provisions shall apply.

Article 8
The chairman of the board, president, vice president or persons holding comparable 
positions of a clearinghouse shall in principle be fulltime positions. Notwithstanding 
the foregoing, such principle may be waived under special circumstances subject to the 
approval of the Bank.

Article 9
A clearinghouse may establish an advisory committee. The committee shall be composed of 
representatives appointed or recommended by the financial institutions participating in 
the clearing operations, and shall be responsible for studying and giving advice on
matters related to clearing operations, business development, regulatory affairs or other 
important matters.

Article 10
The remuneration or pay of directors, supervisors, and employees at each level of a 
clearinghouse may be set with reference to standards for government-run financial 
institutions; the remuneration or pay shall be reported to the Bank for recordation.

Article 11
In managing the foundation's properties and operations, a clearinghouse and its directors 
and supervisors shall rigorously abide by the intent of, and management procedures set 
forth in applicable laws and regulations and in the articles of incorporation.

Article 12

Where a clearinghouse is under any of the following circumstances below, the Bank may 
serve notice and demand remedial action within a given time period; in the event 
remediation is not made within the specified time period, the Bank may void its approval
and notify the court where the foundation filed its registration papers:

1.The board of directors adopts an illegal or improper resolution;

2.The clearinghouse fails to carry out operations in accordance with its operations plan, 
　or  engages in operations outside the permitted scope;

3.The clearinghouse fails to obtain legal documentation to substantiate its income 
　and/or expenditures, or fails to maintain complete accounting records;

4.The clearinghouse makes misrepresentations in reports related to its business, finance, 
　or other important matters; or

5.Other violations of the provisions of laws or regulations.

Article 13

The fiscal year for a clearinghouse shall begin on January 1 and end on December 31 of 
the same year.

A clearinghouse shall prepare its budget for the     following fiscal year and report the 
same to the Bank for recordation two months prior to the beginning of a fiscal year, and 
prepare its year-end business report and final accounting statements and report the same 
to the Bank for recordation within two months after the end of a fiscal year.

III.　　Exchange of Negotiable Instruments and Clearance of Accounts

Article 14

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 15
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 16

Types of negotiable instruments covered under these Regulations are as follows:

1.Bank drafts (including bank acceptance);

2.Cashier's checks (including cashier's checks with a bank as paying agent);

3.Checks (including treasury (public) checks); and

4.Other payment vouchers approved by the Bank for exchange.

Negotiable instruments mentioned in the preceding paragraph can be in written or 
electronic form.

Article 17

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 recordation.

Article 18

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 draft 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 recordation.

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 recordation. The Bank in turn will forward the 
information to the Financial Supervisory Commission.

IV.　　Business Rules of Clearinghouse

Article 19

A clearinghouse shall draft a " Participation Agreement for Clearing Negotiable 
Instruments" which shall clearly state the following particulars:

1.The qualifications required for application to be a clearing entity;

2.Criteria for determining the amount of clearing margin a clearing entity must 
　post, deposit restrictions and conditions for its return;

3[Provisions permitting] a clearing entity to act as a clearing agent for other financial 
　institutions that are non-clearing participants;

4.Negotiable instruments collected by a clearing entity from another clearing entity 
　shall be presented to the local clearinghouse to carry  out clearing; if a negotiable 
　instrument presented for payment is dishonored, the payer clearing entity shall 
　return the dishonored negotiable instrument to the local clearinghouse for exchange;

5.Branches of clearing entities shall, without exception, participate in local clearing 
　of negotiable instruments and the [parent] clearing entity shall submit for clearing 
　all negotiable instruments from other clearing entities accepted by its branches and 
　assume full liability associated with their clearing;

6.A clearing entity shall open a deposit account with the Bank or a correspondent bank 
　of the Bank; settlement of all payable and receivable clearing balances and dishonored 
　negotiable instrument clearing balances shall be conducted in accordance with the 
　Directions for the Central Bank of the Republic of China (Taiwan) to Govern  Electronic 
　Interbank Funds Transfer and Settlement and other relevant regulations; and

7.Other protocols to be observed by clearing entities.

Article 20
Clearinghouses shall draft criteria for all processing fees collected for the provision 
of services.

Article 21
Clearinghouses shall draft procedures for handing negotiable instruments clearing, 
systems for accounting and auditing, and other necessary operation protocols.

Article 22
Clearinghouses shall adopt protocols with financial enterprises that conduct checking 
account operations to govern the handling of dishonored checks and other related matters.

Article 23

For the purpose of conducting negotiable instruments exchange, clearinghouses and 
financial institutions that conduct checking account operations shall collect the 
credit information of checking account holders, and the financial institutions shall 
provide clearinghouses with credit information in their possession.

Clearinghouses shall duly note changes to credit information mentioned in the preceding 
paragraph, and periodically provide financial institutions that conduct checking account 
operations with the following information of account holders with significantly impaired 
credit records:  
1.In case of a personal account, the name and identification card number of holder.  
2.In case of an account held by a business or group that is a non-juristic-person, the 
　account name and the name and identification card number of its responsible person; 
　and  
3.In case of an account held by a juristic person, the account name and the uniform 
　business number of the company or business or the withholding uniform invoice number.

Credit information referred to in Paragraph 1 hereof includes basic account opening 
information, information on loss reporting and stop payment, cancellation of pay order, 
dishonored check record (including alert accounts and frozen accounts), rejected accounts, 
investigation results and court decisions on committed crime associated with use of 
negotiable instruments, presenters, negotiable instruments exchanged, and other relevant 
credit information. Notwithstanding the foregoing, credit information that shall be 
collected by financial institutions that conduct checking account operations exclude 
investigation results or court decisions on committed crime associated with use of 
negotiable instruments. 

Clearinghouses shall, to the extent necessary for matching the accuracy of basic data 
files of nationwide checking account holders, collect household registration data 
pertaining to changes to the name or identification card number of personal account 
holders and the responsible person registration data of juristic person accounts. 

Clearinghouses shall make available for public inquiry of dishonored check record and 
rejected transaction information of checking account holders and other revelent credit 
information.

For the collection of personal information referred to in Paragraph 1 and 
Paragraph 4 hereof and related information security matters, clearinghouses 
shall develop a security maintenance plan to prevent the theft, alteration, 
destruction, loss or leakage of personal information.

Article 24
The business rules and accounting and auditing systems drafted by a clearinghouse in 
accordance with the provisions of the preceding five Articles shall be submitted to 
the Bank for recordation; the same shall apply to all amendments thereto.

V.　　Supplemental Provisions

Article 25
Clearinghouses shall strengthen internal constraints and closely supervise the conduct 
of personnel with respect to the handling of the record of dishonored checks due to 
insufficient funds and other credit history information.

Article 26
Where a clearing entity‘s violation of these Regulations or [other] negotiable 
instrument clearing rules and regulations is of serious nature and might seriously 
undermine the clearing operations, a clearinghouse may, with approval of its board 
of directors, temporarily suspend such entity’s clearing operations and report 
the same to the Bank for recordation. The Bank in turn will forward the information 
to the Financial Supervisory Commission.

Article 27
A clearinghouse shall submit scheduled or unscheduled business, financial or other 
relevant reports as prescribed or notified by the Bank; the Bank may assign an officer 
to examine the business, finance or other matters of a clearinghouse.

Article 28
These regulations shall become effective from the date of promulgation.