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. A clearing house 
shall be a foundation and established with the approval of the Central Bank of the 
Republic of China (Taiwan) (hereafter referred to as “the Bank”).

Article 4
The establishment, supervision and administration of foundations established in 
accordance with the preceding article shall be governed by the Foundations Act, the 
Regulations Regarding Authorization Provisions of the Foundations Act by the Central 
Bank of the Republic of China (Taiwan), and the Regulations Governing the Accounting 
Treatment and the Preparation of Financial Reports for Foundations Overseen by the 
Central Bank of the Republic of China (Taiwan).

Article 5
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 record within 
one month after the conclusion of the meeting.

Article 6
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 7
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.

III.　　Exchange of Negotiable Instruments and Clearance of Accounts

Article 8
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 9
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 10
Types of negotiable instruments covered under these Regulations are as follows:  
1. Bank drafts (including bankers’ acceptances);  
2. Promissory notes (including cashier's checks);  
3. Checks (including treasury (public) checks); and  
4. Other payment certificates approved by the Bank for exchange.  
Negotiable instruments mentioned in the preceding paragraph can be in written or 
electronic form.

Article 11
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 record.

Article 12
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 prescribe 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 record.  
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 record. The Bank in turn will forward the information 
to the Financial Supervisory Commission.

IV.　　Business Rules of Clearinghouse

Article 13
A clearinghouse shall prescribe 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. A clearing entity may 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 14
A clearinghouse shall prescribe criteria for all processing fees collected for 
the provision of services.

Article 15
A clearinghouse shall prescribe procedures for handling negotiable instruments 
clearing, and other necessary operation protocols

Article 16
A clearinghouse shall adopt protocols with financial enterprises that conduct 
checking account operations to govern the handling of dishonored checks and 
other related matters.

Article 17
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.   
A clearinghouse 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.   
A clearinghouse shall make available for public inquiry dishonored check records and 
rejected transaction information of checking account holders and other relevant credit 
information.  
For the collection of personal information referred to in Paragraph 1 and Paragraph 4 
hereof and related information security matters, a clearinghouse shall develop a 
security maintenance plan to prevent the theft, alteration, destruction, loss or 
leakage of personal information.

Article 18
The business rules prescribed by a clearinghouse in accordance with the provisions 
of the preceding five articles shall be submitted to the Bank for record; the same 
shall apply to all amendments thereto.

V.　　Supplemental Provisions

Article 19
A clearinghouse 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 20
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 record. The Bank in turn will forward the information to the 
Financial Supervisory Commission.

Article 21
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 22
These Regulations shall take effect on February 1, 2019.