Regulations Governing Foreign Exchange Brokers

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Title：

Regulations Governing Foreign Exchange Brokers

Inactive Regulations

Amended Date： February 26, 2003

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Article 1

These Regulations are prescribed pursuant to Paragraph 2, Article 35 of the Central Bank of the Republic of China(Taiwan)Act.

Article 2

The term "foreign exchange broker" as used in these Regulations shall mean a profit-seeking business approved by the Central Bank of the Republic of China (Taiwan)(hereinafter referred to as the Bank) after consulting with the Ministry of Finance and having a business license issued by the Ministry of Finance to engage in part or all of the following brokerage business:

1.Buying and selling foreign exchange;

2.Foreign currency call loan;

3.Foreign exchange swaps; and

4.Other foreign exchange business permitted.

With the approval of the Bank, in consultation with the Ministry of Finance, a foreign exchange broker may also operate New Taiwan dollar intermediary business related to items referred to in the preceding paragraph.

Article 3

A foreign exchange broker may conduct business with the following entities:

1.Domestic and foreign banks; and

2.Other financial institutions approved by the Bank after consulting with the Ministry of Finance.

Article 4

A foreign exchange broker shall be incorporated as a company limited by shares having a minimum registered capital of New Taiwan dollars 100 million. An overseas money broker with branch(es) established within the territory of the Republic of China shall have a working capital of no less than New Taiwan dollars 100 million.

The aforesaid minimum registered capital or working capital shall be collected in full prior to the commencement of business.

Article 5

For foreign exchange brokers, the investment ceiling of an investor shall conform to the following provisions:

1.The holding of a single domestic or foreign financial institution shall not exceed 10% of the total capital of said foreign exchange broker; and

2.The holding of a single domestic or foreign investor other than financial institution shall not exceed 20% of the total capital of said foreign exchange broker.

The provisions in the preceding paragraph do not apply to international money brokerage firms that are permitted by the Bank to carry out foreign exchange brokerage business within the territory of the Republic of China.

Article 6

For the establishment of a foreign exchange broker, an applicant shall apply to the Bank by submitting an application form stating the following particulars:

1.The name and organization of the prospective foreign exchange broker;

2.Total capital;

3.Business plan;

4.location of the company;

5.Name, place of birth, home address and curriculum vitae of each promoter and the amount of shares subscribed by each promoter; and

6.Other information required by the Bank.

If any part of the application form in the preceding paragraph is incomplete or inconsistent with relevant provisions of these Regulations, the Bank may ask the applicant to resubmit the correct data within a prescribed period of time, and may reject the application if the applicant fails to do so within the time period prescribed.

Article 7

Within six months after receiving approval from the Bank, a foreign exchange broker shall raise the minimum amount of capital, and apply for company registration with the Ministry of Economic Affairs. And within three months after completing company registration, a foreign exchange broker shall submit the following documents to apply for a business license from the Ministry of Finance:

1.Certificate for company registration;

2.Certificate of capital verification;

3.Articles of incorporation;

4.Shareholders' register and minutes of shareholders' meetings;

5.Directors' register and minutes of meetings of the board of directors;

6.Managing directors' register and minutes of meetings of managing directors;

7.Supervisors' register and minutes of meetings of supervisors; and

8.Other documents required by the Ministry of Finance.

Before the deadlines for completing company registration or business license application prescribed in the preceding paragraph, the applicant may request for an extension with appropriate reasons; only one extension may be granted and the extension shall not exceed three months.

Article 8

A foreign money broker that intends to operate within the territory of the Republic of China shall apply to the Bank for permission, then apply for approval and register pursuant to the Company Act, and lastly apply to the Ministry of Finance for a business license.

Article 9

A foreign exchange broker that intends to make a change in the particulars stated in Subparagraphs 1, 2 or 4 of paragraph 1, Article 6 shall apply to the Bank for permission, register the change, and apply to the Ministry of Finance for a new business license.

Article 10

The Bank, before approving a case, shall consult the Ministry of Finance pursuant to Articles 6, 8 and 9, and shall send a copy of the permission to the Ministry of Finance afterwards.

Article 11

A foreign exchange broker shall report to the Bank and send a copy of the report to the Ministry of Finance in any of the following situations：

1.Commencement, suspension, resumption or termination of business;

2.Changing a director or a supervisor;

3.Merger or dissolution;

4.Involved in any litigation that arises from the business; and

5.Other matters stipulated by the Bank.

Article 12

A foreign exchange broker is required to set aside reserves against losses from incorrect execution of order on a monthly basis.

The aforesaid reserves may not be drawn on except for offsetting losses incurred from incorrect execution of orders or with the approval of the Bank.

Article 13

Senior dealers of a foreign exchange broker shall meet at least one of the following requirements:

1.Having worked for more than a year as a dealer in a reputable overseas or domestic foreign exchange broker;

2.Having worked for more than two years as a dealer in an overseas or domestic bank or having had a job relevant to the foreign exchange business for more than four years; and

3.Having the approval of the Bank.

At least half of the dealers of a foreign exchange broker shall be senior dealers. A foreign exchange broker shall inform the Bank of changes of associated dealers.

Article 14

The staff of a foreign exchange broker shall provide transaction-related information to customers and conduct business in accordance with the principle of good faith. Unless otherwise provided by law or the Bank, the staff of a foreign exchange broker may not disclose business data of customers.

Article 15

A foreign exchange broker shall report the daily turnover to the Bank at the end of each business day, and file a monthly report with the Bank at the end of each month. The Bank shall provide, on a quarterly basis, information about the business of foreign exchange brokers to the Ministry of Finance for reference.

Article 16

The Bank may examine and audit the business or books of a foreign exchange broker , or request a foreign exchange broker to submit related reports or documents so as to maintain the market order.

Article 17

The Bank may take actions pursuant to the provisions of the Administrative Enforcement Law against any foreign exchange broker that fails to operate in accordance with the provisions of these Regulations.

Article 18

After consultation with the Ministry of Finance, the Bank may revoke or void the license of any foreign exchange broker if any of the following violation in providing brokerage services has occurred:

1.After being approved by the Bank, the foreign exchange broker fails to complete company registration and apply for business license within the prescribed period specified in Article 7;

2.The foreign exchange broker fails to commence operation within six months after being issued a business license by the Ministry of Finance.

3.The foreign exchange broker seriously violates the provisions of these Regulations and fails to improve within the period designated by the Bank;

4.After being issued a business license, the foreign exchange broker is found to have submitted false information that constitutes a serious violation in its application; and

5.The foreign exchange broker suspends its operation, is dissolved, declares bankruptcy, or undergoes reorganization.

Article 19

These Regulations shall become effective on the date of promulgation.