Regulations Governing Foreign Exchange Business of Banking Enterprises

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Title：

Regulations Governing Foreign Exchange Business of Banking Enterprises

Inactive Regulations

Announced Date： July 23, 2003

Amended Date： March 09, 2005

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Chapter 1 General Provisions

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 provisions of these Regulations shall govern the foreign exchange business of banking enterprises. Matters not provided herein shall be subject to provisions under other relevant laws and regulations.

Article 3

The term "banking enterprises" as used in these Regulations shall mean banks, credit cooperatives, credit departments of farmers' associations, credit departments of fishermen's associations, and the Chunghwa Post Co., Ltd.

Article 4

The term " foreign exchange business" as used in these Regulations comprises the following items:

1.Foreign exchange business export related;

2.Foreign exchange business import related;

3.Inward and outward remittances;

4.Foreign currency deposits;

5.Foreign currency loans;

6.Foreign currency payment guarantees;

7.Foreign exchange derivatives business; and

8.Other foreign exchange businesses.

The term "foreign exchange derivatives business" as used in these Regulations shall mean dealing, brokerage and agent activities of contracts involving foreign exchange, and whose values are derived from assets, interest rates, exchange rates, commodities, stock prices, indices, or other related products.

The term "contracts " as used in the preceding paragraph shall mean margin contracts, futures, forward contracts, swaps, options, or other contracts of a similar nature.

Article 5

Unless otherwise provided by other laws or the competent authorities, banking enterprises shall maintain the confidentiality of information concerning their customers' deposits, loans, and remittances.

Chapter 2 Commencement of Foreign Exchange Business

Article 6

A banking enterprise shall apply to the Central Bank of the Republic of China (Taiwan)(hereinafter referred to as the Bank) for engaging in foreign exchange business, and may engage in the said business only after being issued a certificate of authorization or a letter of approval.

Foreign exchange business may not be operated without the approval of the Bank.

Article 7

A bank may apply for engaging in all or part of the business categories listed in Paragraph 1 of Article 4.

Credit cooperatives, the credit departments of farmers' or fishermen's associations may apply for purchasing and selling foreign currency cash and traveler's checks.

The Chunghwa Post Co., Ltd. may apply for engaging in international remittances , purchasing and selling foreign currency cash and traveler's checks.

Article 8

Unless otherwise provided by these Regulations or other laws and regulations, domestic and foreign banks within the territory of the Republic of China that apply to the Bank for engaging in foreign exchange business (hereinafter referred to as authorized banks) shall comply with the following provisions:

1.Domestic banks shall:

(1)Maintain capital to risk-weighted assets ratio at 8% or above;

(2)Deploy sufficient experienced personnel for conducting foreign exchange business;

(3)Participate in joint processing of foreign exchange business with other authorized banks for an accumulated amount up to United States dollars 400 million or up to 7,000 transactions; and (4)Maintain a sound financial position for the last three years.

2.Foreign banks shall be approved by Financial Supervisory Commission, Executive Yuan (hereinafter referred to as "FSC") to establish branches in Taiwan.

When a bank applies to FSC for establishing a foreign department to engage in foreign exchange business, FSC shall forward the application to the Bank to review qualifications prescribed in Subparagraph 1 of the preceding paragraph.

Foreign banks approved to engage in foreign exchange business within the territory of the Republic of China may remit inwardly or outwardly capital or working capital only after having obtained a separate approval from FSC.

Article 9

Banks intending to become authorized banks shall submit written applications with the following documents to the Bank for approval:

1.Documents evidencing FSC's approval for registered establishment;

2.Scope of foreign exchange business;

3.Names and locations of overseas correspondent banks;

4.Name and address of the statutory responsible person within the territory of the Republic of China;

5.Capital and working Capital to be remitted to the territory of the Republic of China, as well as the categories and amounts of foreign exchange funding sources; and

6.Other data or documents specified by the Bank.

Article 10

When engaging in foreign exchange business listed in Subparagraphs 1 through 6, paragraph 1, Article 4, the operations and auditing personnel of an authorized bank shall hold foreign exchange business licenses or meet the following qualifications:

1.An operations personnel shall have at least three-month experience in the relevant foreign exchange business.

2.An auditing personnel shall have at least six-month experience in the relevant foreign exchange business.

Article 11

For the branches of an authorized bank to engage in the foreign exchange business listed in Subparagraphs 1 through 6, paragraph 1, Article 4, the bank's head office shall apply to the Bank for approval by submitting documentation detailing the intended scope of business, and attaching photocopies of the bank's business license and the curriculum vitae of operations and auditing personnel..

Article 12

When engaging in foreign exchange derivatives business listed in Subparagraph 7, paragraph 1, Article 4, the operations and management personnel of an authorized bank shall meet at least one of the following qualifications:

1.To have completed courses on derivatives and risk management held by domestic or foreign financial training institutions, the total amount time spent on attending the courses shall be at least 3 months;

2.To hold a foreign exchange derivatives business license;

3.To have one year training or internship in foreign exchange derivatives business at a domestic or foreign financial institution;

4.To have at least six-month working experience in foreign exchange derivatives business at domestic or foreign financial institutions.

Article 13

An authorized bank may engage in foreign exchange forward and swaps transactions without application. However, to engage in any other foreign exchange derivatives business, an authorized bank shall submit the following documents according to the type of business intended and apply to the Bank for approval:

1.Foreign exchange derivatives business involving the New Taiwan dollar exchange rate: Submit a statement of regulatory compliance, resolution of board of directors to apply for foreign exchange derivatives business for domestic banks or letter of authorization from the head office or regional command centers for foreign banks, product profiles, operational guidelines, risk management, risk disclosure statements, and curriculum vitae of the relevant personnel.

2.Any structure combination of foreign exchange derivatives business in the preceding item with other business already authorized by the Bank or other competent authorities: Submit documents listed in the preceding subparagraph.

3.Foreign exchange derivative business not involving the New Taiwan dollar exchange rate: For first time application by an authorized bank to engage in foreign exchange derivatives business or new financial products not yet approved by the Bank, documents listed in Item 1 shall be submitted.

4.Foreign exchange derivatives business (not involving the New Taiwan dollar exchange rate) already approved by the Bank and further structure combinations thereof: Before engaging in this business, submit a statement of regulatory compliance, resolution of board of directors to apply for foreign exchange derivatives business for domestic banks or letter of authorization from the head office or regional command centers for foreign banks, risk disclosure statement, and curriculum vitae of the relevant personnel. However an authorized bank may engage in structure combination of foreign exchange derivatives that involve products in the same categories and that are created through the same transaction contracts without application.

When an authorized bank, which has been approved to conduct derivatives business pursuant to the preceding regulation, engages in the foreign exchange derivatives business not involving the New Taiwan dollar, it should submit to the Bank a product profile, product introduction, and the documents required under Item 4 of the preceding paragraph within one week after such business has commenced for record. If within three (3) weeks after receiving such report , the Bank does not object thereto, the Bank's silence shall be deemed an approval for record.

The scope of the afore-mentioned foreign exchange derivatives business not involving the New Taiwan dollar shall be determined by the Bank separately.

Article 14

An authorized bank that has been approved by FSC to engage in money trust business shall submit the following documents to the Bank to apply for engaging in New Taiwan dollar or foreign currency specific money trusts earmarked for investing in foreign securities:

1.Photocopies of the business license issued by FSC;

2.Resolution of board of directors to apply for the afore-mentioned business for domestic banks or letter of authorization from the head office or regional command centers for foreign banks;

3.Statement of regulatory compliance;

4.Business plan, the content of which shall include product profiles, curriculum vitae of the relevant operation and management personnel, risk management, operational procedures and application principles, and accounting principles;

5.Risk disclosure statement; and

6.Other documents specified by the Bank.

The nature and scope of the foreign securities described in the preceding Paragraph shall be separately regulated by the Bank.

Article 15

To offer foreign currency automatic teller machine (ATM) services, an authorized bank shall apply to the Bank by submitting relevant operational guidelines and identifying the names of the offices controlling the ATM, a list of locations, and risk control measures.

Article 16

To engage in electronic business involving foreign exchange, authorized banks shall submit a description of relevant procedures when applying to the Bank. Authorized banks applying for engaging in foreign exchange receipts and disbursements or transactions with values equal to or over New Taiwan dollars 500,000 on the Internet shall first pass the test of the Online Civil Outward/Inward Remittances Declaration Yearly Aggregate Settlement Amount Query System, and also be capable of performing computerized review of transaction contents such as classification of remittances.

Before offering services in foreign exchange receipts and disbursements or transactions on the Internet, an authorized bank shall first request the customer to visit the bank in person to apply for and follow the procedures stipulated. The authorized bank shall verify the customer's identification documents or basic registration information when processing an application.

Article 17

To engage in foreign exchange business outside business hours, an authorized bank shall submit a description of relevant procedures when applying to the Bank, and shall comply with the following rules:

1.The amount of each foreign exchange settlement shall be limited to New Taiwan dollars 500,000 or its equivalent in foreign currency; and

2.Foreign exchange transactions conducted outside business hours shall be included in the "Daily Transaction Report" and "Daily Foreign Exchange Position Report" on the following business day.

Article 18

Where the authorized bank has established its own domestic foreign exchange processing center to process relevant foreign exchange back office work, the bank shall submit the relevant operational guidelines and procedures to the Bank within one week after the commencement of its operation. In the event that the authorized banks use other methods to assign third parties to process the relevant foreign exchange back office work, the banks shall apply to the Bank for approval by submitting the operational plans for outsourcing. If the Bank has not expressed a negative opinion within 15 days from the day following receipt of the application, the bank may proceed to process the work automatically.

Article 19

Where there is a need to engage in purchasing and selling foreign currency cash and traveler's checks by the branches of an authorized bank, or the banks and their branches that have not been authorized by the Bank to engage in foreign exchange business (hereinafter referred to as non-authorized banks), the bank's head office shall submit to the Bank a description of the scope of the intended business, a photocopy of the bank's business license (or a photocopy of establishment letter issued by FSC) and the curriculum vitae of operations and auditing personnel, except for the branches of an authorized bank which only engage in the money exchange of foreign currency.

Article 20

Operations and auditing personnel at the branches of authorized banks and at non-authorized banks and their branches who engage in the purchasing and selling of foreign currency cash and traveler's checks shall possess at least one-week (five business days) experience in foreign exchange business.

Article 21

The provisions of Item 1 of Article 17 shall apply, mutatis mutandis, when branches of authorized banks and non-authorized banks and their branches have been authorized by the Bank to engage in the purchasing and selling of foreign currency cash and traveler's checks outside business hours.

Transactions conducted under the afore-mentioned business shall be included in the "Daily Transaction Report" and "Daily Foreign Exchange Position Report" on the following business day by the branches of authorized banks. Non-authorized banks and their branches shall include the transactions in the "Daily Transaction Report" on the following business day.

Article 22

When a Credit Cooperative (head office or branch) first applies for approval to purchase and sell foreign currency and traveler's checks, the head office of the credit cooperative shall submit a written application together with a photocopy of the credit cooperative's business license, the curriculum vitaes of the operations and auditing personnel, the balance sheet and income statement of the previous fiscal year, and shall truthfully explain the status of any sanctions imposed on it for violation of financial regulations within the past twelve (12) months.

Article 23

For the credit departments of farmers' or fishermen's associations or their branches to apply for the purchasing and selling of foreign currency cash and traveler's checks, the farmers' or fishermen's association shall submit a written application along with a photocopy of the business license, curriculum vitae of operations and auditing personnel to be reviewed by to the local competent authorities, who shall then forward the application to the central competent authorities and then to the Bank.

Article 24

For a post office under the Chunghwa Post Co., Ltd. to apply for international remittances, to purchase and sell the foreign currency cash and traveler's checks , the company's head office shall submit a written application along with a photocopy of FSC's approval letter (for the post offices which were established after January 1, 2003), and curriculum vitae of operations and auditing personnel to the Bank for approval.

Article 24-1

If a relocation or name change is made by the branches of authorized banks, non-authorized banks and their branches, the head office of credit cooperatives and their branches, or the credit departments of farmer's or fishermen's associations and their branches that have been approved to engage in the foreign exchange business pursuant to Articles 11, 19, 22 and 23, depending on the type of situation, it is required for them to apply for a new certificate or notify the Bank within a week after the receipt of a business license or approval certificate. In the event of relocation, the curriculum vitae of operations and auditing personnel shall also be submitted to the Bank.

If the relocation or name change is made by the post offices under the Chunghwa Post Co., Ltd., which have been permitted to engage in foreign exchange business pursuant to the preceding provisions, it is necessary for them to notify the Bank within a week after the receipt of the letter issued by FSC or the letter issued by its head office. In the event of relocation, the curriculum vitae of operations and auditing personnel shall also be submitted to the Bank.

Article 25

The provisions of Article 10 shall apply, mutatis mutandis, to operations and auditing personnel performing international remittances business at post offices under Chunghwa Post Co., Ltd.

Article 26

The provisions of Article 20 shall apply, mutatis mutandis, to operations and auditing personnel at credit cooperatives, the credit departments of farmers' or fishermen's associations and their branches and post offices under Chunghwa Post Co., Ltd. that engage in the purchasing and selling of foreign currency cash and traveler's checks.

Article 27

The provisions of Subparagraph 1 of Article 17 shall apply, mutatis mutandis, to credit cooperatives and the credit departments of farmers' or fishermen's associations and their branches that have been authorized by the Bank to engage in the purchasing and selling of foreign currency cash and traveler's checks, as well as to post offices under the Chunghwa Post Co., Ltd. that have been authorized by the Bank to engage in international remittances, purchasing and selling foreign currency cash and traveler's checks.

Transactions conducted under international remittances and purchasing and selling of foreign currency cash and traveler's check transactions by the afore-mentioned banking enterprises outside business hours shall be included on the ''Daily Transaction Report'' or ''Daily Details Table''on the following business day.

Article 28

Banking enterprises applying for foreign exchange business will be granted a designated period for providing supplementary information and making corrections if the documentations submitted were found to be incomplete. The Bank may reject the application if supplementary information and corrections were not submitted during the designated period.

Article 29

The Bank may reject a banking enterprise's application for foreign exchange business in the event of any of the following:

1.Qualifications of the applicant do not comply with regulations;

2.The applicant has failed to fully assist declarants to fill out the Declaration Statement of Foreign Exchange Receipts and Disbursements or Transactions(hereinafter referred to as Declaration Statement);

3.A high number of errors in the certificates, reports and forms prepared by the applicant;

4.The applicant had seriously violated the provisions of these Regulations and was rectified by the Bank, but has failed to improve within the period specified by the Bank;

5.There is evidence indicating that the applicant may hinder sound operations of the business, or that the applicant is unable to meet financial policy requirements.

Article 30

The Bank may revoke or cancel its approval to any banking enterprise engaging in foreign exchange business in the event of any of the following:

1.The banking enterprise fails to commence operation within six months after being issued a certificate of authorization or letter of approval. The applicant may request for an extension with appropriate reasons. If approved, the banking enterprise may have an extension of no more than three months. An institution may apply for extension only once;

2.The banking enterprise has seriously violated the provisions of these Regulations and was rectified by the Bank, but has failed to rectify within the period specified by the Bank;

3.After being issued a certificate of authorization or letter of approval, or after being approved to engage in various foreign exchange business, the banking enterprise was found to have provided false information in its application which is deemed a serious violation; or

4.The banking enterprise suspends operations, is dissolved, or declares bankruptcy.

Chapter 3 Management of Foreign Exchange Business

Article 31

Banking enterprises engaging in foreign exchange business shall first verify the identity or primary registration data of the customer, and ensure that supporting documents comply with regulations.

Article 32

Banking enterprises shall accept a customer's request for purchasing and selling of foreign exchanges in accordance with regulations provided by the Bank.

Article 33

The exchange rates used for foreign exchange transactions between a banking enterprise and a customer may be solely determined by the banking enterprise.

The exchange rate for a single non-cash foreign exchange transaction with a customer for an amount of less than ten thousand United States dollars ( US$10,000) shall be posted at the banking enterprises' business premises before 9:30 AM on each business day. The bid/ask spread shall be reported to the Bank for record. Any change to the spread shall also be reported.

Article 34

When submitting reports and forms prescribed in these Regulations, banking enterprises shall attach relevant supporting documents and appendices.

The Department of Foreign Exchange of the Bank may request banking enterprises to fill out additional reports and forms if necessary.

The formats, contents, and completion instructions of the reports and forms prescribed in the previous two paragraphs shall conform to the "Directions Governing Banking Enterprises in Conducting Foreign Exchange Business" separately provided by the Bank, as well as other relevant regulations.

Article 35

With regard to the review of reports and forms submitted by authorized banks, the Bank may dispatch personnel to inspect the relevant account books and documents of banking enterprises, or may request banking enterprises to provide truthful financial reports or other relevant information within a prescribed period of time if deemed necessary.

Article 36

Where an authorized bank operates foreign exchange derivatives business involving the New Taiwan dollar exchange rate, the following rules shall apply:

1.Delivery foreign exchange forward business "between the New Taiwan dollar and foreign currency"

(1)Actual for demand foreign exchange receipts or disbursements, but one receipt or disbursement of foreign exchange may not be used in multiple contracts.

(2)Entering into contracts or processing settlements with clients, either transaction documents supporting actual for demand foreign exchange receipts or disbursements, or a written approval from the competent authorities shall be verified.

(3)Maturity: determined according to actual for demand foreign exchange receipts or disbursements.

(4)The price of a rollover transaction shall be based on the current market exchange rate rather than the rate of the original contracts.

2.Foreign exchange swaps business "between the New Taiwan dollar and foreign currency"

(1)In swaps transactions, when entering into spot foreign exchange settlement or a forward sale (forward purchase) of foreign exchange, the authorized bank shall enter into a foreign exchange forward contract with the same amount in the opposite direction at the same time.

(2)Counterparties: Domestic legal entities: no documents required. Foreign legal entities and natural persons: documents of approval issued by the competent authorities shall be verified.

(3)In the settlement of swaps transactions, the Declaration Statement shall be filled out pursuant to the "Regulations Governing the Declaration for Foreign Exchange Receipts and Disbursements or Transactions" (hereinafter referred to as the Regulations for Declaration). Column 4 of the Declaration Statement "Nature of Foreign Exchange Receipts and Disbursements or Transactions" shall be filled out according to the nature of the actual transaction, and also noted as "foreign exchange swaps transaction'. In addition, the "remittance classification and code number" provided by the Department of Foreign Exchange of the Bank shall be indicated on the foreign exchange memo, and included in the daily foreign exchange transaction report along with the Declaration Statement.

(4)The swap transaction amount need not be included in the foreign exchange settlement and remittance aggregate amount as specified in subparagraph 3, paragraph 1, Article 4 of the Regulations for Declaration.

(5)The prices of rollover transactions shall be based on the current market exchange rates rather than the rates of the original contracts.

3.Non-Delivery New Taiwan dollar foreign exchange forward business (NDF):

(1)Counterparties are limited to domestic authorized banks and the overseas branches or head offices of authorized banks.

(2)The format, content, and accounting treatment of contracts shall be segregated from those of delivery foreign exchange forward (DF) business.

(3)Contracts under this item may not be rolled over or terminated before maturity.

(4)Net cash settlement shall be applied uniformly upon maturity.

(5)Transactions do not allow margin trade.

(6)Without the approval of the Bank, contracts may not be structured to combine with other foreign exchange derivatives products, New Taiwan dollar deposits, foreign currency deposits, or other products.

(7)For non-delivery New Taiwan dollar foreign exchange forward transactions of United States dollars 5 million or above, the Department of Foreign Exchange of the Bank shall be notified immediately by telephone.

4.New Taiwan dollar exchange rate option business:

(1)Counterparties are limited to domestic and foreign legal entities.

(2)Both net amount settlement and gross amount settlement upon maturity are allowed, but the settlement method shall be specified in the contracts.

(3)The currency used for option premium and settlement if the option is exercised may be either in the denominated foreign currency or New Taiwan dollar, but shall be specified in the contract.

(4)Only "plain vanilla" options may be transacted. Without the approval of the Bank, contracts may not be structured to combine with options or other foreign exchange derivatives products, New Taiwan dollar deposits, foreign currency deposits, or other products.

5.Cross currency swaps business "between the New Taiwan dollar and foreign currency":

(1)Counterparties are limited to domestic and foreign legal entities.

(2)For cross currency swaps involving the exchange of principal both at inception and maturity, domestic legal entities are not required to submit transaction documents. Both the principal and interest need not be included in the remittance aggregate amount as specified in Subparagraph 3, paragraph 1, Article 4 of the Regulations for Declaration.

(3)For other types of cross currency swaps, the bank shall request its customer to submit documents evidencing actual demand at the time of transaction, the transaction amount shall be included in the remittance aggregate amount as specified in Subparagraph 3, paragraph 1, Article 4 of the Regulations for Declaration. However, if the foreign exchange receipts and disbursements or transactions are for the export or import of goods, providing services, or other uses approved by the competent authorities, they need not be included in the remittance aggregate amount.

(4)In the settlement of cross currency swaps transactions, the Declaration Statement shall be filled out pursuant to the Regulations for Declaration. Column 4 of the Declaration Statement "Nature of Foreign Exchange Receipts and Disbursements or Transactions" shall be filled out according to the nature of the actual transaction, and also noted as "cross currency swaps transaction". In addition, the "remittance classification and code number" provided by the Department of Foreign Exchange of the Bank shall be shown on the foreign exchange memo, and included in the daily foreign exchange transaction report along with the Declaration Statement.

(5)The exchange of principal or interest in each term in the future is deemed as a foreign exchange forward contract, and shall be reported on the daily foreign exchange forward transaction report when entering into contract.

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.

Article 38

For a new foreign exchange derivatives business that has not yet been approved, an authorized bank shall apply for approval pursuant to the procedures set forth in Article 13; the relevant guidelines concerning the business shall be specified in the letter of approval issued by the Bank. The Bank may authorize the "Taipei Foreign Exchange Market Development Foundation" (" the Foundation") to coordinate with "R.O.C. Bankers Association" ("BA") to formulate guidelines for contract signing, transaction and settlement methods, the contents of risk disclosure statements, accounting principles, formats of financial statements and reports, information disclosure methods, methods for dispute resolution, procedure for reporting incompliance to the Bank and other related matters. Such guidelines will become effective after the Bank's approval. The same procedure shall be followed for any amendments.

An authorized bank shall act in accordance with relevant regulations and the above guidelines when conducting the foreign exchange derivatives business.

Article 39

An authorized bank may accept the entrustment of the offshore banking unit (OBU) of the same bank to engage in OBU business. The scope and relevant regulations governing the business shall be separately provided by the Bank.

Article 40

For foreign currency deposits business, an authorized bank shall follow international business practice in determining and posting its own minimum deposit interest rates. The applicable interest rates for maturities not posted shall be negotiated between the authorized bank and its customer with reference to other posted rates with similar maturities. Interest rates that are subject to negotiation shall be announced publicly.

The announcement in the preceding paragraph shall be displayed in the business hall, and also posted on a publicly accessible website or disclosed to the general public through other means.

Article 41

An authorized bank may purchase or sell foreign exchange on the foreign exchange market or with the Bank, and may also hold long or short positions within the limits set by itself.

An authorized bank participating in the inter-bank foreign exchange market shall comply with the rules formulated by the Foundation after coordination with BA, and with reference to international customs and had reported to the Bank.

Article 42

An authorized bank shall set its total position limits for transactions between the New Taiwan dollar and foreign currency, which shall be submitted along with its board resolution (the Taiwan branches of foreign banks shall submit documentation of approval issued by their head offices) to the Department of Foreign Exchange of the Bank.

The combined position of non-delivery New Taiwan dollar forward contracts and New Taiwan dollar exchange rate options may not exceed one-third of the afore-mentioned total position limit.

Article 43

An authorized bank shall determine its position limits including " transaction positions for individual currencies" and "overnight positions for each trader". All its offices shall abide by these position limits and make auditing regularly.

Article 44

Authorized banks shall fill out "Foreign Exchange Position Daily Reports" for all foreign exchange transactions involving the New Taiwan dollar on a daily basis, and submit the reports to the Department of Foreign Exchange of the Bank on the following business day. Foreign exchange positions recorded on internal books of authorized banks shall be identical to those submitted to the Foreign Exchange Department.

Authorized banks shall report the estimated foreign exchange positions for the day to the Department of Foreign Exchange of the Bank by telephone at the end of each business day.

Article 45

Authorized banks, when engaging in large spot or forward transactions with clients over the counter, shall use the "Large Spot, Forward, and Cross Currency Swap (CCS) Transactions Information Online Transmitting System" under the "Online Civil Outward/ Inward Remittances Declaration Yearly Aggregate Settlement Amount Query System" to transmit relevant data to the Department of Foreign Exchange of the Bank pursuant to the following regulations:

1.Data on foreign exchange purchase or sale of United States dollars 1 million or above or its equivalent in other foreign currencies by a company or firm (excluding transactions from the export or import of goods processed with documentary bills), or of United States dollars 500,000 or above or its equivalent in other foreign currencies by an individual or an association shall be transmitted immediately on contract day.

2.Data on forward contracts transactions, and cross currency swap (CCS) transactions involving the conversion of New Taiwan dollars against foreign curriencies for United States dollars 1 million or above or its equivalent in other foreign currencies shall be transmitted before 12:00 noon on the business day following the contract.

3.Relevant transmitting operations shall be processed in accordance with the "Manual for the Online Data Transmitting System on Large Spot, Forward, and Cross Currency Swap (CCS) transactions" prescribed by the Department of Foreign Exchange of the Bank.

Authorized banks, when engaging in large spot or forward transactions involving the conversion of the New Taiwan dollars through their internet bank network, shall first pass the Bank's requirments of the "Internet Bank's Large Spot and Forward Transactions Information of Internet Bank Online Transmitting System"; they shall use the "Large Spot and Forward Transactions Information Online Reporting and Transmitting System", which is linked under the "Outward/Inward Remittances yearly Aggregate Settlement Amount Online Query System", to transmit relevant data to the Department of Foreign Exchange of the Bank pursuant to the following regulations:

1.After verifying the relevent transaction documents, data on foreign exchange purchase or sale of United States dollars 1 million or above or its equivalent in other foreign currencies by a company or firm (excluding transactions from the export or import of goods processed with documentary bills), or of United States dollars 500,000 or above or its equivalent in other foreign currencies by an individual or an association, shall be transmitted immediately on the contracting day.

2.After verifying the relevent transaction documents, data on forward contracts transactions involving the conversion of New Taiwan dollars against foreign currencies for 1 million or above or its equivalent in other foreign currencies shall be transmitted immediately on the contract day.

Article 46

The relevant timetable for the authorized banks to transmit reports to the Department of Foreign Exchange of the Bank:

1.Daily Report: Before 12:00 noon of the following business day.

2.Monthly Report: Within ten (10) days after the end of each month.

The scope of the daily report and monthly report described in the preceding Paragraph shall be separately regulated by the Bank.

Article 47

(repealed)

Article 48

Non-authorized banks, credit cooperatives, and credit departments of farmer's or fishermen's associations shall submit daily reports of purchasing and selling foreign currency cash and traveler's check to the Department of Foreign Exchange of the Bank before 12:00 noon on the following business day.

Article 49

(repealed)

Article 50

The Chunghwa Post Co., Ltd. shall submit daily details tables for inward and outward international remittances to the Department of Foreign Exchange of the Bank before 12:00 noon on the following business day.

Chapter 4 Supplementary Provisions

Article 51

The Bank may take action pursuant to the provisions of the Administrative Enforcement Law against any banking enterprise that fails to operate in accordance with the provisions of these Regulations.

Article 52

These Regulations shall become effective on the date of promulgation.