The FSC Announced Amendments to Provisions of “Standards Governing the Establishment of Securities Firms”, “Rules Governing Securities Firms” and “Rules Governing Responsible Persons and Associated Persons of Securities Firms”
2021-04-27
To assist the financial technology industry by adjusting laws and regulations for the implementation of financial technologies innovative experimentation, in order to improve the development of the financial technology industry and respond to the investment and trading patterns of financial technology innovation, the Financial Supervisory Commission (FSC) proposes to allow securities firms to to conduct “fund trading and exchange brokerage business” (fund brokerage business) as well as to allow applicants of financial technology innovation experiments who have been approved to handle securities related business to apply for permission to convert into securities firms, and therefore plans to amend the “Standards Governing the Establishment of Securities Firms”, “ Rules Governing Securities Firms” and “Rules Governing Responsible Persons and Associated Persons of Securities Firms” (hereinafter referred to as Personnel Management Rules). In addition, in line with the “Stock Market Maker System” to be implemented at the end of June 2021, the SFC will amend the “Regulations Governing Securities Firms” to lift the restrictions on the prices of selling borrowed securities for stock market makers (limited to securities dealers). The contents of the relevant draft amendments have been completed and will be promulgated and implemented in accordance with the administrative procedures in the near future. The main points of the amendments are as follows:
1. Securities firms will be allowed to handle fund brokerage business:
(1) The standard for the establishment of securities firms solely engaged in fund brokerage businesses will be amended to add that the amount of required capital is NT$50 million, the deposit for establishment is NT$10 million, and the internal control system shall be handled in accordance with the requirements of the Taipei Exchange (TPEx) (amendments to Articles 3, 7 and 11).
(2) The Regulations Governing Securities Firms will be amended to add that the business deposit for a securities firm which is only engaged in fund brokerage business is NT$10 million, to require securities firms engaged in this business to set up a special deposit account at a bank for the receipt and payment of funds which shall not be used for other purposes, to specify that securities firms only engaged in this business shall deliver investors' funds to a trust, to exclude the application of some provisions of these Regulations, and to authorize the TPEx to manage and formulate relevant provisions (amendments to Articles 9, 38-1 and 45-1).
(3) The Personnel Management Rules will be amended to stipulate that the responsible person and salespersons of a securities firm that only operates fund brokerage business shall have the salesperson qualification and be registered as specified in these Rules, the remaining requirements on manager qualification and personnel training shall not be applicable under these Rules, and the TPEx is authorized to manage and formulate relevant provisions (amendment to Article 21-1).
2. Allowing applicants of financial technology innovation experiments to apply for status conversion permission to securities firms: The innovation experiment is innovative in nature and can improve the efficiency of financial services, reduce operating costs or improve the rights and interests of financial consumers. The applicant shall be a company limited by shares whose net worth is not less than the amount specified in Article 3 of the Standards Governing the Establishment of Securities Firms and not less than two-thirds of the company's share capital, and has not engaged in businesses not allowed for securities firms. The current provisions of the Standards Governing the Establishment of Securities Firms shall apply mutatis mutandis to the qualification of the applicant, the margin to be deposited, the documents and procedures for applying for transformation and issuing license (amendment to Article 10-2 of the Standards Governing the Establishment of Securities Firms).
3. Lifting the restrictions on the prices of selling borrowed securities by stock market makers (limited to securities dealers): The Regulations Governing Securities Firms will be amended to lift the restriction that the prices of selling borrowed securities by stock market makers shall not be lower than the closing price of the previous business day, in order for securities dealers to provide trading quotations or hedge risks as stock market makers (amendment to Article 32-1).
The amendments above will expand the business scope of securities firms, provide multiple investment channels for investors, and assist in the business cohesion and promotion of applicants for financial technology innovation experiments, so as to enhance the development and competitiveness of the financial technology industry. In addition, the stock market maker system can improve stock liquidity and drive the overall market momentum by continuous provision of reasonable quotations, so as to achieve the effect of market activation.
Securities Firms Division,
Securities and Futures Bureau
Contact person: Section Chief Hsu
Tel: 02-27747161
If you have any questions, please write to: FSCMAIL
1. Securities firms will be allowed to handle fund brokerage business:
(1) The standard for the establishment of securities firms solely engaged in fund brokerage businesses will be amended to add that the amount of required capital is NT$50 million, the deposit for establishment is NT$10 million, and the internal control system shall be handled in accordance with the requirements of the Taipei Exchange (TPEx) (amendments to Articles 3, 7 and 11).
(2) The Regulations Governing Securities Firms will be amended to add that the business deposit for a securities firm which is only engaged in fund brokerage business is NT$10 million, to require securities firms engaged in this business to set up a special deposit account at a bank for the receipt and payment of funds which shall not be used for other purposes, to specify that securities firms only engaged in this business shall deliver investors' funds to a trust, to exclude the application of some provisions of these Regulations, and to authorize the TPEx to manage and formulate relevant provisions (amendments to Articles 9, 38-1 and 45-1).
(3) The Personnel Management Rules will be amended to stipulate that the responsible person and salespersons of a securities firm that only operates fund brokerage business shall have the salesperson qualification and be registered as specified in these Rules, the remaining requirements on manager qualification and personnel training shall not be applicable under these Rules, and the TPEx is authorized to manage and formulate relevant provisions (amendment to Article 21-1).
2. Allowing applicants of financial technology innovation experiments to apply for status conversion permission to securities firms: The innovation experiment is innovative in nature and can improve the efficiency of financial services, reduce operating costs or improve the rights and interests of financial consumers. The applicant shall be a company limited by shares whose net worth is not less than the amount specified in Article 3 of the Standards Governing the Establishment of Securities Firms and not less than two-thirds of the company's share capital, and has not engaged in businesses not allowed for securities firms. The current provisions of the Standards Governing the Establishment of Securities Firms shall apply mutatis mutandis to the qualification of the applicant, the margin to be deposited, the documents and procedures for applying for transformation and issuing license (amendment to Article 10-2 of the Standards Governing the Establishment of Securities Firms).
3. Lifting the restrictions on the prices of selling borrowed securities by stock market makers (limited to securities dealers): The Regulations Governing Securities Firms will be amended to lift the restriction that the prices of selling borrowed securities by stock market makers shall not be lower than the closing price of the previous business day, in order for securities dealers to provide trading quotations or hedge risks as stock market makers (amendment to Article 32-1).
The amendments above will expand the business scope of securities firms, provide multiple investment channels for investors, and assist in the business cohesion and promotion of applicants for financial technology innovation experiments, so as to enhance the development and competitiveness of the financial technology industry. In addition, the stock market maker system can improve stock liquidity and drive the overall market momentum by continuous provision of reasonable quotations, so as to achieve the effect of market activation.
Securities Firms Division,
Securities and Futures Bureau
Contact person: Section Chief Hsu
Tel: 02-27747161
If you have any questions, please write to: FSCMAIL
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Update：
2021-05-25