Chapter I General Provisions
Article 1
The Futures Trading Act (hereinafter referred to as "this Act") is enacted for the purpose of facilitating the sound development of the futures market and maintaining the orderly transaction of the market. Article 2
The regulation of futures transaction shall be governed by this Act; such matters not provided for in this Act shall be governed by the provisions of other relevant acts. Article 3
For the purpose of this Act, "futures trading" shall mean trading under the following contracts regarding derivatives of commodities, currencies, securities, interest rates, indices, or any other interests conducted pursuant to the regulations or practices set forth by domestic or foreign futures exchanges or other futures markets:
1.Futures Contract shall mean a contract made pursuant to the agreement of the parties involved to purchase or sell a specified quantity of a certain underlying interest for delivery at a specified future time and at a specified price and under the specified trading terms, or to offset the obligation under the contract by settling the difference in price prior to or on the last trading day.
2.Option Contract shall mean a contract made pursuant to the agreement of the parties involved, wherein the option buyer pays the premium in exchange for obtaining a right of call option or put option to purchase or sell a specified quantity of a certain underlying interest at a specified price and under the specified trading terms within a specified period of time; whereas the option seller has the corresponding obligation to fulfill his/her duties pursuant to such option contract when the option buyer exercises the right and demands for the option seller's performance; or both parties agree to offset the obligation and right under the contract by settling the difference in price prior to or on the last trading day.
3.Futures Option Contract shall mean a contract made pursuant to the agreement of the parties involved, wherein the option buyer pays the premium in exchange for obtaining a right of call option or put option to purchase or sell a specified quantity of a certain underlying futures contract at a specified price and under the specified trading terms within a specified period of time; whereas the option seller has the corresponding obligation to fulfill his/her duties pursuant to such option contract when the option buyer exercises the right and demands for the option seller's performance; or both agree to offset the obligation and right under the contract by settling the difference in price prior to or the last trading day.
4.Leverage Contract shall mean a contract made pursuant to the agreement of the parties involved, wherein one party undertakes to pay a specific percentage of an amount or to obtain a specific credit line limit granted by the other party, and, within a specified future time period, to offset the obligation and right pursuant to the terms under the contract by settling the difference in price or delivering the underlying interest.
For reasons of financial, currency, foreign exchange, and government bond policies, etc., futures trading conducted outside futures exchanges may, as announced by the Ministry of Finance within the scope of its governing matters or by the Central Bank of China within the scope of its administrating matters, be exempted from the application of this Act. Article 4
The term "Competent Authority" as referred to in this Act shall be the Financial Supervisory Commission, Executive Yuan. Article 5
The futures trading that a futures commission merchant may be mandated to engage in shall be confined to those futures categories and at those exchanges as announced by the Competent Authority. Article 6
The Competent Authority may, with the approval by the Executive Yuan, enter into cooperation agreements with foreign government agencies, institutions, or international organizations to facilitate matters such as information exchange, technical cooperation, and investigation assistance.
The Competent Authority may, with the approval by the Executive Yuan, authorize other agencies, institutions or associations to enter into the cooperation agreements as referred to in the preceding paragraph.
Unless otherwise conflicting with the interests of the state or the rights of the investing public, the Competent Authority may request the provision of the necessary information and records from related regulatory authorities or financial institutions, and provide them to the requesting foreign government agency, institution, or international organization which has executed cooperation agreements based on the principles of reciprocity and confidentiality. Chapter II Futures Exchange
Section I General Provision
Article 7
A futures exchange shall be established for the purpose of promoting the public interest and preserving the transaction fairness of the futures market.
A futures exchange may be organized in form of either membership or company. Article 8
A futures exchange shall be established with an approval granted and a business license issued by the Competent Authority.
The establishment criteria as referred to in the preceding Paragraph and the governing regulations for the futures exchanges shall be prescribed by the Competent Authority. Article 9
The business of a futures exchange is to provide services for a centralized futures trading market. Unless otherwise approved by the Competent Authority, a futures exchange shall neither engage in other business nor invest in other enterprises. Article 10
A futures trading contract shall not be traded on the futures exchange without prior approval from the Competent Authority. Nonetheless, when the Competent Authority is approving the futures trading contract involving currency exchange between New Taiwan Dollars and foreign currencies, the Competent Authority shall consult with and obtain the consent of the Central Bank of China in advance.
The Competent Authority shall grant or deny the application as referred to in the preceding paragraph within six months, unless extraordinary circumstances are present. Article 11
An approved futures trading contract may be voided by the Competent Authority if one of the following events occurs:
1. The contract has lost its economic value;
2. The contract is not consistent with the public interest;
3. Upon the petition filed by the futures exchange. Article 12
Unless otherwise prescribed by this Act or other acts, or otherwise approved by the Competent Authority, futures trading shall be conducted only at a futures exchange. Article 13
Unless acting pursuant to this Act, no person shall engage in operating a futures exchange or the business of a futures exchange.
No person shall provide any premises, facilities, or information for others to engage in the unlawful business as referred to in the preceding Paragraph. Article 14
A futures exchange shall deposit an operation bond with the National Treasury. The amount and the governing regulations of the said bond shall be prescribed by the Competent Authority. Article 15
The operating rules of a futures exchange shall contain the following particulars:
1. use of the futures trading market;
2. trading system;
3. clearing and settlement system;
4. calculating methodology of margin and premium;
5. administration of futures commission merchants;
6. surveillance of the futures trading market;
7. contingency plan;
8. handling procedures and penalties for default cases;
9. other matters as required by the Competent Authority.
The prescription and amendment of the provisions in the operating rules as referred to in the preceding Paragraph shall be approved by the Competent Authority. Article 16
A futures exchange, in the execution of market surveillance pursuant to Item 6 of Paragraph 1 in the preceding Article, may publicize the very trading information where such a surveillance has detected abnormalities; in case such a trading is suspected of materially dampening the market order, the following measures may be undertaken:
1. the adjustment of margin level or the time span for collection;
2. the restriction of trading volumes for the whole or partial portion of futures commission merchants;
3. the restriction of trading volumes and/or open positions;
4. suspension or termination of the said futures trade;
5. any other necessary measure for the maintenance of the market order or for the protection of futures traders. Article 17
In the event of the following events, the Competent Authority may void the license of a futures exchange:
1. the application for incorporation or the business license contains false statement;
2. where, three months elapsed after the issuance of the business license, the futures exchange fails to commence its business operation or, after commencing its business operation, it has voluntarily suspended its operation for a continuous period of three months or longer, unless the futures exchange, for justifiable cause shown, has applied for and obtained an extension approval by the Competent Authority. Article 18
A futures exchange shall file registration statements with the Competent Authority for its recordation upon commencing or suspending its business operation. Article 19
Any directors, supervisors, or their individual representatives, managers, or employees of a futures exchange shall keep confidential any information relevant to futures transactions acquired through the performance of their duties. Article 20
The rules regarding qualification and personnel governance for the responsible persons and associated persons of a futures exchange shall be prescribed by the Competent Authority. Section II Membership Type Futures Exchange
Article 21
A membership futures exchange shall be established as a non-profit juristic person. Article 22
The number of memberships of a membership futures exchange shall be no less than seven. Article 23
The promoters of a membership futures exchange shall, based on an unanimous agreement, execute the "Articles of Association" containing the following particulars with signatures and chops:
1. objectives;
2. name;
3. location of the head office;
4. organization and responsibilities;
5. categories and eligibility of membership;
6. number of memberships;
7. accession and withdrawal of members;
8. membership contribution and refund;
9. matters concerning discipline of members;
10. matters concerning number, responsibilities, term of office, election and removal of directors and supervisors;
11. matters regarding clearing and settlement;
12. imposition of penalties for breach of contract;
13. matters regarding transaction fees and charges for members;
14. apportionment of membership expenses;
15. disposal of residual assets upon dissolution;
16. matters regarding accounting;
17. procedures for amending the Articles of Association;
18. methods for public announcement;
19. any other matters as required by the Competent Authority; and
20. date of executing the Articles of Association. Article 24
The members of a membership futures exchange shall make their contributions in accordance with the provisions of the Articles of Association. The minimum contribution amount shall be prescribed by the Competent Authority according to the categories of membership.
In addition to the sharing of membership expenses according to the provisions of Articles of Association and the contribution referred to in the preceding Paragraph, a member's liability for the futures exchange is limited to ten times of its membership contribution.
The member contribution referred to in the first paragraph shall be paid in cash. Article 25
In case of any of the following acts by a member of a membership futures exchange, the futures exchange shall impose upon the member a monetary penalty and may further warn, suspend or restrict such member from trading futures on the said futures exchange, or may expel the member should the offense be of a serious nature:
1. any act in violation of acts and regulations, or any failure to comply with the administrative orders issued by the Competent Authority pursuant to acts and regulations;
2. any act in violation of the Articles of Association, operating rules, standards for mandate contracts, or any other rules of the futures exchange;
3. any transaction in violation of the principles of integrity and good faith which may cause damages to others.
The expulsion of a member as referred to in the preceding Paragraph shall be reported to the Competent Authority for recordation. Article 26
Where a member withdraws from the membership or is suspended from trading, the membership futures exchange shall, in compliance with the Articles of Association, require the said member or designate an other member to wind up and settle its transactions effected on the futures exchange; within the scope of winding up the business, the said member shall not be deemed to have withdrawn from the futures exchange or suspended from trading.
Where another member is designated to wind up the transactions in accordance with the preceding Paragraph, a mandate relationship is deemed to exist between the withdrawing member and the designated member so far as it is necessary for winding up and settling the transactions. Article 27
A membership futures exchange shall have at least three board directors and one supervisor elected from among its members in accordance with the Articles of Association. At least one-fourth of the directors shall be elected from among non-member experts, half of whom shall be appointed by the Competent Authority and the remaining shall be selected by the Board with the approval of the Competent Authority. The selection procedures for such directors shall be prescribed by the Competent Authority.
The term of office of both directors and supervisors shall be three years; successive terms in office are permissible upon re-election or re-appointment.
The directors shall establish a board of directors and shall elect a chairman with the consent of the majority of the directors.
The board chairman shall be a full-time executive officer; the above requirement shall not apply, however, if the membership futures exchange has assigned a manager vested with full authority to take charge of its operation. Article 28
No person who falls within any of the following categories shall serve as a promoter, director, supervisor, or manager of a membership futures exchange; those already serving in any of these capacities shall be discharged:
1. any person specified in any Item of Article 30 of the Company Act;
2. any person who served as the director, supervisor, manager, or other equivalent position of a juristic person at the time it was adjudicated bankrupt; and that three years have not elapsed since the close of the bankruptcy, or the reconciliation has not been fulfilled;
3. any person who has a record of a negotiable instrument being dishonored by a financial institution in the preceding three years; or
4. any person who has been discharged from his position under Paragraph 1 of Article 101 of this Act, or Article 56 or Item 2 of Article 66 of the Securities and Exchange Act within the past five years;
5. any person who has been sentenced under this Act, the Foreign Futures Trading Act, the Company Act, the Securities and Exchange Act, the Banking Act, the Statute for the Regulation of Foreign Exchange, the Insurance Act, or the Credit Union Act to a punishment of not less severe than a criminal fine; and five years have not elapsed since the completion of sentence execution, the expiration of the suspension of sentence, or the pardon of the crime;
6. any person who has been removed from his or her position pursuant to Item 2, Paragraph 1 of Article 100 of this Act within the past five years; or
7. any person who has been proved that, on behalf of others, he/she illegally acted as a promoter, director, supervisor or manager of a membership futures exchange.
Where the promoter, director, or supervisor of the membership futures exchange is a juristic person, the preceding Paragraph shall apply mutatis mutandis to the representatives of the said juristic person or the individuals designated to execute business for the juristic person. Article 29
Representatives of member directors or supervisors, non-member directors or supervisors, or any employees of the membership futures exchange shall not, for their own interest and using any trading account, either on their own behalf or by commissioning others, trade futures contracts in such futures exchange.
The persons referred to in the preceding Paragraph are prohibited from, providing funds to, sharing profits or losses with, or involving in any other business with any members of the exchange; however, the above restriction shall not apply to the representatives of member directors or supervisors who perform such acts for the interests of the members they represent. Article 30
In the event that the Competent Authority finds that any director or supervisor of the futures exchange was improperly elected, or any director, supervisor or manager was in violation of any act or regulation, or the Articles of Association, or failing to comply with any administrative dispositions issued by the Competent Authority under and pursuant to this Act and related regulations, the Competent Authority may notify the futures exchange to discharge such persons from their offices. Article 31
Unless otherwise provided in this Act, the provisions of the Company Act regarding directors, supervisors, or managers shall apply mutatis mutandis to the directors, supervisors, or managers of a membership futures exchange. Article 32
The provisions of this section regarding directors and supervisors shall apply mutatis mutandis to their designated representatives. Article 33
A membership futures exchange shall proceed with the dissolution process upon the occurrence of any one of the following causes:
1. any event of dissolution specified in the Articles of Association occur;
2. by resolution of the general meeting of members;
3. The number of membership is less than seven;
4. bankruptcy; or
5. voidance of the approval for the establishment of the futures exchange.
The dissolution referred to in Item 2 of the preceding Paragraph shall not become effective without the approval from the Competent Authority. Section III: Futures Exchange Organized as a Company
Article 34
A futures exchange organized as a company shall be a company limited by shares; the shareholding of any shareholder shall not exceed five percent of the paid-in capital in the said company unless an approval was granted by the Competent Authority under special circumstances. Article 35
The Articles of Incorporation of a futures exchange organized as a company shall be executed in accordance with the Company Act. The following particulars shall not be effective unless they are explicitly stipulated in the Articles of Incorporation:
1. qualifications of shareholders and restrictions imposed on the transfer of shares;
2. qualifications of traders;
3. establishment of a clearing department;
4. any other matters required by the Competent Authority.
Where the Articles of Incorporation of a futures exchange organized as a company impose any restrictions as prescribed under the preceding Item 1, Article 163 and Article 267 of the Company Act shall not be applicable. Article 36
At least one-fourth of the directors and supervisors of a futures exchange organized as a company shall be non-shareholder experts, half of whom shall be appointed by the Competent Authority, and the remaining half shall be selected by the Board subject to approval by the Competent Authority. The selection procedures for such board members shall be prescribed by the Competent Authority, and Paragraph 1 of Article 192 and Paragraph 1 of the Article 216 of the Company Act shall not be applicable. Article 37
A futures exchange organized as a company shall not issue bearer stocks.
In case a futures exchange organized as a company imposes any restrictions on the qualifications of shareholders pursuant to Item 1 of Paragraph 1 of Article 35 of this Act, the person to whom the stock of the futures exchange may be transferred or pledged are limited to those whose qualifications are expressly stipulated in the Articles of Incorporation. Article 38
A futures exchange organized as a company shall establish a business committee and a discipline committee, and at least one-third of the members of each committee shall consist of the futures commission merchants trading on the exchange.
The organization and responsibilities for the committees referred to in the preceding Paragraph shall be filed for approval with the Competent Authority. Article 39
Futures commission merchants trading in a futures exchange organized as a company shall enter into a contract for the usage of the centralized futures trading market with the exchange specifying the following:
1. the rate of futures trading processing fees;
2. that any futures commission merchant who violates any provisions of Paragraph 1 of Article 25 of this Act shall be punished with a monetary penalty for breach of contract, have its trading suspended or restricted, or have its usage contract terminated;
3. that any futures commission merchant who has been designated to wind up or settle trades made by other futures commission merchants shall have the obligation to perform in accordance with the contract.
The contract referred to in the preceding Paragraph together with other relevant materials shall be registered by the futures exchange with the Competent Authorities for its approval and recordation. Article 40
The contract referred to in the preceding Article shall be terminated either pursuant to the provisions of the contract, or upon the dissolution, voidance of the business license, or suspension of business of either party to the contract. Article 41
A futures exchange organized as a company, when terminating the contract with a futures commission merchant pursuant to Item 2 of Paragraph 1 of Article 39 of this Act shall register such contract termination with the Competent Authority for its recordation. Article 42
Where a futures commission merchant terminates the contract pursuant to Article 40 under this Act or is suspended from trading, it shall bear the obligation to wind up its transactions in the centralized futures trading market. Article 43
The Competent Authority, at its discretion, may order a futures exchange organized as a company to allocate a certain proportion of its earnings as special reserve in addition to the legally required reserve.
The ratio of the special reserve referred to in the preceding Paragraph to be allocated per annum shall be determined by the Competent Authority depending upon the earnings status of the futures exchange. Article 44
The provisions of Article 28, Article 30, and Article 32 of this Act shall apply mutatis mutandis to a futures exchange organized as a company. Chapter III Futures Clearing Houses
Article 45
Approval and a business license shall be obtained from the Competent Authority for the establishment of a futures clearing house; such approval and business license are also required in case where the clearing business is conducted by a futures exchange or by other institutions.
The operations, finance and accounting of a futures clearing house shall be kept independent. The form of organization, the rules for the establishment criteria, and the governing regulation shall be prescribed by the Competent Authority. Article 46
The clearance of futures trading, unless otherwise approved by the Competent Authority, shall be executed by a clearing member with its futures clearing house.
The rules regarding the qualification of a clearing member as referred to in the preceding Paragraph shall be prescribed by the futures clearing house and approved by the Competent Authority. Article 47
The operating rules of a futures clearing house shall contain the following particulars:
1. procedures and methods of clearing and settlement;
2. clearing confirmation, recordation and report statement;
3. matter relating to clearing margin and premium;
4. matters relating to delivery and cash settlement;
5. contribution, custody and utilization of clearing and settlement fund;
6. surveillance of the futures trading market;
7. matters regarding service charges;
8. handling procedures and penalties for default cases;
9. contingency plan; and
10. other matters as required by the Competent Authority.
The prescription and amendment of the provisions in the operating rules as referred to in the preceding Paragraph shall be reported to the Competent Authority for its approval. Article 48
A futures clearing house may, in the process of surveillance of the futures trading market pursuant to Item 6 of Paragraph 1 of the preceding Article, take the following necessary measures against any members when it discovers circumstances that may materially affect the market order:
1. adjust the amount of the clearing margin;
2. issue intra-day multiple margin calls;
3. liquidate the open positions in whole or in part; or
4. any other measures that are necessary to maintain market order or to protect futures trading.
The standards for determining when the market order may be materially affected shall be prescribed by the clearing house and approved by the Competent Authority. Article 49
In case a clearing member fails to perform its clearing and settlement obligation, the futures clearing house shall appropriate the following funds as compensation in the order set forth below:
1. the defaulting clearing member's clearing margin;
2. the defaulting member's contribution to the clearing and settlement fund;
3. other member's contribution to the clearing and settlement fund;
4. the compensation reserve fund of the futures clearing house; and
5. the aggregate contribution from each individual member of the futures clearing house in the proportion determined by the clearing house.
The contribution proportion referred to in Item 5 of the preceding Paragraph shall be filed with the Competent Authority for its approval.
The defaulting futures clearing member is liable to indemnify the compensation funds as prescribed under Item 3, Item 4 and Item 5 of Paragraph 1. Article 50
A futures clearing house shall collect a clearing margin from each of its clearing members, and such margin may be deposited in cash or in other securities approved by the Competent Authority; where the margin is partially composed of pledged securities, the securities proportion in value shall be prescribed by the Competent Authority.
The methods of collection, the levying criteria, and the discounted rate of the value of the pledged securities for the clearing margin as referred to in the preceding Paragraph shall be prescribed by the futures clearing house and registered with the Competent Authority for its approval. Article 51
The clearing margins collected by the futures clearing house shall be deposited separately from the futures clearing house's own assets.
The creditors of a futures clearing house, the financial institution holding the clearing margins, or clearing members, unless otherwise provided by this Act, shall not attach or claim any rights on such clearing margins.
A futures clearing house shall separately deal with the clearing margins between proprietary and brokerage accounts that it collects from its clearing members. Article 52
The creditors of a futures clearing member shall have priority rights to claim against the clearing and settlement fund for the contribution put by the clearing member where the debt obligation arises from the clearing; the priority of the creditors shall be as follows in decreasing order:
1. The clearing house;
2. Futures traders;
3. Members of the clearing house. Article 53
A clearing house shall deposit a compensation reserve fund; the rules regarding the proportion, custody, and utilization of the fund shall be prescribed by the Competent Authority. Article 54
A futures clearing house may, in case a member is bankrupt, dissolved, suspended for business or defaulted upon its clearing and settlement obligation, transfer such member's account and the related accounts of futures traders to another member who has executed a succession agreement with the defaulting member. Where it is deemed necessary, the futures clearing house may appoint a non-contractual member as transferee to assume the liability and responsibility of the defaulting member.
A clearing house may impose a monetary penalty, void the membership, or take other necessary measures upon a member who refuses to accept the succession as referred to in the preceding Paragraph. Article 55
The provision provided in Chapter II regarding the futures exchange shall apply mutatis mutandis to futures clearing house unless otherwise provided for by this Chapter or with regards to the latter part of Article 34 of this Act. Chapter IV Futures Enterprises
Section I Futures Commission Merchants
Article 56
Unless otherwise provided for in the Act, only authorized futures commission merchants shall engage in the business of futures trading.
A futures commission merchant shall be authorized and obtain a business license issued by the Competent Authority prior to the commencement of its business operation.
Unless recognized by the ROC government and with business license approved and issued by the Competent Authority, a foreign futures commission merchant may not commence to operate its business.
Unless approved and issued a business license by the Competent Authority, no branch office of a futures commission merchant shall be established or commence to operate its business.
The rules regarding organization forms, establishment criteria, and the governing regulations of the futures commission merchants shall be prescribed by the Competent Authority. Article 57
Unless approved by the Competent Authority, a futures commission merchant shall not be allowed to concurrently engage in other business.
Except for those securities firms concurrently engage in securities related futures business or those with approval from the related regulatory authorities, no futures commission merchant business shall be operated concurrently by any other company engaging in any other business. The criteria for the said securities firms shall be prescribed by the Competent Authority.
Firms engaging in futures business in accordance with the preceding Paragraph shall establish an independent department in charge of the futures business; the department's operation and accounting shall also be separated. Article 58
The name of a futures commission merchant shall explicitly bear the word of "futures." These futures commission merchants referred to under the proviso in Paragraph 2 of Article 57 shall be exempted from this requirement. Article 59
The minimum requirement of equity capital or designated operating capital of a futures commission merchant shall be prescribed by the Competent Authority. Article 60
A futures commission merchant shall, prior to commencing its business, deposit an operation bond with a financial institution designated by the Competent Authority; amount of the said bond shall be prescribed by the Competent Authority.
Creditors with debt claims arising from the futures business of a futures commission merchant shall have the rights of priority to recover damages from the operation bond referred to in the preceding paragraph.
A futures commission merchant shall restore the bond to its original level if such bond falls below the amount specified in Paragraph 1 hereof as a result of satisfying the liabilities described in the preceding Paragraph. Article 61
The rules governing the qualification and administration of the responsible persons, associated persons, or other business facilitating agents shall be prescribed by the Competent Authority. Article 62
The provision of Article 28 shall apply mutatis mutandis to the responsible persons or associated persons of futures commission merchants. Article 63
No responsible persons, associated persons or any other employees of a futures commission merchant may in any way:
1. divulge any information regarding matters mandated by his/her traders or any secrets with regard to all matters coming to his/her knowledge in the course of performing his/her duties;
2. guarantee a futures trader a profit;
3. make a commitment to a futures trader to share profit or loss;
4. use the account or name of a futures trader to engage in proprietary trading;
5. offer the use of the name or account of his/her own or of any other person to a futures trader for futures trading; or
6. make exaggerated or biased advertisement or disseminate false information. Article 64
A futures commission merchant shall, when accepting a futures trading mandate, assess the customer's capability of making futures trading. In case the assessment of the customer's credit situation and financial strength shows that he/she is incapable of engaging in futures trading, the futures commission merchant shall refuse to accept the mandate, unless an appropriate collateral has been provided by the said customer.
A futures commission merchant, for the purpose of accepting futures trading mandates, shall enter into a mandate contract with the futures trader at the time of opening of the trading account. The contents of such a contract shall be prescribed by the Competent Authority. Article 65
Only qualified associated persons shall accept a new account opening by futures traders on behalf of its futures commission merchant. Prior to the account opening, the futures commission merchant shall advise the trader of the nature of various kinds of futures, the terms of trading, and the potential risks involved, and submit a risk disclosure statement to the futures trader.
The content and the format of the risk disclosure statement referred to in the preceding Paragraph shall be prescribed by the Competent Authority. Article 66
A futures commission merchant shall not employ any non-qualified associated person to accept trading mandates from futures traders and engage in futures trading.
The minimum required number of associated persons of a futures commission merchant and the items required in the futures trading orders form shall be prescribed by the Competent Authority. Article 67
A futures commission merchant mandated to engage in futures trading shall collect margins or premiums from the futures traders. For each customer the merchant shall keep a detailed account statement specifying the carrying net value on daily basis. Article 68
A futures commission merchant mandated for futures trading shall prepare and submit a transaction statement to the futures trader after the consummation of the futures transaction, and it shall further prepare and submit a reconciliation statement to each futures trader by the end of each month.
The contents of the transaction statement and the monthly reconciliation statement referred to in the preceding Paragraph shall be prescribed by the Competent Authority. Article 69
A futures commission merchant, when concurrently engaging in proprietary and brokerage businesses shall, in each transaction, distinguish in writing the proprietary and brokerage transactions from one another. Article 70
A futures commission merchant shall open an exclusive customer margin/premium account in a banking institution designated by the Competent Authority, and shall deposit its futures customers' margins or premiums into such an exclusive account. The said account shall be segregated from the account of the futures commission merchant's own assets.
The creditors of futures commission merchants or designated institutions referred to in the preceding Paragraph shall not file an attachment suit or claim any rights on the said segregated customer margin/premium accounts unless otherwise provided for in this Act. Article 71
A futures commission merchant shall not withdraw any fund from the segregated customer margin/premium account, unless one of the following situations occurs:
1. instruction from the futures trader to deliver the excess margins/premiums;
2. payment for the futures trader of the margins/premiums due and/or settlement balance;
3. payment for the futures trader of brokerage commissions, interests, or other transactional fees payable to the futures broker; or
4. other items being approved by the Competent Authority. Article 72
Where the owners' equity of a futures commission merchant is lower than the designated percentage of the minimum paid-in capital, or its adjusted net capital is lower than the designated ratio of the total customer margin required for the open positions of futures traders, the futures commission merchant shall immediately report the situation to the Competent Authority. The Competent Authority shall order such futures commission merchant to correct the situation within a limited period. If the futures commission merchant fails to conform to the order within the period, the Competent Authority may, depending on the severity of the case, restrict a part of its business or void its license.
The designated percentage, the calculating methodology for the adjusted net capital, the net capital ratio, and the relevant registration and time period for correction referred to in the preceding Paragraph shall be prescribed by the Competent Authority. Article 73
A futures commission merchant shall not accept a discretionary authorization to decide the category, quantity, or price of futures transaction on behalf of futures traders. Nonetheless, those in compliance with regulations of the Competent Authority shall not be restricted by the above.
A futures commission merchant shall not engage in any unnecessary transaction on behalf of a futures trader. Futures commission merchants with discretionary authorization under the preceding Paragraph shall also be subject to this provision. Article 74
A futures commission merchant shall not engage in any of the followings:
1. trading in non-compliance with the instructions or terms of the mandate by the futures trader;
2. conducting futures trades on behalf of a futures trader without the authorization of the futures trader. Article 75
The Competent Authority may, in case a futures commission merchant is bankrupt, dissolved, suspended, or is required by acts or regulations to cease to accept trading orders from futures traders, order it to transfer the relevant accounts of its futures traders to another futures commission merchant with whom it has a succession agreement, unless the said futures commission merchant is also a member of a futures clearing house, and is acting pursuant to Article 54.
A futures commission merchant, unless with justified reason and approved by the Competent Authority, shall within two business days of receiving the transfer order from the Competent Authority, transfer the balance of the segregated customer margin/premium account and statements of the futures traders to the designated futures commission merchants as referred to in the preceding Paragraph. The costs of the transfer shall be borne by the transferring futures commission merchant.
A futures commission merchant shall, within two months after commencement of its business operation, register with the Competent Authority for its recordation a photocopy of the succession agreement specifying that another futures commission merchant agrees to assume the relevant accounts of futures traders upon the occurrence of the events referred to in Paragraph 1. Article 76
A futures commission merchant shall liquidate its open futures positions if the Competent Authority in accordance with this Act voids its business license or orders it to cease operation. Article 77
A futures commission merchant whose business has been voided shall be deemed as a futures commission merchant to the extent and within the scope of liquidating its futures transactions; the futures commission merchant ordered to cease operation shall be deemed to be in operation to the extent and within the scope of liquidating its pending transaction. Article 78
In case a futures commission merchant is dissolved or partially ceases to operate its business, its responsible person shall submit a report explaining the cause to the Competent Authority.
The provisions of Articles 76 and 77 shall apply mutatis mutandis to the situation provided in the preceding Paragraph. Article 79
Article 17 and Article 18 shall apply mutatis mutandis to futures commission merchants. Section II Leverage Transaction Merchants
Article 80
Unless approved by the Competent Authority, a leverage transaction merchant shall not engage in futures transaction business.
A leverage transaction merchant shall be authorized and obtain a business license issued by the Competent Authority prior to the commencement of its business operation.
No branch of a leverage transaction merchant shall be established or commence operation without having been approved and issued a business license by the Competent Authority.
The rules regarding establishment criteria and governing regulations for leverage transactions shall be prescribed by the Competent Authority. Article 81
The provisions of Article 17, Article 18, and Articles 57 to 78 shall apply mutatis mutandis to leverage transaction merchants. Article 82
A futures trust enterprise, managed futures enterprise, futures advisory enterprise or other futures services enterprises shall not commence operation having been approved and issued a business license by the Competent Authority.
No branch office of a futures services enterprise shall be established and commence to operate its business without having been approved and issued a business license by the Competent Authority.
The rules regarding establishment criteria and governing regulations for futures services enterprises shall be prescribed by the Competent Authority. Article 83
In addition to this Act or any other regulations promulgated thereunder, other acts governing trust and trust businesses shall be applicable to the regulation of the futures business. Article 84
Unless approved by the Competent Authority, a futures trust enterprise shall not engage in any activity to raise a futures trust fund.
A futures trust enterprise shall provide a prospectus before raising any futures trust fund. The content required in such prospectus shall be prescribed by the Competent Authority. Article 85
The futures trust funds raised from the public shall be kept segregated and independent from the assets of the futures trust enterprise and the fund custodian institution.
The rules governing the management of the futures trust fund shall be prescribed by the Competent Authority. Article 86
No creditors shall file an attachment proceeding or claim any other right against the assets of the futures trust fund to satisfy the liabilities incurred by the futures trust enterprise and the fund custodian institution from such institutions' own assets. Article 87
Before accepting a mandate by a specific customer to conduct futures trading, a managed futures enterprise shall advise the customer of the nature of futures trading and the inherent risks involved, tender the risk disclosure statement, and sign a written mandate contract with the customer.
The content and format of the written contract and the risk disclosure statement referred to in the preceding Paragraph shall be prescribed by the Competent Authority.
The provisions of Article 84 to Article 86 shall apply mutatis mutandis where the managed futures enterprise raises funds from the public to engage in futures trading. Article 88
The provisions of Article 17, Article 18, Article 57 to Article 61, Article 63 to Article 66, and Article 74 shall apply mutatis mutandis to the futures services enterprises. Chapter V Futures Associations
Article 89
A futures related enterprise shall not commence to operate its business unless it joins a futures association.
A futures enterprise shall temporarily join a futures association designated by the Competent Authority where there is no such association organized within its locality.
Unless otherwise provided in this Act, the Business Organization Act shall be applicable to the establishment, organization and supervision of the futures associations referred to in preceding Paragraph. Article 90
The Federation of Futures Industry Associations shall consist of the following members;
1. futures exchange;
2. futures clearing houses;
3. provincial futures association or municipal futures association; and
4. other parties designated by the Competent Authority.
The establishment of the Federation of Futures Industry Associations shall be approved by the Competent Authority before lodging the registration application to the Ministry of the Interior. Article 91
The Federation of Futures Industry Associations may collect some fees, in addition to the fees set forth by the Business Organization Act, to the extent deemed necessary to effect the function of self-regulation and to coordinate in the development of the futures market. The category and rate of such fees shall be proposed by the association and approved by the Competent Authority. Article 92
The Federation of Futures Industry Associations shall have at least three directors and one supervisor elected among its members pursuant to its articles of association. Nonetheless at least, one fourth of its directors and supervisors shall consist of related experts among whom half shall be appointed by the Competent Authority, and the remaining shall be appointed by the directors and supervisors and approved by the Competent Authority. The rules governing such appointment shall be prescribed by the Competent Authority.
The terms of office for the directors and the supervisors shall be three years, and they may be eligible for re-election. The chairman of the board of directors, however, may be re-elected only once. Article 93
The required particulars of the Articles of Association for the futures associations and the Federation of Futures Industry Associations, the regulations for the guidance and supervision of their business, and the supervision of their responsible persons and associated persons shall be prescribed by the Competent Authority. Article 94
A futures association may impose necessary sanctions upon its members or the representatives of the members pursuant to the Articles of Association. Chapter VI Supervision and Administration
Section I Supervision
Article 95
The Competent Authority shall establish market surveillance guidelines to protect public interest and maintain market order. Article 96
In the event of any of the following circumstances in the futures market or a futures trading thereof, the Competent Authority may issue orders to adjust the margin level, restrict trading volume or open positions of the transacting party or adopt any other necessary measures; where such circumstances are special, the Competent Authority may order the complete or partial suspension of futures trading:
1. where the futures market or futures trading has been or has the danger of being manipulated or monopolized;
2. where any measure taken by the Taiwan government or a foreign government is sufficient to affect the futures market, futures trading, or certain underlying assets for futures trading.
3. where the foreign or domestic market fluctuates substantially due to acts of god, war, civil commotion, or other force majeure events, which will severely impede the futures market, futures trading, or certain underlying assets for futures trading; or
4. other events which will severely affect the futures market order or harm the public interest. Article 97
Futures exchanges, futures clearing houses, futures enterprises, and futures associations shall periodically prepare and file with the Competent Authority financial statements that have been audited and attested, or reviewed, by a certified public accountant, and shall preserve the trading and business records.
The rules regarding the preparation of the financial statements, registration procedures, particulars for public announcement, and record keeping referred to in the preceding Paragraph shall be prescribed by the Competent Authority. Article 97-1
Futures exchanges, futures clearing houses, and futures enterprises shall establish financial and operational internal control systems.
The Competent Authority may prescribe guidelines governing internal control systems of companies or institutions referred to in the preceding Paragraph.
Unless approved by the Competent Authority, a company or institution referred to in Paragraph 1 shall report an Internal Control Declaration to the Competent Authority within four months after the close of each accounting year. Article 98
In order to protect the public interest or maintain the market order, the Competent Authority may, from time to time, order a futures exchange, futures clearing house, futures enterprise, futures association or any related persons having financial or business intercourse with the parties above to furnish financial or business statements, or examine their business, assets, accounting books, documents or other related articles. In case there is substantial likelihood that there has been a violation of act or regulations, the Competent Authority may seal or take possession of the relevant documents.
The scope of the related persons referred to in the preceding Paragraph shall be prescribed by the Competent Authority. Article 99
In order to maintain the public interest and market order, in case there is the likelihood that this Act is likely to be violated, the Competent Authority may request the institution, organization, or individual related to the futures trading to submit relevant books and documents, or to call those related persons to explain their transactions. The guidelines for the above shall be prescribed by the Competent Authority.
The persons being requested to appear under the preceding Paragraph may retain attorneys-at-law, certified public accountants, or any other persons who under the law can legally represent and defend them. Article 100
In case any futures exchange, futures clearing house, or futures enterprise acts in violation of this Act, in addition to being subject to be punished in accordance with the provisions set forth under this Act, the Competent Authority may, depending upon the severity of the violation, additionally impose the following sanctions and, in addition thereto, order such violator to correct its conduct within a limited period of time:
1. warning;
2. remove the responsible persons or other related persons;
3. issue order to suspend the business in part or in whole for no more than six months; or
4. void the business license.
Where any party fails to comply with the order to correct its conduct within the time specified, the Competent Authority may successively re-impose the sanctions referred to in the preceding Paragraph upon such party or impose heavier sanctions until the violation has been corrected. Article 101
The responsible persons or employees of a futures exchange, futures clearing house, or futures enterprise violating this Act or any regulation promulgated pursuant to this Act shall be punished, in accordance with this Act and in addition thereto, the Competent Authority, depending on the seriousness of the violation, may order, for no more than six months, the suspension of his/her capacity to execute transactions or to remove him/her from the position held; In addition, the Competent Authority may impose upon the futures exchange, futures clearing house, or futures enterprise sanctions in accordance with the preceding Article.
After any of the persons referred to in the preceding Paragraph has been removed from his/her office, the futures exchange, futures clearing house, or futures enterprise shall report the same to the Competent Authority. Article 102
In order to protect the public interest, the Competent Authority may issue an order notifying a futures exchange, futures clearing house, or futures association to amend its Articles of Association, operating rules, standards of mandate contract, or any other rules, or suspending, restricting, amending, or voiding any resolution or disposition made by such exchange, clearing house, or association. Article 103
The Competent Authority may appoint persons to a futures exchange and/or futures clearing house for supervisory purposes. The rules for supervision shall be prescribed by the Competent Authority. Section II Administration
Article 104
The Competent Authority may restrict the futures trading volumes and open positions of futures traders.
A futures trader shall register its futures trading volumes and open positions. The scope, content, and procedure of the registration statement shall be prescribed by the Competent Authority. Article 105
No person may mandate a futures enterprise which has not been approved by the Competent Authority to engage in futures trading. Article 106
With regard to futures trading, no person shall, with an intent to manipulate the price of futures, engage in any one of the following acts:
1. acting independently or conspiring with others to continuously inflate, maintain, or deflate the prices of a certain futures contract, or its related spot commodities;
2. acting independently or conspiring with others to increase, maintain, or decrease the open positions of a certain futures contract or the supply or demand of its related spot commodities;
3. acting independently or conspiring with others to disseminate or spread false information; or
4. directly or indirectly engaging in manipulative acts to influence the prices of a certain futures contract or its related spot commodities. Article 107
The following persons directly or indirectly having access to material information which may materially affect the prices of a certain futures contract shall not either trade for his own account or have others trade on futures or its related spot commodities which are related to such information prior to the disclosure of the information. Nonetheless, persons who with justifiable cause believe the information has been publicly disclosed shall not be restricted by the above:
1. directors, supervisors, managers, employees, or mandataries of a futures exchange, futures clearing house, futures enterprise, futures association or any other related institutions;
2. public officials, employees or mandataries of the Competent Authority or the competent authorities of other related businesses;
3. directors, supervisors, managers or employees of the mandataries referred to in the preceding two Items; or
4. any person who has been informed of the information by the persons referred to in the preceding three Items.
The preceding Paragraph shall apply mutatis mutandis to the representatives of the directors and supervisors. Article 108
Any person involved in futures trading shall not engage in bucketing, misrepresentation, fraud, deceit, or other conducts which will mislead the futures traders or other third parties.
The term "bucketing" referred to in the preceding Paragraph shall mean:
1. off market offsetting;
2. cross-trading;
3. taking the other side of a customer's order;
4. accommodation trading. Chapter VII Arbitration
Article 109
For any dispute arising out of a futures trading conducted pursuant to this Act, the parties may resort to arbitration as stipulated under the contract.
Unless otherwise provided by this Act, the procedures of the arbitration referred to in the preceding Paragraph shall be regulated by the Commercial Arbitration Act. Article 110
Where the arbitrators selected by the parties to the dispute cannot agree on the appointment of the third arbitrator as provided under the agreement to arbitrate, the Competent Authority may appoint the third arbitrator upon the application of the parties or on its authority. Article 111
If any futures enterprise delays its compliance with the arbitration award, the settlement reached pursuant to Article 28 of the Commercial Arbitration Act, or mediation rendered pursuant to Article 28-1 of Commercial Arbitration Act, the Competent Authority may suspend the business of the futures enterprise or impose any other necessary punishments prior to its compliance, unless the decisions referred to above have been challenged pursuant to Article 23 of the Commercial Arbitration Act. Chapter VIII Penal Provisions
Article 112
A person shall be punished with imprisonment for a period not exceeding seven years and in addition thereto may be fined a criminal fine of not more than three million New Taiwan Dollars (NT$3,000,000) for any of the following offenses:
1. without approval, to engage in the operation of a futures exchange or any related business of a futures exchange;
2. without approval, to engage in the operation of a futures clearing house;
3. the violation of the provisions of Paragraph 1 of Article 56;
4. without approval, to engage in the business of a leverage transaction merchant;
5. without approval, to engage in the business of a futures trust enterprise, managed futures enterprise, futures advisory enterprise or any other related futures services enterprises;
6. the violation of the provision of Paragraph 1 of Article 84 by any futures trust enterprise in raising a futures trust fund; or
7. the violation of Article 106, Article 107, or Paragraph 1 of Article 108. Article 113
Any director, supervisor, manager, mandatary, or employee of a futures exchange, futures clearing house, or futures trust enterprise who demands, agrees to accept, or receives any illegitimate profit in connection with the performance of his duty shall be punished with imprisonment for a period not exceeding five years, detention, or in addition thereto a criminal fine of not more than two million four hundred thousand New Taiwan Dollars (NT$2,400,000)
Any person referred to in the preceding Paragraph who demands, agrees to accept, or receives any illegitimate profits for actions in contravention of his duty, shall be punished with imprisonment for a period not exceeding seven years, detention, and/or a criminal fine of not more than three million New Taiwan Dollars (NT$3,000,000)
The profits received by the person who committed the offenses specified in the preceding two Paragraphs shall be confiscated. If the whole or partial portion of the profits cannot be confiscated, the value thereof shall be disgorged from the offender. Article 114
Any person who offers, promises, or delivers illegitimate profit to any person who acts in contradiction to his duty as specified in the preceding Article shall be punished with imprisonment for a period not exceeding three years, detention, and/or a criminal fine not exceeding two million New Taiwan Dollars (NT$2,000,000).
The punishment of the offense specified in the preceding Paragraph may be pardoned if the offender voluntarily surrenders himself to the law enforcement authorities. Article 115
A person shall be punished with imprisonment for a period not exceeding three years, detention, and/or a criminal fine of not more than two million and four hundred thousand New Taiwan Dollars (NT$2,400,00) for any of the following offenses:
1. making false representation or omission in the contents of the application materials required under Paragraph 1 of Article 8, Paragraph 1 of Article 45, Paragraphs 2 to 4 of Article 56, Paragraphs 2 and 3 of Article 80, Paragraphs 1 and 2 of Article 82, and Paragraph 1 of Article 84;
2. the violation of the provisions of Article 71;
3. the violation of Article 81 mutatis mutandis applying Article 71 thereunder by a leverage transaction merchant;
4. making false statement in the accounting books, documents or other related articles or reporting materials required to be produced under an order from the Competent Authority issued pursuant to Article 98; or
5. making false statement in the accounting books, documentary evidence, financial statement or any other business documents filed by any futures exchange, futures clearing house, futures enterprise, or futures association as required by law or by orders issued by the Competent Authority under the laws. Article 116
A person shall be punished with imprisonment for a period not exceeding three years, detention, and/or a criminal fine of not more than two million New Taiwan Dollars (NT$2,000,000) for any of the following offenses:
1. the violation of the provisions of Article 5 or Article 63;
2. the violation of Paragraph 2 of Article 13, except where the provider does not know that it is an illegal futures exchange or is engaging in illegal futures exchange business;
3. the violation of Article 81 mutatis mutandis applying Article 63 thereunder by the responsible person, associated person, or any other employees of a leverage transaction merchant; or
4. the violation of Article 88 mutatis mutandis applying Article 63 thereunder by the responsible persons, associated person or any other employees of a futures services enterprise. Article 117
A person shall be punished with imprisonment for a period not exceeding one year, detention, and/or a criminal fine of not more than one million eight hundred thousand New Taiwan Dollars (NT$1,800,000) for any of the following offenses:
1. the violation of the provisions of Article 12, Article 19, or Article 29; or
2. the violation of Article 55 mutatis mutandis applying Article 19 or Article 29 thereunder by a futures clearing house. Article 118
Where a representative, agent, associated person or any other employee of a juristic person committed the following offenses in connection with the performance of his/her duty, in addition to the punishment imposed on the person in violation of the law pursuant to Article 116 and Article 117, the criminal fines stipulated under each applicable Article shall also be imposed on the juristic person:
1. the violation of the provisions of Article 19, Article 29, or Article 63;
2. the violation of the provisions of Article 55 mutatis mutandis applying Article 19 or Article 29 thereunder; or
3. the violation of the provisions of Article 81 or Article 88 mutatis mutandis applying Article 63 thereunder.
Before the crimes referred to in the preceding Paragraph have been discovered, if the juristic person on its own accord file a complaint or report the crime, the punishment hereunder may be reduced or remitted. Article 119
A person shall be punished with an administrative fine of not less than one hundred twenty thousand New Taiwan Dollars (NT$120,000) but not more than six hundred thousand New Taiwan Dollars (NT$600,000) for committing any of the following offenses:
1. the violation of the provisions of Article 10, Article 18, first part of Paragraph 2 of Article 45, Paragraph 4 of Article 56, Paragraph 1 of Article 57, Article 64, Paragraph 1 of Article 65, Paragraph 1 of Article 66, Article 67, Paragraph 1 of Article 70, Paragraph 1 of Article 72, Article 73, Article 74, Paragraph 1 of Article 78, Paragraph 3 of Article 80, Paragraph 2 of Article 82, Paragraph 1 of Article 85, Paragraph 1 of Article 87, Paragraph 1 or Paragraph 3 of Article 97-1, Paragraph 2 of Article 104, or Article 105 of this Act;
2. the violation of the orders issued pursuant to the provisions of Paragraph 2 of Article 8, last part of Paragraph 2 of Article 45, Paragraph 5 of Article 56, Paragraph 4 of Article 80, Paragraph 3 of Article 82, or Paragraph 2 of Article 85 of this Act;
3. a futures clearing house acting in violation of the provision of Article 55 mutatis mutandis applying Article 18 of this Act;
4. a futures commission merchant acting in violation of the provisions of Article 79 mutatis mutandis applying Article 18 of this Act;
5. a leverage transaction merchant acting in violation of the provisions of Article 81 mutatis mutandis applying Article 18, Paragraph 1 of Article 57, Article 64, Paragraph 1 of Article 65, Paragraph 1 of Article 66, Article 67, Paragraph 1 of Article 70, Paragraph 1 of Article 72, Article 73 and Article 74, or Paragraph 1 of Article 78 of this Act;
6. a futures service enterprise acting in violation of the provisions of Article 88 mutatis mutandis applying Article 18, Paragraph 1 of Article 57, Article 64, Paragraph 1 of Article 65, Paragraph 1 of Article 66, or Article 74 of this Act.
7. failure to furnish accounting books, documentary evidence or other related articles or reporting materials within the period specified in an order issued by the Competent Authority, or any refusal or impediment of the inspection initiated by the Competent Authority pursuant to the provisions of Article 98;
8. failure on the part of a futures exchange, futures clearing house, futures enterprise, or futures association to prepare, register, publicly announce, maintain, or keep the accounts, documentary evidence, financial statement or other relevant business documents according to law or as required by orders issued by the Competent Authority;
9. refusal to comply with the investigation initiated by the Competent Authority pursuant to Article 99, to provide related documents, or to attend the hearing at the office of the competent authority for examination without justifiable cause.
Where a person who has committed any act referred to in Item 1, or Item 3 to Item 8 of the preceding Paragraph and has been punished with an administrative fine and ordered by the Competent Authority to take corrective actions within a given time limit but fails to act within the defined period, the Competent Authority may set a new compliance period and successively impose an administrative fine of not less than two hundred forty thousand New Taiwan Dollars (NT$ 240,000) but not more than one million two hundred thousand New Taiwan Dollars (NT$ 1,200,000) for each successive failure to comply. Article 120
If any person refuses to pay an administrative fine imposed under this Act within the required time, the case shall be referred to the courts for compulsory execution. Chapter IX Supplementary Provisions
Article 121
The Foreign Futures Trading Act shall become inapplicable upon the implementation of this Act. Article 122
Where any license or credential of qualification obtained or issued pursuant to the Foreign Futures Trading Act, or the Securities and Exchange Act and its related regulations is inconsistent with the requirements of this Act, the recipients shall apply for a new license or credential with the Competent Authority within one year after the implementation of this Act. Article 123
The Competent Authority referred to in Article 4 shall retain the title "Securities and Exchange Commission of the Ministry of Finance" before the Organizational Act of the Securities and Exchange Commission of the Ministry of Finance is amended to change its name to the "Securities and Futures Commission of the Ministry of Finance." Article 124
The Enforcement Rules of this Act shall be prescribed by the Ministry of Finance. Article 125
The implementation date of this Act shall be prescribed by the Executive Yuan.
Amended articles of this Act shall become effective as of the date of promulgation. |