Regulations Governing Futures Clearing Houses Article 21

A futures clearing house shall pay attention to the financial, business and internal auditing situation of its clearing members, and shall prescribe auditing rules and report to the FSC for recordation. Upon discovery of any violation of laws/regulations or improper situation, a futures clearing house shall immediately handle it appropriately and inform the FSC and the Futures Exchange.In the event that a futures clearing house discovers its clearing member's business operation is not sound and is experiencing a loss which caused its credit default, or experiencing emergency events, or has material failure of its internal auditing operation, it shall immediately conduct a special examination and provide guidance.In the event that a clearing member cannot perform its obligation of clearing or settlement, a futures clearing house shall immediately conduct a special examination and supervise the assigned clearing member to take over its clearing and settlement matters.The handling procedure and rules regarding the auditing and guidance referred to in the preceding Paragraph shall be drafted by the futures clearing house and futures exchange, and shall be reported to the FSC for approval. Any amendment to the said procedure and rules shall also be submitted to the FSC for approval.