Regulations Governing Securities Firms Article 10

A securities firm operating the business of accepting brokerage orders to trade securities on the centralized securities exchange market shall make deposits to the TWSE settlement and clearing fund in the following manner:1. Before commencement of business operation, the securities firm shall deposit a basic amount of NT$15 million. After commencement of business operation, it shall additionally deposit a specified percentage of the net receipt or net payment amount of the executed trades of TWSE listed securities for which it has accepted brokerage trading orders within 10 days after the close of each quarter until the end of the then-current year. The percentage shall be separately determined by the FSC.2. From the year following the commencement of business operation, the originally deposited basic amount shall be reduced to NT$3.5 million and combined into the amount equal to the above-mentioned percentage of the net receipt or net payment amount of the executed trades of TWSE listed securities for which it accepted trading orders for the previous year on a yearly basis. At the end of January of each year, the insufficient or excess amount of the fund shall be deposited with or withdrawn from the TWSE.Before the commencement of business operation, a securities firm operating the business of proprietary trading of securities on the centralized securities exchange market shall make a lump sum deposit of NT$5 million to the TWSE settlement and clearing fund. After commencement of business operation and from the year following commencement of business operation, in addition to the basic amount, it shall furthermore continue to make deposits to the fund based on a specified percentage of the net receipt or net payment amount of the trades of TWSE listed securities that it has executed in proprietary trading. The method for calculation and lodging of the deposit shall follow that set out in the preceding paragraph.A securities firm operating the businesses of brokerage and proprietary trading of securities on the centralized securities exchange market shall deposit an aggregate of the amounts referred to in the preceding two paragraphs.Before commencement of business operation of each domestic branch office, a securities firm shall make a lump sum deposit of NT$3 million to the settlement and clearing fund; provided that from the next year following the commencement of business operation, the originally deposited amount shall be reduced to NT$500,000.A securities firm establishing a simple branch office or converting a branch office into a simple branch office is exempt from making a deposit to the TWSE settlement and clearing fund for such branch. For each branch office converted into a simple branch office, after obtaining the simple branch office license, the securities firm may apply to the TWSE for the return of the settlement and clearing funds it had originally deposited.A joint liability system shall be adopted for the settlement and clearing fund deposited by securities firms, and a special management committee of the fund shall be set up. The management rules shall be drafted by the TWSE with input from the Securities Association and reported to the FSC for approval. This provision shall also apply to any amendment of the rules.The special management committee of the fund may, depending on the degree of operational risk of a securities firm, notify the securities firm to make additional deposits to the settlement and clearing fund and report such to the FSC for recordation. The detailed rules for the above fund shall be drafted by the special management committee of the fund and reported to the FSC for approval. This provision shall also apply to any amendment of the rules.A securities firm operating over-the-counter brokerage or proprietary securities trading business shall make deposits to the TPEx settlement and clearing fund in compliance with the applicable requirements of the TPEx.