These Regulations are prescribed in accordance with Article 56, paragraph 5 of the Futures Trading Act ("the Act").

A futures commission merchant shall prescribe an internal control system in accordance with the Regulations Governing the Establishment of Internal Control Systems by Service Enterprises in Securities and Futures Markets adopted by the Financial Supervisory Commission (FSC) and the regulations providing standards for the internal control systems of futures commission merchants adopted by futures-related agencies, such as the Taiwan Futures Exchange Corporation (TAIFEX).
The operation of a futures commission merchant shall be in accordance with acts and regulations, articles of incorporation, and the internal control system referred to in the preceding paragraph.
When a futures commission merchant operates futures brokerage business, it shall retain transaction vouchers and records of customer identification and registration sufficient for a complete and full understanding of the transaction for any transaction above a specific amount or suspected of money-laundering, and shall handle the case pursuant to the Money Laundering Control Act and the internal control systems.
The prescription and amendment of the internal control system referred to in paragraph 1 above shall be approved by the board of directors, and a record thereof shall be kept on file. Any amendments to be made pursuant to notices from the FSC or futures-related agencies shall be made within the specified time limit.

In case of any of the following events, a futures commission merchant shall report to the FSC for approval in advance:
1. change of name of the futures commission merchant;
2. change of capitalization, operating capital, or the fund for operating business;
3. change of the business place of the futures commission merchant or its branch unit(s);
4. change of the company's business items;
5. acquisition in whole or in major part of the business or assets of another futures commission merchant, or transfer in whole or in major part of the business or assets of the futures commission merchant itself;
6. merger or dissolution;
7. investment in a foreign enterprise; or
8. any other matters that are required per FSC regulations to be reported and approved in advance.
The matters that the preceding paragraph requires to be reported to the FSC for approval shall be reported to the FSC via the TAIFEX.

In any of the following events, a futures commission merchant shall report to the FSC:
1. where business operations are commenced, suspended, resumed or terminated;
2. where the institution for clearance and settlement of futures trades is changed;
3. where a customer margin account is opened, changed, or closed;
4. where a futures commission merchant, or any of its directors, supervisors, managerial officers, associated persons, or any other employee becomes involved in litigation or arbitration stemming from the performance of job duties, or is subject to compulsory execution as an obligor, or where a futures commission merchant is a bankrupt, or is refused services or has a negotiable instrument dishonored by a bank;
5. where any of the conditions referred to in Article 28 of the Act applies to any director, supervisor, managerial officer, or associated person;
6. where, as shown by facts, any director, supervisor, managerial officer, or associated person has engaged or been involved in any other dishonest or improper activities which demonstrate that such person is not suitable to engage in futures trading;
7. where any director, supervisor, managerial officer, associated person, or other employee has violated the Act or any order issued by the FSC in accordance with the Act;
8. where there is any change in the shareholding of any director, supervisor, or managerial officer, or of any shareholder holding more than 10 percent of the shares of the company;
9. where there is any change of the financial ratio or other material events affecting financial structure which, according to the futures trading acts and regulations of a foreign country, must be reported to the competent authority for futures in such country, or to other authorities there;
10. where the futures commission merchant's futures trading volume, whether on its proprietary account or on customers' accounts, has reached the reporting threshold under futures trading acts and regulations of the ROC or a foreign country; or
11. where there is any other matter that must be reported under FSC regulations.
For the matters under subparagraphs 1 and 2 in the preceding paragraph, the company shall report in advance; for the matters under subparagraphs 3 through 7, the company shall report within 5 business days from either the date on which it becomes aware of such a matter, or the day on which such a matter occurs; for matters under item 8, any director, supervisor, or managerial officer, or any shareholder holding more than 10 percent of the shares of the company, shall report to the company by the 5th day of the following month, and the company shall collect such reports and forward them in a single batch [to the FSC] by the 15th day of the same month; for matters under subparagraphs 9 and 10, the company shall report to the FSC at the time when it reports the same to the ROC or foreign futures exchange or to other authorities.
Matters that must be reported pursuant to paragraph 1 above shall be submitted to the FSC via the TAIFEX.
The term "business day" as used in these Regulations means a trading day on the domestic futures markets.

A futures commission merchant shall not use the business permission issued by the FSC to advertise or guarantee that it has strong operations or sound financial structure.

A futures commission merchant shall operate its business in a fair and reasonable manner. The operating costs, transaction risks, reasonable profits, and overall customer contribution shall be taken into consideration in determining the fees to be collected. It is not permitted to use unreasonable fees to solicit or conduct business.
Before a futures commission merchant makes use of any promotional or advertising materials, a managerial officer in the futures commission merchant must first examine the materials and either sign them or affix his/her seal.
The promotional and advertising materials and related records referred to in the preceding paragraph shall be kept for 2 years.
Regulations governing matters related to the format, content, preparation, and dissemination of the promotional and advertising materials referred to in paragraph 2 above, and any amendment thereto, shall be prescribed by the Chinese National Futures Association ("the Futures Association") and reported to the FSC for recordation.
The FSC may at any time conduct an inspection of random samples of the promotional materials, advertising materials, and related records, and the futures commission merchant shall not refuse or interfere.

Where a futures commission merchant, with the intention of soliciting business, issues written, pictorial, or oral promotion statements, or issues advertisements via newspapers, magazines, broadcast radio, television, teletex system, or other mass media, such statements and advertisements shall not contain the following:
1. misrepresentations, high-pressure sales tactics, or declarations that futures trading is suitable for all persons;
2. concealment of material facts, such that the general public would likely be misled;
3. emphasis on profitability without explaining the relevant risks;
4. use of only favorable materials when advertising the futures commission merchant's investment performance;
5. use of charts, formulas, computer software, or other futures technical analysis instruments for advertising purposes without conspicuous explanation of the functional limits thereof; or
6. other exaggerated or biased representations or anything likely to deceive the general public.

In providing customers with information, research reports, or other data regarding spot markets and futures markets, a futures commission merchant shall not engage in misrepresentation, concealment, or fraud, or otherwise mislead its customers.

A futures commission merchant shall display its permission license in a conspicuous place on the business premises.

A futures commission merchant shall establish an internal auditing system for scheduled and unscheduled audits of the company's financial and business operations. Audit reports based on such audits shall be prepared and kept on file for inspection.
The audit reports referred to in the preceding paragraph shall include comments on whether or not the company's financial and business operations are in compliance with applicable acts and regulations and the internal control system of the company.

The brokerage and proprietary futures trading of a futures commission merchant shall be operated separately and independently. Business information shall not be shared among them, and the rights and interests of the futures traders shall not be prejudiced.

A futures commission merchant's futures trading shall be handled by duly registered qualified associated persons, as required by the Regulations Governing Responsible Persons and Associated Persons of Futures Commission Merchants.

No futures commission merchant shall commence business without joining a futures industry association.