A securities investment trust enterprise or securities investment consulting enterprise may not operate discretionary investment businesses until it has met the conditions set by the Competent Authority and has obtained approval from the Competent Authority.
The Competent Authority shall prescribe regulations governing conditions, eligibility, application procedures, personnel administration, contract signing, account processing, and other compliance requirements under the preceding paragraph.

Discretionary investment assets received from customers by securities investment trust enterprises or securities investment consulting enterprises shall be kept separate and independent from the private property of the securities investment trust enterprises or securities investment consulting enterprises and discretionary investment custodians.
Creditors may not make any claim or exercise any other rights against the discretionary investment assets to satisfy liabilities incurred by the securities investment trust enterprise or securities investment consulting enterprise and the discretionary investment custodian with respect to their own private properties.

A securities investment trust enterprise or securities investment consulting enterprise that will operate discretionary investment businesses shall deposit an operation bond with a financial institution.
Where a trust enterprise that will concurrently operate discretionary investment businesses has already deposited a compensation reserve, it is not required to deposit an operation bond.
The Competent Authority shall prescribe the deposit method and amount of the operation bond and the eligibility criteria for financial institutions with which it may be deposited.
A principal, settlor, or beneficiary who is [a creditor of] a claim arising from discretionary investment business shall have a preferential right of payment from the operation bond referred to in paragraph 1 or the compensation reserve referred to in paragraph 2.

Where a securities investment trust enterprise or securities investment consulting enterprise operates discretionary investment businesses on a mandate basis, the customer shall place the assets in the discretionary investment custody of the custodian or transfer them to the custodian by a trust.
A trust enterprise that concurrently operates discretionary investment businesses may keep the trust property in its own custody; if it keeps the trust property in its own custody it shall appoint dedicated personnel to handle the custodial matters.
A securities investment trust enterprise or securities investment consulting enterprise may not keep discretionary investment assets in its own custody except under the circumstances provided in the preceding paragraph.
If a customer of a discretionary investment business is a trust enterprise or another enterprise approved by the Competent Authority, the customer may keep the discretionary investment assets in its own custody.

Where a control relationship exists between the discretionary investment custodian and the securities investment trust enterprise or securities investment consulting enterprise, the securities investment trust enterprise or securities investment consulting enterprise shall be obligated to inform the customer.
"Control relationship" in the preceding paragraph shall be defined by the Competent Authority.

The value of the discretionary investment assets of a single customer accepted by a securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment businesses may not be less than a certain amount.
The total amount accepted for investment purposes by a securities investment consulting enterprise operating discretionary investment businesses may not exceed a certain multiple of its net worth. Provided, this restriction shall not apply where its paid-in capital reaches a certain amount.
"Certain multiple" and "certain amount" in the preceding two paragraphs shall be defined by the Competent Authority.

The scope of investment or trading by securities investment trust enterprises or securities investment consulting enterprises operating discretionary investment business, and restrictions thereupon, shall be prescribed by the Competent Authority.
Where the business of discretionary investment in foreign securities operated by a securities investment trust enterprise or securities investment consulting enterprise involves inward or outward remittance of funds, approval shall be obtained from the Central Bank.
A securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment business and investing in securities shall, except as otherwise provided by law, appoint a securities broker to do so on the centralized securities exchange market or over-the-counter markets.

A securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment business shall do so in compliance with operating rules.
Operating rules under the preceding paragraph regarding contract signing, account opening, trading, settlement, clearing, and handling of other related matters, and any amendments thereto, shall be drafted by the Securities Investment Trust and Consulting Association and ratified by the Competent Authority.

The provisions of Article 17 shall apply mutatis mutandis to investment decisions that a securities investment trust enterprise or securities investment consulting enterprise makes to utilize discretionary investment assets.
A securities investment trust enterprise or securities investment consulting enterprise utilizing discretionary investment assets shall diversify its investments; the Competent Authority shall prescribe the investment target diversification rate.

The following acts are prohibited in the operation of discretionary investment business:
1.Using information learned in the course of professional duties to engage in securities trading for the enterprise's own account or for any party other than the customer.
2.Engaging in any trading prejudicial to the rights and interests of the customer when utilizing discretionary investment assets to trade securities.
3.Signing any agreement with the customer to share proceeds or losses resulting from investment in securities, provided that this restriction shall not apply where the Competent Authority has otherwise made provision for performance-linked compensation.
4.Using a customer's discretionary investment assets to conduct matched order trades with the enterprise's own funds or the discretionary investment assets of another customer, provided that this restriction does not apply to unintentionally matched order trades that occur on a centralized securities exchange market or on an over-the-counter market.
5.Using a customer's account to trade securities for the enterprise's own account or for any other party.
6.Outsourcing a discretionary investment services contract, in full or in part, to another party to perform, or assigning such a contract to another party, provided that this restriction shall not apply where the Competent Authority has provided otherwise.
7.When utilizing a customer's discretionary investment assets to trade securities, in the absence of legitimate reason, shifting executed orders from the discretionary investment account into the enterprise's own account, the account of another, or another discretionary investment account, or shifting them from another account into the discretionary investment account.
8.Formulating investment decisions not based upon an investment analysis report, or basing investment decisions on an investment analysis report that clearly is lacking in reasonable analytical foundation and basis, provided that this restriction shall not apply where a reasonable explanation can be given.
9.Any other acts that would adversely affect the operation of the enterprise or the rights or interests of customers.

Before signing a discretionary investment contract with a customer, a securities investment trust enterprise or securities investment consulting enterprise shall carry out the following matters:
1.It shall assign dedicated personnel to explain in detail to the customer matters related to the discretionary investment services and provide the customer with a discretionary investment services prospectus.
2.It shall allow the customer a period of at least seven days to review the entire content of the terms and conditions, fully acquaint themself with the customer's financial ability, investment experience, objectives, and requirements, and compile a reference file on the customer including a data sheet and other relevant documentation.
The discretionary investment services prospectus shall be made an attachment to the discretionary investment contract; the Competent Authority shall prescribe the particulars required to be included in the prospectus.

A securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment businesses shall sign a discretionary investment contract with the customer specifying the various rights and obligations arising between it and the customer as a result of the mandate or trust relationship, and the customer and the custodian also shall separately sign a mandate or trust contract. Provided, this restriction shall not apply to one who, under this Act, is permitted to keep the discretionary investment assets in its own custody.
Where discretionary investment assets involve idle funds, the utilization and scope thereof shall be prescribed by the Competent Authority.
The particulars required to be included in a discretionary investment contract under paragraph 1 shall be prescribed by the Competent Authority.
A template for discretionary investment contracts under paragraph 1 shall be drafted by the Securities Investment Trust and Consulting Association and submitted to the Competent Authority for ratification.

An operator of discretionary investment businesses shall create a separate account for each individual customer and record, on a daily basis the trading activities of the customer's assets, and the balance of the discretionary investment assets by volume and monetary amount.
A customer may request to examine the data referred to in the preceding paragraph and the appointed securities investment trust enterprise or securities investment consulting enterprise may not refuse such a request.
Any service fees returned or other benefits paid by a securities firm, futures broker, or other trading counterparty when investment assets are used for trading of securities, securities-related products, or other items that may be invested in or traded as provided by the competent authority, shall be applied to offset the customer's transaction costs.
An operator of discretionary investment businesses shall produce monthly reports detailing each customer's asset trading record and current status and deliver the reports to the customers.
When losses on the net asset value of the discretionary investment assets of a customer reach a certain percentage of the original discretionary investment assets, the securities investment trust enterprise or securities investment consulting enterprise shall within two business days from the date of occurrence of the event produce a report referred to in the preceding paragraph and deliver the report to the customer. The same shall subsequently apply each time losses reach a certain percentage of the net asset value specified in the previous report.
The "certain" percentages in the preceding paragraph shall be prescribed by the Competent Authority.
In the case of a discretionary investment business customer who meets conditions set by the competent authority, the securities investment trust enterprise or securities investment consulting enterprise and the customer may between themselves agree on matters including the custody of the discretionary investment assets, matters required to be done before signing a contract, and account processing, and are exempted from application of the provisions of the preceding four paragraphs, paragraph 1 of Article 53, and Article 60, and of paragraph 1 of the preceding Article regarding the signing of a mandate or trust contract between a customer and a custodian.