Unless otherwise provided in these Regulations or by the Bank, a securities enterprise may engage in foreign exchange business only after its head office, or a branch within the territory of the Republic of China in the case of a foreign securities firm, has submitted an application to the Bank and been issued a letter of approval.
A securities enterprise may apply to engage in all or some of the business categories mentioned in the subparagraphs of Paragraph 1 of Article 4 herein, and the Bank will grant approval to each business category individually. The Bank may also prescribe other rules or state those rules in the letter of approval for business categories approved under Subparagraph 4 of the same paragraph and article.
Unless otherwise provided in these Regulations or by the Bank, a securities enterprise shall report the date of commencement to the Bank for record within seven (7) days after commencing its foreign exchange business.
Unless otherwise provided in these Regulations or by the Bank, securities enterprises shall not conduct any foreign exchange business without the approval of the Bank.

A securities enterprise that applies for approval to engage in foreign exchange business shall submit a written application with the following documents:
1.A photocopy of the certificate of security business license;
2.A photocopy of the business license or qualification document for relevant business evidencing the approval of the FSC or the consent of the Taipei Exchange (hereinafter referred to as “TPEx”) for the securities enterprise to engage in the business;
3.A resolution of the board of directors resolving to apply for the business or a letter of authorization from the head office or regional command center in the case of a foreign securities firm; and
4.A statement of regulatory compliance.
When a securities enterprise applies to engage in foreign exchange businesses provided in Item 2 of Subparagraph 1, Subparagraph 2 or 3, Paragraph 1 of Article 4 herein, it shall simultaneously apply for a foreign currency risk upper limit and the exclusion of overseas long-term equity investment, real estate and equipment from such limit. This does not apply to authorized foreign exchange banks (hereinafter referred to as "authorized banks") concurrently engaging in securities business.
When a change in the approved foreign currency risk upper limit and exempt items mentioned in the preceding paragraph occurs, a securities enterprise shall submit a FSC approval document or other relevant documents to the Bank for consent.

A securities enterprise that applies for foreign exchange business will be granted a designated period for providing supplementary information or making corrections if the documentation or information submitted were found to be incomplete or insufficient. The Bank may reject the application if supplementary information or corrections are not submitted within the designated period.

The Bank may reject a securities enterprise’s application for foreign exchange business in the event of any of the following:
1.Qualifications of the applicant do not comply with the requirements;
2.The applicant has failed to assist declarants to fill out the Declaration Statement of Foreign Exchange Receipts and Disbursements or Transactions (hereinafter referred to as “Declaration Statement”) as required.
3.A high error rate in the certificates, reports and forms prepared by the applicant;
4.The applicant has violated the provisions of these Regulations or relevant rules in the past year and the violation is of a serious nature; the applicant was ordered to rectify the situation by the Bank, but has failed to do so within the period specified by the Bank; or
5.Other facts that are sufficient to indicate that the applicant may hinder sound operations of the business, or that the applicant is unable to meet financial policy requirements.
When a securities enterprise reporting a foreign exchange business to the Bank for record with false documents or reporting a foreign exchange business which is not required to report to the Bank for record according to these Regulations, the Bank may, depending on the severity of the situation, impose the following sanctions:
1.Demand the securities enterprise to take remedial action;
2.Suspend the application of the securities enterprise for new foreign exchange business or for adding branches to conduct foreign exchange business for a specified period of time;
3.Suspend specific foreign exchange businesses of the securities enterprise for a specified period of time; or
4.Withdraw the securities enterprise’s privilege of commencing a foreign exchange business that requires reporting for record according to these Regulations by reporting the business to the Bank for record.

The Bank may suspend, revoke or cancel its approval in part or in whole the foreign exchange business engaged by a securities enterprise, or suspend the application of the securities enterprise for new foreign exchange business or for adding branches to conduct foreign exchange business in the event of any of the following:
1.The securities enterprise fails to commence operation within six months after being issued a letter of approval. The applicant may request for an extension with valid reasons. If agreed by the Bank, the securities enterprise may have an one-time extension of no more than three months;
2.The securities enterprise did not engage in a foreign exchange business again within one year after reporting to the Bank the date of commencing the business;
3.The securities enterprise has violated the provisions of these Regulations or other relevant laws and regulations and the violation is of a serious nature, or was asked by the Bank to rectify the situation within the period specified by the Bank, but has failed to do so;
4.After the securities enterprise has been approved to engage in various foreign exchange businesses, its original application documents were found to contain false information or misrepresentation of a serious nature;
5.The securities enterprise suspends operations, is dissolved, or declares bankruptcy; or
6.Other facts that are sufficient to indicate that the securities enterprise may hinder sound operations of the business, or that the securities enterprise is unable to meet financial policy requirements.
For the securities enterprise whose approval is revoked or cancelled according to the preceding paragraph, the Bank will announce to nullify the approval.
A securities enterprise that is ordered by the Bank or the relevant competent authority to suspend or stop applying for business for a specified period of time shall not commence any foreign exchange business that requires reporting for record according to these Regulations by reporting the business to the Bank for record if the suspension period has not expired, if it fails to propose proper and concrete improvement measures during the suspension period, or if its proposed improvement measures have not been accepted by the competent authority.

Securities enterprises engaging in the foreign exchange business shall first verify the identity and primary registration information of the customer and ensure that the supporting documents comply with these Regulations before processing the transaction.
When a securities enterprise engages in the foreign exchange business, the operation of customer due diligence, record keeping, and reporting of suspicious transactions on money laundering or terrorist financing shall comply with“Money Laundering Control Act”,“Regulations Governing Anti-Money Laundering of Financial Institutions ”and other applicable regulations；the reporting on the property, or property interests and location of the property or property interests of designated individuals, legal persons or entities shall comply with“Terrorism Financing Prevention Act”and other applicable regulations.

When engaging in foreign exchange business, securities enterprises shall carry out internal control and risk management in accordance with relevant rules and regulations of the competent authority. Securities enterprises shall also disclose fully to the customers foreign exchange related risks, and shall not offer predictions on the future movements of the NTD exchange rates.
The Bank’s letter of approval or acknowledgement to reporting for record is merely a certificate for the securities enterprise to engage in relevant foreign exchange businesses, which shall not be publicized as the Bank's endorsement for the safety or performance of related business or used in other inappropriate ways.

A securities enterprise’s coverage of foreign exchange positions arising from its foreign exchange business shall be carried out by its head office through an authorized bank, an offshore banking unit or an overseas financial institution.
A securities enterprise shall heed its foreign exchange risk and draft its own foreign exchange risk management rules based on the foreign exchange business conducted. After the rules have been passed by its board of directors (council members) or the head office (or regional headquarter) in the case of a foreign securities firm, all its offices shall abide by these rules and conduct audits regularly.

When a securities enterprise has a demand for a certain foreign currency arising out of its securities-related foreign exchange business, the securities enterprise may raise the foreign currency funds through the following means:
1.The securities enterprise may engage in foreign exchange swaps or cross currency swaps between NTD and the foreign currency with authorized banks;
2.A securities enterprise that engages in the following foreign exchange businesses may borrow money directly from an overseas financial institution or obtain a foreign currency loan from an authorized bank according to the following rules, but the borrowed funds may not be used as working capital:
(1)Acting as a participating dealer of an offshore ETF: For hedging transactions to cover equity risk associated with offshore ETF positions held, the securities enterprise may obtain a foreign currency loan with the foreign transaction document or the Bank’s business approval letter.
(2)Acting as a liquidity provider for domestically issued foreign currency denominated ETF: The securities enterprise may obtain a foreign currency loan with the Bank’s business approval letter.
(3)Proprietary trading of foreign currency securities: The securities enterprise may obtain a foreign currency loan with the transaction confirmation or document from the counterparty. For such a loan, the securities enterprise shall sign an affidavit undertaking that “proceeds from the sale of the original purchased foreign currency security will be used directly to repay the lender and will not be used for other purposes.”
(4)Underwriting of an international bond: When underwriting on a firm commitment basis or a standby commitment basis, the securities enterprise may use the underwritten bond as collateral to obtain a foreign currency loan with the Bank’s business approval letter or related underwriting contractual documents and relevant documents evidencing the payment of the settlement amount by the enterprise. The loan should be repaid no later than the maturity date of the underwritten bond or when the bond is sold.
3.A securities enterprise may obtain a foreign currency call loan from an authorized bank, an offshore banking unit or an overseas financial institution.
When acquiring a foreign currency loan or a call loan, securities enterprises shall also comply with the following rules:
1.The total balance of foreign currency loans plus foreign currency call loans from other financial institutions shall not exceed 100% of its net worth as shown in its CPA audited or certified financial statements plus the balance of unsold committed underwritten foreign currency bonds;
2.The total balance of foreign currency loans plus foreign currency call loans mentioned in the preceding subparagraph shall include those foreign currency loans and call loans obtained by its offshore securities unit (OSU), but excluding transactions between the OSU and its head office;
3.The tenor of foreign currency call loans handled by securities enterprises shall not be longer than one year; and
4.Proceeds from foreign currency loans and call loans may not be sold for NTD, and unless with the Bank’s approval, the sources of fund for loan repayment may not come from foreign exchange against NTD.

Securities enterprises may not exchange the foreign currency fund they receive from repo trades of foreign currency securities into NTD, and unless with the Bank’s approval, the sources of fund for the settlement payment upon expiration may not come from foreign exchange against NTD.

Securities enterprises that have been approved by the Bank to engage in securities-related foreign exchange business may, within the scope of its permitted businesses, handle the offshore securities business and related tax matters on behalf of an OSU of the same securities firm. Such business handled by the securities firm shall be booked on the account books of the OSU.
When handling the services on behalf of an OSU mentioned in the preceding paragraph, the securities enterprise shall observe the “Offshore Banking Act”, “Enforcement Rules of the Offshore Banking Act”, “Regulations Governing Offshore Securities Units”, as well as other applicable regulations.

Unless otherwise provided in these Regulations, a securities enterprise that engages in foreign exchange business involving outward and inward remittance of fund or foreign exchange settlement against NTD shall deal with an authorized bank in accordance with the “Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions” (hereinafter referred to as the “Regulations for Declaration”), “Directions Governing Banking Enterprises for Operating Foreign Exchange Business” (hereinafter referred to as “Operating Directions”), and “Directions for Banking Enterprises on Assisting Customers to Declare Foreign Exchange Receipts and Disbursements or Transactions”.
Unless special provisions apply to the foreign exchange settlement, securities enterprises shall observe the following rules when handling receipt/payment associated with their foreign exchange business:
1.Where the receipt/payment of the foreign exchange business is in foreign currency, the customer shall carry out foreign exchange settlement at an authorized bank in accordance with the “Regulations for Declaration”, or the payment may be transferred from the customer’s foreign exchange deposit account;
2.When accepting orders to trade foreign securities, conducting wealth management business involving foreign exchange by means of trust, or acting as a master agent or its mandated sub-distributors of an offshore fund institution to purchase or redeem offshore funds in NTD, the securities enterprise shall carry out foreign exchange settlement at an authorized bank in accordance with the “Regulations for Declaration”; and
3.Foreign exchange settlement shall be carried out at an authorized bank based on the exact amount of the transaction. Unless with the Bank’s approval, settlement on a net basis after offset of receipt/payment is not allowed.

Securities enterprises that engage in foreign exchange business shall, for each category of business, submit relevant reports to the Bank’s Department of Foreign Exchange and ensure the completeness and accuracy of the contents of the reports. The instructions for filling the application form, required attachments and methods of submission of the reports shall be prescribed separately by the Bank.
The timetable for securities enterprises to submit relevant reports to the Department of Foreign Exchange of the Bank is as follows:
1.Daily report：Before 12:00 noon on the next business day.
2.Monthly report：Within ten (10) days after the end of each month.
If deemed necessary, the Bank may ask a securities enterprise to submit other relevant reports.
With regard to the review of reports submitted by securities enterprises, the Bank may dispatch personnel to inspect the relevant account books and documents, or request securities enterprises to provide truthful and relevant documents or information within a prescribed period of time if deemed necessary.