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.