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Chapter Law Content

Title: Futures Trading Act CH
Category: Financial Supervisory Commission(金融監督管理委員會)
Chapter I General Provisions
Article 1
(Legislative Intent)
The Futures Trading Act (hereinafter referred to as "this Act") is enacted for the purpose of facilitating the sound development of the futures market and maintaining the orderly transaction of the market.
Article 2
(Applicable Scope)
The regulation of futures transaction shall be governed by this Act; such matters not provided for in this Act shall be governed by the provisions of other relevant acts.
Article 3
(Definition of Futures Trading)
For the purpose of this Act, "futures trading" shall mean trading in any of the following contracts, or any combination thereof, deriving from commodities, currencies, securities, interest rates, indices, or other interests, conducted pursuant to the regulations or practices set forth by domestic or foreign futures exchanges or other futures markets:
1. Futures Contract shall mean a contract made pursuant to the agreement of the parties involved to purchase or sell a specified quantity of a certain underlying interest for delivery at a specified future time and at a specified price and under the specified trading terms, or to offset the obligation under the contract by settling the difference in price prior to or on the last trading day.
2. Option Contract shall mean a contract made pursuant to the agreement of the parties involved, wherein the option buyer pays the premium in exchange for obtaining a right of call option or put option to purchase or sell a specified quantity of a certain underlying interest at a specified price and under the specified trading terms within a specified period of time; whereas the option seller has the corresponding obligation to fulfill his/her duties pursuant to such option contract when the option buyer exercises the right and demands for the option seller's performance; or both parties agree to offset the obligation and right under the contract by settling the difference in price prior to or on the last trading day.
3. Futures Option Contract shall mean a contract made pursuant to the agreement of the parties involved, wherein the option buyer pays the premium in exchange for obtaining a right of call option or put option to purchase or sell a specified quantity of a certain underlying futures contract at a specified price and under the specified trading terms within a specified period of time; whereas the option seller has the corresponding obligation to fulfill his/her duties pursuant to such option contract when the option buyer exercises the right and demands for the option seller's performance; or both agree to offset the obligation and right under the contract by settling the difference in price prior to or the last trading day.
4. Leverage Contract shall mean a contract made pursuant to the agreement of the parties involved, wherein one party pays a specific percentage of a price or obtains a specific credit line limit granted by the other party, and the parties offset the obligations and rights under the contract by settlement of the difference in price or delivery of the underlying interest within a specified future time period and by an agreed method.
5. Swap Contract shall mean a contract made pursuant to the agreement of the parties involved to exchange a certain underlying interest, or a cash flow arising therefrom, within a specified future time period and by an agreed method.
6. Other types of contracts.
For reasons of financial, currency, foreign exchange, and government bond policies, etc., futures trading conducted outside futures exchanges may, as announced by the Competent Authority within the scope of its governing matters or by the Central Bank of the Republic of China (Taiwan) within the scope of its administrating matters, be exempted from the application of this Act. However, within the scope of futures trading for which central clearing is required by the provisions of the Competent Authority, central clearing shall be performed in accordance with this Act at a futures clearing house designated thereby.
If the scope of futures trading for which central clearing is required, as referred to in the preceding paragraph, involves foreign exchange, the Competent Authority shall consult with and obtain the consent of the Central Bank of the Republic of China (Taiwan) in advance.
Article 4
(Competent Authority)
The term "Competent Authority" as referred to in this Act shall be the Financial Supervisory Commission.
Article 5
(Futures Trading Categories and Futures Exchanges)
The futures trading that a futures commission merchant may be mandated to engage in shall be confined to those futures categories and at those exchanges as announced by the Competent Authority.
Article 5-1
(Exemption from the Act May be Granted Within Approved Periods and Scopes to Facilitate Innovation in Financial Technology and Promote the Financial Regulatory Sandbox)
To facilitate the development of financial inclusion and financial technologies, applicants, not limited to futures enterprises, may apply to conduct innovative experimentation in futures business pursuant to the Financial Technology Development and Innovative Experimentation Act.
An innovative experiment under the preceding paragraph may be exempted from application of the provisions of this Act within the period and scope approved by the Competent Authority.
The Competent Authority shall take into reference the results of implementation of the innovative experimentation under paragraph 1, and review the appropriateness of this Act and relevant financial laws and regulations in light thereof.
Article 6
(International Cooperation Agreements)
The Competent Authority may, with the approval by the Executive Yuan, enter into cooperation agreements with foreign government agencies, institutions, or international organizations to facilitate matters such as information exchange, technical cooperation, and investigation assistance.
The Competent Authority may, with the approval by the Executive Yuan, authorize other agencies, institutions or associations to enter into the cooperation agreements as referred to in the preceding paragraph.
Unless otherwise conflicting with the interests of the state or the rights of the investing public, the Competent Authority may request the provision of the necessary information and records from related regulatory authorities or financial institutions, and provide them to the requesting foreign government agency, institution, or international organization which has executed cooperation agreements based on the principles of reciprocity and confidentiality.