(Conditions for Operation of Discretionary Investment Business)
A securities investment trust enterprise or securities investment consulting enterprise may not operate discretionary investment business 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.

(Independence of Investment Assets)
Fiduciary 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 full fiduciary custodian institutions.
Creditors may not make any claim or exercise any other rights against the fiduciary investment assets to satisfy liabilities incurred by the securities investment trust enterprise or securities investment consulting enterprise and the full fiduciary custodian institution with respect to their own private properties.

(Operation Bond and Compensation Reserve)
A securities investment trust enterprise or securities investment consulting enterprise that will operate discretionary investment business shall deposit an operation bond with a financial institution.
Where a trust enterprise that will concurrently operate discretionary investment business 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 preferential right of payment from the operation bond referred to in paragraph 1 or the compensation reserve referred to in paragraph 2.

(Placement of Assets in Custody or Keeping in Own Custody)
Where a securities investment trust enterprise or securities investment consulting enterprise operates discretionary investment business on a mandate basis, the customer shall place the assets in the full fiduciary custody of the custodian institution or transfer them to the custodian institution by trust.
A trust enterprise that concurrently operates discretionary investment business 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 fiduciary 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 fiduciary investment assets in its own custody.

(Obligation to Inform of Control Relationship)
Where a control relationship exists between the full fiduciary custodian institution 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.

(Limit on Amount of Discretionary Investment Assets of a Single Customer)
The value of the fiduciary investment assets of a single customer accepted by a securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment business may not be less than a certain amount.
The total amount accepted for investment purposes by a securities investment consulting enterprise operating discretionary investment business 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.

(Discretionary Investment Business Investment or Trading Scope and Restrictions)
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 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.

(Discretionary Investment Business Operating Rules)
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.

(Mutatis Mutandis Application of Provisions Regarding Investment Decisions and Diversification Rate)
The provisions of Article 17 shall apply mutatis mutandis to investment decisions that a securities investment trust enterprise or securities investment consulting enterprise makes for the utilization of fiduciary investment assets.
A securities investment trust enterprise or securities investment consulting enterprise utilizing fiduciary investment assets shall diversify its investments; the Competent Authority shall prescribe the investment target diversification rate.

(Conduct Prohibited in Discretionary Investment Business)
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 fiduciary investment assets to trade securities.
3. signing any agreement with the customer to share proceeds or losses resulting from investment in securities; provided, this restriction shall not apply where the Competent Authority has otherwise made provision for performance-linked compensation.
4. using a customer's fiduciary investment assets to conduct cross trading with the enterprise's own funds or the fiduciary investment assets of another customer; provided, that this restriction does not apply to unintentional cross trades that occur on the 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, this restriction shall not apply where the Competent Authority has provided otherwise.
7. when utilizing a customer's fiduciary 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.

(Matters Required to Be Done Before Signing Contract)
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 and shall fully acquaint itself with the customer's financial ability, investment experience, objectives, and requirements, and shall 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.

(Required Contents and Template of Contract)
A securities investment trust enterprise or securities investment consulting enterprise operating discretionary investment business 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 institution 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 fiduciary investment assets in its own custody.
Where fiduciary 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.

(Obligation to Accept Customer Inquiries and Produce Current Status Reports)
An operator of discretionary investment business 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 fiduciary 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 business shall produce monthly reports detailing each customer's asset trading record and current status, and shall deliver the reports to the customers.
When losses on the net asset value of the fiduciary investment assets of a customer reach a certain percentage of the original fiduciary 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 recorded 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 fiduciary 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 institution.