Page 48 - Taiwan Futures Exchange 2019 Annual Report

44 2019 Taiwan Futures Exchange 5. Supervision of FCMs, Clearing Members, and Market Data Users (1) TAIFEX amended Article 44 of the Operating Rules of the Taiwan Futures Exchange Corporation, the Guidelines for Pre-Account Opening Procedures by Futures Commission Merchants Outside Their Place of Business, and the Guidelines for Pre-Account Opening Procedures by FCM-Appointed Introducing Brokers Outside of the Place of Business, permitting account-opening personnel from head and branch offices to carry out pre-account opening procedures at different locations. These amendments facilitated the expansion of futures enterprises' businesses, satisfied a business need of both FCMs and IBs, increased the efficiency of account openings, and reduced account-opening costs, made it easier for institutions to open accounts, and furthered the market's development by enabling institutions to undertake pre-account opening procedures outside a futures enterprise's place of business. The amendments took effect on 14 May 2019. (2) To weigh FCMs' operational risk, and appropriately manage FCMs' adjusted net capital and total received customer margin, we clearly states in Article 19-1 of TAIFEX's Operating Rules that the adjusted net capital amount of an FCM shall not be less than 6% of the total amount in the customer margin account for market surveillance and traders' protection. In consideration of the fact that FCMs with clearing-member status already deposit a portion of customer margins with TAIFEX as clearing margin, and that this portion generates less operational risk, and in consideration of futures firms' needs and operational risks, TAIFEX amended Article 19-1 to allow FCMs with clearing member status to deduct clearing margin deposited with TAIFEX from the total amount in the customer margin account. This amendment took effect on 6 August 2019. (3) To strengthen FCMs' anti-money laundering/countering the financing of terrorism (AML/CFT) capabilities and provide FCMs with guidance on carrying out the relevant operations, TAIFEX acted at our regulator's direction to arrange 13 seminars between 13 June and 28 June 2019 addressing cases of deficiencies in AML/CFT, as well as 2019's amendments to the guidelines for the internal control systems of FCMs and IBs. More than 1,300 audit, legal-compliance, and AML/CFT managers from FCMs and IBs attended. In addition, we implemented a risk-basis oriented audit mechanism to effectively audit exclusively operated FCMs' AML/CFT initiatives. By reviewing FCMs' improvements through initiative audits and through regular audits of exclusively operated FCMs, TAIFEX spurred the industry to materially improve deficient items. (4) To ensure that FCM and IB internal control systems comply with standards in a timely and uniform fashion, and to enhance FCM and IB compliance, TAIFEX amended the relevant rules in the guidelines for the internal control systems of FCMs and IBs in accordance with additions and amendments to the requirements of our regulator, self-regulatory organizations, and TAIFEX's Operating Rules. We also arranged related seminars in June 2019 to assist FCMs with compliance, carrying out AML/CFT operations, and reducing their operational risks.