Amendments to Regulations Related to Securities Firms and Futures Commission Merchants by the FSC of Taiwan

December 2022

Oli Wong and Jiselle Ong

To improve the administration over the operation of securities firms and futures commission merchants and to carry out corporate governance, the Financial Supervisory Commission (hereinafter, the “FSC”) partially amended the Regulations Governing Responsible Persons and Associated Persons of Securities Firms (hereinafter, the “Securities Firm Regulations”), and the Regulations Governing Responsible Persons and Associated Persons of Futures Commission Merchants (hereinafter, the “FCM Regulations”) at the end of October 2022[1] by adding provisions on the concurrent positions held by the responsible persons of securities firms or futures commission merchants, the qualifications of a chairman, the supervisory duty of the board of directors, on-the-job training programs, etc.  These amendments are highlighted below:

1. Requirements for the concurrent positions and self-regulation of the responsible persons of securities firms or futures commission merchants (Articles 11-1 and 11-3 of the Securities Firm Regulations and Articles 7-1 and 7-3 of the FCM Regulations):

To prevent the concurrent positions of the responsible person of a securities firm or futures commission merchant from impacting his/her core duty or causing any conflicts of interest, the responsible person of a securities firm or futures commission merchant is, in principle, prohibited from serving concurrently as the responsible person of another financial institution.  However, exceptions to the concurrent service are also stipulated.

A conflict of interest is presumed if a director or a supervisor of a securities firm or futures commission merchant, or his/her related person, serves concurrently as a director or supervisor of another financial institution.  However, there is no potential conflict of interest if the securities firm or futures commission merchant has a controlling/subordinate relationship with the other financial institution or if the concurrent services comply with the Securities Firm regulations or the FCM Regulations.[2]  In the event of a conflict of interest, the FSC may order an adjustment within a stated period; if the adjustment is not made within the period without justification, the director (supervisor) shall be dismissed.

A securities firm or futures commission merchant shall periodically evaluate the performance of the responsible person on his/her concurrent positions as a reference for determining if the responsible person may continue to serve on the concurrent positions or if the concurrent services may be reduced on a discretionary basis.  An adjustment shall be made if his/her core duty is affected.

2. Qualifications of the chairman of a securities firm or futures commission merchant (Article 9-1 of the Securities Firm Regulations and Article 7-2 of the FCM Regulations):

To enhance the competence of the chairman of a securities firm or futures commission merchant, it is specifically stipulated, concerning the qualifications of the chairman, that the chairman should not only have good moral character and the ability to effectively lead and operate a securities firm or futures commission merchant but also possess certain academic qualifications and experience in related industries (securities, futures, financial, or insurance industry).

The chairman of a securities firm or futures commission merchant shall apply to the FSC for the accreditation of the chairman’s qualifications within 10 days of the election.  The chairman of a securities firm or futures commission merchant elected after the effective date of the Amendments of October 28, 2022 shall comply with the above moral character, competence, and qualification requirements and shall be dismissed in case of non-compliance.

3. The election and supervisory duties imposed on the board of directors (Article 11 of the Securities Firm Regulations and Article 20-1 of the FCM Regulations):

The managers of securities firms or futures commission merchants are responsible for the execution of important policies and business management of the company.  Whether they maintain the relevant qualifications and whether they are competent for the positions are both factors that affect the sound operation of the company.  Therefore, the amendments impose upon the board of directors the responsibility to select and supervise the managers and require the board of directors to supervise and establish a system of accountability for managers.

4. Requirements for the on-the-job training of securities firms or futures commission merchants (Article 15 of the Securities Firm Regulations and Article 11 of the FCM Regulations):

The current pre-employment training and on-the-job training are conducted by institutions designated by the FSC.  To increase the flexibility of the on-the-job training courses, securities firms or futures commission merchants may conduct on-the-job training on their own by applying to their respective associations in accordance with the on-the-job training guidelines set by those associations.

The amendments will strengthen the operational governance of securities firms and futures commission merchants, and implement the requirements for the chairman, board of directors, managers and directors (supervisors), and the accountability of managers, which will facilitate the future operational management of securities firms and futures commission merchants.  In addition, with the exception of the conflict-of-interest provisions of Article 11-3 of the Securities Firm Regulations and Article 7-3 of the FCM Regulations, which will come into effect on January 1, 2023, the remaining amendments to the above regulations came into effect on their date of promulgation on October 28, 2022.  Securities firms and futures commission merchants are recommended to make steady adjustments and establish relevant personnel regulations.


[1] The FSC considered the Regulations Governing Qualification Requirements and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Banks and the Regulations Governing Qualification Requirement and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Insurance Enterprises for reference in formulating these amendments.

[2] In addition, the government and a securities firm or futures commission merchant whose shares are 100% owned directly or indirectly by the government are not governed by the conflict-of-interest provisions of the regulations under Article 11-3, Paragraph 4 of the Securities Firm Regulations and Article 7-3, Paragraph 4 of the FCM Regulations.


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