Opening a Futures Trading Account
I. Account Opening Criteria
FCMs are not permitted to open accounts for persons meeting any of the following descriptions:
- persons under 20 years of age;
- persons who have been adjudicated bankrupt and whose rights have not yet been reinstated;
- persons under guardianship or assistance whose interdiction has not been voided;
- persons engaged by juristic persons to open an account who are unable to produce certifications of authorization by such juristic persons to do so;
- overseas Chinese or foreign nationals, or mainland-area investors commissioned to open an account but who are unable to produce documentary proof of registration issued by the TWSE or TAIFEX;
- offshore overseas Chinese or foreign nationals, or mainland-area investors, opening accounts who fail to produce photocopies of their contract with a domestic agent, power of attorney for the agent, or declaration from their domestic agent;
- staff and employees of the Competent Authority, the Futures Exchange, futures clearing houses, futures industry associations, or the Federation of Futures Industry Associations;
- persons who have defaulted on a futures trading contract or a securities trading contract where the case has not yet closed and five years have not elapsed since such default;
- persons who have been convicted of violating a futures trading regulation or securities trading regulation by a final and unappealable judgment of a judicial authority, or who have previously been notified by the competent authority to suspend securities or futures trading, where less than five years has elapsed since the conviction or the expiry of the period of suspension; or
- FCMs that have not obtained approval from the Competent Authority to engage in proprietary trading.
- Principals who apply to convert an account it originally opened as a discretionary futures trading account to a futures trading account for its own use.
If any circumstance in the preceding is discovered to apply to a futures trader that has already opened an account, the FCM will immediately cease to accept new orders from the trader, and will, when the claims and liabilities of the trader have been fully settled, terminate the account.
II. Documents the Trader Must Prepare
If the principal is a natural person, the principal must present his or her National Identity Card when opening the account; if the principal is a juristic person, the juristic person and its representative must affix their signatures or seals to the brokerage contract, and issue a power of attorney. When the principal signs the brokerage agreement, a seal specimen or signature card is retained. The handling of futures trading procedures is effected against the same seal specimen or signature.
When handling a principal's request to open an account, FCMs provide the principal with a brokerage agreement and a risk disclosure statement. After a specially assigned staff member has outlined for the principal the contents of the contract and explained futures trading procedures, the said documents are signed or sealed and dated by the principal and kept on file. FCMs also prepare a written prospectus for the reference of principals, which includes information on futures-related acts and regulations applicable to the FCMs' business, and futures exchange rules and regulations on total futures trading volume, trading volume reporting thresholds, price fluctuation limits, and other relevant restrictions.
IV. Forms and Documents
Documents and forms related to opening a futures trading account are listed below. The principal may inquire with the FCM about the format of the forms.
- An account opening application and a credit inquiry form
- A futures trading risk disclosure statement
- A brokerage agreement
- A seal specimen or signature card
- A principal's statement of qualifications to open an account
- A non-in-person-order signature/seal waiver consent form
- A power of attorney authorizing an agent to open the account and engage in futures trading
- An account opening statement
If a principal opens an account at a futures introducing broker, the futures introducing broker will in addition provide an explanatory document specifying the rights and obligations between the futures introducing broker and the principal.
V. Special Restrictions
Insiders of an FCM may not use the name of another to engage in futures trading and, except in the circumstances listed below, may open an account for futures trading only with the FCM to which the insider belongs:
- That FCM has its business suspended by a sanctioned imposed by the competent authority, or has its trading suspended or terminated by a disposition of TAIFEX.
- That FCM voluntarily applies for suspension of business.
- That FCM operates only a proprietary futures trading business and does not operate a futures brokerage business.
- That FCM has not yet actually begun to engage in the business of brokering of foreign futures trades.
- The futures trading is conducted by a managed futures enterprise under a mandate contract for discretionary futures trading.
- Other circumstances approved by the Financial Supervisory Commission of the Executive Yuan.
Insiders of a futures introducing broker may open an account for futures trading only at the mandating FCM, and may not use the name of another to do so. If the FCM engages a futures introducing broker to open an account for an insider, it is done by the futures introducing broker to which the insider belongs.
However, an insider referred to in the preceding paragraph is free from the restriction of opening an account only at the mandating futures commission merchant, provided such account is for purposes of futures trading under a mandate contract for discretionary trading by a managed futures enterprise, and provided the insider has signed such a contract.