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Pursuant to Article 64 of the Operating Rules of the Taiwan Futures Exchange Corporation, futures commission merchants (FCMs) reporting an out-trade because of an error occurring in futures brokerage trading, or reporting an account number correction because of an error by a trader ("account number correction"), shall do so in compliance with Rules For The Reporting And Handling Of Out-Trades and Account Number Corrections By Futures Commission Merchants

Where an FCM commits an error or omission when engaging in futures brokerage trading, it is an out-trade.

The principal causes of out-trades are: an error regarding the principal's account number, the trading price, the direction of the trade, order type, trading volume, or traded product, or a repeat entry of an order.

FCMs establish segregated error accounts at their head office and each branch office for the handling of out-trades, and append the company's Government Uniform Invoice Number to the order number. Taxes and processing fees on trading in segregated error accounts are paid in accordance with regulations.

• When an FCM discovers an out-trade, it handles the out-trade position through its own segregated error account or the original principal's account.
• Where an FCM handles an out-trade position through the original principal's account, it first obtains the consent of the principal.
• Where an out-trade arises from improper entry of the principal's account number, in addition to handling the out-trade according to the aforementioned principles, the FCM may apply for a position adjustment and have the erroneous position adjusted to the original principal's account.
• Out-trades on opposite sides of the same contract may be adjusted to the segregated error account and mutually offset.
• Time limit: An out-trade must be handled before the close of the next regular trading session following its occurrence, in the case of an out-trade occurring during the regular trading session; or before the close of the second-next regular trading session, in the case of an out-trade occurring during the after-hours trading session. In the case of an expiring contract, if an out-trade position falls on the last trading day, it shall be handled on the last trading day before the close of the regular trading session or the close of the after-hour trading session or before the end of trading.
• A futures commission merchant which must report a position adjustment due to handling of an out-trade shall do so pursuant to Point 5 or 15(Position Adjustment) of the TAIFEX Operational Key Points of Clearing and Settlement for Futures Commission Merchants and Clearing Members.

• When a futures commission merchant accepts a trader's application for an account number correction because of an error by the trader, the account number before the correction and the corrected account number for remittance shall without exception belong to the same trader and the same business location. The futures commission merchant shall first check that the correct account for remittance has duly received in full the margin and premium; neither the account number before nor the account number after the correction may be of an omnibus account.
• If the position for which the account number correction is made is a day trade of futures contracts under Article 49-2 of the TAIFEX Operating Regulations, the corrected account number for remittance for which the trader applies with the futures commission merchant shall be one for which a risk disclosure statement for day trading of futures contracts has been signed.
• After a position for which an account number correction is made has been liquidated by the futures commission merchant, the futures commission merchant may not accept any application for account number correction for that position.
• A futures commission merchant accepting a trader's application for account number correction shall handle the correction before the close of the next regular trading session following the occurrence, in the case of a transaction occurring during the regular trading session; or before the close of the second-next regular trading session, in the case of a transaction occurring during the after-hours trading session. In the case of an expiring contract, if a position requiring account number correction falls on the last trading day, it shall be handled on the last trading day before the close of the regular trading session or the close of the after-hour trading session or before the end of trading.

• Reporting time:
  • Computer reporting:
    A futures commission merchant handling an out-trade or account number correction shall report the error to the Taiwan Futures Exchange Corporation within 45 minutes after the closing of the regular trading session for each futures trading contract on the day it completes the handling.
  • Reporting by electronic media:
    Where any of the following circumstances occurs with respect to a futures commission merchant handling out-trades or account number corrections, in addition to online reporting on the day of handling, by 5 p.m. on the next business day, the futures commission merchant shall submit a report to the TAIFEX by electronic media:
    
    • For the same trader on a single day, the total number of futures out-trades or account number corrections reaches 40 contracts or more, or for options reaches 160 contracts or more.
    • For the same trader on a single day, the total amount of profit or loss after out-trades are redressed or the total amount of profit or loss after the closing out of positions for which account number corrections are made reaches NT$800,000 or more.
  • Notification mechanism:
    When a futures commission merchant handles account number corrections and any of the following levels is reached, it shall notify the TAIFEX:
    
    • For the same trader at the same business location on a single day, the total number of futures or options out-trades reaches 1,000 contracts or more.
    • For the same trader at the same business location on a single day, the total amount of profit or loss after out-trades are redressed reaches NT$10 million or more.
    
    To make an out-trade notification referred to above, a futures commission merchant shall submit a Futures Commission Merchant Out-Trade Notification to the TAIFEX by fax. For out-trades occurring during the regular trading session, it shall make the notification to the TAIFEX within 45 minutes after the close of the regular trading sessions for the futures trading contracts on the current day. For out-trades occurring in the after-hours trading session, it shall make the notification to the TAIFEX before 10 a.m. of the next regular trading session following the occurrence.
    

FCMs compile itemized out-trade account books, and keep complete records of the following information in bound form for future reference:

• Photocopy of the order form.
• Photocopy of the order details entered online.
• Photocopy of the trade execution information.
• Photocopy of the out-trade book adjustment.
• Report of trader's account number correction.
• Out-trade report.

• If a futures commission merchant violates these Rules, the TAIFEX may handle the violation pursuant to Article 126 of the Operating Rules.
• If an out-trade report or account number correction by a futures commission merchant contains any false or misleading representation, the Taiwan Futures Exchange Corporation may, in accordance with Article 130 of the Operating Rules, suspend trading by such merchant or terminate its contract for use of the market.