TAIWAN Law and Practice Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
the determination of price quotes and principles for negotiated trades. For Tokens Without the Nature of Securities There is no law or regulation specifically governing how to handle trading orders. However, pursuant to the VASP Guidelines, a VASP should ensure that transactions are conducted in a fair and transparent manner. Specifically, a VASP should establish mech - anisms to ensure fair market transactions, including measures such as abnormal price alerts, as well as regulations to prevent market abuse and avoid con - flicts of interest. Also, under the Crypto AML Registration Regulations, a VASP offering virtual asset exchange services must establish and publicly disclose its policy for preventing conflicts of interest. Additionally, the VASP is required to implement reasonable measures to protect custom - er interests and ensure the prompt and fair execution of customer exchange instructions. 6.6 Rise of Peer-to-Peer Trading Platforms Please see 2.2 Regulatory Regime , 2.14 Impact of AML and Sanctions Rules , 6.1 Permissible Trading Platforms and 6.3 Impact of the Emergence of Cryp- tocurrency Exchanges regarding crypto exchanges and trading platforms. For peer-to-peer lending platforms, please see 2.2 Regulatory Regime . 6.7 Rules of Payment for Order Flow We assume that “payment for order flow” refers to a fee/compensation received by an exchange or trad - ing platform for routing/connecting a buy/sell order to a specific market maker/trader, who takes the other side of the order, and in such case, such market maker would be the seller to any buy order or buyer to any sell order. For Security Tokens Trading (secondary market) for security tokens must completely follow the STO regulations, so the trading mechanism may not be freely structured as the “pay - ment for order flow” method indicated above. Pur - suant to the STO regulations, the platform operator should obtain a securities dealer licence and handle
the trading by way of price negotiation. The platform operator should be the counterparty to every transac - tion and should offer a reasonable reference quotation based on the market conditions. Also, each security token under an STO programme may be traded only on a single platform. For Tokens Without the Nature of Securities The VASP Guidelines are silent in this regard. Please, however, note that pursuant to the VASP Guidelines, a VASP should ensure that transactions are conducted in a fair and transparent manner. Specifically, a VASP should establish mechanisms to ensure fair market transactions, including measures such as abnormal price alerts, as well as regulations to prevent market abuse and avoid conflicts of inter - est. Therefore, as long as the rules outlined in the VASP Guidelines are followed, such practice should be allowed. Also, under the Crypto AML Registration Regulations, a VASP offering virtual asset exchange services must establish and publicly disclose its policy for preventing conflicts of interest. Additionally, the VASP is required to implement reasonable measures to protect custom - er interests and ensure the prompt and fair execution According to the STO regulations, when a customer defaults on a settlement obligation, the securities firm (ie, platform operator) shall cancel the trade and, after immediately notifying the customer, shall itself pursue compensation. There is no other rule specifically governing market integrity and market abuse on the part of the traders under the STO regulations. For Tokens Without the Nature of Securities As was similarly stated in 6.5 Order Handling Rules , there is no law or regulation specifically governing market integrity and market abuse. However, pursuant to the VASP Guidelines, a VASP should ensure that transactions are conducted in a fair and transparent manner. of customer exchange instructions. 6.8 Market Integrity Principles For Security Tokens
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