TAIWAN Law and Practice Contributed by: Robin Chang, Sarah Wu and Eddie Hsiung, Lee & Li
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 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. 7. High-Frequency and Algorithmic Trading 7.1 Creation and Usage Regulations To our knowledge, no regulations have been issued specifically for the creation and usage of technolo - gies regarding high-frequency and algorithmic trad - ing by securities brokers. Securities brokers would be required to have in place internal control systems and risk control systems in line with applicable rules and regulations of the FSC. Under Taiwan law, no entity may conduct securities dealing as its business unless it has obtained prior approval from the FSC to act as a securities dealer. 7.3 Regulatory Distinction Between Funds and Dealers As regards local funds, the most prevalent form of collective investment scheme in Taiwan is securities investment trust funds, which may be either offered to the general public or privately placed with speci - fied individuals. Securities investment trust funds are managed by securities investment trust enterprises (SITEs), which business may not be carried out with - out prior approval/licence from the FSC. With respect to dealers, please see 7.2 Requirement to Be Licensed or Otherwise Register as Market Makers When Functioning in a Principal Capacity . 7.2 Requirement To Be Licensed or Registered as a Market Maker When Functioning in a Principal Capacity
Given the above, in Taiwan, SITEs and securities deal - ers are subject to different sets of regulations. 7.4 Regulation of Programmers and Programming No regulations have been issued for programmers who develop and create trading algorithms and other electronic trading tools, assuming such programmers do not carry out any activities that may only be con - ducted by FSC-licensed financial services entities. However, financial services entities’ purchase and use of the services provided by such programmers might be subject to relevant outsourcing regulations, depending on the individual circumstances. In Taiwan, underwriting processes are governed by the Regulations Governing Business Solicitation, Policy Underwriting and Claim Adjusting of Insurance Enter - prises (the “Underwriting Regulations”). According to the Underwriting Regulations, an insurance company shall establish internal systems and procedures for policy underwriting, which shall include, among oth - ers, the following: • The qualifications, job descriptions, on-the-job training and reward/discipline of underwriters. • Procedure and flow chart covering the process from acceptance of application to agreeing to underwrite a policy, including at least underwrit - ing guidelines, financial underwriting mechanism, survival analysis and physical examination stand - ards, insurance reporting mechanism, hierarchy of authority, and arrangement of reinsurance. • The policy of understanding and evaluating the needs and suitability of the applicant and the insured. 8. Insurtech 8.1 Underwriting Processes • The operating procedure for evaluating whether the insured amount and premium payment are com - mensurate with the income, financial situation and occupation of the applicant or the insured. • The operating procedure for evaluating the suitabil - ity of selling insurance products with surrender val - ue (excluding small-amount whole-life insurance, group annuity insurance and accident insurance
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