TWSE Market Insights

＜中文版＞

According to the statistics from the National Police Agency, Ministry of the Interior, the average daily amount of fraud from August to September this year (2024) was about NT$300 to NT$400 million, with financial fraud still accounting for the highest proportion. The Executive Yuan passed one new and three amended laws related to the combating of fraud on May 9, 2024, and the Legislative Yuan passed it through three readings on July 12 and 16, 2024 to comprehensively upgrade the fight against fraud crimes. As a securities market operator, the Taiwan Stock Exchange (hereinafter referred to as the TWSE) actively responds to government policies and contributes efforts and funds to be committed to promoting anti-fraud education for investors. In addition to setting up an anti-fraud section with rich contents on its official website, the TWSE launched a creative website “Square Delivery” and planned a large-scale “5D Anti-Fraud Action,” hoping to spread the seeds of anti-fraud awareness to every investor.

As the number of financial investment fraud cases is the highest, the TWSE intends to combine the strength of securities firms to play their frontline role, and actively advocate to securities firm customers. After sufficient communication with industry participants, the TWSE has planned to strengthen anti-fraud measures since June 2024, including revising relevant regulations, establishing anti-fraud joint prevention zones, conducting the 2024 annual securities firm anti-fraud evaluation activities, and assisting securities firms in setting up anti-fraud zones on their official websites, in order to comprehensively enhance the anti-fraud function of the securities market. As this year is coming to an end, the TWSE shares the results of its phased tasks and hopes to continue improving in the coming year (2025).

In terms of regulatory revisions, due to the implementation of the “Management Measures for Suspending or Directly Closing Accounts under paragraph 6, Article 15-2 of the Money Laundering Control Act” on March 1, 2024, financial institutions will enforce relevant financial restrictions on shadow accounts in accordance with the law. The National Police Agency, Ministry of the Interior has also established the “Anti-Money Laundering Account Adjudication and Warning System,” through which the user may query whether the perpetrator has been warned or punished. Due to the fact that if the investor’s account is subject to a warning or punishment, the investor will not be able to make online payments through his/her account for delivery, and the securities firm may face the risk of customer settlement default. The TWSE has suggested and obtained the approval of the Financial Supervisory Commission and the Ministry of Justice to give securities firms access to the system, which is conducive to risk control in advance and assists the government in preventing fraudulent groups from using shadow accounts. The system was officially launched on October 15.

On the other hand, the TWSE has revised the relevant regulations of the “Standard Rules for the Internal Control System of Securities Firms,” and has already issued a letter to request securities firms to post anti-fraud warnings on the customer order trading interface and statement to increase the frequency of reminders. In addition, securities firms have been conducting customer-care interviews for many years. This year, a priority selection mechanism for elderly customers was added, and securities firms are requested to pay more attention to elderly customers who are easily targeted by fraud groups to enhance their awareness of fraud prevention.

In terms of online advocacy, the TWSE plans to collect anti-fraud materials from peripheral units every quarter, including anti-fraud advocacy videos, posters, and advocacy audios for use by securities firms. These materials can be placed on securities firms’ official websites, social media or apps, or posted on the business premises to help securities firms reduce their cost of production.

In terms of physical advocacy meetings, the TWSE has held two anti-fraud advocacy meetings for securities firm employees in the second half of the year, and invited criminal police officers, professional think tank lecturers, and senior executives of securities firms to share their experience on anti-fraud topics to equip securities firm employees with more sufficient anti-fraud knowledge, in order for them to provide correct assistance at once when customers face fraud crises, thus reducing the probability of customer rights violation.

According to observations by the TWSE, most securities firms post fraudulent information or clarification statements on their official websites or social media. With reference to the Securities Investment Trust and Consulting Association which has established a dedicated area for members to clarify, the TWSE plans to set up an “Anti-Fraud Joint Prevention Action Zone” on the Market Observation Post System, allowing securities firms to upload and share fraud cases they are aware of to the zone for investors to browse, in order to strengthen the anti-fraud information joint prevention mechanism and enhance the overall market’s anti-fraud concept. As of the end of November, securities firms have reported over 200 fraud cases, and the TWSE has compiled and summarized the contents of the reports as promotional materials on its Facebook page. In the future, the TWSE will continue optimizing the Zone, so that the public may have a clearer understanding of the media used by fraud groups by searching in the Zone, and quickly distinguish the types of fraud.

To encourage securities firms to implement anti-fraud and fraud prevention activities in their daily operations, the TWSE has drawn on the Sustainable Financial Evaluation jointly conducted by the Taiwan Academy of Banking and Finance, the , and the Securities and Futures Institute under the supervision of the Financial Supervisory Commission since 2023, in order to plan the anti-fraud evaluation activities for securities firms for the year 2024.The evaluation framework is designed with the four question groups of “anti-fraud organization management and effectiveness,” “anti-fraud advocacy activities and training,” “anti-fraud customer care measures,” and “anti-fraud information disclosure.” Each question group includes basic qualitative indicators and bonus quantitative indicators. Securities firms must provide corresponding supporting data to facilitate the TWSE’s evaluation. After the evaluation results were released, the TWSE held the “2024 Securities Brokers and Dealers Senior Executive Seminar” on November 19 to award 27 securities firms with excellent anti-fraud evaluation performance, to thank and affirm the participants for their active cooperation in implementing anti-fraud activities.

The evaluation data provided by securities firms has indeed played a role in this evaluation. For example, participating securities firms have established anti-fraud task forces to carry out and plan their anti-fraud training and advocacy activities, develop anti-fraud related policies, and set up anti-fraud hotlines to provide real-time services for customer consultation. In terms of advocacy, securities firms participating in the evaluation actively participate in online or physical lectures, including lectures on social media, customer presentations, investment presentations, campus presentations, and internal business personnel training. Large securities firms also combine their group resources to incorporate anti-fraud initiatives into non-traditional financial activities such as sports matches and exhibitions, in order to reach out to more people and achieve the benefits of joint prevention.

Given the widespread use of the internet, official websites serve as an important facade and information source for businesses or organizations. The TWSE provides partial subsidies for securities firms to set up or optimize anti-fraud zones on their official websites, social media, apps, and other interactive platforms. Through clear anti-fraud topic pages, common fraud methods, prevention measures, fraud patterns, and related announcements are presented, which is conducive to enhancing the coverage of anti-fraud information in the securities market. It is encouraging that there are 35 securities firms willing to respond, and excluding foreign and concurrent securities firms, the participation rate exceeds 70%.

Despite the cooperation between the government and civil organizations to combat fraud, the methods of fraud groups continue to evolve rapidly and are difficult to prevent, and we cannot afford to slack off in any way. Through measures such as regulatory revisions, advocacy and evaluation activities, establishment of special zones, and information disclosure, we have only one ultimate goal to achieve, which is that the public and investors may recall the advocacy content they have received when encountering fraudulent behavior, awaken the anti-fraud awareness they have established, and calm down and conduct verification with multiple parties to protect their rights and property. In terms of future improvement planning, the TWSE will continue conducting anti-fraud evaluation activities for securities firms, optimize the Anti-Fraud Joint Prevention Action Zone, work together with securities firms to keep up with the times, and firmly and fully convey anti-fraud awareness to every investor, and make every effort to promote the sustainable development of Taiwan’s capital market.