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Taiwan Stock Exchange Corporation Rules Governing the Trading of Securities with Warrants  CH

Amended Date: 2015.04.02
Article 1     These Rules are established according to Article 55 of the Operating Rules of the Taiwan Stock Exchange Corporation.
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Article 2     All securities with warrants issued by securities issuer according to the Regulations Governing the Offering and Issuance of Securities by Securities Issuers approved by the Taiwan Stock Exchange Corporation (TWSE) for listing shall be traded on the centralized securities exchange market of the TWSE and a centralized securities depository enterprise shall be authorized to handle the book-entry transfer of these securities.
    For purpose of these Rules, securities with warrants include separable securities with warrants and inseparable securities with warrants.
    The inseparable securities with warrants in the preceding paragraph include inseparable preferred shares with warrants and inseparable corporate bond with warrants.
    The separable securities with warrants in Paragraph 2 above include separated corporate bonds, separated preferred shares, and separated stock warrants (hereinafter "Stock Warrants").
Article 3     Trading of securities with warrants shall be subject to the requirements under these Rules or other applicable laws and regulations or the applicable regulations under the TWSE polices and guidelines for matters not provided for in these Rules.
    For separable preferred shares with warrants, the TWSE requirements on the trading of preferred shares shall apply mutatis mutandis to the trading of the separated preferred shares.
    For separable corporate bonds with warrants, the TWSE requirements on the trading of corporate bonds shall apply mutatis mutandis to the trading of the separated corporate bonds.
Article 4     Except qualified institutional investors, a principal shall sign a risk disclosure statement for first time trading of securities with warrants before a securities broker may accept the order.
    The TWSE shall separately establish the particulars to be recorded in the risk disclosure statement in the preceding paragraph.
    The qualified institutional investors in Paragraph 1 shall refer to domestic and foreign banks, insurance companies, bill finance companies, securities firms, fund management companies, government investment institutions, government funds, pension funds, mutual funds, unit trusts, securities investment trust companies, securities investment consulting firms, trust enterprise, futures commission merchants and futures service enterprises.
Article 5     When receiving an order for trading of securities with warrants, a securities broker shall first check and verify the classes and quantities of the securities in the principal's central custody account meeting the closing conditions before performing the sale according to the order.
Article 6     The quantity of securities with warrants in a trading order must be one trade unit or in its integral multiple.
    Trade unit of securities with warrants:
  1. For inseparable preferred shares with warrants: one trade unit is 1,000 shares.
  2. For inseparable corporate bonds with warrants: one trade unit is NT$100,000 par value.
    The trade unit of Stock Warrants is 1,000 units of Stock Warrants.
Article 7     The price of trading order and fluctuation unit of securities with warrants:
  1. The requirement on listed stocks shall apply mutatis mutandis to inseparable preferred shares with warrants.
  2. The requirements on listed convertible corporate bonds shall apply mutatis mutandis to inseparable corporate bonds with warrants.
  3. The requirements on listed call warrants shall apply mutatis mutandis to Stock Warrants.
Article 8     Daily fluctuations of securities with warrants shall be calculated according to the formula below:
  1. For inseparable preferred shares with warrants:
  2. Limit-up price = Auction reference price at market opening of the current trading session ×(1 + 10%) + (Limit-up price of underlying securities of the current trading session - Auction reference price of underlying securities at market opening of the current trading session) ×Subscription ratio
    Limit-down price =Auction reference price at market opening of the current trading session ×(1 - 10%) - (Auction reference price of underlying securities at market opening of the current trading session - Limit-down price of underlying securities of the current trading session) ×Subscription ratio
  3. Inseparable corporate bonds with warrants:
  4. Limit-up price = Auction reference price at market opening of the current trading session ×(1 + 5%) + (Limit-up price of underlying securities of the current trading session - Auction reference price of underlying securities at market opening of the current trading session) ×Subscription ratio
    Limit-down price =Auction reference price at market opening of the current trading session ×(1 - 5%) - (Auction reference price of underlying securities at market opening of the current trading session - Limit-down price of underlying securities of the current trading session) ×Subscription ratio
  5. Stock Warrants:
  6. Limit-up price = Auction reference price at market opening of the current trading session + (Limit-up price of underlying securities of the current trading session - Auction reference price of underlying securities at market opening of the current trading session) ×Subscription ratio
    Limit-down price =Auction reference price at market opening of the current trading session - (Auction reference price of underlying securities at market opening of the current trading session - Limit-down price of underlying securities of the current trading session) ×Subscription ratio
    The provisions under Subparagraphs 1 and 2, Paragraph 2 of Article 58-3 of the Operating Rules of the Taiwan Stock Exchange Corporation shall apply mutatis mutandis to the auction reference price at market opening of the current trading session in the preceding paragraph, except the securities with warrants in the initial listing for which the price under Article 7 may be calculated using the reference price for initial listing.
    The reference price for initial listing in the preceding paragraph shall be determined by the following method:
  1. For inseparable preferred shares with warrants and inseparable corporate bonds with warrants, the public sale price prior to listing shall be used.
  2. For Stock Warrants, the following formula shall be used in the calculation:
    Issue price of Stock Warrants ×(Auction reference price of underlying securities at market opening of the current trading session on the listing date of Stock Warrants ÷ Auction reference price of underlying securities at market opening of the current trading session on the issue date of Stock Warrants) ×(Exercise ratio of the listing date of Stock Warrants ÷ Exercise ratio of the issue date of Stock Warrants)
    The auction reference price of underlying securities at market opening of the current trading session in Paragraphs 1 and 3 above shall be subject to the provisions under Article 58-3 of the Operating Rules of the Taiwan Stock Exchange Corporation.
    In the case of an ex-dividend/ex-rights date for preferred shares or date on which trading will resume after capital reduction, the reference used for calculation of fluctuations of the current trading session in Subparagraph 1 of Paragraph 1 above shall comply with the reference established in the Operating Rules of the Taiwan Stock Exchange Corporation and other applicable policies and regulations.
    The limit-up and limit-down prices in the calculations in Paragraph 1 above are always positive numbers. After conversion of fluctuations, a price lower than the minimum fluctuation unit shall be deemed the minimum fluctuation unit and the lowest price shall be the minimum fluctuation unit.
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Article 9     Trading orders shall be confined to limit orders.
Article 9-1     Upon receipt of a single order of more than 100 trade units of Stock Warrants, a securities firm shall carefully evaluate the principal's investment ability. If the order is within the scope of its investment ability, at least 30% of the purchase price shall be received and the sale certificates shall all be loaded. If the order is beyond its investment ability, advance collection of all funds and securities shall be required.
Article 10     For matched trades, the sequence of trading orders shall be determined according to the following rules:
  1. A higher purchase order takes precedence over a lower purchase order, and a lower sale order takes precedence over a higher sale order.
  2. The priority of orders at the same price shall be determined according to the time of entry, except for orders at the same price entered prior to market opening in which case the priority shall be randomly determined by the computer system.
Article 11     The method of competitive auction for trading orders of securities with warrants shall be governed by Article 58-3 of the Operating Rules of the Taiwan Stock Exchange Corporation.
    Matching of trading orders of Stock Warrants shall be exempt from the requirements under by Paragraphs 4 and 5, Article 58-3 of the Operating Rules of the Taiwan Stock Exchange Corporation.
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Article 12     Paragraph 5, Article 58 of the Operating Rules of the Taiwan Stock Exchange Corporation shall apply mutatis mutandis to disclosure of the price and quantity of securities with warrants for a trading order.
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Article 13     Acceptance of orders and trading of securities with warrants shall be suspended from the second business day prior to the delisting date.
Article 14     Trading of inseparable corporate bonds with warrants shall always be ex-dividend trading.
    Interest shall be calculated based on the number of days from the first day of the interest period for the current term (inclusive) until the delivery date (exclusive).
Article 15     The applicable provisions under the Operating Rules of the Taiwan Stock Exchange Corporation shall apply mutatis mutandis to the clearing and settlement operation of securities with warrants.
Article 16     When exercising the subscription rights, a holder of Stock Warrants shall complete and submit a subscription application to the issuer or its agent. Payment of shares shall be made by the holder to the issuer or its agent.
    After the holder of Stock Warrants exercises the subscription rights, delivery of securities shall comply with the regulations governing centralized securities depository enterprises.
Article 17     These Rules shall come into force upon approval and public announcement of the competent authority. The same shall apply to amendments.