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Article NO. Content

Title:

Taiwan Stock Exchange Corporation Rules Governing Purchase of Listed Securities by Reverse Auction  CH

Amended Date: 2015.04.02
Article 2     When a securities broker, acting pursuant to these Rules, accepts an engagement by a principal to conduct a purchase of securities by reverse auction, it shall fill out an application form and submit it to the TWSE. If the principal is an overseas Chinese, foreign national, or mainland area investor with special-case approval from the Ministry of Economic Affairs Investment Commission, any of the Science Park Administrations, or the Export Processing Zone Administration, the application shall include evidentiary documentation of government approval of the investment and inward remittance of funds. If the principal is a domestic company, the total amount of any equity investment shall be handled in compliance with the provisions of Article 13 of the Company Act, and supporting documentation shall be annexed.
    Once the TWSE has granted permission in response to an application filed in connection with an engagement by a principal, as referred to in the preceding paragraph, it will make a public announcement of the matters listed below three trading days prior to the implementation of the reverse auction. After the TWSE has made the public announcement, neither the principal nor the engaged securities broker may apply to amend or cancel the application. However, this restriction does not apply to cancellation of reverse auctions or amendment of reverse auction quantities pursuant to the provisions of Article 6, paragraph 4.
  1. The name and quantity of the securities to be purchased by reverse auction.
  2. The date and time of the reverse auction.
  3. The following information for the party initiating the reverse auction:
    1. Background.
    2. Purpose of the reverse auction.
    3. If an overseas Chinese, foreign national, or mainland area investor, the source of the investment capital.
    4. If a juristic person, its financial condition for the most recent year.
  4. Floor price for a reverse auction: Limited to within a range of 15 percent above or below the auction reference price at market opening on the current day, provided that if there is no price fluctuation limit for a given security, at the time of application a floor price limited to within 15 percent above or below the closing price on the reverse auction date may be selected. At the commencement of the reverse auction, the securities firm that applies for the reverse auction shall deliver a sealed letter containing the reverse auction floor price to the TWSE for on-the-spot announcement, and such floor price shall also be published in the Market Information System. When at the time of application the closing price on the reverse auction date has been selected as the basis for calculating the reverse auction floor price, if no closing price for the security is available on the day of the reverse auction, the reverse auction floor price shall be calculated based on the price determined by the following principles, and limited to a range of 15 percent above or below that price:
    1. When, on the day of auction, the highest bid price at market close is higher than the auction reference price at market opening, the highest bid price shall be adopted.
    2. When, on the day of auction, the lowest ask price at market close is lower than the auction reference price at market opening, the lowest ask price shall be adopted.
    3. When neither of the above conditions is met, the auction reference price at market opening on the current day shall be adopted.
  5. Auction method: To be selected pursuant to Article 6, paragraph 1.
  6. Means of handling a shortfall between the quantity of successful bids and the publicly announced quantity to be purchased through the reverse auction.
  7. Period and method for quotes by securities firms participating in the bidding.
  8. Other relevant matters.