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Article NO. Content

Title:

Taiwan Stock Exchange Corporation Directions For the Recognition of the Qualifications of Issuers of Exchange-Traded Funds and Underlying Indexes  CH

Amended Date: 2014.06.16
Article 3     For the purposes of these Directions, "underlying index" refers to the index tracked, simulated, or replicated by an ETF that an issuer applies to have listed and traded on the TWSE.
    The compiler of the underlying index shall meet all the following qualifications:
  1. Has 5 years or more experience in index compilation, and the ability to establish and review index compilation rules, and to maintain or update on a daily basis the files for the components of the index. If the index compiler is a securities firm, bank, or an interested party of the issuer, the compiler must establish an internal firewall system for the index compilation rules, file maintenance, and related operations.
  2. Has the ability to calculate intraday real-time index value, or enter into contracts with market information suppliers to calculate index value.
  3. Has the ability to transmit the intraday real-time index value to make it known throughout the market, or enters into contracts with two or more market information suppliers for the transmission of the index value.
    The components of the underlying index shall meet all the following qualifications:
  1. Meet one or more of the following qualifications:
    1. Listed for trading on the TWSE.
    2. Listed for trading on the GreTai Securities Market.
    3. Listed and traded on a foreign centralized securities market or over-the-counter market approved by the competent authority, and compliant with regulations regarding the types and scope of foreign securities invested by the securities investment trust fund.
    4. Listed for trading on the Taiwan Futures Exchange.
    5. Being spot commodities that are traded in futures trading or are related to futures, are traded on a foreign futures exchange or approved by the competent authority, and furthermore comply with the regulations governing the scope of utilization of futures trust funds.
    6. Being other instruments approved by the competent authority.
  2. The components of the underlying index shall have the following properties:
    1. The components of the index shall be sufficiently dispersed; the component accounting for the highest share of market capitalization of the index may not exceed 30 percent of the total market capitalization of the index, and the cumulative portion of the top five component securities may not exceed 65 percent of the index of the total market capitalization of the index. This requirement, however, does not apply to a fund investment for which the characteristics of the underlying index meet the conditions set forth in Article 10-1, paragraph 4, subparagraph 3 of the Regulations Governing Futures Trust Funds.
    2. The components of the index shall have a definite degree of liquidity. The TWSE may set required liquidity standards depending on the characteristics of the components of the index.