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Title:

Taiwan Stock Exchange Corporation Rules for the Trading of Book-Entry Central Government Bonds  CH

Amended Date: 2011.01.12 
   Chapter One General Provisions
Article 1    These Rules are established according to the provisions in Paragraph 2, Article 55 of the Operating Rules of the Taiwan Stock Exchange Corporation.
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Article 2    Trading of book-entry central government bonds at the TWSE centralized securities exchange market for book-entry central government bonds shall be in compliance with the requirements in these Rules. For matters not provided in these Rules, other applicable laws and regulations and the relevant requirements in the TWSE rules shall govern.
Article 3    For the purposes of these Rules, " book-entry central government bonds" (including "exchangeable bonds") refer to the book-entry central government bonds traded at the TWSE centralized securities market for book-entry central government bonds (hereinafter the "Central Bonds").
Article 4    (Deleted)
Article 5    (Deleted)
   Chapter Two Market Trading
Article 6    The trading hours under these Rules are the same as those of the TWSE centralized securities exchange market. Trading may be suspended in the event of a material market change or where the TWSE deems necessary.
Article 7    The registered trading quantity shall be in one trading unit or its integral multiples. For the Central Bonds, one trading unit is NT$ 100,000 par value and the maximum trading units for each consignment order is ten.
    For Central Bonds that are serial bonds whose principals have have been paid off, their trading units shall be calculated based on the residual value after the repayment.
Article 8    The trading price shall be registered by the securities firms on a basis of NT$ 100 par value. The unit of increase or decrease is always 10%.
    The transaction amount shall be calculated according to the following formula:
    Transaction Amount = Execution Price ÷ 100 × Trading Unit ×Execution Volume
Article 9    Disclosure of the following information about trading of book-entry central government bonds is required:
  1. Trading quote and consigned amount; and
  2. Execution price and volume.
Article 10    The trading price of the Central Bonds is not subject to restrictions as to price hike or drop.
Article 11    The principal shall first open a consignment trading of securities account, book-entry bond account and book-entry payment account before the securities brokers may proceed with trading of book-entry central government bonds according to the consignment.
Article 12    To trade the Central Bonds, the principal shall complete an order ticket and fill in the consignment price column accurately.
    The form of the Central Bonds brokerage order ticket and information to be included in the order ticket shall be in compliance with the requirements of the competent authority.
Article 13    Trading orders of the Central Bonds shall be keyed in by the inputter of the securities firm participating in the transaction. Such orders shall include the code of the securities firm, serial number of the brokerage order ticket, type of order ticket, account number of the principal, code of the bond, type of trade, unit price, volume, and sale/purchase for each and every transaction in sequential order according to the information contained in the brokerage order ticket delivered by the sales representative, provided the TWSE may adjust the above items depending on actual need.
    With regard to the numbering of the brokerage order tickets in the preceding paragraph, the securities broker shall assign a serial number to each ticket in the order the orders are received, separately on each individual computer terminal. A securities dealer shall assign the serial number in the order of dealing trading orders.
Article 14    Competitive auction is held individually for each matched trade. The matching sequence and execution prices shall be determined based on each buy or sell orders entered, according to the following principles:
  1. Where the buy order price entered is higher than or equal to the lowest sell order price previously entered, the trading orders will be satisfied from the lowest to the highest sell order price. In cases where sell orders are placed at the same price, the trading orders will be satisfied in the order of the offer time until all orders are satisfied or the buy order price entered is lower than the sell order price of an unexecuted trade.
  2. When the sell order price entered is lower than or equal to the highest buy order price previously entered, the trading orders will be satisfied from the highest to the lowest buy order price. In case where buy orders are placed at the same prices, the trading orders will be satisfied in the order of offer time until all orders are satisfied or the sell order price entered is higher than the buy order price of an unexecuted trade.
    The validity of a trading order for the Central Bonds is limited to the day on which the order is received. Upon processing by the computer server at the TWSE, the results will be immediately reported back to the securities firm. All trading orders that remain unexecuted by the securities firm will be deemed invalid once the above reporting is made.
    The information to be reported in the preceding paragraph should include the code of the securities firm, serial number of the brokerage order ticket, type of order ticket, account number of the principal, type of the Central Bond, type of trade, unit price, volume, sale/purchase and time of transaction, provided the TWSE may as adjust the above items based on actual need.
Article 15    Any application by the securities firm for canceling an order or reducing the volume to be traded shall be made via the computer system.
Article 16    Consignment orders and trading shall be suspended two business days prior to the delisting date of the Central Bonds.
   Chapter Three Calculation of Interest
Article 17    All trades of the Central Bonds executed pursuant to these Rules shall be ex-dividend trading.
    The calculation of interest shall be based on the actual number of days between the interest-bearing commencement date and the trade date by way of including the beginning day and excluding the last day.
   Chapter Four Clearing and Settlement
Article 18    The principal holding the Central Bonds deliverable shall complete and send to the securities firm an Application for Registration of Outgoing Transfer for the Central Bonds to be transferred on the following day, before 12 am of the first business day after the trade date, for the securities firm to forward to the clearing bank on the same day. The securities firm shall further ascertain from the clearing bank the balance of the Central Bonds of the principal, by 5 pm of the same day.
    The principal will be deemed in breach of contract if failing to act in accordance with the preceding paragraph or in case of insufficient funds in the account, in which case the securities broker shall inform the TWSE, as well as the principal, of the breach before 6 pm of the day of the breach and complete the necessary procedures on behalf of the principal.
Article 19    For Central Bonds traded over the TWSE market, a separate "settlement list" shall be prepared for the bonds, and the funds shall be included in the settlement of normal settlement trades in a different settlement list.
    The securities firm shall proceed with settlement according to the "settlement list" for the Central Bonds verified as accurate, and the funds and securities receivable and deliverable shall be calculated based on the balance.
    For the securities firm with settlement consideration receivable or payable, settlement procedures shall be completed in accordance with Subparagraph 1, Paragraph 2, and Subparagraph 1, Paragraph 4 of Article 104 of the Operating Rules Of The Taiwan Stock Exchange Corporation.
    In case of the Central Bonds deliverable, an application for outgoing transfer shall be filed with the clearing bank on the first business day after the trade date. The clearing bank shall transfer the Central Bonds to the TWSE Central Bonds settlement account with the clearing bank by 10 am of the second business day after the trade date.
    In case of Central Bonds receivable, upon payment of the settlement consideration payable according to the third paragraph above, the TWSE will request the clearing bank to transfer the Central Bonds to the Central Bonds settlement account with the clearing bank as held by the party with the Central Bonds receivable.
Article 20    The price payable by the securities firm for purchase of the Central Bonds shall include the interest calculated according to the provisions in Article 17, except where trade is executed on the second business day before the interest payment date of the Central Bonds, in which case the price payable for purchase of the Central Bonds does not include the interest accrued for the current period.
Article 21    In the event settlement of the Central Bonds deliverable is not completed within the time prescribed in Article 19, a security bond in the amount equivalent to 120% of the closing price of the bonds on the previous business day in the form of a demand bill issued by the bank appointed by the TWSE or in cash shall be deposited in the account designated by the TWSE. In the absence of a closing price on the previous day, the last available closing price shall be used.
    In the event settlement of the Central Bonds deliverable is not completed by 11 am, the TWSE may use the security bond in the preceding paragraph to acquire the Central Bonds in the market and return the remaining balance of the security bond to the security firm upon completing the settlement on said firm's behalf.
    Failure to complete settlement of deliverable Central Bonds by 11 am to furnish a security bond according to the first paragraph is deemed violation of the settlement obligation.
Article 22    In cases where the centralized securities exchange market is closed on the settlement date of the Central Bonds due to natural disaster etc., settlement of the Central Bonds that are due for settlement shall be postponed to the day business is resumed, in which case interest shall accrue until the new settlement day according to Article 17.
Article 23    In the event a local government institution in certain areas announces closure of offices due to natural disaster etc. or election day, settlement of the Central Bonds that are due for settlement shall be postponed to the day business is resumed, in which case interest shall accrue until the new settlement day according to Article 17.
    In areas where settlement of funds and securities is postponed, the net amount of the Central Bonds deliverable by all the securities firm in these areas for settlement in the market shall be acquired by the TWSE at the bonds and securities lending center or at the market for interim settlement on behalf of these securities firms.
   Chapter Five Supplemental Provisions
Article 24    The TWSE shall be notified of all error accounts and corrections to account numbers for book-entry central government bonds, provided that the provisions in Article 87 of the Operating Rules of The Taiwan Stock Exchange Corporation shall not apply.
Article 25    (Deleted)
Article 26    These Rules shall take effect after having been submitted to and approved by the competent authority and implemented upon publication. Subsequent amendments thereto shall be effected in the same manner.