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Operating principles for cash creation and redemption of beneficial certificates of ETFs:
- After the TWSE accepts an application for cash creation or redemption which contains information on cash creation or redemption that meets the requirements stated in the cash composition file published by the SITE or FTE, the TWSE will compile and forward the application information to the SITE or FTE for review. The review results will be made available on the TWSE computer system for participating dealers’ inquiry, and the participating dealers will notify the applicants of application results for confirmation and save the results and the aforesaid application information for future reference.
When the SITE or FTE accepts the cash creation or redemption applications forwarded by the TWSE, it shall conduct the relevant procedures in accordance with Article 21-3 of the Rules Governing the Public Offering, Issuance, and Sale of Securities Investment Trust Funds and Their Subscription or Redemption of the Securities Investment Trust and Consulting Association of the R.O.C. or Article 21-2 of the Public Offering, Issuance, and Sale of Futures Trust Funds and Their Subscription or Redemption of Chinese National Futures Association. Whether or not the SITE or FTE the SITE approves such applications, it shall notify the TWSE of its decision before the prescribed time ends on the date of application so such information may be available to participating dealers.
- The TWSE will forward the beneficial certificates in accepted redemption applications to the CSD for handling the earmark operation. Upon receiving the notice of the CSD with respect to the earmark result, the TWSE will forward the information to SITE or FTE and make the same information available on the TWSE computer system for participating dealers.
- If an application for cash creation has been found to comply with the requirements and accepted by relevant institutions, the custodian institution shall complete the collection and payment of cash payment and other relevant charges or payments, and the CSD shall then complete the delivery transfer of beneficial certificates. If an application for cash redemption has been found to comply with the requirements and accepted by relevant institutions, the custodian institution shall transfer the funds payable to the applicant via the participating dealer after completing the related operations.
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