Taiwan Stock Exchange - Rules & Regulations Directory
time:2019/12/06 04:58

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Title:

Taiwan Stock Exchange Corporation Directions for the Particulars to be Recorded in Risk Disclosure Statements for Call (Put) Warrants 

Amended Date: 2018.02.14 
Categories: Securities Exchange Market > Trading > Call (Put) Warrants

1
    In view of the fact that call (put) warrants feature the right to purchase and sell specific instruments and, during the existence of call (put) warrants, their value interacts with the price of such specific instruments, investors are advised to be aware of the impact of price fluctuation of such instruments on the call (put) warrants.

2
    Prior to listing, the terms and conditions of issuance of call (put) warrants, such as issue price and exercise ratio, are established by the issuer. After the call (put) warrants are listed and traded and freely transferred on the centralized exchange market, their prices are determined according to supply and demand of the market.

3
    Prior to purchase of call (put) warrants, investors are advised to understand the financial and credit position of the issuer in connection with its ability to perform the contract. The Taiwan Stock Exchange Corporation does not responsible for guaranteeing the issuer's liability for contract performance.

4
    In the event that call (put) warrants must be de-listed due to causes such as the issuer's breach of the listing contract or delisting of the underlying instruments, the issuer shall repurchase the call (put) warrants from holders of call (put) warrants that have not matured, at the agreed price under the primary terms and conditions of issuance, in order to conclude the contractual obligation of the issuer.

5
    No price fluctuation limit is imposed on call (put) warrants issued over an exchange traded funds with foreign component securities, a futures exchange traded funds that tracks a foreign futures index, an offshore exchange traded fund, a foreign security, or a foreign index. Exchange rate and other risks shall be taken into account when purchasing call (put) warrants issued over foreign securities or indices as underlying securities.

6
    Where call (put) warrants are traded with futures as the underlying instrument, the investor shall pay attention to the possible price risk of the underlying futures that may arise during the period of validity from the difference in the trading hours prescribed in the respective futures contracts.

7
    Where the validity period of knock-out call warrants (callable bull contracts), capped put warrants (callable bear contracts) may be extended, the day on which the closing price of the underlying securities, closing index of the underlying index or simple arithmetic mean trade price of the underlying future during the last minute before 1:30 p.m. reaches the knock-out price or point is deemed the warrant's last trading day; such warrants are deemed to each maturity on the second business day thereafter, and the automatic cash settlement performance method is adopted based on the simple arithmetic mean trade price of the underlying securities, underlying settlement index or settlement price of the underlying future on the first business day following the last trading day of the warrant. If there is no trade price for the underlying security, the base auction price for the opening of trading of the underlying security on the expiration date of the warrants shall be used. If the trading of underlying security or underlying future is halted or suspended on the first business day following the last trading day of the warrants or on the expiry date, the closing price of the underlying security or daily settlement price of the underlying future on the last trading day of the contracts shall be used. The aforementioned underlying settlement index and settlement price and daily settlement price of the underlying future shall be calculated in accordance with Article 11, subparagraphs F and G, and subparagraph H, item g of the TWSE Rules Governing Review of Call (Put) Warrant Listings.

8
    The risk disclosure statement is not inclusive and is not a comprehensive list of all risks of call (put) warrants and factors that may market performance. Before making an investment, the investor should not only carefully review the disk disclosure statement but also be alert to other factors that may cause an impact, and make well-thought financial plans and thorough risk assessment to avoid insufferable losses from hasty or ill-judged decisions on investment.
    Note 1 : These are the particulars to be recorded in the risk disclosure statements ,the securities firm may include any other matters at its discretion as the case may be.
    Note 2 : The principal shall sign the risk disclosure statement to undertake as below:
  1. it shall be solely responsible for the investment risks;
  2. it has received a copy of the risk disclosure statement in advance; and
  3. after being provided with explanations by the representative sent by the securities firm (the representative must also sign on the statement to take responsibility), it fully understands the risks of trading of call (put) warrants.
    Note 3 : The risk disclosure statement is executed in duplicate, with one to be retained by the securities firm for filing purpose and the other by the investor for reference.

Data Source:Taiwan Stock Exchange - Rules & Regulations Directory
twse-regulation.twse.com.tw