Chapter 1 General Provisions |
| Article 1 | These Rules are adopted pursuant to Article 55 of the Operating Rules of Taiwan Stock Exchange Corporation (TWSE).
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| Article 2 | The term "beneficial certificate" as used in these Rules includes:
- Any beneficial certificate for an offering of a closed-end securities investment trust fund issued by a securities investment trust enterprise ("SITE") pursuant to the Regulations Governing Securities Investment Trust Funds.
- Any of the following beneficial certificates issued for an offering of an exchange-traded securities investment trust fund ("ETF") by a SITE pursuant to the Regulations Governing Securities Investment Trust Funds, by an offshore fund manager or its designated institution ("offshore fund entity") pursuant to the Regulations Governing Offshore Funds, or by a futures trust enterprise pursuant to the Regulations Governing Futures Trust Funds:
- Beneficial certificates issued by a SITE for an offering of a securities investment trust ETF ("securities investment trust ETF") (such certificates hereinafter called "securities investment trust ETF beneficial certificates):
- The term "securities investment trust ETF with domestic component securities" refers to an ETF in which the component securities of its underlying index are all domestic securities.
- The term " securities investment trust ETF with foreign component securities" refers to an ETF in which the component securities of its underlying index contain one or more foreign securities, or to an ETF as specified under Article 37, paragraph 4 of the Regulations Governing Securities Investment Trust Funds ("linked ETF").
- The term "leveraged or inverse securities investment trust ETF" refers to an ETF that tracks, simulates, or replicates a multiple of the performance of an index ("leveraged ETF") or a multiple of the inverse performance of an index ("inverse ETF").
- Any beneficial certificate, fund share or investment unit issued for an offering of an offshore ETF ("offshore ETF") issued by an offshore fund entity ("offshore ETF beneficial certificates").
- Any beneficial certificate issued by a futures trust enterprise for an offering of an exchange-traded futures trust fund ("futures ETF") (such certificates hereinafter called "futures ETF beneficial certificate"). If intended to track, simulate or replicate the performance of its underlying indexes in the positive direction ("leveraged futures ETF") or opposite (inverse) direction ("inverse futures ETF"), the fund is called a leveraged or inverse futures ETF.
- Any foreign-currency beneficial certificate of a fund offered by a SITE pursuant to item 1 ("underlying ETF beneficial certificate").
- Any beneficial certificate issued by a trustee institution for the establishment of a real estate investment trust ("REIT") fund pursuant to the Real Estate Securitization Act.
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| Article 3 | Book-entry settlement of beneficial certificates listed for trading on the TWSE's centralized securities exchange market shall be conducted by a central securities depository, and the trustor may not apply for withdrawing those beneficial certificates.
When a principal trades in any of the following ETF beneficial certificates, the securities firm may only accept the order after the principal has signed a separate risk disclosure statement:
- futures ETF beneficial certificates
- leveraged or inverse securities investment trust ETF beneficial certificates
- ETF beneficial certificates traded in foreign currency
- underlying ETF beneficial certificates
- beneficial certificates of non-investment grade bonds ETFs
- beneficial certificates deemed necessary by the TWSE
The following funds and accounts may be exempted from signing risk disclosure statements: privately placed securities investment trust funds managed by professional institutional investors or SITEs, futures trust funds offered by futures trust enterprises to persons with prescribed qualifications, discretionary investment accounts managed by SITEs, securities investment consulting enterprises or securities brokers concurrently operating securities investment consulting enterprises, and discretionary investment accounts managed by managed futures enterprises.
The matters that must be set out in the risk disclosure statement as referred to in paragraph 2 will be separately prescribed by the TWSE.
"Professional institutional investors" in paragraph 3 means the professional institutional investors defined in the Regulations Governing Offshore Structured Products.
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| Article 4 | A principal that trades in leveraged or inverse securities investment trust ETF beneficial certificates or leveraged or inverse ETF beneficial certificates for the first time is required to meet at least one of the following conditions:
- The principal has opened a margin account.
- The principal has had at least 10 trading orders for call (put) warrants executed within the most recent one year.
- The principal has had at least 10 trading orders of futures trading contracts listed on the Taiwan Futures Exchange executed within the most recent one year.
- The principal has trade confirmation records of leveraged and inverse securities investment trust ETF beneficial certificates or leveraged and inverse futures ETF beneficial certificates.
The principal may apply to a securities firm by correspondence or electronic means that is sufficient to identify the applicant as the principal himself/herself/itself and confirm his/her/its indication of intent.
Professional institutional investors that conform to Article 3 of the Regulations Governing Offshore Structured Products, privately placed securities investment trust funds managed by professional institutional investors or SITEs, futures trust funds offered by futures trust enterprises to persons with prescribed qualifications, discretionary investment accounts managed by SITEs, securities investment consulting enterprises or securities brokers concurrently operating securities investment consulting enterprises, or discretionary investment accounts managed by managed future enterprises are not governed by paragraph 1.
Should the principal engage in irregular trade in order to fulfill the conditions in the first paragraph, the securities firm shall ascertain whether the principal has actual trading experience in respect of beneficial certificates as mentioned in the first paragraph and may, where necessary, refuse to accept trading orders from the principal.
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| Article 4-1 | A principal trading the beneficial certificates of leveraged or inverse securities investment trust ETFs for the first time shall complete a checklist of beneficial certificates of leveraged or inverse securities investment trust ETFs for the principal to read carefully and sign before the securities firm may accept the principal’s order. The principal may do so by correspondence, e-mail, facsimile, or electronic means that is sufficient to identify the principal as itself and confirm its indication of intent.
The aforementioned checklist of beneficial certificates of leveraged or inverse securities investment trust ETFs shall be created by the TWSE.
Professional institutional investors that conform to the Regulations Governing Offshore Structured Products, privately placed securities investment trust funds managed by SITEs, futures trust funds offered by futures trust enterprises to persons with prescribed qualifications, discretionary investment accounts managed by SITEs, securities investment consulting enterprises or securities brokers concurrently operating securities investment consulting enterprises, or discretionary investment accounts managed by managed future enterprises are not governed by paragraph 1.
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