| Article 13 | A securities firm that signs relevant agreements under paragraph 1, 2 or 3 with a SITE, futures trust enterprise, or offshore fund institution is referred to as a participating dealer. A participating dealer shall meet the following conditions and pass the review of the TWSE before being issued a written approval:
- The capital adequacy ratio of the securities firm has remained over 150% for the last six months, save in the event of a financial institution acting concurrently as a securities firm, in which case the capital adequacy ratio is governed by the relevant provision of Article 44 of the Banking Act; provided, however, the above does not apply to a Taiwanese branch of a foreign securities firm where the head office of the home country has calculated its own capital adequacy ratio according to the local laws and regulations, with the operating risk of the Taiwanese branch included in the calculation, and the criteria are met, and the Financial Supervisory Commission has granted exemption from the capital adequacy ratio requirements that are applicable to Taiwanese securities firms.
- A long-term credit rating of a specific level or higher from a credit rating agency shall be obtained: Taiwan Ratings Corporation twBB- or above, Moody's Investors Service, Inc. Ba3 or above, Standard & Poor's Ratings Services BB- or above, or Fitch Ratings Ltd. BB- or above, or Fitch Ratings Limited, Taiwan Branch BB-(twn) or above. In the event of a financial institution acting concurrently as a securities firm, the credit rating of the financial institution may apply. In the event of a Taiwanese branch of a foreign securities firm, the credit rating of the group's financial holding company may apply.
A securities firm shall enter into a participation agreement with the SITE, offshore fund institution or futures trust enterprise within one year of said firm's procurement of the written approval of the TWSE, to become a participating dealer. A domestic securities firm having established a service agreement with an affiliate of a participating dealer of offshore ETF beneficial certificates in the same enterprise group and handling the relevant matters is also deemed a participating dealer of offshore ETF beneficial certificates.
A securities firm which acts as a participating dealer with the TWSE's permission or which has obtained the permission but has not signed the agreement shall desist from acting as a participating dealer if it has failed to comply with paragraph 1, subparagraph 1 for two consecutive months, and may not be reinstated until it has fulfilled the requirement governing the capital adequacy ratio or percentage accounted for by adjusted net capital in the total amount of customer margins required for the open positions of futures traders for three consecutive months and procured the approval of the TWSE.
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| Article 14 | If on a same day the amount of component securities portfolio of the underlying index of a securities investment trust ETF with domestic component securities purchased by a securities firm for its own account or on behalf of a single account, or the total amount of the aforementioned purchased securities plus that securities firm's original holdings and borrowings thereof and the amount of securities it purchased or acquired through in-kind redemption on the preceding day, meets the requirements for in-kind creation of that ETF beneficial certificate, and on that same day it sells the same quantity of that beneficial certificate; or if on a same day the amount of beneficial certificates of a securities investment trust ETF with domestic component securities that a securities firm purchases for its own account or on behalf of a single account, or the total amount of the aforementioned purchased certificates plus that securities firm's original holdings and borrowings thereof and beneficial certificates it purchased or acquired through in-kind creation on the preceding day, meets the requirements for in-kind redemption of the component securities portfolio of the underlying index of that ETF, and on that same day it sells the same quantity of those component securities portfolio of the underlying index of the ETF; then that securities firm's settlement, and subsequent related matters, shall be conducted according to the following provisions:
- 1. On the transaction date, the securities firm, via computer link, shall report to the TWSE and submit an application to postpone settlement.
- If the securities firm reports the sale of beneficial certificates, or component securities portfolio of the underlying index, of a securities investment trust ETF with domestic component securities, and applies for postponing settlement pursuant to the preceding subparagraph, after the TWSE has reviewed and approved the application it shall prepare a statement and transmit an electronic file thereof to the central securities depository to conduct the relevant operations accordingly. The provisions of Article 109 of the TWSE Operating Rules do not apply to the aforementioned operations.
- After the securities firm has completed settlement on the second business day after the transaction date for the component securities portfolio of the underlying index, or beneficial certificates, of a securities investment trust ETF with domestic component securities that it has purchased, and for any price payable for other purchases, the component portfolio securities or beneficial certificates receivable by it shall be transferred to serve as collateral for the postponed settlement, and the TWSE will notify the central securities depository to thereupon apply to the SITE for the in-kind creation of that beneficial certificate, or in-kind redemption of the component securities portfolio of the underlying index of the fund to unwind the position.
- If the component securities portfolio of the underlying index of a securities investment trust ETF with domestic component securities listed for trading on the GreTai Securities Market (GTSM) includes exchange-listed securities, after the TWSE receives notification from the GTSM regarding the portion of listed securities sold by the securities firm, the TWSE shall prepare a statement for that portion and transmit an electronic file thereof to the central securities depository pursuant to subparagraph 2.
When a securities firm conducts creation of leveraged or inverse securities investment trust ETF beneficial certificates in which the component securities of the underlying index are all domestic securities, for its own account or on behalf of its customers, after confirmation has been given by the securities investment trust enterprise, the beneficial certificates may be sold from the date of creation. When the component securities of the underlying index contain one or more foreign securities, after confirmation has been given by the securities investment trust enterprise, the beneficial certificates may be sold from the business day preceding the day when they are registered with the central securities depository.
When a securities firm conducts creation of ETF securities investment trust beneficial certificates for its own account or on behalf of its customers, and their component securities of the underlying index are all domestic securities, after confirmation has been given by the securities investment trust enterprise, the beneficial certificates may be sold on the day of creation. If their component securities of the underlying index contain one or more foreign securities, after confirmation has been given by the securities investment trust enterprise, the beneficial certificates may be sold on the business day before they are registered with the central securities depository.
When a securities firm carries out creation of ETF beneficial certificates for an offshore exchange-traded fund for its own account or on behalf of its customers, those ETF beneficial certificates may, subject to confirmation of the participating securities firm, be sold on the second business day after the creation.
When a securities firm conducts creation of original and leveraged and inverse ETF futures trust fund beneficial certificates for its own account or on behalf of its customers and their components of the underlying index are all domestic futures contracts, after confirmation has been given by the futures trust enterprise, the beneficial certificates may be sold on the business day following the creation. If their components of the underlying index contain one or more foreign futures contracts, after confirmation has been given by the futures trust enterprise, the beneficial certificates may be sold on the business day before they are registered with the central securities depository.
When ETF securities investment trust fund beneficial certificates, ETF futures trust fund beneficial certificates, leveraged and reverse ETF securities investment trust fund beneficial certificates, leveraged and reverse ETF futures trust fund beneficial certificates, and offshore ETF beneficial certificates are listed as alerted securities subject to advance collection of funds and securities, the positions for which the securities firm conducts creation for its own account (including liquidity providers) or on behalf of its customers shall not be sold after they are registered with the central securities depository in the same manner as how advance collection of funds and securities is handled for that underlying index.
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