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Title:

Regulations Governing Book-Entry Operations for Centrally Deposited Securities  CH

Amended Date: 2021.03.29 
   CHAPTER IV THE BOOK-ENTRY OF SECURITIES
Article 27    Unless provided otherwise, customers, while making book-entry settlement of deposited securities, shall present the passbook as well as the specimen chop/signature for settlement confirmation. The said participant shall then make necessary record entries on each relevant customer's passbook and account book and notify the CSDE of the total amount of securities which the customers are required to deliver to the participant in the transaction.
    The CSDE shall, upon receiving notification from the participant, immediately make book-entry transfer of the said securities from the "sub-account of customers" to the "sub-account pending settlement" on such participant's account book.
Article 28    Where a customer in the name of the participant directly deposits with a CSDE securities that the customer has consigned to purchase and is entitled to receive, upon completion of the relevant settlement procedures, the participant shall record on the customer's passbook information regarding the types and quantities of securities and other necessary matters, and shall notify the CSDE of the total amount of securities required to be transferred to customers.
    After the CSDE has received the said notification from the participant and the said purchased securities have been transferred to the participant's account, the CSDE shall transfer such securities from the "sub-account pending settlement" to the "sub-account of the customers" on the participant's account book and notify such participant.
Article 29    While a participant is conducting the settlement for centralized securities which will be delivered by securities firms and securities finance enterprises to the Taiwan Stock exchange or the TPEx, a CSDE shall, in accordance with the "Calculation Table for Settlement" or the "Calculation Table for Delivery," transfer the said securities from the "sub-account pending settlement" on the relevant participants' account books to the accounts of the TWSE or of the TPEx within the prescribed time period for settlement. Where the balance in the account of a securities firm or securities finance enterprise is insufficient for settlement, the CSDE shall nevertheless transfer the existing balance to the account of the TWSE or of the TPEx, and notify the TWSE or the TPEx to take appropriate action on the matter.
    For the securities to be delivered by the TWSE or the TPEx to securities firms or securities finance enterprises, the CSDE shall, in accordance with the notification of the TWSE or the TPEx, transfer the said securities to the accounts of securities firms or securities finance enterprises.
    When a participant is conducting balance settlement for emerging stock or open-end fund beneficial certificate transactions, for stocks or open-end fund beneficial certificates that shall be delivered by securities firms to a CSDE, the CSDE shall, in accordance with the "Calculation Table for Delivery," transfer the stocks or open-end fund beneficial certificates from the "sub-account pending settlement" on the relevant participants' account books to the account of the CSDE. For stocks or open-end fund beneficial certificates that shall be received by a securities firm from the CSDE, the CSDE shall transfer the stocks or open-end fund beneficial certificates from its account to the account of the securities firm.
    When participants conduct real-time gross settlement of emerging stock or open-end fund beneficial certificate transactions, the CSDE shall, after receiving notice from both participants, transfer the stock or open-end fund beneficial certificates from the selling participant's CSDE account into the buying participant's CSDE account, and shall notify the participants to make the necessary entries into their customer’s account books.
    For a stock that is registered on the Pioneer Stock Board and traded over-the-counter, centralized settlement shall be performed in accordance with paragraphs 1 and 2, and the preceding two paragraphs shall not apply.
Article 29-1    When a transfer of securities by a customer, other than on a centralized securities exchange market or an over-the-counter market, is carried out by book-entry transfer, the customer shall submit the transfer information and relevant documentation to the participant along with its request to handle the transfer, in accordance with the provisions of the Criteria Governing Handling of Stock Affairs by Public Stock Companies. The participant shall notify the CSDE by keying into the computer information regarding the securities that should be transferred and delivered from the customer to the transferee, and shall make the necessary entries in the customer’s account books.
     When the application for transfer of securities under the preceding paragraph is one for transfer of bonds, beneficial securities, or asset-backed securities and not of a private placement nature, the application shall be reviewed and confirmed by the participant; with respect to applications for transfer of other securities, the participant shall submit the transfer information and relevant documentation to the CSDE, and the CSDE shall forward the information and documentation to the issuer for review and confirmation.
     Once the securities to be transferred by application have been reviewed and verified as correct by the participant or issuer, the CSDE shall transfer such securities from the "sub-account pending settlement" on the transferor's participant account book to the "sub-account of the customers" on the transferee's participant account book.
    The provisions of paragraph 1, the latter part of paragraph 2, and the preceding paragraph shall apply mutatis mutandis to transfers of securities by participants other than on a centralized securities exchange market or an over-the-counter market, with the exception of transfers of bonds, beneficial securities, and asset-backed securities that moreover are not of private placement nature, which transfers shall be reviewed and confirmed by the CSDE.
Article 30    Where a customer requests to transfer the balance of securities from the customer's account with one participant to the customer's account with another participant, or transfer it to another person's account under the provisions of any act or regulation, the customer shall submit the account passbook and an account transfer application to the former participant and such participant shall notify the CSDE to transfer the balance to the customer's account with the new participant; provided, this shall not apply where there are other regulatory restrictions regarding the securities for which the application for transfer is made.
    The CSDE shall, after making account transfer in accordance with the notification as referred to in the preceding paragraph, record the transaction immediately in the relevant participants' account books, and notify such participants to record necessary information in the customer's account books.
    Where an account transfer referred to in paragraph 1 satisfies any of the following conditions, it is not necessary to submit the account passbook and transfer application to the participant:
  1. Where, for securities sold through short sale, a customer requests to make an account transfer to settle the short sale with spot securities.
  2. Where a customer requests to make an account transfer of collateral for money borrowing in connection with securities business.
  3. Where, in accordance with CSDE provisions for termination of book registration of securities and their replacement with physical securities, a customer requests to make an account transfer to withdraw the balance of securities from the customer's accounts.
  4. Where, in compliance with the applicable requirements of the TPEx, a customer requests to make an account transfer to trade international bonds by means of negotiated transaction at a securities firm's place of business.
  5. Where a customer requests to make an account transfer to provide securities as collateral for short sales, or to cover shortfalls in margin for margin purchases and short sales.
  6. As otherwise provided by an act or regulation or approved by the FSC.
Article 30-1    While making book-entry delivery of pledged securities in centralized custody, a customer shall present the passbook and affix its specimen chop or signature on the relevant accounts for the book-entry delivery confirmation. The relevant participant shall then record necessary information on the customer's passbook and account book and notify the CSDE of the amount of securities which the customer is required to deliver to the relevant pledgee.
    The CSDE shall, upon receiving the said notification from the said participant, transfer the securities from the "sub-account of the customer" on the pledgor's participant account book to the "sub-account of pledged securities" on the pledgee's participant account book.
    Where a participant makes book-entry delivery of its own deposited securities for the purpose of a pledge, the participant shall notify the CSDE to transfer the same amount of securities from the "sub-account of participant's self-owned securities" to the "sub-account of pledged securities" on the pledgee's participant account book.
Article 30-2    Where the pledge created by the deposited securities by book-entry delivery is discharged, the participant representing the pledgee shall notify the CSDE to transfer the pledged securities from the "sub-account of pledged securities" on such participant's account book to the "sub-account of the customer" or the "participant's self-owned securities sub-account" on the pledgor's participant account book. The participant of said pledgor shall also make necessary records entries on the customer’s account book.
Article 30-3    Where the rights of a pledgee over deposited securities are enforced by the court in accordance with compulsory execution procedures, the CSDE shall transfer the pledged securities from the "sub-account of pledged securities" on the pledgee's participant account book to the account designated by the court for auction or make physical delivery of the securities to the court-designated person.
    Where the pledge of deposited securities is enforced by the pledgee's withdrawal of securities or by the pledgee's self conducted auction, the CSDE shall, upon receiving notification from the pledgee's participant, transfer the securities from the "sub-account of pledged securities" on such participant's account book or make book-entry transfer in accordance with the result of auction.
Article 30-4    Where the pledgee enforces its rights by acquiring the ownership of pledged securities, the CSDE shall, in accordance with the notice of the pledgee's participant, transfer the securities from the "sub-account of pledged securities" to the "sub-account of participant's self-owned securities" or the "sub-account of the customer" on the pledgee's participant account book. The participant shall record necessary information on the customer's account book.
Article 30-5    An issuer that delivers securities by means of book-entry transfer shall compile in a computer medium a list of the names of the securities to be delivered by book-entry transfer, and deliver it to the CSDE before the date of the book-entry transfer delivery, accompanied by the relevant certification for the securities of that issue.
    On the transfer date, the CSDE shall transfer the securities into the customer's account with the participant in accordance with the content of the computerized list of the names of the securities to be delivered by book-entry transfer as referred to in the preceding paragraph. If the securities owner has not opened an account with the participant, the securities delivered by book-entry transfer shall be recorded in the "entry sub-account" of the CSDE's issuer account book.
    After carrying out delivery by book-entry transfer in accordance with the preceding paragraph, the CSDE shall make the necessary entries in the participant's account book, and notify each participant. Each participant shall then make the necessary entries in their customer’s account books.
    A securities owner referred to paragraph 2 shall first open an account with the participant and carry out transfer of the securities to its account in accordance with CSDE rules prior to carrying out any book-entry transfer procedures for the withdrawal, sale, or pledge of such securities.
Article 30-6    While filing for trust registration of securities in centralized custody, a customer shall present the passbook, relevant certifications issued by tax authorities, and trust agreement, will, or relevant documents corroborating the existence of the trust relation. The relevant participant shall, upon confirmation of such documents, then make necessary records on its passbook and on the customer's account book and issue a notification to the CSDE.
    The CSDE shall, upon receiving the notification from the participant, transfer the securities from the "sub-account of the customer" on the settlor's participant account book to the "participant's self-owned securities sub-account" or "sub-account of the customer" on the trustee's participant account book, and make records of the trust subject matter accordingly.
Article 30-7    The records of trust relations on the CSDE's participant account book or on the participant's customer account book or passbook shall be deemed as "other documents evidencing the rights thereof" under Article 4, paragraph 2 of the Trust Act or Article 20, paragraph 2 of the Trust Enterprise Act.
Article 30-8    When securities held in centralized custody are made the object of a trust, and when trust gains therefrom are distributed or the trust relationship is declared unviable, invalidated, voided, rescinded, revoked, amended, or terminated, the participant on the trustee's part shall, annexing relevant certifications, notify the CSDE to transfer the securities from the "participant's self-owned securities sub-account" or "sub-account of the customer" on the participant account book to the "sub-account of the customer" or the "participant's self-owned securities sub-account" on the participant account book of the beneficiary, settlor, or entity designated by the trustee or by the competent authority in charge of the trust industry. The participant on the part of the beneficiary, settlor, or entity designated by the trustee or by the competent authority in charge of the trust industry shall also make necessary records on the customer’s account books.