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Operational Rules Governing Day Trades of Securities  CH

Amended Date: 2016.02.01 
Categories: Securities Exchange Market > Trading > Securities Transaction
   Chapter I General Principles
Article 1     For the purposes of these Rules, day trading of securities shall mean trading, by the normal settlement method, in which, by agreement of the principal and the securities firm, with respect to a TWSE (or GTSM) listed security designated by the competent authority, after a buy order or sell order for the security is executed on the cash (spot) market, an equal quantity of the security is offset through the same brokerage account on the same day, and the settlement of funds is conducted based on the price difference after the offsetting of the opposite trades.
    If a TWSE (or GTSM) listed security that is eligible for day trading has been publicly announced by the TWSE or the GTSM under relevant bylaws or rules as being placed under an altered trading method or under dispositive measures, the security may not be an object of a day trade.
    Day trades of securities are limited to day trades between trades executed in normal trading before market close, and to day trades between a buy or sell trade executed in normal trading before market close and an opposite offsetting trade executed in after-hours fixed-price trading.
    These Rules do not apply to odd-lot trades, block trades, trades conducted under Article 74 of the TWSE Operating Rules, and trades conducted through over-the-counter price negotiation under Article 32-1, and trades under Article 39, of the GreTai Securities Market Rules Governing Securities Trading on the GTSM.
Article 2    A principal applying to conduct day trades of securities shall have opened a brokerage account for three full months and shall have had at least 10 trading orders executed within the most recent one year, provided that these restrictions do not apply to those that have opened a margin account or to professional institutional investors.
    A principal shall first sign a general authorization agreement with the securities broker, stipulating the matters specified in Article 1, paragraph 1, and, unless a professional institutional investor, shall sign a risk disclosure statement before the securities broker may accept the principal's orders for day trades.
    If a principal has signed a general authorization agreement, and on the day of a trade does not wish to offset the trade in day trading, the principal shall, before market close, make a statement to the securities broker. The securities broker shall confirm the statement and keep a record.
    The risk disclosure statement and general authorization agreement under the preceding paragraphs shall be publicly announced by the TWSE.
    Professional institutional investors under paragraphs 1 and 2 shall mean domestic and foreign banks, insurance companies, bills finance companies, securities firms, fund management companies, government investment institutions, government funds, pension funds, mutual funds, unit trusts, securities investment trust enterprises, securities investment consulting enterprises, trust enterprises, futures commission merchants, futures service enterprises, and other institutions approved by the competent authority.
    A securities broker shall input into the computer systems designated by the TWSE and the GTSM the list of names of principals that may conduct day trades. If there is any change, an adjustment shall be made immediately.
    A principal may not use an omnibus trading account to engage in day trades of securities. Trades conducted after trade allocation of an omnibus trading account, and trades for which the account number is corrected after trade allocation, may not be offset as day trades.
Article 3    The monetary amount of a principal's initial buy and sell orders executed in day trading shall be included in the calculation toward the single-day trading limit. However, the monetary amounts of the opposite offsetting orders executed in day trading shall not be included in the calculation toward the single-day trading limit. Trading limit amounts may not be credited back for revolving use on the same day after being offset in day trading.
    If the securities broker, pursuant to relevant regulations, does not establish a single-day trading limit for the principal, and the principal engages in day trades, it shall separately establish a limit for day trades. The total sum of sell orders for day trades may not exceed the day trading limit. The monetary amount of buy orders and the monetary amount of canceled sell orders need not be included in the calculation toward the day trading limit. After a limit amount has been offset, it may not be credited back for revolving use on the same day.
    The monetary amount of day-trading sell orders by a principal under the preceding paragraph during after-hours fixed-price trading shall be included in the calculation toward the day trading limit, but the monetary amount of unexecuted day-trading sell orders during normal trading hours is not included in the calculation toward the daily limit.