| Title： |
Taiwan Stock Exchange Corporation Rules Governing Block Trading of Listed Securities(2007.06.27) |
| Date： |
|
Chapter 1 General Principles
|
| Article 1 | These Rules are adopted pursuant to Article 71 and Article 74 of the Operating Rules of the Taiwan Stock Exchange Corporation (TSEC). |
| Article 2 | A block trade may only be conducted as either a non-paired trade or a paired trade.
A block trade may not involve a margin purchase, short sale, or sale of borrowed securities.
The settlement date of a block trade may be either the transaction date or the second business day after the transaction date. |
| Article 3 | The volume, type, and dollar amount of a bid or ask quote placed by a securities firm shall comply with the following provisions:
1. A non-paired block trade of a single security shall be for 500 or more trading units of a listed security; where paired, it shall be for 1,000 or more trading units of a listed security.
2. A non-paired block trade of a basket of stocks shall be for five or more listed stocks, and the dollar amount shall be NT$15 million or more; where paired, it shall be for five or more listed stocks, and the dollar amount shall be NT$30 million or more.
Even where the criterion in subparagraph 1 of the preceding paragraph is not met, a non-paired trade of a single security may still be carried out if-- in the case of a bid or ask quote for a non-paired trade, the quote is for a total dollar amount of NT$15 million or more, or-- in the case of a bid or ask quote for a paired trade, the bid or ask quote is for a total dollar amount of NT$30 million or more. **??REFORMAT FOR READABILITY** |
| Article 4 | When a securities firm is engaged to provide an ask quote for a block trade of securities, it shall check that the number of shares in the investor's central depository account is at least equal to the amount required for settlement, and shall retain a record for future reference. |
Chapter 2 Non-paired trades
|
| Article 5 | Trading periods for non-paired trades, and the times for posting of permissible price ranges for bid and ask quotes, are as follows:
1. At 9:30 a.m. the TSEC will post the ranges of permissible price ranges for bid and ask quotes for any given security; from the time of that posting until 9:50 a.m. it will accept quotes from securities firms, and match and execute them one-by-one.
2. At 11:30 a.m. the TSEC will post the ranges of permissible price ranges for bid and ask quotes for any given security; from the time of that posting until 11:50 a.m. it will accept quotes from securities firms, and match and execute them one-by-one.
3. At 1:35 p.m. the TSEC will post the ranges of permissible price ranges for bid and ask quotes for any given security; from the time of that posting until 1:50 p.m. it will accept quotes from securities firms, and match and execute them one-by-one; provided, that the TSEC may postpone the posting time for the trading period of this subparagraph or declare a halt in the acceptance of trading orders from securities firms, based on the circumstances at the close of that day's market trading hours (i.e. the market trading hours 9 a.m. to 1:30 p.m. as provided under Article 3 of the TSEC Operating Rules).
The permissible price range for bid and ask quotes placed under the preceding paragraph is limited to 3.5 percent around the reference price; provided, that during the trading periods specified in subparagraphs 1 and 2 of the preceding paragraph, the price ranges obtained by the aforementioned method may not exceed the daily fluctuation limits, as specified in Article 63 of the TSEC Operating Rules, for market trading hours on the current day.
The reference price referred to in the preceding paragraph is determined by the following principles:
1. During the trading periods specified in subparagraphs 1 and 2 of paragraph 1, the reference price is the average of the prices for the highest unexecuted bid quote and lowest unexecuted ask quote for the latest trading during current trading day as of the time of announcement, as posted under Article 58 of the TSEC Operating Rules; provided, that when the prices posted are exclusively bids or asks, the reference price is the highest posted bid or lowest posted ask; when there is no posted bid or ask, the reference price is the latest transaction price during the current trading session; if there has not yet been a transaction during the current trading session, then the reference price is the auction reference price at market opening of the current trading session.
2. During the trading period set forth in paragraph 1, subparagraph 3, the reference price is the closing price for the market trading hours of the current day. If there is no closing price for the current trading session, the reference price is the auction reference price at market opening of the current trading session.
The "auction reference price at market opening of the current trading session" of the preceding paragraph is set either through subject mutatis mutandis application of the provisions of Article 58-3, paragraph 1, subparagraph 3 of the TSEC Operating Rules, or in accordance with the provisions of Article 59-1 and Article 67-1 of those same Operating Rules.
A quote for a non-paired trade is valid only for the trading period in which it is placed, and may be cancelled at any time prior to execution.
Placement of quotes for non-paired trades will be temporarily suspended on an ex-dividend or ex-rights date and the next business day thereafter, and on trading days on which no price fluctuation limit is imposed under Article 63, paragraph 2 of the TSEC Operating Rules. |
| Article 6 | The provisions of Article 28-1 of the TSEC Operating Rules apply to the total dollar amount of quotes for non-paired trades placed by a securities firm on a given day for settlement on the second business day after the transaction date; provided, that this restriction does not apply to the total dollar amount of quotes for non-paired trades placed by a securities firm for settlement on the transaction date.
Where a securities firm quotes non-paired trades for settlement on the transaction date, the TSEC may, as it deems necessary, notify the securities firm to post a deposit with the TSEC equal to 50 percent of the combined dollar amount of all bid and ask quotes for block trades to be settled on the transaction date, and accept the quotes only after such deposit is collected in full. |
| Article 7 | When a securities broker is engaged to provide a bid or ask quote for a non-paired trade, except where advance collection of funds or securities is otherwise required, the broker may pre-collect an appropriate portion or a fixed percentage of such funds or securities from the principal as circumstances merit. |
| Article 8 | A quote for a non-paired block trade of a single security will be matched against quotes with the same settlement date. Matching priority and execution price for individually placed bid quotes or ask quotes are handled according to the following principles:
1. If the current bid quote is priced at or above the lowest previously placed ask quote, it will be matched and executed against individual asks sequentially from lowest to highest; if multiple ask prices are identical they will be matched and executed sequentially by time priority until the current bid quote is completely satisfied or the price of the current bid quote is lower than the prices of unexecuted ask quotes.
2. If the current ask quote is priced at or below the lowest previously placed bid quote, it will be matched and executed against individual bids sequentially from highest to lowest; if multiple bid prices are identical they will be matched and executed sequentially by time priority until the current ask quote is completely satisfied or the price of the current ask quote is higher than the prices of unexecuted bid quotes.
The current bid (or ask) quote for a non-paired block trade of a basket of stocks will be matched and executed against previously placed ask (or bid) quotes in order of time priority, on the condition that the settlement date, stock codes, unit prices, and volumes of the current bid (or ask) quote must all be identical to those of the previously placed ask (or bid) quotes;. |
| Article 9 | During each of the trading periods specified in Article 5, paragraph 1, the TSEC will post real-time information on unexecuted quotes for non-paired trades.
Transaction information regarding non-paired trades will be publicly announced in real time through a system for the posting of trading information. |
Chapter 3 Paired trades
|
| Article 10 | The trading periods for paired trades are from 9:30 a.m. to 9:50 a.m., 11:30 a.m. to 11:50 a.m., and 1:35 p.m. to 5 p.m.
A quote for a paired trade is valid during all trading periods that same day and, prior to execution, the original quote for a current paired trade may be canceled during any trading period; provided, that a quote for settlement on the transaction date is only valid until 1:50 p.m. that same day. |
| Article 11 | The permissible price range for a quote on a paired trade is restricted to 3.5 percent around the auction reference price at market opening of the current trading session.
The "auction reference price at market opening of the current trading session" of the preceding paragraph is set either through mutatis mutandis application of the provisions of Article 58-3, paragraph 1, subparagraph 3 of the TSEC Operating Rules, or in accordance with the provisions of Article 59-1 and Article 67-1 of those same Operating Rules. |
| Article 12 | Placement of quotes for paired trades will be temporarily suspended on an ex-dividend or ex-rights date and the next business day thereafter, and on trading days on which no price fluctuation limit is imposed under Article 63, paragraph 2 of the TSEC Operating Rules. |
| Article 13 | The provisions of Article 28-1 of the TSEC Operating Rules apply to the total dollar amount of quotes for paired trades placed by a securities firm on a given day for settlement on the second business day after the transaction date; provided, that this restriction does not apply to the total dollar amount of quotes for paired trades placed by a securities firm for settlement on the transaction date.
Where a securities firm quotes paired trades for settlement on the transaction date, the TSEC may, as it deems necessary, notify the securities firm to post a deposit with the TSEC equal to 50 percent of the combined dollar amount of all bid and ask quotes for block trades to be settled on the transaction date, and accept the quotes only after such deposit is collected in full.
Where the post-netting transaction amount of a single paired trade quoted by a securities firm on a given day is zero, such a transaction will not be included in the dollar amount calculations of the preceding two paragraphs. |
| Article 14 | When a securities broker is engaged to provide a bid or ask quote for a paired trade, except where advance collection of funds or securities is otherwise required, the broker may pre-collect an appropriate portion or a fixed percentage of such funds or securities from the principal as circumstances merit. |
| Article 15 | When it places a bid or ask quote for a paired trade, a securities firm shall do so in accordance with the following provisions (the quote for the paired trade will not be matched and executed unless the settlement dates, ticker codes, unit prices, and volumes of the subject securities of the paired trade match up correctly and the TSEC has checked and found the quote to be in compliance with block trading requirements):
1. When both the bid and ask quotes for the same paired trade are placed by a single securities firm, the firm shall first submit a quote indicating the group code, settlement date, securities firm code, ticker code(s), unit price(s), a listing of purchases and sales, and total volume of the paired trade, and thereafter submit the order ticket number, account number of the principal (or dealer), and trading order volume.
2. When either bid or ask quotes for the same paired trade are placed by different securities firms, the group code, settlement date, code for each securities firm, ticker code(s), unit price(s), a listing of purchases and sales, and the total trade volume shall first be provided in a quote placed by one of the ask-side securities firms acting as representative for the other(s). The ask-side representative and each of the other securities firms participating in the paired trade shall then each separately provide an order ticket number, their principal (or dealer) account number, and trading order volume.
Where a block trade of a basket of stocks is conducted as a paired trade, only one principal's account number (or dealer's account number) will be provided for the bid and ask quotes, respectively, and the settlement date, stock codes, unit prices, and volumes must match up. Matching and execution based on the current pair as quoted will not be carried out until the quote has been checked by the TSEC and found to be in compliance with block trading requirements. |
| Article 16 | Transaction information regarding paired trades will be publicly announced in real time through a system for the posting of trading information. |
Chapter 4 Clearing and Settlement
|
| Article 17 | An individual settlement calculation statement shall be prepared for each block trade to be settled on the transaction date. On the transaction date of the balance recorded in the settlement calculation statement, the securities firm shall conduct settlement after netting of receivables and deliverables.
The "settlement calculation statement" of the preceding paragraph is for use with non-paired and paired block trades settled on the transaction date.
Where a block trade is settled on the second business day after the transaction date, settlement prices and securities that are receivable or deliverable will be settled together with any other trades for settlement on the second business day after the transaction date. |
| Article 18 | Where a block trade is settled on the transaction date, settlement prices and securities that are receivable or deliverable will be settled in accordance with the following provisions:
1. A securities firm required to pay a settlement price shall remit the amount payable by 2:30 pm into the bank account designated by the TSEC. Where a securities firm is required to deliver securities, the TSEC will notify the central securities depository to carry out book-entry transfer procedures.
2. For a securities firm to which a settlement price is owed, the TSEC will notify the designated bank after 2:30 pm to remit the amount into its account; for a securities firm to which securities are owed, after the payable settlement price referred to in the preceding subparagraph has been paid and the TSEC has checked and verified completion thereof, the TSEC will notify the central securities depository to carry out book-entry transfer procedures.
If a seller's securities firm is unable to complete settlement obligations because of default by the seller, an out-trade, or some other legitimate reason, after it files a report, the TSEC will produce a statement and electronic file and transmit them to the central securities depository to carry out related procedures. The seller's securities firm shall calculate collateral in an amount equal to 120 percent of the amount obtained by multiplying the closing price of those securities on the transaction date by the volume reported; the collateral shall be incorporated into the calculation of the given day's settlement prices receivable or deliverable for block trading to be settled on the transaction date, and settlement shall be performed on a netting basis in accordance with paragraph 1.
If a securities firm fails to perform settlement in accordance with paragraph 1, subparagraph 1, the TSEC will impose a delinquency penalty of NT$30,000 for a delay of an hour or less, and an additional NT$10,000 for each additional hour's delay.
Failure by a securities firm to perform settlement by the prescribed time will be deemed default on settlement obligations, but this does not apply where settlement is completed within banking hours on the current day. |
Chapter 5 Supplementary Provisions |
| Article 19 | Prices of securities quoted and transacted under these Rules will not be taken as opening or closing prices for the trading day, nor will they be taken as the basis for recording market highs or lows. |
| Article 20 | The handling of matters on which these Rules are silent shall be subject mutatis mutandis to the relevant rules of the TSEC. |
| Article 21 | These Rules, and any amendments hereto, will be publicly announced and implemented after approval by the competent authority. |