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Taiwan Stock Exchange Corporation Rules Governing Auction of Listed Securities by Consignment(2009.06.09) |
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Article 1
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Except as otherwise provided by law, when Taiwan Stock Exchange Corporation (TWSE) accepts applications from securities firms for auctions of listed securities pursuant to Article 74 of the Operating Rules of the Taiwan Stock Exchange Corporation (hereinafter referred to as the "Operating Rules"), the auctions shall be conducted in accordance with these Regulations.
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Article 2
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Consignment or application to auction listed securities under these Regulations shall proceed as follows:
1. Where a securities broker applies to the TWSE for auction of securities on behalf of a principal (below, "auction principal"), the securities broker (below, "applicant securities broker") shall fill out an application form.
2. Where a securities dealer applies to have securities it holds auctioned by the TWSE, the securities dealer shall fill out an application form.
Where the government disposes of government-held securities by auction Subparagraph 1 of the preceding paragraph shall apply mutatis mutandis.
After consignments or applications in Paragraph 1 are agreed to or acknowledged by the TWSE, the TWSE shall publicly announce the auction requirements three days prior to the auction date.
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Article 3
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Bids shall be submitted between 3:00 and 4:00 PM; transactions shall be completed on the day of the bid, provided that when an auction principal entrusts a securities broker to apply to the TWSE to auction securities, while the listed company whose securities are being auctioned is at the same time participating in the issuance of overseas depositary receipts by a depositary institution in which the underlying securities are those held by the auction principal, auction transactions shall be completed on the first business day after the day of the bid.
Securities auctions on the TWSE's Exchange shall be conducted via automated computer systems. Bidding is limited to securities firms using this Exchange.
Securities brokers who submit bids shall do so on behalf of their consignment principals, provided they may not accept bidding consignments from auction principals. The consignment particulars shall comply with the Criteria Governing Consignment Contracts of Securities Brokers. The execution of a new account contract is also required.
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Article 4
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Except as otherwise announced by the TWSE, participating securities firms shall submit bids via computers or terminals connected to the TWSE's computer systems.
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Article 5
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When securities are auctioned pursuant to these Regulations, the TWSE may, after obtaining the consent of the applicant securities firms, announce the auction base price in its Market Information System at the time when auction begins or when bidding has been closed. When application is made for auction of securities in accordance with the proviso of Paragraph 1, Article 3, however, the time of announcement of the auction base price may be separately decided through consultation between the applicant securities firm and the TWSE.
Except for the release of state-owned shares, the base price as referred to in the preceding paragraph shall be limited to within fifteen percent upward or downward of the closing price of the business day preceding the auction day. For securities on which no price fluctuation limit is imposed, however, the base price may be limited to fifteen percent upward or downward of the closing price on the day of the auction, and publicly announced by the TWSE pursuant to notification as provided in Article 2, subparagraph 3.
If the base price is announced at the auction venue by the applicant securities broker, the TWSE shall be informed of the price by sealed letter.
The auction base price and the auction bids shall be expressed on a per-unit basis (call (put) warrant units, units of beneficial interest, and depository receipt units shall each be referred to as a "unit").
Securities firms may cancel or change the volume and price of their quotes during the bidding period. Application for cancellation or change shall be conducted via computers or terminals connected to the TWSE's computers.
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Article 6
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The volume of securities auctioned pursuant to these Regulations shall not be less than two million shares (units). However, Auctions of state-owned shares shall not be subject to this restriction.
Except as otherwise provided by announcement, securities auctioned in accordance with these Regulations shall be auctioned in lots equivalent to the security's trading unit and multiples thereof. Non-standard bids shall be disqualified.
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Article 7
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Auction principals shall choose from one of the following methods as the basis of the cut-off price, and shall notify the TWSE for announcement pursuant to Paragraph 3, Article 2:
1. Where bidding securities firms enter bids that are higher than the announced auction base price, the cut-off price shall be the lowest bid at which all of the auctioned shares can be sold. The entire volume of all bids higher than the cut-off price shall be transacted at the cut-off price. If the volume of bids at the cut-off price cannot be satisfied in full, the bids shall be satisfied according to the ratio of the bid volumes until no whole lot remains. If there is a remainder, it shall be allotted in the order of a computer-generated random sequence, with only one lot allotted to each consignment. However, when the volume of bids above the auction base price falls short of the auctioned volume, all bids above the auction base price shall be transacted at the lowest bid above the auction base price.
2. Where bidding securities firms enter bids that are equal to or greater than the announced auction base price, their bids shall be transacted pursuant to Article 9 if the bid volumes are less than the volume announced by the TWSE.
3. Where bidding securities firms enter bids that are higher than the announced auction base price, the entire volume of all bids higher than the base price shall be transacted at the base price when the volume is within that announced by the TWSE. When the total volume of bids above the base price exceeds the volume announced by the TWSE, the bids shall be satisfied according to the ratio of the bid volumes until no whole lot remains. If there is a remainder, it shall be allotted in the order of a computer-generated random sequence, with only one lot allotted to each consignment.
Where an auction principal is an entity releasing state-owned shares and there are special circumstances under which it cannot use the methods described in the preceding paragraph, that principal may propose an alternative auction method,which will be announced subject to approval by the competent authority.
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Article 8
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With respect to securities auctioned pursuant to Subparagraph 2, Paragraph 1 and Paragraph 3 of Article 7, if bids submitted by bidding securities firms are lower than the announced auction base price or the total transacted volume is less than the announced allotment, the TWSE shall announce an alternative procedure along with the base price after consulting with the applicant securities firms.
When application is made for auction of securities in accordance with the proviso of Paragraph 1, Article 3, the applicant securities firm may, after obtaining the consent of the auction principal, notify the TWSE to disclose, at any appropriate time after the bidding has been closed on the day of the auction, the total volume of bids above a specified price.
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Article 9
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Securities auctioned pursuant to Subparagraph 2, Paragraph 1 of Article 7 shall be traded in the following order and in the descending order of received purchase consignment bids:
1. Higher bids shall be transacted first.
2. Where bids are quoted at the same price, they shall be satisfied according to the ratio of the bid volumes until no whole lot remains. If there is a remainder, it shall be allotted in the order of a computer-generated random sequence, with only one lot being allotted to each consignment.
If the total volume traded in the order assigned by the preceding paragraph is less than the announced auction allotment, the TWSE shall consult with the auctioning securities firms regarding an alternative procedure.
Bids submitted by auction principals, or those that are lower than the announced base price, or those that cannot be satisfied in accordance with the first paragraph, shall be invalidated.
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Article 10
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Successful trades shall be settled in accordance with normal settlement procedures.
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Article 11
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The TWSE shall, as it deems necessary, require securities firms that auction securities or bid in securities auctions to submit margins based on the volume of securities auctioned or bid for. The submission procedures shall be announced together with the auction requirements.
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Article 12
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The TWSE shall, as it deem necessary, prescribe the purchase volume of securities auctioned under these Regulations.
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Article 13
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When accepting auction consignments, securities firms may solicit a brokerage commission from the principals.
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Article 14
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When the TWSE auctions securities pursuant to these Regulations, it shall collect a handling fee of one thousandth of the total amount of the successful transactions from the applicant securities firms.
Where handling fees have been paid by applicant securities firms in accordance with the preceding paragraph, the TWSE shall not add the volume of securities traded in the auction to total volume of securities traded by the securities firm in that month, nor shall the TWSE impose handling fee.
Where the auction handling fee in Paragraph 1 does not exceed NT$1,500 or the cut-off price cannot be decided because bids fall short of the base price, the TWSE shall charge a handling fee of NT$1,500. Applicant securities firms to auction may ask the auction principal to bear the shortfall.
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Article 15
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When the TWSE auctions listed securities pursuant to these Regulations, it may suspend open bidding for the auctioned securities during auction period (except for those tendered by Securities Finance Enterprises to effect settlement or return securities). The volume of auction consignments shall not be subject to the restrictions imposed on regular transaction consignments. The auction transaction price shall not be subject to the fluctuation restrictions imposed on regular transactions. With due consideration, the TWSE may also decide not to set the auction transaction price as the opening or closing price that day. The volume of securities transacted may also be calculated independently of regular transactions.
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Article 16
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Where these Regulations are silent, the TWSE's Articles of Incorporation and Operating rules shall govern.
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Article 17
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These Regulations shall be promulgated after approval by the competent authority. The same shall apply to any amendment.
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