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1
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These Procedures and Specific Standards are adopted pursuant to Article 2, paragraphs 5 and 12, and Article 3 of the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale.
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2
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With the exception of Taipei Exchange (TPEx) listed managed stocks and stocks registered on the Emerging Stock Board, all TPEx listed common stock shares satisfying the criteria below are eligible for margin purchase and short sale on the TPEx.
- Having been listed for trading on the TPEx for at least six months.
- Having maintained net worth per share of at least par value; or having no accumulated losses in the latest financial year if it is a primary TPEx listed company whose shares have no par value or a par value other than NT$10 per share.
- Having been incorporated and registered for at least 3 years. If the issuer is a transferee company of a demerger from a TWSE or GTSM listed company, the time of incorporation may be calculated from the time of establishment of the demerged division as shown in the financial data of the demerged parent company. If the issuer is an investment holding company or financial holding company, the time of incorporation may be calculated from the time of incorporation of its operating entity.
- Having accumulated paid-up capital of NT$300 million or more; or having net worth of NT$600 million or more if it is a primary TPEx listed company whose shares have no par value or a par value other than NT$10 per share.
- Profitability:
- Having had no accumulated losses, and had operating profit and net income before tax totaling 3% or more of paid-up capital on a standalone or consolidated basis, in the latest financial year;
- or, if it is a primary TPEx listed company whose shares have no par value or a par value other than NT$10 per share, had operating profit and net income before tax totaling 3% or more of shareholders' equity on a standalone or consolidated basis.
- Have none of the circumstances described below:
- Excessively intense share price volatility.
- Excessively concentrated equity ownership.
- Excessively irregular changes in trade volume.
The term "net worth" as used in this point means the balance sheet equity attributable to shareholders of the parent company.
Beneficial certificates of exchange-traded funds shall be announced by the TPEx as eligible for margin purchase and short sale from the day they begin to be traded on the TPEx.
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3
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Except as provided in in Point 6, the assessment date under these Procedures and Specific Standards shall be the date on which the TPEx trading of a subject security reaches 6 full months. If the assessment date falls on a non-business day, it is moved to the next business day.
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4
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The financial data referred in Point 2, paragraph 1 shall be based on the financial statements for the most recent period as publicly announced following auditing and attestation or review by a CPA.
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5
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Whether TPEx listed securities have any of the circumstances described in Point 2, paragraph 1, subparagraph 6, shall be determined according to the specific determination standards specified in Point 7 as at the assessment date.
To assess whether a TPEx listed companies has excessively concentrated equity ownership as referred to in Point 2, paragraph 1, subparagraph 6, the TPEx will require the company to submit equity ownership related information as at the assessment date.
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6
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For shares that are deemed ineligible for margin purchase and short sale on the TPEx after six months of TPEx listed trading, the TPEx will conduct follow-up assessments at regular intervals in accordance with these Procedures and Specific Standards.
The regular interval mentioned in the preceding paragraph refers to monthly assessments; the assessment date shall be the last business day of each month.
If a TPEx listed company is deemed to have excessively concentrated equity ownership as referred to in Point 2, paragraph 1, subparagraph 6, the TPEx may proceed with a follow-up assessment at any time once the company gives notice that it has rectified its excessively concentrated equity ownership, and the TPEx will not be restricted by the regular interval in this regard.
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7
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The circumstance referred to in Point 2, paragraph 1, subparagraph 6 shall be assessed by the following specific determination standards:
- Timeframe of assessment:
Changes during the 90 business days preceding the assessment date ("the Timeframe") are the basis for calculation.
- Sampled range:
With the exception of Taipei Exchange (TPEx) listed managed stocks and stocks registered on the Emerging Stock Board, all TPEx listed common stock shares and exchange-traded fund beneficial certificates are the sampled securities.
- Determination standards:
- Excessively intense price volatility is defined as any one of the following. If there are no securities of industry peers listed on the TPEx, comparisons may be made to securities of industry peers listed on the TWSE. If there are no securities of industry peers listed on the TWSE, the industry peer assessment standard shall be deemed inapplicable to the company under assessment:
- The daily price movement (absolute value) of the security averaged over the Timeframe reaches the daily movement of the sampled securities averaged over the same period plus two or more standard deviations, and exceeds 150% of the daily movement of securities of industry peers averaged over the same period.
- The spread-to-average ratio (the ratio of the difference between the highest and the lowest price over the Timeframe to the average price for the Timeframe) of the security reaches the spread-to-average ratio of each sampled security for the same period plus two or more standard deviations, and exceeds 150% of the spread-to-average ratio of the securities of industry peers for the same period.
- Any other circumstances that may be deemed excessively intense price volatility.
- Excessively irregular change in trade volume is defined as any one of the following:
- The turnover rate of the security is 10 or more times the average turnover rate for the sampled securities over the Timeframe.
- The turnover rate of the security is less than 10% of the average turnover rate of the sampled securities over the Timeframe, and its total trade volume during the Timeframe is less than 3,000 round lots.
- Any other circumstances that may be deemed excessively irregular trade volume.
- Excessively concentrated equity ownership of TPEx listed securities is defined as any one of the following:
- The number of registered shareholders is less than 1,000.
- The number of shareholders holding 1,000 to 50,000 shares is less than 500.
- The registered shares held by all the company's directors, supervisors, managerial officers, and major shareholders (those with more than 10% shareholding) account for a combined total of 75% of the company’s listed shares if the company has 50 million or fewer issued shares; or 80% if the company has more than 50 million up to 500 million issued shares; or 85% if the company has more than 500 million issued shares.
- Any other circumstances that may be deemed excessively concentrated equity ownership.
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8
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Unless there is a circumstance of excessively concentrated equity ownership, any security that is to be listed on the TPEx and that satisfies the following criteria will be announced as eligible for margin purchase and short sale from the day listed; the provisions of Point 6, paragraph 3, and Point 7, subparagraph 3, item 3 above are applicable to the relevant procedures and assessment standards set out in this point:
- The securities to be listed on the TPEx are shares, eligible for margin purchase and short sale, issued by a TWSE listed or TPEx listed company that is to be converted in accordance with the Financial Holding Company Act into a financial holding company.
- The securities to be listed on the TPEx are shares, eligible for margin purchase and short sale, issued by a TWSE listed or TPEx listed company that is to be converted into an investment holding company through a 100 percent share conversion in accordance with the Business Mergers and Acquisitions Act.
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9
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These Procedures and Specific Standards, and any amendments hereto, shall be implemented following submission to and approval by the competent authority.
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