| Title： |
Taiwan Stock Exchange Corporation Rules Governing Trading of Exchange Traded Notes(2018.09.10) |
| Date： |
|
Chapter 1 General Provisions
|
| Article 1 | These Rules are established in accordance with Article 55 of the Operating Rules of the Taiwan Stock Exchange Corporation.
|
| Article 2 | For purpose of these Rules, exchange traded notes (ETNs) are the ETNs issued by an issuer in accordance with the Regulations Governing the Issuance of Exchange Traded Notes by Securities Firms.
The ETNs as referred to in the preceding paragraph include:
- Domestic component ETNs that track the index consisted of domestic underlyings.
- Foreign component ETNs that track the index consisted of one or more foreign underlyings.
- Leveraged and inverse ETNs that track a multiple of the performance ("leveraged ETNs") or a multiple of the inverse performance ("inverse ETNs") within the scope of the preceding two subparagraphs.
|
| Article 3 | ETNs that are listed and traded at the centralized securities exchange market of the Taiwan Stock Exchange Corporation ("TWSE") will be handled by centralized securities depository enterprise for delivery by book-entry transfer, with regard to which no customer may request to receive the ETNs.
The ETNs in the preceding paragraph shall be issued in a non-physical form.
|
| Article 4 | When trading ETNs, a customer shall sign a risk disclosure statement before a securities firm may accept an order.
A risk disclosure statement may not be needed for professional institutional investor as defined in the Regulations Governing Offshore Structured Products, private placement securities investment trust fund managed by securities investment trust enterprise, futures trust funds offered to buyers meeting certain qualifications by futures trust enterprise, and discretionary investment accounts managed by securities investment consulting enterprise or securities broker who is also a securities investment consulting enterprise, and discretionary investment accounts managed by managed futures enterprise.
The TWSE shall separately determine the particulars to be included in the risk disclosure statement in the first paragraph.
|
| Article 5 | A customer who is trading leveraged and inverse ETNs shall meet the qualifications described in one of the following subparagraphs:
- Has opened a margin transaction account.
- Has completed trading of call (put) warrants in 10 or more orders in the most recent year.
- Has completed trading of futures trading contracts listed at the Taiwan Futures Exchange in 10 or more orders in the most recent year.
- Has records showing completion of trading of leveraged and inverse ETNs.
The customer may submit a trading request to securities firm through correspondence or in an electronic manner sufficiently to prove their identity and expression of intent.
The provisions of the first paragraph do not apply to professional institutional investor as defined in the Regulations Governing Offshore Structured Products, private placement securities investment trust fund managed by securities investment trust enterprise, futures trust funds offered to buyers meeting certain qualifications by futures trust enterprise, and discretionary investment accounts managed by securities investment consulting enterprise or securities broker who is also a securities investment consulting enterprise, and discretionary investment accounts managed by managed futures enterprise.
If a customer who has met the qualifications in the first paragraph engages in irregular trading, the securities firm shall evaluate whether the customer has had the trading experience as described in the first paragraph and may refuse their trading request where necessary.
|
Chapter 2 Market Trading
|
| Article 6 | For ETNs that track the index consisted of foreign underlyings, when the foreign market where the index component is trading is closed, the ETNs may continue to be traded at the TWSE centralized securities exchange market.
|
| Article 7 | Trading volume of ETNs in the order quote shall be one trading unit or its multiples. One thousand units of ETNs are one trading unit. No odd-lot trading is permitted.
|
| Article 8 | Prices of ETNs in the order quote are unit based.
The tick size of order price quotes shall be 1 cent if the market price per unit is below NT$50, and 5 cents if the market price per unit is NT$50 or above.
|
| Article 9 | After listing of ETNs, the regulations governing price movement for listed securities shall apply mutatis mutandis to their daily price movement, except ETNs that track the index consisted of foreign underlyings, to which no minimum or maximum price movement applies.
For a leveraged or inverse ETN of which the components of the underlying index are all domestic underlyings, the daily price limit shall be 10 percent above or below its price multiplied by the multiple of the ETN. For those of which the components of the underlying index include foreign underlyings, there is no limit on their price movement in either direction.
|
| Article 10 | Calculation of the price movement of ETNs on the first day after their listing shall be based on the latest indicative value for the latest available business day as provided by the issuer on the business day before their listing.
The auction reference price at market opening of the ETNs on the first day after their listing as in the preceding paragraph is the price on the same basis in that paragraph after adjustment in accordance Article 8, paragraph 2 above.
|
| Article 11 | An ETN trade for which settlement is performed on or after the commencement date of book-closure for suspension of change of entries to the list of ETN holders due to a distribution of dividends pursuant to its issuance plan, shall be an ex-dividend trade.
Calculation of the price movement for the commencement date of ex-dividend trading shall be based on the closing price of the previous day by deducting the value of distributed dividends. The auction reference price at market opening on the commencement date of ex-dividend trading is the closing price of the previous day by deducting the value of distributed dividends after adjustment in accordance with Article 8, paragraph 2 above.
If there is no closing price of the previous day on the commencement date of ex-dividend trading, the closing price used as basis for calculation in the preceding paragraph shall be replaced by the price as determined based on the principle stated in Article 58-3, paragraph 2, subparagraph 2, of the Operating Rules of the Taiwan Stock Exchange Corporation.
|
| Article 12 | An ETN issuer shall itself serve or appoint another securities firm to serve as the liquidity provider to provide liquidity during the trading at the TWSE centralized securities exchange market. The TWSE will separately establish guidelines for the operation.
|
Chapter 3 Subscription and Sellback
|
| Article 13 | A securities firm that provides services of subscription and sellback of ETNs for itself or on behalf of others shall report to the TWSE, for which the TWSE will separately establish regulations for their compliance.
When a securities firm provides services of subscription of ETNs for itself or on behalf or others, the ETNs will not be available for sellout until after they have been recorded at centralized securities depository enterprise.
|
Chapter 4 Restrictions, Fees and Settlement and Delivery
|
| Article 14 | ETNs are not eligible for margin purchases and short sales, day trades, money lending in connection with securities business, money lending for unrestricted purposes, securities settlement financing, securities-based lending business, and securities borrowing and lending transactions, nor may they be used as collateral.
The securities borrowing and lending transactions referred to in the preceding paragraph do not include securities borrowings for settlement in accordance with Article 109 of the Operating Rules of the Taiwan Stock Exchange Corporation.
|
| Article 15 | A securities firm may not accept customer orders to trade ETNs through omnibus trading accounts, nor may it use ETNs as a subject matter of systematic (fixed-term, fixed-amount) investment business.
|
| Article 16 | Commissions or handling charges that are collectible by securities brokers acting for their customers and by the TWSE after the execution of ETN trades shall be governed mutatis mutandis by the relevant provisions regarding listed stocks.
|
| Article 17 | Settlement and delivery of ETNs shall be governed mutatis mutandis by the provisions of the Operating Rules of the Taiwan Stock Exchange Corporation.
|
Chapter 5 Delisting Repayment Schedule
|
| Article 18 | Upon maturity of an ETN, the value of repayment shall be calculated based on the ETN's indicative value published after market close on the last trading day prior to the maturity. The issuer shall, by 11 a.m. on the next business day following the delisting date, transfer all payables to the TWSE. After receipt of the above payables, the TWSE will transfer the funds to securities firms to be delivered to investors.
|
| Article 19 | In the event of delisting of an ETN due to mandatory redemption, the value of repayment shall be calculated based on the ETN's indicative value published after market close on the last trading day prior to the delisting. The issuer shall, by 11 a.m. on the next business day following the delisting date, transfer all payables to the TWSE. After receipt of the above payables, the TWSE will transfer the funds to securities firms to be delivered to investors.
|
| Article 20 | In the event of delisting of an ETN due to a circumstance under Article 50-8, paragraph 2, of the Operating Rules of the Taiwan Stock Exchange Corporation, the value of repayment shall be calculated based on the ETN's indicative value published after market close on the last trading day prior to the delisting. The issuer shall, by 11 a.m. on the next business day following the delisting date, transfer all payables to the TWSE. After receipt of the above payables, the TWSE will transfer the funds to securities firms to be delivered to investors.
|
Chapter 6 Supplementary Provisions |
| Article 21 | Trading of ETNs shall be governed by these Rules. For matters not provided for in these Rules, the applicable provisions of the TWSE regulations and policies shall govern.
|
| Article 22 | These Rules shall come into force upon announcement after having been submitted to and approved by the competent authority for recordation. Subsequent amendments thereto shall be effected in the same manner.
|