| Title： |
Taiwan Stock Exchange Corporation Rules Governing Trading of Beneficial Certificates(2008.02.18) |
| Date： |
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Article 12
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If on a same day the amount of underlying portfolio stocks of an ETF beneficial certificate purchased by a securities firm for its own account or on behalf of a single account, or the total amount of the aforementioned purchased stocks plus that securities firm's original holdings and borrowings thereof and the amount of portfolio stocks it purchased or acquired through in-kind redemption on the preceding day, meets the requirements for in-kind creation of that ETF beneficial certificate, and on that same day it sells the same quantity of that beneficial certificate; or if on a same day the amount of ETF beneficial certificates that a securities firm purchases for its own account or on behalf of a single account, or the total amount of the aforementioned purchased certificates plus that securities firm's original holdings and borrowings thereof and beneficial certificates it purchased or acquired through in-kind creation on the preceding day, meets the requirements for in-kind redemption of the underlying portfolio stocks of that ETF beneficial certificate, and on that same day it sells the same quantity of those underlying portfolio stocks; then that securities firm's settlement, and subsequent related matters, shall be conducted according to the following provisions:
1. On the transaction date, the securities firm, via computer link, shall report to the TSEC and submit an application to postpone settlement.
2. If the securities firm reports the sale of ETF beneficial certificates or an ETF's underlying portfolio of stocks and applies to postpone settlement pursuant to the preceding subparagraph, after the TSEC has reviewed and approved the application it shall prepare a statement and transmit an electronic file thereof to the central securities depository to conduct the relevant operations accordingly. The provisions of Article 109 of the TSEC Operating Rules do not apply to the aforementioned operations.
3. After the securities firm has completed settlement on the second business day after the transaction date for underlying stock portfolios of ETF beneficial certificates, or for beneficial certificates, that it has purchased, and for any price payable for other purchases, the portfolio stocks or beneficial certificates receivable by it shall be transferred to serve as collateral for the postponed settlement, and the TSEC will notify the central securities depository to thereupon apply to the SITE for the in-kind creation of that beneficial certificate, or in-kind redemption of that beneficial certificate's underlying portfolio stocks to unwind the position.
4. If the stock portfolio underlying an ETF beneficial certificate listed for trading on the GreTai Securities Market ("GreTai") includes exchange-listed stocks, after the TSEC receives notification from the GreTai regarding the portion of listed stocks sold by the securities firm, the TSEC shall prepare a statement for that portion and transmit an electronic file thereof to the central securities depository pursuant to subparagraph 2.
The provisions of the preceding paragraph do not apply if the component stocks of the underlying index that the ETF beneficial certificates track, simulate, or replicate include foreign stocks.
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