| Title： |
Taiwan Stock Exchange Corporation Regulations Governing Block Trading of Listed Securities(2005.01.28) |
| Date： |
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Article 1
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These Regulations are promulgated pursuant to Article 71 and Article 74 of the Operating Rules of this Corporation.
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Article 2
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A single buy order or sell order of a securities firm that falls in any of the following categories shall be handled in accordance with these Regulations:
1. Block trade of a single security: refers to a single buy order or sell order for at least 500 trading units of a single listed security.
2. Block trade of a basket of stocks: refers to a single buy order or sell order for at least five listed stocks with a total value of at least NT$15 million.
Where the criterion in subparagraph 1 of the preceding paragraph is not met, but the total value of a single buy order or sell order is at least NT$15 million, it also may be a block trade of a single security.
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Article 3
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Block trades are conducted through automated computer trading. The trading hours and the times for public announcement of the ranges of trading prices that may be quoted are as follows:
1. At 9:30 am and 11:30 am, this Corporation will announce the range of trading prices that may be quoted for each security; for a period of 10 minutes following each announcement, it will accept trading orders from securities firms and match and execute them on a continuous basis.
2. At 1:35 pm, this Corporation will announce the range of trading prices that may be quoted for each security, and for a period of 15 minutes following each announcement, it will accept trading orders from securities firms and match and execute them on a continuous basis. However, depending on the conditions at the close of market trading hours (i.e. the market trading hours of 9 am to 1:30 pm specified in Article 3 of the Operating Rules of this Corporation) on the current day, this Corporation may postpone the announcement time for the trading period in this subparagraph, or announce the cessation of acceptance of trading orders from securities firms.
The calculation of the ranges of trading prices that may be quoted under each subparagraph of the preceding paragraph shall be limited to 2 percent above or below the reference basis price. However, the price ranges calculated by the aforementioned method for the trading periods specified in subparagraph 1 of the preceding paragraph may not exceed the daily fluctuation limits, as specified in Article 63 of the Operating Rules of this Corporation, for market trading hours for the current day.
The reference basis price referred to in the preceding paragraph shall be determined by the following principles:
1. For each trading period specified in subparagraph 1 of paragraph 1, the reference basis price shall be the average of the bid and ask quoted for the highest unexecuted buy order and lowest unexecuted sell order in the latest trading during the daily trading session on the current day as of the time of announcement, as posted under Article 58 of the Operating Rules; however, where only either a bid or ask is posted, then the highest posted bid or lowest posted ask shall be used; where neither a bid nor ask is posted, the latest traded price for the current daily session shall be used; if there is not yet a traded price for the current daily session, the auction reference price at market opening of the current daily session shall be used. The provisions of Article 58-3, paragraph 1, subparagraph 3 of this Corporation's Operating Rules shall apply mutatis mutandis to the "auction reference price at market opening of the current daily session."
2. For the "trading period" specified in paragraph 1, subparagraph 2, the reference basis price shall be the closing price of the market trading hours of the current day. If there is no closing price for the current daily session, the auction reference price at market opening of the current daily session shall be used.
Block trade orders are valid only for the trading period in which they are entered; orders may be cancelled prior to execution.
Block trade orders will be suspended on the ex-dividend date and the ex-rights date of a stock and the next business day thereafter.
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Article 4
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The total value of block trade orders placed by a securities firm on a given day is not subject to the limits in Article 28-1 of the Operating Rules of this Corporation. However, when this Corporation deems necessary, it may notify securities firms placing buy orders to deposit with this Corporation a margin of 50 percent of the purchase price, and won’t accept the order until the margin has been collected.
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Article 5
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When a securities broker places a buy order, it shall pre-collect the purchase price from the principal; when it places a sell order, it shall, via this Corporation's computer connection system, notify the centralized securities depository enterprise to earmark as collateral securities in the principal's central securities depository account according to the securities for which the sale order is placed.
If securities are pledged and delivered by the book-entry method and a securities firm accepts an order by the pledgee to carry out a self-conducted auction of the securities, the securities firm shall comply with the Regulations Governing Book-Entry Operations for Centrally Deposited Securities, the Regulations Governing Operations of Centralized Securities Depository Enterprises, and related regulations, and may place the sell order only after the centralized securities depositary company has checked and verified the order. However, a sell order may not be placed combining pledged and unpledged securities of the same kind.
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Article 6
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Block trades are conducted by continuous auction.
For block trades of a single security, the matching priority and the execution price shall be separately established for the consecutively entered buy orders and sell orders based upon the following principles:
(1) Incoming buy orders with prices greater than or equal to the lowest previously entered sell order will be matched and executed at the individual ask prices sequentially from lowest to highest; if there are multiple sell orders at the same ask prices they will be matched and executed sequentially by time priority until all buy orders are satisfied or the price of the current incoming buy order is lower than the prices of unexecuted sell orders.
(2) Incoming sell orders with prices lesser than or equal to the highest previously entered buy order will be matched and executed at the individual bid prices sequentially from highest to lowest; if there are multiple buy orders at the same bid prices they will be matched and executed sequentially by time priority until all sell orders are satisfied or the price of the current incoming sell order is higher than the prices of unexecuted buy orders.
For matching and execution of block trades of baskets of stocks, the stock codes, unit prices, and volumes of the incoming buy (or sell) order must all be identical to those of the previously entered sell (or buy) order; the orders are then matched with sell (or buy) orders sequentially by time priority for execution.
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Article 7
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During each of the trading periods specified in Article 3, paragraph 1, this Corporation may post, in real time, information on unexecuted block trade orders.
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Article 8
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As soon as a block trade order is executed, an execution confirmation slip shall be printed on the printers of the buyer's and seller's securities firms, and the transaction information shall be publicly announced by this Corporation through its Market Information System (MIS) in real time.
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Article 9
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When out-trades and account number corrections occur in block trading, the securities broker shall report the out-trade or account number correction information to this Corporation in writing by no latter than 2:30 pm on the trade date; for account number corrections, it shall additionally submit an application form stating agreement by both parties to the account number as it appears before and after correction.
When a securities broker reports an out-trade in block trading under the preceding paragraph, it shall on the same day or the following business day, handle the out-trade by a repurchase or resale of equal volume on the Taiwan Stock Exchange. However, it may first offset any identical securities also traded in block trading [and subject to out-trades] on the same trade date.
After handling an out-trade through a repurchase or resale in accordance with the preceding paragraph, the securities broker shall report the status of liquidation to this Corporation in writing by no later than 5 pm on the day the out-trade is handled.
Where a securities firm fails to comply with the preceding three paragraphs, this Corporation may apply, mutatis mutandis, the provisions of Articles 135 and 136 of the Operating Rules regarding handling of violations.
A securities broker shall bear sole liability for any injury to the rights and interests of the investor or any other dispute arising out of the reporting and handling of block trading out-trades or account number corrections.
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Article 10
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When a securities broker has confirmed that a principal who placed a block trade order is in default, it shall report the circumstances of the default to this Corporation in writing no later than 6 pm on the trade date, and simultaneously notify the principal.
When a securities broker reports default by a principal in a block trade in accordance with the preceding paragraph, the broker shall immediately perform settlement procedures on behalf of the principal. For securities or payments received as a result of performing settlement, the broker shall engage another securities broker to dispose of them on the Taiwan Stock Exchange on the first business day following the principal's default, and may also apply, mutatis mutandis, Article 91, paragraph 6, of the Operating Rules of this Corporation. Resulting gains or losses shall be handled in accordance with Article 19 of the Taiwan Stock Exchange Corporation Criteria Governing Consignment Contracts of Securities Brokers.
When a single principal fails to perform settlement obligations both on securities bought and securities sold in block trading, the securities broker shall report the purchase and sale defaults separately, and shall engage another securities broker to dispose of the total amount of the securities or payments received as a result of performing settlement on behalf of the principal; the broker may not proceed to offset such amounts itself. However, for identical securities traded in block trades through the same account on the same default report date, the securities broker may offset against each other any purchase and sales amounts of equal volume [within the scope of the block trades for which settlement was defaulted on].
After handling a default in accordance with the preceding paragraph, the securities broker shall, no later than 6 pm of the same day, report the status of liquidation to this Corporation in writing and notify the principal.
When a securities firm fails to comply with the preceding four paragraphs, this Corporation may handle the matter by the mutatis mutandis application of Article 136 of the Operating Rules of this Corporation.
In the event of any injury to rights or interests of the principal or any other dispute arising following the notification forwarded by this Corporation to all securities broker based on a block trading default report filed by a securities broker, the securities broker reporting the default shall bear sole liability.
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Article 11
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Individual settlement calculation statements shall be compiled for block trades.
When handling the central settlement of block trades, this Corporation shall calculate the net amount after mutually offsetting the amounts payable and receivable. Securities firms shall complete settlement procedures on the trade date on the basis of the securities and prices specified in the settlement report.
A securities firm with money payable for settlement shall remit the amount payable by 2:30 pm into the bank account designated by this Corporation. For securities firms with securities deliverable, this Corporation shall notify the securities central depository enterprise to carry out book-entry transfer procedures.
For securities firms with money receivable for settlement, this Corporation shall notify the designated bank after 2:30 pm to remit the amounts into the accounts; for securities firms with securities receivable, after the money payable for settlement has been processed under paragraph 3, and this Corporation has checked and verified completion thereof, this Corporation shall notify the securities central depository enterprise to carry out book-entry transfer procedures.
If the seller's securities firm is unable to complete settlement, after this Corporation has reviewed and verified the written information on its out-trade report form, this Corporation will produce a statement and electronic file and transmit them to the securities central depository enterprise to carry out related procedures. The seller's securities firm shall deposit with this Corporation, during banking hours on the current day, collateral equal to 120 percent of the amount obtained by multiplying the closing price of those securities on the trade date by the volume applied for.
If a securities firm fails to perform settlement in accordance with paragraph 3, this Corporation shall 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 shall be deemed default of settlement obligations, but this shall not apply where settlement is completed within banking hours on the current day.
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Article 12
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Prices of securities quoted and transacted under these Regulations shall not be taken as opening or closing prices for the trading day, nor may they be taken as the basis for recording market highs or lows.
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Article 13
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Matters on which these Regulations are silent shall be subject mutatis mutandis to applicable provisions of the rules and bylaws of this Corporation.
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Article 14
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These Regulations, and any amendments hereto, shall be publicly announced and implemented after approval by the competent authority.
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