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Taiwan Stock Exchange Corporation Rules Governing Trading of Call (Put) Warrants
Securities Exchange Market > Trading > Call (Put) Warrants
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Taiwan Stock Exchange Corporation Rules Governing Trading of Call (Put) Warrants(2011.11.16)
When a principal wishes to exercise a warrant right, it shall submit an application via its securities firm to the TWSE. After the TWSE accepts the application, it will request that the issuer honor the exercise of the warrant. [In such cases], or where, upon expiration of a call (put) warrant that is to be settled in cash, the TWSE has calculated and deemed that there is exercise value in the warrant and has notified the securities firm to exercise the warrant on behalf of the principal, fees shall be collected according to the provisions of the preceding article. If the principal applies to exercise the warrant by delivery of shares, the formula for non-index call (put) warrants shall be -- "Strike price of the call (put) warrant x number of underlying shares". If the principal applies to exercise the warrant by cash settlement, or for automatic cash settlement if in the money at expiration, the formula shall be -- “The difference between the strike price and the settlement price x number of underlying shares”. The formula for index call (put) warrants shall be -- "The difference between the strike index and settlement index x corresponding monetary value per index point x number of units of warrants x exercise ratio."
When a liquidity provider of call (put) warrants hired to provide liquidity buys back any warrant on a centralized securities exchange market, it shall deliver such warrants in full to the centralized custody account which it previously notified the TWSE of in writing. The exercise of warrants held in such an account may not be requested.
The term "exercise value" in paragraph 1 means the positive difference between the strike price of the underlying stocks or the strike index of the underlying index of a call (put) warrant and the settlement price or the index at settlement of the call (put) warrant at its expiration date, as calculated under Article 10, subparagraph 5, item 16 of the Taiwan Stock Exchange Corporation Rules Governing Review of Call (Put) Warrant Listings.
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English version of regulations are translated by Baker McKenzie Taipei Office.