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IV. For the purposes of this point, the following terms shall have the following meanings:
(I) Subject securities: Means exchange-listed securities that are eligible for margin purchase and short sale transactions, with the TWSE deciding whether to adjust margin purchase leverage limits and short sale margin requirements; provided, that this does not apply to beneficial certificates of an exchange traded fund (ETF) nor to beneficial certificates of an offshore ETF.
(II) Sampling period: Prices and trading volume are reviewed daily. The 30 business days preceding the review date (inclusive) constitute the sampling period, which is taken as the acquisition period for the data used in calculations.
(III) Sampled securities: Exchange-listed common shares, Taiwan depositary receipts, and beneficial certificates that have not been placed under an altered trading method are the sampled securities, which serve as the basis for comparison with subject securities.
(IV) Degree of price fluctuation: Refers to the average daily degree of price fluctuation (absolute value) as calculated during the sampling period for the subject securities, sampled securities, or securities of industry peers.
(V) Spread ratio: Refers to the ratio between: (a) the spread between the highest and lowest prices for the subject securities, sampled securities, or securities of industry peers, as calculated for the sampling period; and (b) the respective average prices thereof.
Where, for five consecutive business days or for any six business days during the most recent ten business days, the share price of subject securities is too volatile or the trading volume is excessively abnormal in the manner described below, or if it is determined on the basis of records on equity ownership or beneficial ownership prepared in connection with either: (a) a regular shareholders meeting convened by an exchange-listed company or foreign issuer; or (b) a general meeting of beneficial owners of a securities investment trust fund; that equity ownership or beneficial ownership is overly concentrated, the TWSE shall on the next business day lower the margin purchase leverage limit by 10 percent and raise the short sale margin requirement by 10 percent. Where the aforementioned circumstances occur simultaneously or in close succession, the margin purchase leverage limit shall be lowered by 10 percent and the short sale margin requirement raised by 10 percent one time only.
(I) Where either both of the following descriptions in items 1 and 2, or the following descriptions in item 3, apply to subject securities, the share price is too volatile:
1. The degree of price fluctuation for the securities is equal to the average value for degree of price fluctuation for the sampled securities plus two or more standard deviations, and exceeds 150% of the average value for degree of price fluctuation for the securities of industry peers.
2. The degree of price differential for the securities is equal to the average value for degree of price differential for the sampled securities plus two or more standard deviations, and exceeds 150% of the average value for degree of price differential for the securities of industry peers.
3. When the percentage of premium or discount calculated from the closing price of Taiwan depositary receipts and the closing price of the shares they represent on the exchange market of their home country meets any of the following conditions during the sampling period:
(1) When on the current day, the percentage of premium on a Taiwan depositary receipt announced through the Market Observation Post System (MOPS) for the previous business day is in excess of 80 percent, while the current day closing price is also the highest of the most recent six business days (inclusive of the current day), provided that if there is no closing price for the most recent five business days (excluding the current day), then the current day closing price must also be higher than the opening reference price.
(2) When on the current day, the percentage of discount on a Taiwan depositary receipt announced through the MOPS for the previous business day is in excess of 80 percent, while the current day closing price is also the lowest of the most recent six business days (inclusive of the current day), provided that if there is no closing price for the most recent five business days (excluding the current day), then the current day closing price must also be lower than the opening reference price.
Exceptions:
During the period for calculating the standards for subject securities prescribed in item 1 or 2 of this subparagraph, or when making for the subject securities the comparison based on the closing prices for the most recent six business days (inclusive of the current day) by the standards prescribed in item 3 of this subparagraph, if price fluctuation occurs due to non trade-related factors (such as ex-rights or ex-dividend factors), those factors in the fluctuation shall be excluded from the calculation.
(II) Where either one of the following descriptions applies to subject securities during the sampling period, trading volume is excessively abnormal.
1. The turnover rate for the securities is 10 or more times the average turnover rate for the sampled securities.
2. The turnover rate for the securities is less than 10 percent of the average turnover rate for the sampled securities, and the total figure for trading volume is less than 1,000 round lots of shares or 1,000 trading units.
(III) Where any one of the following descriptions applies to subject securities, equity ownership or beneficial ownership is overly concentrated:
1. Shares: Shareholders owning 1,000 to 50,000 shares are fewer than 500 in number. Taiwan depositary receipts: Holders of Taiwan depositary receipts owning 1,000 to 50,000 units are fewer than 500 in number. Beneficial certificates: Persons owning not more than 100,000 beneficial units are fewer than 1,000 in number.
2. Shares: The holdings of all directors, supervisors, managerial officers, and shareholders with a stake of greater than 10 percent account for a combined total of at least 75 percent of the company's listed registered shares, and the company's paid-in capital is NT$500 million or less; or the aforementioned holdings are at least 80 percent and paid-in capital is greater than NT$500 million and less than NT$5 billion; or the aforementioned holdings are at least 85 percent and paid-in capital is greater than NT$5 billion. Taiwan depositary receipts: The holdings of persons owning greater than 5 percent of the company's total issued Taiwan depositary receipt units account in combination for greater than 80 percent of total issued units as recorded in the roster of Taiwan depositary receipt holders. Beneficial certificates: The beneficial units recorded in the register of beneficial owners under the names of beneficial owners holding more than 5 percent of the total dollar amount of a fund account in combination for greater than 80 percent of the total dollar amount of the fund.
3. Where records on equity ownership or beneficial ownership are not delivered to the TWSE within 20 days after a regular shareholders meeting or a general meeting of beneficial owners of a fund, equity ownership or beneficial ownership shall be deemed overly concentrated.
Where there is an irregularity in the redemption of Taiwan depositary receipts, the TWSE may on the next business day lower the margin purchase leverage limit by 20 percent and raise the short sale margin requirement by 20 percent, and under serious circumstances may lower the margin purchase leverage limit and raise the short sale margin requirement multiple times in succession.
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