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GreTai Securities Market Rules Governing Over-the-Counter Trading of Financial Derivatives by Securities Firms(2009.01.05) |
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Article 43-1
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A securities firm that trades equity derivatives linked to Taiwan stocks with offshore overseas Chinese or foreign nationals shall first confirm that the trading counterparty has completed registration in accordance with the Regulations Governing Investment in Securities by Overseas Chinese and Foreign Nationals and the Operation Directions for Registration of Offshore Trades by Overseas Chinese and Foreign Nationals in Derivatives Products Linked to Taiwan Stocks.
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Article 45
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Except where law or regulation provides otherwise, the two parties may stipulate the manner in which equity derivatives linked to Taiwan stocks are to be exercised, either by settlement in cash or by physical delivery of the linked underlying securities by the securities firm or another institution approved by the competent authority to perform physical settlement; the provisions of Article 33, paragraph 2 shall apply mutatis mutandis. For equity derivatives linked to foreign equity products, the two parties may stipulate settlement in cash settlement or by physical delivery according to the practices of the relevant market.
When the underlying of the equity derivatives of the preceding paragraph is a stock index, the method of exercise shall be settlement in cash.
Trades in derivatives products linked to Taiwan stocks by offshore overseas Chinese and foreign nationals that a securities firm registers with the GTSM must be denominated and settled in foreign currencies and may not involve physical delivery of Taiwan spot securities.
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Article 64
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When any of the following circumstances applies to a securities firm, the GTSM may notify it to take supplementary or corrective action within a prescribed time period:
1. Violation of Article 15, Articles 16 through 20, Articles 22 through 34, Article 38, Articles 40 through 43-1, Article 45, the portion of Article 46 requiring the mutatis mutandis application of Articles 34 and 38, Articles 47 through 50, Article 53, Article 53, or Article 56.
2. Execution of financial derivatives trades not in conformance with the relevant portions of the securities firm's application or filing.
3. A regulatory capital adequacy ratio less than 200 percent.
4. Execution of trades not in conformance with the securities firm's "procedures for handling financial derivatives transactions" or its internal control or auditing systems.
5. Violation of the applicable provisions of other GTSM rules, regulations, operating procedures, guidelines, directions, supplementary rules, public announcements, or circulars.
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