| Title： |
Taiwan Stock Exchange Corporation Operation Directions Governing Liquidity Providers of Call (Put) Warrants(2016.08.23) |
| Date： |
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A liquidity provider shall be a domestic securities firm that operates proprietary securities trading business, provided such does not apply to a foreign issuer making the application through a branch office established in the territory of the Republic of China by a directly or indirectly wholly-owned subsidiary and serves as its own liquidity provider. A liquidity provider shall appoint at least one associated person to be in charge of liquidity providing business. If the issuer changes liquidity providers during the period of validity of call (put) warrants, it shall notify the TWSE 3 business days prior to the change, and input the following matters into the TWSE-designated Internet reporting system:
- The abbreviation and code of the call (put) warrants.
- Name of the replacing liquidity provider.
- Contact telephone number of the replacing liquidity provider (not applicable to performance of the quoting obligation by means of "voluntary quoting").
- Effective date of the change.
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A liquidity provider shall apply with the TWSE to establish a segregated account. If the issuer serves as its own liquidity provider, the segregated account shall be established under the dealer's account, and the account number of the domestic securities dealer shall be 888888-5. If the issuer engages another securities firm to serve as the liquidity provider, the segregated account shall be established under the dealer account of the institution so engaged, and the account number of the domestic securities dealer shall be 888888-6. In the event of a foreign issuer making the application through a branch office established in the territory of the Republic of China by a directly or indirectly wholly-owned subsidiary and serving as its own liquidity provider, the segregated account shall be established under the account of the securities brokers department of the branch office. The aforementioned segregated accounts shall be used only for the trading of warrants issued by the liquidity provider or of warrants for which it has been engaged to provide liquidity, and buy and sell quotes from the same account may not be executed against each other. No warrant in the segregated account may be made the subject of a pledge.
When a liquidity provider providing liquidity for warrants engages, through the segregated account referred to in the preceding paragraph, on the same day, in any normal settlement trades of such warrants by means of ordinary trading, after-market fixed-price trading, or block trading, it may carry out the settlement on the basis of the net balance after offsetting the purchases and sales of the warrants.
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If the liquidity provider does not comply with the price quoting rules, or if on the given day it is discovered that in trading of the warrants there has arisen any circumstance that meets a standard of "irregularity" under Article 2 of the TWSE Directions for Announcement or Notice of Attention to Trading Information and Dispositions, the TWSE will immediately request an explanation by the liquidity provider and may conduct an on-site inquiry. If the liquidity provider's explanations are found obviously unreasonable, the TWSE may request by letter the liquidity provider to take pay attention to the matter and take corrective action. If the liquidity provider has been requested by letter from the TWSE to take corrective action during the past year because of a cause under this paragraph, the TWSE may additionally impose a penalty of from NT$30,000 to NT$100,000 on the issuer of the warrants. If the circumstances of breach or irregularity are serious, the TWSE may also, at its sole discretion, notify and restrict the issuer from issuing warrants during the following one to 3 months. In addition, the TWSE may notify the issuer to change liquidity providers.
Where the TWSE issues a letter to an issuer requiring attention and rectification, imposes a breach penalty on an issuer, or restrains an issuer from applying for issuing warrants for a prescribed period of time, the TWSE shall submit a copy to the competent authority.
The issuer of the call (put) warrants shall remit payment of the penalty to the TWSE Finance Department within 5 days from the date on which it receives notice of the penalty.
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