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Article 14
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Issuers shall apply to the TWSE to open a segregated account at the time of their initial issue of domestic call (put) warrants and offshore call (put) warrants for which the underlying security is a domestic security. Where the issuer will be self-hedging or partially self-hedging, the account shall be used exclusively for establishing a hedge position after issuance of the warrants and for future performance of obligations when the investors exercise the warrants. Where the issuer entrusts another institution with hedging, the account shall be used for performance of obligations when the investors exercise the warrants, and the risk management institution is also required to open a segregated account with the issuer for the purpose of establishing a hedge position after issuance of the warrants.<br/>The segregated accounts of issuers referred to in the preceding paragraph shall be opened under securities dealer accounts. When an issuer issues domestic call (put) warrants, for hedging needs to which Article 2-3 of the Securities Transaction Tax Act applies, the account number of the aforesaid account of a domestic issuer shall be 888888-8, provided when an issuer issues overseas call (put) warrants, he aforesaid hedging needs do not apply, in which case a domestic issuer's account number shall be 888888-1. Aforeign issuer applying to issue warrants through a branch office established in the territory of the ROC by a subsidiary which is either directly or indirectly wholly-owned shall open such account in the securities brokerage department of that branch office; the segregated hedge account opened with the issuer by the risk management institution shall be opened in the securities brokerage department. The domestic risk management institution's account number shall be 888888-8 when an issuer issues domestic call (put) warrants and888888-9when an issuer issues overseas call (put) warrants. The above-mentioned accounts shall be reported to the TWSE in advance, and may only be used for trading in financial hedging instruments for hedging purpose and in call (put) warrants issued by the issuer itself. In addition, the securities in the segregated hedging account without exception may not be pledged.
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