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Operating principles for the in-kind creation and redemption of beneficial certificates of ETFs:
- After the TWSE accepts an application for in-kind creation or redemption which contains information on portfolios of securities or beneficial certificates that meets the requirements stated in the PCF published by the SITE, the TWSE will compile and forward the application information to the SITE for review. The review results will be made available on the TWSE computer system for participating dealers' inquiry, and the participating dealers will notify the applicants of application results for confirmation and save the results and the aforesaid application information for future reference.Regardless whether the SITE approves the in-kind creation or redemption applications forwarded by the TWSE or not, it shall notify the TWSE of its decision before the prescribed time ends on the date of application so such information may be available to participating dealers.
- The TWSE will forward the portfolio of securities or beneficial certificates in accepted applications to the CSD for handling the earmark operation. Upon receiving the notice of the CSD with respect to the earmark result, the TWSE will forward the information to SITE and make the same information available on the TWSE computer system for participating dealers.
- If an application for in-kind creation or redemption has been found to comply with the requirements and accepted by relevant institutions, the custodian institution shall complete the collection and payment of cash payment, cash in lieu, deposit and other relevant charges or payments on the next business day following the date of application, and the CSD shall complete the delivery transfer of beneficial certificates (portfolios of securities) created (redeemed) no later than the second business day following the date of application. If there is cash credit to the applicant after the completion of in-kind creation or redemption, the custodian institution shall transfer the funds to the applicant via the participating dealer after completing the related operations.
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