|
Article 41
|
A securities firm may not engage in financial derivatives trades related to Taiwan equities with any of the following parties:
- A director, supervisor, or officer of the securities firm, or a shareholder that directly or indirectly holds 10 percent or more of its total shares.
- A spouse, minor child, or nominee of any of the persons referred to in subparagraph 1.
- Any investee company in which 10 percent or more of total shares are directly or indirectly held by any person referred to in the preceding two subparagraphs.
- The issuer of the conversion securities, linked securities, or underlying securities, or any person related to the issuer as set out in the preceding 3 subparagraphs.
Calculation of the total shareholdings of the shareholders under subparagraph 1 above shall include shareholdings of spouses, minor children, and nominees of the persons under subparagraph 1.
Before a securities firm engages in a financial derivatives trade referred to in the preceding paragraph with a trading counterparty, the counterparty shall sign an undertaking stating whether or not it is a related party as set out in paragraph 1; when the trading counterparty is a professional institutional investor, the securities firm may use available information to make an effective confirmation, by means of its own internal operating procedures, that the trading counterparty is not a related party under paragraph 1. When the securities firm is unable to undertake verification of a trading counterparty, however, and when the trading counterparty is unable to produce an undertaking, the securities firm may not engage in a trade with that counterparty.
A securities firm may enter into trades with the professional institutional investors of paragraph 1, subparagraphs 1 through 3, provided that the terms it accords those persons may not be more favorable than those accorded others in the same class of counterparties, and that the trades may be undertaken only after passage of a resolution by three-fourths or more of the company directors in attendance at a director's meeting with a two-thirds quorum, or after a resolution granting authorization to the relevant department.
The restrictions of paragraph 1, subparagraphs 1 through 3 do not apply when the price of a trade by a securities firm, with one individual non-institutional investor, is less than NT$1 million, or when the cumulative price of unexpired trades is less than NT$5 million.
Without regard for the restriction in paragraph 1, subparagraph 4, a securities firm may engage, with an issuer of stock appreciation rights, in trading of financial derivatives linked to the Taiwan stock equity of the issuer, and shall comply with the following requirements:
- The securities firm shall ensure that the issuer engages in such trades due to a hedging need arising from the issuance of stock appreciation rights, and shall obtain reasonable and credible supporting evidence from the issuer before engaging in the trades.
- The trades shall be limited to the sale of call options linked to the stock of the issuer.
- The exercise method shall be limited to cash settlement.
|