Title：Taiwan Stock Exchange Corporation Standards for Granting of Transaction Charge Discounts and Financial Incentives to Beneficiary Certificate Liquidity Providers（2016.03.08）
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Categories：
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Securities Exchange Market > Trading > Beneficial Certificates
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1
Standards for Granting of Transaction Charge Discounts
- The Taiwan Stock Exchange Corporation (hereinafter " TWSE") may grant transaction charge discounts if a liquidity provider and the exchange-traded fund beneficiary certificatesand their underlying ETF beneficiary certificates (collectively the "ETF beneficiary certificates") for which the liquidity provider is responsible for providing liquidity meet the following criteria for performance of the current month:
- Regular trading of the ETF beneficiary certificates must meet the following standards:
- Two or less occurrences where the best buy-sell spread exceeds 1% for more than 30 consecutive minutes.
The best buy-sell spread shall be calculated according to the following formula:
(Best buy-sell spread) = [ (Unmatched lowest selling price quote) - (Unmatched highest buying price quote) ] / (Unmatched lowest selling price quote).
- Two or less occurrences where the market quotation discloses only buying or selling quotes for more than three minutes, except buy limit orders or sell limit orders, provided that the above time may be excluded in the circumstance where matching should be postponed under Paragraph 4, Article 58-3 of the Operating Rules of the Taiwan Stock Exchange Corporation.
- Regular trading of the ETF beneficiary certificates liquidity providers must meet the following standards:
- Two or less occurrences, in each period, where the liquidity provider fails to quote purchase and sell orders of eight or more trade units during the postponement of matching when the circumstance under Paragraph 4, Article 58-3 of the Operating Rules of the Taiwan Stock Exchange Corporation happens to the ETF beneficiary certificates during trading hours.
- The average daily turnover rate for the regular trading of the ETF beneficiary certificates traded by the liquidity provider should be more than one-third of the average daily turnover rate for all relevant stocks if the average daily total asset value of the ETF beneficiary certificates reaches NT$ 10 billion or more, or more than one-sixth of the average daily turnover rate for all relevant stocks if the average daily total asset value of the ETF beneficiary certificates is less than NT$ 10 billion.
The average daily turnover rate for the ETF beneficiary certificates traded by the liquidity provider is calculated by dividing the average daily trading volume of the ETF beneficiary certificates in the current month by the average daily available units of the ETFs.
- For the calculation of the average daily trading volume in Paragraph I-1-B-b and Paragraph I-2-A, the trading volume of the ETF beneficiary certificates traded by the liquidity provider in the current month in Paragraph I-2-B, the average daily total trading volume for buy and sell orders in Paragraph II-3, and the securities transaction tax of the ETFs sold by providers receiving financial incentives in the current period, only the trading volume of the ETF beneficiary certificates traded by the liquidity provider at the designated ETF beneficiary certificates account in the current month may be included, and the volume of the trades at the designated account in one trade and the volumes of trades between the designated account and other accounts opened in the provider's own name should be excluded.
- Standards for transaction charge discounts to liquidity providers trading ETF beneficiary certificates in the current month
- Standard of average daily trading volume for regular trading
- If the average daily total asset value of the ETF beneficiary certificates reaches NT$ 10 billion or more:
┌───────────────┬──────────────┐
│Average daily trading volume │Transaction charge discounts│
├───────────────┼──────────────┤
│1000 or more trade units and │10% │
│less than 2000 trade units │ │
├───────────────┼──────────────┤
│2000 or more trade units and │20% │
│less than 3000 trade units │ │
├───────────────┼──────────────┤
│3000 or more trade units and │30% │
│less than 4000 trade units │ │
├───────────────┼──────────────┤
│4000 or more trade units and │40% │
│less than 5000 trade units │ │
├───────────────┼──────────────┤
│5000 or more trade units │50% │
└───────────────┼──────────────┘
- If the average daily total asset value of the ETF beneficiary certificates is less than NT$ 10 billion:
┌───────────────┬──────────────┐
│Average daily trading volume │Transaction charge discounts│
├───────────────┼──────────────┤
│100 or more trade units and │10% │
│less than 300 trade units │ │
├───────────────┼──────────────┤
│300 or more trade units and │20% │
│less than 500 trade units │ │
├───────────────┼──────────────┤
│500 or more trade units and │30% │
│less than 1000 trade units │ │
├───────────────┼──────────────┤
│1000 or more trade units and │40% │
│less than 1500 trade units │ │
├───────────────┼──────────────┤
│1500 or more trade units │50% │
└───────────────┼──────────────┘
- Percentage standards for trading volume in regular trading
┌─────────────────┬────────────┐
│Monthly percentage trading volume │Transaction charge │
│ │discounts │
├─────────────────┼────────────┤
│10% or more and less than 30% │20% │
├─────────────────┼────────────┤
│30% or more and less than 50% │30% │
├─────────────────┼────────────┤
│50% or more and less than 70% │50% │
├─────────────────┼────────────┤
│70% or more and less than 90% │70% │
├─────────────────┼────────────┤
│90% or more │100% │
├─────────────────┼────────────┤
│Note:(Monthly percentage trading volume) = (Trading volume │
│ of the ETFs traded by the liquidity provider in the │
│ current month) ÷ (Total ETF trading volume in the │
│ current month). (Totally trading volume = (Buying │
│ volume + Selling volume) / 2) │
└──────────────────────────────┘
- If the discount standards in the preceding two paragraphs are met, transaction charge discounts may be combined in the calculation. Any discount amount above 100% may be used as credit against the transaction charges for other ETF beneficiary certificates the liquidity provider is responsible for.
2
Standards for Granting of Financial Incentives
- The TWSE has set aside NT$ 20 million as financial incentives to ETF beneficiary certificates liquidity providers.
- A liquidity provider may only receive financial incentives if it meets the performance standards in Paragraph I-1 and satisfies the following conditions:
- ETF beneficiary certificates have been listed for at least a month.
- For every three months (as one period), if the average daily total asset value of the ETF beneficiary certificates reaches NT$ 10 billion or more for the period, the average daily trading volume for each month must be 2,500 trade units or more, or if the average daily total asset value of the ETF beneficiary certificates is less than NT$ 10 billion, the average daily trading volume for each month must be 100 trade units or more.
- If after an offset of daily purchase and sale of the ETF beneficiary certificates the liquidity provider still has sell orders for the current period, the number of securities borrowed for settlement in accordance with Article 109 of the Operating Rules of the Taiwan Stock Exchange Corporation does not exceed the number of beneficiary units per subscription unit of the ETF beneficiary certificates.
- For each period, liquidity providers for all the ETF beneficiary certificates will be ranked based on the average daily total buying and trading volumes for each type of ETF beneficiary certificates for which they are responsible for providing liquidity and granted financial incentives. In the case where the average daily total asset value of the ETF beneficiary certificates reaches NT$ 10 billion or more, the first place provider will receive NT$ 700,000, the second place provider NT$ 500,000, the third place provider NT$ 300,000, and the fourth place provider NT$ 200,000. If the average daily total asset value of the ETFs for the current period is less than NT$ 10 billion, the first place provider will receive NT$ 700,000, the second place provider NT$ 500,000, the third place provider NT$ 300,000, and the fourth to 12th place providers each NT$ 200,000. Notwithstanding the above, the amount of financial incentives granted to a winner shall be the amount equivalent to the securities transaction tax on the sale of the ETF beneficiary certificates for the current term or the above financial incentives, whichever is lower.
3
TheTWSE will issue a separate public announcement for the period when these standards for granting of transaction charge discounts and financial incentives will be enforced.
4
TheTWSE may amend the above standards depending on the circumstances.