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    These Operating Directions are prescribed in accordance with Article 13 of the Rules Governing Trading of Exchange Traded Notes of the Taiwan Stock Exchange Corporation (TWSE).

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    Terms:

1. The term "issuer" refers to a securities firm that issues exchange traded notes (ETNs).
2. The term "applicant" refers to a customer that orders for subscription or sellback through a securities transaction account opened at a securities firm; a securities firm that engages in subscription or sellback for its own account is also an applicant.
3. The term "indicative value" refers to the value of an ETN calculated based on the rising and falling, accrued revenue and fees payable by investors with respect to the ETN.
4. The term "subscription" refers to a securities firm for its own account or on behalf of its customer subscribing ETNs from an issuer. The subscription price shall be calculated based on the number of units prescribed in the issuance plan and the indicative value announced after the closing of market trading on the application date.
5. The term "sellback" refers to a securities firm for its own account or on behalf of its customer sells back the ETNs to the issuer in exchange for cash consideration. The sellback price shall be calculated based on the number of units prescribed in the issuance plan and the indicative value announced after the closing of market trading on the application date.

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    Operating principles for a securities firm carrying out subscription and sellback of ETNs for its own account or on behalf of its customer:

1. A securities firm carries out applications for subscription and sellback of ETNs through computer linkup on the TWSE's centralized securities exchange market trading days during the period from the issuance of ETNs to the last trading date.
2. A securities firm carrying out subscription and sellback of ETNs for its own account or on behalf of its customer shall comply with the following:
1. An applicant must sell back ETNs from the available balance in a single securities depository account on the business date.
2. When carrying out subscription orders on behalf of its customer, a securities firm may collect in advance the subscription price and shall submit the application within the time limit prescribed by the TWSE. After the actual amount due is ascertained, the applicant should be notified for making additional payment if the pre-collected payment of the subscription price is insufficient or refund if the pre-collected payment is excessive.
3. A securities firm shall open a separate segregated deposit account with its settlement bank specifically for the collection and disbursement of price and other relevant charges in association with the subscription and sellback on behalf of its customer.
3. The collection and transfer of relevant securities referred to in the preceding subparagraph shall be handled via book-entry transfer; the payment collection from and disbursement to applicant shall be handled via settlement account.
4. A securities firm carrying out sellback of ETNs for its own account or on behalf of its customer shall, according to the issuance plan of the ETNs, calculate its holding of the ETNs and when the total number adds up to the minimum number to apply for sellback, submit the application within the time limit prescribed by the TWSE. The TWSE will forthwith forward all the application to central securities depository (CSD) to proceed with earmarking.
5. If the CSD fails to complete the earmarking for the sellback referring to in the preceding subparagraph, the application for sellback is then failed.

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    When a customer engages a securities firm for carrying out subscription or sellback of ETNs, the securities firm may only accept the engagement after the customer signs a risk disclosure statement.
    Professional institutional investors prescribed in the Regulations Governing Offshore Structured Products, privately placed securities investment trust funds managed by securities investment trust enterprises, futures trust funds offered by futures trust enterprises to persons with prescribed qualifications, discretionary investment accounts managed by securities investment trust enterprises, securities investment consulting enterprises or securities brokers concurrently operating securities investment consulting business, or discretionary investment accounts managed by managed future enterprises need not to sign risk disclosure statement.
    The particulars to be included in the risk disclosure statement referred to in the first paragraph will be separately prescribed by the TWSE.

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    A customer engaging a securities firm for the first time to carry out subscription or sellback of leveraged or inverse ETNs and options strategy ETNs shall meet one of the following conditions:

1. Having opened a margin account.
2. Having had at least 10 trading orders for purchasing or selling call (put) warrants executed within the past one year.
3. Having had at least 10 trading orders for purchasing or selling futures trading contracts listed on the Taiwan Futures Exchange executed within the past one year.
4. Having trading record for purchasing leveraged or inverse ETNs or options strategy ETNs.

    The customer may submit its request to the securities firm by correspondence or electronic means that is sufficient to verify the identity and confirm the expression of intent of the customer.
    A person who has obtained leveraged or inverse ETNs or futures and options strategy ETNs by inheritance, gift, final and conclusive court judgment, or other cause reported to and approved by the TWSE may, after submitting documentary proof, sell back such securities without being subject to the application of paragraph 1.
    Paragraph 1 does not apply to professional investors prescribed in the Regulations Governing Offshore Structured Products, privately placed securities investment trust funds managed by securities investment trust enterprises, futures trust funds offered by futures trust enterprises to persons with prescribed qualifications, discretionary investment accounts managed by securities investment trust enterprises, securities investment consulting enterprises or securities brokers concurrently operating securities investment consulting business, or discretionary investment accounts managed by managed future enterprises.
    If a customer engages in abnormal tradings for the purpose of meeting the conditions set out in the first paragraph, the securities firm shall assess whether the customer has substantial experience in tradings set out in the first paragraph and may refuse to accept orders for subscription or sellback if necessary.

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     Operating principles for carrying out subscription and sellback of ETNs:

1. After the TWSE refers to the number of units of subscription and sellback applied for by the issuer and accepts qualified applications for subscription and sellback, the TWSE will compile and forward the application information for the issuer's review. The results will be made available on the TWSE computer system for securities firms' inquiries, and the securities firm shall then accordingly notify the applicants of results for confirmation. Securities firm shall retain the aforesaid applications and review results for future reference. The issuer accepting the applications for subscription or sellback forwarded by the TWSE shall notify the TWSE of its decision, regardless the applications are approved or not, before the expiry of the prescribed time period on the application date so such information may be available for securities firms' inquiries.
2. The TWSE will accept applications for sellback of ETNs and forward the applications to CSD to proceed with earmarking. Upon receiving the earmark results from CSD, the TWSE will compile and forward the results to the issuer. The results will be made available on the TWSE computer system for securities firms' inquiries.
3. If an application for subscription is determined to meet the requirements, the securities firm shall confirm the subscription details before 12:00 on the business day following the application date and, in accordance with the statement of amount payable provided by the TWSE at 12:30, transfer the funds to the TWSE before 14:30; on the second business day following the application date, CSD will complete the transfer of the ETNs and the TWSE will forward the aforesaid payment in aggregate to the issuer.
4. If an application for sellback is determined to meet the requirements, the issuer shall confirm the sellback details before 12:00 on the business day following the application date and, in accordance with the statement of amount payable provided by the TWSE at 12:30, transfer the funds to the TWSE before 14:30; on the second business day following the application date, CSD will complete the cancellation of the ETNs and the TWSE will forward the aforesaid payment in aggregate to the securities firm, which will then forward to the applicants.

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    These Directions shall take effect after having been submitted to and approved by the competent authority. Subsequent amendments thereto shall be effected in the same manner.