| Article 1 |
These Regulations are promulgated pursuant to Article 39 of the Taipei Exchange Rules Governing Securities Trading on the TPEx (the "TPEx Trading Rules").
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| Article 2 |
Trading in call (put) warrants issued by a securities firm in accordance with the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx and approved by the Taipei Exchange (TPEx) for TPEx listing shall be carried out through the TPEx automated trade matching system, and through book-entry transfer services provided by a centralized securities depository enterprise retained for that purpose, and the principal may not apply to retrieve deposited call (put) warrants.
The call (put) warrants under the preceding paragraph shall be issued in uncertificated (dematerialized) form.
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| Article 2-1 |
TPEx contract-based call (put) warrants that securities firms trade at their places of business with investors may be cancelled or exercised only as stipulated in the trading contract between the parties, and may not be traded on the TPEx.
The collection/payment of funds related to TPEx contract-based call (put) warrants that securities firms trade at their places of business with investors shall be completed by the following times at the latest:
- Transaction price when undertaken: second business day after the day the trading contract is signed.
- Exercise funds: second business day after the request to exercise.
- Funds for early cancellation: second business day after the request for early cancellation.
- Funds upon expiration of the contract: second business day after the expiration date.
To exercise a TPEx contract-based call warrant, the holder shall directly contact the securities firm that originally sold the warrant, and that securities firm shall contact the centralized securities depository enterprise to carry out delivery of the securities or shall itself carry out cash settlement.
To exercise a TPEx contract-based put warrant, the holder shall directly contact the securities firm that originally sold the warrant, and it shall do so by means of cash settlement only.
If a TPEx contract-based call warrant referred to above still has exercise value on the expiration date, if the holder does not apply for exercise in time, the securities firm that sold the warrant may adopt the method of "automatic cash settlement where in-the-money at expiration," and carry out automatic cash settlement based on the closing price of the underlying securities on the warrant expiration date.
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| Article 3 |
Trading in TPEx listed call (put) warrants shall be subject to these Regulations, or, for matters on which these Regulations are silent, to other applicable acts, regulations, or TPEx bylaws.
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| Article 4 |
With the exception of qualified institutional investors, an investor trading in TPEx listed call (put) warrants for the first time shall sign a risk disclosure statement before a securities broker may accept orders from it.
With the exception of qualified institutional investors, an investor trading for the first time in TPEx contract-based call (put) warrants with a securities firm handling such warrants also shall be required to sign a risk disclosure statement before the securities firm may trade with the investor.
The particulars to be included in the risk disclosure statement referred to above shall be separately prescribed by the TPEx.
The “qualified institutional investors” referred to in this Article are domestic and foreign banks, insurance companies, bills finance companies, securities firms, fund management companies, government investment institutions, government funds, pension funds, mutual funds, unit trusts, securities investment trust companies, securities investment consulting companies, trust enterprises, futures commission merchants, and futures service enterprises.
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| Article 4-1 |
If the linked underlying of a TPEx or TPEx contract-based call (put) warrant is a domestic stock, or spot gold that is registered for TPEx trading ("spot gold"), and is subject by act or regulation to a ceiling on the ratio of investment by overseas Chinese or foreign nationals, the exercise of such TPEx or TPEx contract-based call (put) warrants in which the overseas Chinese or foreign national is invested, shall be limited to cash settlement. The same shall apply to basket TPEx or TPEx contract-based call (put) warrants that include any underlying security subject to an abovecited statutory or regulatory ceiling.
The exercise of index call (put) warrants, of futures call (put) warrants, of call (put) warrants invested in by mainland Chinese investors, and of call (put) warrants for which the underlying are foreign securities, is limited to cash settlement.
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| Article 5 |
The quantity quoted in a trading order for TPEx listed call (put) warrants shall be one trading unit or a multiple thereof.
One trading unit of TPEx listed call (put) warrants is a lot of 1,000 such warrants.
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| Article 6 |
The price quoted in a trading order for TPEx listed call (put) warrants shall be per unit of one warrant.
The fluctuation unit (tick) is New Taiwan (NT) 1 cent for TPEx listed call (put) warrants priced less than NT$5; NT5 cents for call (put) warrants priced from NT$5 to less than NT$10; NT10 cents for call (put) warrants priced from NT$10 to less than NT$50; NT50 cents for call (put) warrants priced from NT$50 to less than NT$100; NT$1 for call (put) warrants priced from NT$100 to less than NT$500; and NT$5 for call (put) warrants priced NT$500 or more.
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| Article 7 |
Daily fluctuation limits for TPEx listed call (put) warrants are calculated based on type as follows:
- Fluctuation limits for call (put) warrants for which the underlying is a domestic stock or an exchange-traded fund (ETF) as announced by the TPEx shall be calculated based on the following formulas:
- For call warrants
- Limit-up price = Reference price for the given day + (Limit-up price of the underlying security for the given day - Basis price of the underlying security at the opening of trading on the given day) x Exercise ratio
- Limit-down price = Reference price for the given day - (Basis price of the underlying security at the opening of trading on the given day - Limit-down price of the underlying security for the given day) x Exercise ratio
- For put warrants
- Limit-up price = Reference price for the given day + (Basis price of the underlying security at the opening of trading on the given day - Limit-down price of the underlying security for the given day) x Exercise ratio
- Limit-down price = Reference price for the given day - (Limit-up price of the underlying security for the given day - Basis price of the underlying security at the opening of trading on the given day) x Exercise ratio
- Limit-up and limit-down prices for basket call (put) warrants shall be calculated by the formulas in the preceding subparagraph, incorporating the greatest among the separate calculations for each underlying security within the basket obtained by "(Limit-up price of the underlying security for the given day - Basis price of the underlying security at the opening of trading on the given day) x Sum of the exercise ratios for each underlying security within the basket" and "(Basis price of the underlying security at the opening of trading on the given day - Limit-down price of the underlying security for the given day) x Sum of the exercise ratios for each underlying security within the basket."
- Fluctuation limits for index call (put) warrants for which the underlying is an index as announced by the TPEx shall be calculated based on the following formulas:
- Limit-up price for the call (put) warrants = Reference price for the given day ＋ (Closing price of the underlying index on the previous day × corresponding monetary value per index point × exercise ratio × 10%).
- Limit-down price for the call (put) warrants = Reference price for the given day － (Closing price of the underlying index on the previous day × corresponding monetary value per index point × exercise ratio × 10%).
- Fluctuation limits for futures call (put) warrants for which the underlying is futures shall be calculated based on the following formulas:
- Limit-up price for the call (put) warrants = Reference price for the given day ＋ (Daily settlement price of the futures on the previous day × corresponding monetary value per point × exercise ratio × limit-up percentage for the underlying futures).
- Limit-down price for the call (put) warrants = Reference price for the given day － (Daily settlement price of the futures on the previous day × corresponding monetary value per point × exercise ratio × limit-down percentage for the underlying futures).
- The limit-up and limit-down for futures as mentioned above shall be set in accordance with the futures contract specifications. If the contract limit is a 3-level price limit, the largest limit level shall be used in the calculation.
- No price fluctuation limit is imposed on call (put) warrants for which the underlying is an exchange-traded fund (ETF) with foreign component securities or that tracks a foreign futures index, or is a foreign security or index, or spot gold.
For the determination of the "reference price for the given day" referred to in the preceding paragraph, the provision regarding the reference prices for TPEx listed stocks under Article 57, paragraph 1 of the TPEx Trading Rules shall apply mutatis mutandis. However, the reference price on the first day of TPEx listing of an initial issue of call (put) warrants shall be determined in accordance with Article 6 and the methods listed below, provided that in the case of a follow-on issue of call (put) warrants, the reference price on the first day of TPEx listing shall be the basis price at the opening of trading on the given day:
- For those for which the underlyings are domestic stocks or ETFs as announced by the TPEx:
- Reference price on the first day of TPEx listing = Issue price of the call warrant x (Basis price of the underlying security at the opening of trading on the day of the TPEx listing date of the call warrant ÷ Basis price of the underlying security at the opening of trading on the day of the issue date of the call warrant) x (Exercise ratio for the call warrant on the TPEx listing date ÷ Exercise ratio for the call warrant on the issue date).
- Reference price on the first day of TPEx listing = Issue price of the put warrant x (Basis price of the underlying security at the opening of trading on the day of the issue date of the put warrant ÷ Basis price of the underlying security at the opening of trading on the day of the TPEx listing date of the put warrant) x (Exercise ratio for the put warrant on the TPEx listing date ÷ Exercise ratio for the put warrant on the issue date).
- For those for which the underlyings are indexes as announced by the TPEx:
- Reference price for an index call warrant on the first day of TPEx listing ＝ Call warrant issue price × (Closing price of the underlying index on the day before the call warrants are listed on the TPEx ÷ Closing price of the underlying index on the day before the call warrants are issued) × (Exercise ratio on the TPEx listing date of the call warrants ÷ Exercise ratio on the issuance date of the call warrants).
- Reference price for a put warrant on the first day of TPEx listing ＝ Put warrant issue price × (Closing price of the underlying index on the day before the put warrants are issued ÷ Closing price of the underlying index on the day before the put warrants are listed on the TPEx) × (Exercise ratio on the issuance date of the put warrants ÷ Exercise ratio on the listing date of the put warrants).
- For those for which the underlying is spot gold:
- Reference price for a call warrant on the first day of TPEx listing = Issue price of the call warrant x (Average price at closing of the spot gold on the business day prior to the TPEx listing date of the call warrant ÷ Average price at closing of the spot gold on the business day prior to the issue date of the call warrant) x (Exercise ratio for the call warrant on the TPEx listing date ÷ Exercise ratio for the call warrant on the issue date).
- Reference price for a put warrant on the first day of TPEx listing = Issue price of the put warrant x (Average price at closing of the spot gold on the business day prior to the issue date of the put warrant ÷ Average price at closing of the spot gold on the business day prior to the date of the TPEx listing date of the put warrant) x (Exercise ratio for the put warrant on the issue date ÷ Exercise ratio for the put warrant on the TPEx listing date).
- The average price at closing as mentioned above is the average of the highest bid price and lowest ask price of market makers at the closing of spot gold.
- For those for which the underlyings are futures:
- Reference price for a call warrant on the first day of TPEx listing = Call warrant issue price × (Daily settlement price of the futures two days before the call warrants are listed on the TPEx ÷ Daily settlement price of the futures two days before the call warrants are issued) × (Exercise ratio on the TPEx listing date of the call warrants ÷ Exercise ratio on the issuance date of the call warrants).
- Reference price for a put warrant on the first day of TPEx listing = Put warrant issue price × (Daily settlement price of the futures two days before the put warrants are issued ÷ Daily settlement price of the futures two days before the put warrants are listed on the TPEx) × (Exercise ratio on the issuance date of the put warrants ÷ Exercise ratio on the TPEx listing date of the put warrants).
- The reference price for a callable bull contract or callable bear contract on the first day of TPEx listing is as follows:
- Where a security is the underlying object: the difference between the reset adjusted strike price and the basis price for the opening of trading of the underlying security on the day of TPEx listing of the contract × exercise ratio ＋ funding cost.
- Where an index is the underlying object: the difference between the reset adjusted strike index and the closing level of the underlying index on the day preceding the day of TPEx listing of the contract × exercise ratio ＋ funding cost.
- Where spot gold is the underlying object: the difference between the reset adjusted strike price and the average price at closing of the spot gold on the business day preceding the day of TPEx listing of the contract × exercise ratio ＋ funding cost.
- Where futures are the underlying object: the difference between the reset adjusted strike point and the daily settlement price of the underlying futures two days before the warrants are listed on the TPEx × exercise ratio ＋ funding cost.
- The average price at closing as mentioned above is the average of the highest bid price and lowest ask price of market makers at the closing of spot gold.
- The funding cost as mentioned above shall be calculated in accordance with Article 11, paragraph 1, subparagraph 8, item E of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.
- For those for which the underlying is a foreign security or index, its reference price on the first day of TPEx listing is the issue price.
For the determination of the "basis price of the underlying security at the opening of trading on the [given] day" referred to in paragraphs 1 and 2, the provision regarding the basis price for the opening of trading of TPEx listed stocks under Article 60-1 of the TPEx Trading Rules shall apply mutatis mutandis. The "daily settlement price of the underlying futures" shall be handled in accordance with Article 11, paragraph 1, subparagraph 8, item G of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.
The limit-up or limit-down prices referred to in paragraph 1 shall be positive numbers, or in the case of negative numbers, shall uniformly be based on the tick under Article 6 hereof.
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| Article 8 |
The price and time in force of trading quotes for TPEx listed call (put) warrants shall be governed mutatis mutandis by Article 35-12 of the TPEx Trading Rules.
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| Article 8-1 |
(Deleted)
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| Article 9 |
Trading of TPEx listed call (put) warrants on the TPEx shall be carried out via the TPEx automated trade matching system by either brokerage or proprietary trading.
Transactions in call (put) warrants shall be executed by either of two methods: call auction and continuous trading.
The execution prices for call auction trading shall be determined based on the following principles:
- All buy orders higher than the determined price and all sell orders lower than the determined price shall be satisfied in full.
- One side of the buy orders or sell orders at the determined price shall be satisfied in full.
- If two or more prices conform to the principles described in the preceding two subparagraphs, the price closest to the most recent execution price in the current trading session shall be selected, or if no execution price is yet available in the current trading session, the price closest to the basis price for the opening of trading in the current trading session shall be selected.
The execution prices for continuous trading shall be determined for each placed buy or sell order based on the following principles:
- When a bid quote placed for a buy order is higher than or equal to the lowest ask quote from all previously placed sell orders, the bid quote shall be executed sequentially against one or more of the ask quotes, in ascending order of ask price, until satisfaction of the buy order in full or the currently placed bid quote is lower than any ask quote from the unexecuted sell orders.
- When an ask quote placed for a sell order is lower than or equal to the highest bid quote from all previously placed buy orders, the ask quote shall be executed sequentially against one or more of the bid quotes, in descending order of bid price, until satisfaction of the sell order in full or the currently placed ask quote is higher than any bid quote from the unexecuted buy orders.
For the first matching for call (put) warrants in a given trading session, call auction trading shall be used, and for subsequent matching, continuous trading shall be used; then, for a certain period of time before closing of market, call auction trading shall be used to match and execute the accumulated buy/sell orders for that period.
Article 35, paragraph 5 of the TPEx Trading Rules shall apply mutatis mutandis to the expression "a certain period of time" used in the preceding paragraph.
Except as otherwise prescribed by the TPEx, the provisions of the TPEx Trading Rules regarding TPEx listed stocks shall apply mutatis mutandis to TPEx listed call (put) warrants trading via the TPEx automated trade matching system with regard to trading method, trading session, disclosure of trading information, and restrictions on trading orders.
Article 35, paragraph 4 and Article 35-11 of the TPEx Trading Rules do not apply to trades of TPEx listed call (put) warrants through the TPEx automated trade matching system.
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| Article 10 |
Payment settlement operations for TPEx listed call (put) warrants shall be governed mutatis mutandis by the applicable provisions of the TPEx Trading Rules.
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| Article 11 |
Fees collected from investors by securities brokers accepting orders to trade TPEx listed call (put) warrants, and fees collected from securities brokers by the TPEx, shall be governed mutatis mutandis by applicable provisions regarding TPEx listed stocks.
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| Article 12 |
When an investor wishes to request exercise of call (put) warrant exercise rights, it shall have its mandated securities broker file an application with the TPEx. Upon receiving the request of the securities broker, the TPEx will then contact the securities firm issuing the TPEx listed warrants to request exercise. Or in the case of call (put) warrants to be settled in cash, upon expiry of the warrants if the TPEx has calculated and deemed the warrants to possess exercise value, the TPEx will notify the securities broker to exercise the warrants. Fees will be collected pursuant to the preceding article. If the investor applies for exercise via delivery of securities or physical delivery, the exercise value is determined by the following formula: (Strike price of the call [put] warrants × quantity of the underlyings). If the investor applies for cash settlement, or for automatic cash settlement if in the money at expiration, the formula for index call (put) warrants shall be (Difference between the strike point and settlement index × monetary value per point × number of warrant units × exercise ratio); the formula for futures call (put) warrants shall be (Difference between the strike point and the settlement price × monetary value per point × number of warrant units × exercise ratio); the formula for all others shall be (Difference between the strike price and the settlement price × quantity of the underlyings).
When, in order to fulfill its mandate to provide liquidity, a liquidity provider of TPEx listed call (put) warrants buys back from the TPEx any warrant it previously issued, the liquidity provider shall transfer all such repurchased warrants into the central securities depository account of which it previously notified the TPEx in writing. Exercise may not be requested for the call (put) warrants in that account.
The term "exercise value" in paragraph 1 means there is a positive difference between the strike price or point of the linked underlyings, of the call (put) warrants and the settlement price or settlement index of such call (put) warrants upon expiration as calculated pursuant to Article 11, paragraph 1, subparagraph 9, item P of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.
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| Article 13 |
Except where otherwise provided by the terms of issuance, where investors elect to exercise rights on TPEx listed call (put) warrants and the exercise method is "payout in securities, but the issuer may opt for cash settlement," or "payout in physical delivery, but the issuer may opt for cash settlement," if on the same business day the issuing securities firm opts to settle its obligations partially by payout in securities and partially by cash settlement, or partially by payout in physical delivery and partially by cash settlement, the priority in receiving payout in securities or physical delivery shall be determined by the chronological order in which the TPEx receives the requests for exercise from the securities brokers.
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| Article 14 |
These Regulations, and any amendments hereto, shall be promulgated and enforced after ratification by the competent authority.
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