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In view of the fact that call (put) warrants feature the right to purchase or sell linked underlyings and, during the duration of call (put) warrants, their price interacts with the price of such underlyings, investors are advised to be aware of the impact of price fluctuation of such underlyings on the call (put) warrants they hold.
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| 2 |
Prior to listing on the TPEx, the terms and conditions of issuance of call (put) warrants, such as issue price and exercise ratio, are established by the issuer. After the call (put) warrants are listed and traded and freely transferred on the TPEx market, their prices are determined according to supply and demand of the market.
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The terms and conditions of contract-based call (put) warrants, such as trade price, exercise ratio, strike price, and exercise method, are negotiated and agreed upon between the securities firm and investors before trading. These warrants will not be listed for trading on the TPEx securities market, nor may their trading contract be transferred. Investors acknowledge their awareness of this feature of contract-based warrants.
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Prior to purchase of call (put) warrants, investors are advised to understand the financial and credit positions of the securities firm in connection with its ability to perform the contract. The Taipei Exchange is not responsible for guaranteeing the performance of the issuer's contractual obligations.
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If a call (put) warrant fails to be listed on the TPEx due to the securities firm's breach of relevant provisions, or a call (put) warrant is delisted from the TPEx due to causes such as delisting of the linked underlying, or the trading of a contract-based call (put) warrant is not approved by the TPEx, the securities firm shall repurchase the call (put) warrant from the investors at the stated price, or return to the investors the prices they have already paid, according to the original terms and conditions of issuance or trading contract clauses, in order to close out the contractual obligation of the securities firm.
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When trading call (put) warrants that have futures as the underlyings, investors should pay attention to the various price risks of the underlying futures that may be encountered during the trading hours set in the rules for the respective futures contracts during the duration of the warrants.
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For a callable bull contract or callable bear contract, or extendable callable bull or bear contract, when the closing price of the underlying security, the average price at closing of the underlying spot gold, the closing index of the underlying index, or the simple arithmetic mean trade price of the underlying futures during the last minute before 1:30 p.m., reaches the knock-out price or point on a given day, that day will be deemed the contract's last trading day, and the contract will expire on the second following business day, requiring automatic cash settlement based on the simple arithmetic mean trade price of the underlying security, the average price at closing of the underlying spot gold, the underlying settlement index, or the underlying futures settlement price on the business day following the last trading day of the contract. If there is no trade price for the underlying security, then it will be calculated based on the basis price for the underlying security at the opening of trading on the expiration date of the contract. If the trading of the underlying security, the underlying spot gold, or the underlying futures is halted or suspended on the business day following the last trading day of the contract and on the expiration date thereof, then it will be calculated based on the closing price of the underlying security, the average price at closing of the underlying spot gold, or the daily settlement price of the underlying futures on the last trading day of the contract. The underlying settlement index, the underlying futures settlement price, and the daily settlement price of the underlying futures mentioned above shall be determined in accordance with Article 11, paragraph 1, subparagraph 6, subparagraph 7, and subparagraph 8, item G of the TPEx Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.
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The risk disclosure statement is not inclusive and is not a comprehensive list of all risks of call (put) warrants and factors that may affect market prices. Before making an investment, investors should not only carefully review the risk disclosure statement but also be alert to other factors that may cause an impact, and make thoroughgoing financial plans and risk assessments to avoid insufferable losses from hasty or ill-judged decisions on investment in such derivative financial products.
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Trading of a call (put) warrant for which the linked 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 that is registered for TPEx trading, is not subject to any price fluctuation limits. When trading call (put) warrants that have foreign securities or indices as the underlyings, investors should also consider the exchange rate and other associated risks.
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