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These Directions are adopted pursuant to Article 12 of the Taipei Exchange (TPEx) Directions for the Management of Financial Derivative Product Transaction Information Databases.
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A financial institution that is a participant in the Financial Derivative Product Early Settlement System ("the System"), when carrying out settlement of trades, shall do so in accordance with these Directions.
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Terms used in these Directions are defined as follows:
- "Early settlement operations" means the handling by the TPEx of the operations for early termination by the parties to a financial derivatives product contract transaction in accordance with the provisions of Points 6 to 10 of these Directions concerning downloading of relevant information, information reporting input, and preliminary and final execution, with multi-party clearing of net amounts payable and receivable between each related participating financial institution.
- "Signatory financial institution" means the financial institution that signs and delivers to the TPEx the letter of participation in the early settlement agreement in accordance with Point 4, paragraph 4.
- "Participating financial institution" means the signatory financial institution that, in accordance with Point 4, paragraph 2, has applied to, and been approved by, the TPEx to participate in a given early settlement procedure.
- "Participate in transaction settlement" means that, in a given early settlement procedure, a participating financial institution reports a financial derivative product transaction between it and another participating financial institution in accordance with Point 7, paragraph 1.
- "Early settlement payment date" means the date, after the given early settlement procedures, on which a participating financial institution must pay the net amount of funds required for early settlement in accordance with the provisions of Point 11.
- "Funds required for early settlement" means the amount of funds receivable by a participating financial institution or payable by it to another participating financial institution in accordance with the final execution result of any given early settlement procedure.
- "Net funds required for early settlement" means the total of all funds payable for early settlement by a participating financial institution in accordance with the final execution result of any given early settlement procedure minus the total of all funds receivable for early settlement by that same participating financial institution. When the net amount is positive, it shall be paid by the participating financial institution in accordance with Point 11. When the net amount is negative, it shall be collected by the participating financial institution in accordance with Point 11.
- "Early settlement agreement" means an early settlement agreement publicly announced separately by the TPEx.
Terms used in these Directions are defined as follows:
- "Early settlement operations" means the handling by the TPEx of the operations for early termination by the parties to a financial derivatives product contract transaction in accordance with the provisions of Points 6 to 10 of these Directions concerning downloading of relevant information, information reporting input, and preliminary and final execution, with multi-party clearing of net amounts payable and receivable between each related participating financial institution.
- "Signatory financial institution" means the financial institution that signs and delivers to the TPEx the letter of participation in the early settlement agreement in accordance with Point 4, paragraph 4.
- "Participating financial institution" means the signatory financial institution that, in accordance with Point 4, paragraph 2, has applied to, and been approved by, the TPEx to participate in a given early settlement procedure.
- "Participate in transaction settlement" means that, in a given early settlement procedure, a participating financial institution reports a financial derivative product transaction between it and another participating financial institution in accordance with Point 7, paragraph 1.
- "Early settlement payment date" means the date, after the given early settlement procedures, on which a participating financial institution must pay the net amount of funds required for early settlement in accordance with the provisions of Point 11.
- "Funds required for early settlement" means the amount of funds receivable by a participating financial institution or payable by it to another participating financial institution in accordance with the final execution result of any given early settlement procedure.
- "Net funds required for early settlement" means the total of all funds payable for early settlement by a participating financial institution in accordance with the final execution result of any given early settlement procedure minus the total of all funds receivable for early settlement by that same participating financial institution. When the net amount is positive, it shall be paid by the participating financial institution in accordance with Point 11. When the net amount is negative, it shall be collected by the participating financial institution in accordance with Point 11.
- "Early settlement agreement" means an early settlement agreement publicly announced separately by the TPEx.
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Matters such as the applicable products, times, and operating procedures for each early settlement that will be undertaken through the System will be publicly announced by the TPEx.
During the registration and application period announced by the TPEx, a signatory financial institution may apply to the TPEx to participate in a given early settlement procedure by means of a written application in the required TPEx format, or by selecting from the menus provided by the System.
If a signatory financial institution has submitted an application under the preceding paragraph, and the TPEx has not rejected the application, it shall be deemed that the TPEx has agreed to its participation in the given early settlement procedure.
When submitting an application under paragraph 2 for the first time, a financial institution shall sign and deliver to the TPEx the letter of participation in the early settlement agreement, in which it agrees to be bound by the terms of the early settlement agreement.
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A participating financial institution is deemed to have agreed that the TPEx may process and use the information it reports to the TPEx on financial derivatives transactions by means of the TPEx's financial derivative product transaction information database system.
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After the conclusion of the registration and application period under Point 4, paragraph 2, the TPEx shall provide participating financial institutions with downloads of their relevant transaction information.
The transaction counterparties of the transaction information of the preceding paragraph shall be limited to the two participating financial institutions who are both parties to the given early settlement procedure of that transaction.
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A participating financial institution shall input the information that is to be reported to the TPEx in accordance with TPEx requirements for information content and format, within the time limit publicly announced by the TPEx for the reporting of the preliminary information relevant to the transaction.
When a participating financial institution fails to provide information required by the TPEx within the time limit for transaction information reporting, the application submitted by the participating financial institution pursuant to Point 4, paragraph 2 will be deemed void. The given financial institution shall not be included in the relevant early settlement procedures, and the provisions of Points 8 to 14 herein will not be applicable.
The required information and format of paragraph 1 will be publicly announced by the TPEx.
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The TPEx may use a two-stage preliminary and final execution method when carrying out an early settlement procedure.
The TPEx may provide all participating financial institutions with its first-stage preliminary execution result for an early settlement procedure as a reference for use by the participating financial institutions when carrying out the second-stage final execution of the early settlement procedure. The provision of a preliminary execution result has no legal effect.
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After the TPEx provides a preliminary early settlement result pursuant to the preceding paragraph, each participating financial institution shall report and input the final executed transaction information in accordance with TPEx requirements regarding the content, format, and time period for submission of the information.
If a participating financial institution fails to input transaction information in accordance with the preceding paragraph, it will be deemed to have agreed that the information provided by it in accordance with Point 7, paragraph 1 may be taken as the final execution transaction information under the preceding paragraph.
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The TPEx shall provide each participating financial institution with a download of its final execution result by 8 a.m. of the final execution date publicly announced by it under Point 4, paragraph 1.
After the TPEx provides a final early settlement execution result pursuant to the preceding paragraph, each participating financial institution shall indicate through the System whether or not it opposes that final execution result. Those who have not indicated opposition will be deemed to have agreed to, and to be bound by, the final execution result.
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If any participating financial institution indicates through the System within the time limit set out in the preceding Point that it opposes the final execution result, then the given early settlement procedure shall be cancelled, and the final execution result will not be binding on either the TPEx or any participating financial institution.
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A participating financial institution that has a net balance of early settlement funds payable on the early settlement payment date shall directly proceed to remit the balance through the System into the dedicated funds clearing account by 1:30 pm on the same day. When a participating financial institution has a net balance of early settlement funds receivable, the TPEx, after actual receipt of the funds on the same day, will directly proceed to remit the funds into the designated funds account from 1:30 pm.
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After the TPEx has effected payment and receipt of early settlement funds for each of the participating financial institutions in accordance with the preceding point, the settlement transaction participation contracts set out in the final execution result will be deemed terminated, and the rights and obligations of the parties participating in the given early settlement procedure will be extinguished.
If any participating financial institution fails to carry out payment and settlement in accordance with the preceding point, then the given early settlement procedure will be canceled, and the final execution result will not be binding on either the TPEx or any participating financial institution. The TPEx shall return the original prices to each of the related participating financial institutions by the first trading day following the early settlement payment date.
The TPEx, depending on the degree of materiality of the circumstances, may restrict or suspend the right to participate in the System for any signatory financial institution that fails to complete payment and settlement in accordance with the preceding paragraph.
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A participating financial institution shall pay a business service fee to the TPEx by the 10th day of the following month for each transaction terminated by an early settlement procedure.
The business service fee of the preceding paragraph shall be calculated by multiplying the notional principal amount of the given financial institution's settlement transaction participation contract, as set out in the given final execution result, by the residual maturity of the derivative, and shall be limited to a fee rate of no more than two-millionths.
Fee rates under the preceding paragraph shall be publicly announced by the TPEx.
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These Directions, and any amendments hereto, shall be publicly announced and enter into force upon being reported to and approved by the competent authority.
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