| Article 1 |
These Rules are adopted pursuant to Article 39 of the Taipei Exchange (TPEx) Rules Governing Securities Trading on the TPEx (the “Trading Rules”).
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| Article 2 |
Trading of convertible corporate bonds, exchangeable corporate bonds, and bond conversion entitlement certificates shall be undertaken in accordance with these Rules. The TPEx Trading Rules and the provisions of related bylaws with respect to TPEx listed stocks shall apply mutatis mutandis to any matters for which these Rules make no provision.
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| Article 3 |
The methods by which securities firms trade convertible corporate bonds, exchangeable corporate bonds, and bond conversion entitlement certificates are as follows:
- Proprietary trading or brokerage trading through the TPEx automated trade matching system.
- Proprietary trading by over-the-counter (OTC) negotiation at the places of business of securities firms.
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| Article 3-1 |
For trading in convertible corporate bonds or exchangeable corporate bonds, a securities firm may accept an order from a principal only after the principal has signed a risk disclosure statement.
The following are exempted from signing risk disclosure statements: professional institutional investors; 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, by securities investment consulting enterprises, or by securities brokers concurrently operating securities investment consulting enterprises; and discretionary investment accounts managed by managed futures enterprises.
The risk disclosure statement referred to in paragraph 1 will be separately prescribed by the TPEx.
"Professional institutional investors" referred to in paragraph 2 means professional institutional investors as defined in Article 43, paragraph 6 of the TPEx Trading Rules.
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| Article 3-2 |
If the underlying of convertible corporate bonds or the underlying of exchangeable corporate bonds is securities listed on the Taiwan Innovation Board (TIB) of the Taiwan Stock Exchange Corporation, the securities firm, before accepting a principal's first-time order to buy TIB securities, shall verify that the principal meets the eligibility qualifications required of a principal to purchase TIB securities as specified in the Operating Rules of the Taiwan Stock Exchange Corporation and has signed a risk disclosure statement in accordance with the rules relating to TIB securities, and only then may the securities firm accept the principal's order.
With respect to the eligibility qualifications required of a principal under the preceding paragraph, the securities firm shall fulfill its duty of due diligence and obtain reasonable, credible supporting evidence, and shall regularly carry out follow-up review of the principal's qualifications.
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| Article 4 |
The time period for trading of convertible corporate bonds, exchangeable corporate bonds, and bond conversion entitlement certificates is as follows:
- For trading through the TPEx automated trade matching system, the time period set out in the TPEx Trading Rules applies mutatis mutandis.
- For OTC negotiation, the time period is 9 a.m. to 3 p.m.
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| Article 5 |
Quotes for trades of corporate bonds and exchangeable corporate bonds shall take bonds with face value of NT$100,000 as one trading unit. Quantities quoted for trading shall be one trading unit or integer multiples of one trading unit.
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| Article 6 |
All trading of convertible corporate bonds and exchangeable corporate bonds through the TPEx shall without exception be on an ex-dividend basis.
The buyer shall pay to the seller, together with the trade price, any interest receivable as of the trade date by the seller.
Interest receivable pursuant to the preceding paragraph shall be calculated based on the number of calendar days from the interest accrual date to the trade date, inclusive of the first day but exclusive of the last.
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| Article 7 |
Except as otherwise prescribed by the TPEx, the provisions of the Trading Rules with respect to TPEx listed stocks apply mutatis mutandis to the trading method, disclosure of trading information, restrictions on trading orders, and any other relevant matters with respect to the trading of convertible corporate bonds and exchangeable corporate bonds through the TPEx automated trade matching system.
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| Article 8 |
Buy and sell prices for outright purchases and sales of convertible corporate bonds and exchangeable corporate bonds shall be quoted on a price-per-hundred basis, with units of price fluctuation as follows:
- NT$5 cents for those priced less than NT$150.
- NT$1 for those priced from NT$150 to less than NT$1,000.
- NT$5 for those priced at NT$1,000 or higher.
The price fluctuation limit for outright trades of convertible corporate bonds and exchangeable corporate bonds during any business day shall be limited to 10 percent above or below the given day's reference price.
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| Article 9 |
The reference price for outright trades of convertible corporate bonds and exchangeable corporate bonds on the first day of TPEx trading shall be determined as follows:
- The public offering price of the given convertible corporate bond or exchangeable corporate bond.
- For convertible corporate bonds and exchangeable corporate bonds announced for delisting by the TWSE and furthermore announced for TPEx trading by the TPEx, the price will be the closing price on the final trading day prior to delisting by the TWSE. If there is no closing price for that final trading day, the price will be set pursuant to Article 58-3, paragraph 2, subparagraph 2 of the Operating Rules of the Taiwan Stock Exchange Corporation.
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| Article 10 |
The provisions of the TPEx Trading Rules with respect to TPEx listed stocks apply mutatis mutandis to the method of calculation and public announcement of the reference price, the base price for the opening of trading, and closing price, on any given business day, for outright trades of convertible corporate bonds and exchangeable corporate bonds.
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| Article 11 |
Prior to commencing business on each business day, securities firms shall post at their places of business the high, low, closing, and weighted average price and the transaction volume for each convertible corporate bond and each exchangeable corporate bond in outright trades on the preceding business day.
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| Article 12 |
Securities dealers may use the following methods when engaging in proprietary trading of convertible corporate bonds and exchangeable corporate bonds:
- Trading through the TPEx automated trade matching system.
- Trading by OTC negotiation at the places of business of securities dealers. Trading by negotiation includes outright trades and repo trades.
Except where these Rules provide otherwise, the provisions of the TPEx Trading Rules with respect to TPEx listed stocks apply mutatis mutandis to securities dealers engaging in outright trades under subparagraph 2 of the preceding paragraph.
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| Article 13 |
Proprietary trading of convertible corporate bonds and exchangeable corporate bonds by securities dealers through OTC negotiation at their places of business shall be restricted to the following:
- Trades with customers or with other securities dealers.
- Trades necessitated when an out-trade or default occurs in a securities broker’s trading through the TPEx automated trade matching system and the securities broker must enter into a negotiated trade with another securities dealer to cover the securities because of inability to do so through the automated trade matching system.
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| Article 13-1 |
When a securities dealer engages in convertible bond asset swap business in accordance with the TPEx Rules Governing Over-the-Counter Trading of Financial Derivatives by Securities Firms and sells convertible corporate bonds on the trade date of the asset swap contract, or exercises its call option and repurchases the convertible corporate bonds, the related price quotation and trading methods shall be as stipulated in the asset swap contract and are exempted from the related provisions of Articles 8, 10, and 12 of these Rules.
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| Article 14 |
When a securities dealer engages in negotiated trades of convertible corporate bonds or exchangeable corporate bonds at its place of business, settlement by the netting of an outright sale or purchase and a repo trade or of an outright purchase and an outright sale shall be performed in accordance with Article 70-2 of the TPEx Trading Rules. A securities dealer conducting repo trades in convertible corporate bonds or exchangeable corporate bonds shall do so in accordance with the relevant provisions of Article 52 and Article 79 of the TPEx Trading Rules.
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| Article 15 |
When the issuer of convertible corporate bonds has TPEx-listed stock, the provisions relating to TPEx listed stocks apply mutatis mutandis to TPEx trading of its bond conversion entitlement certificates.
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| Article 16 |
The reference price on the first day of TPEx listing of bond conversion entitlement certificates shall be calculated as the closing price of the underlying stock on the preceding business day minus the rights differential. If the rights differential cannot be determined, the reference price shall be calculated on the basis of the closing price of the underlying stock on the preceding business day. In the event that there is no closing price of the underlying convertible stock for the preceding business day, the reference price shall be determined on the basis of the principles set out in Article 57, paragraph 1 of the TPEx Trading Rules.
The rights differential of the preceding paragraph is calculated based on the forecasted figures for shareholder equity distribution for the period as filed with the TPEx in accordance with the provisions of the issuer's contract for TPEx listing. The issuer shall be solely responsible, however, in the event of a discrepancy between the forecasted figures filed with the TPEx and the actual figures.
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| Article 17 |
When a securities dealer engages in trading of convertible corporate bonds or exchangeable corporate bonds, it shall handle payment/delivery in accordance with the Operating Rules of the Taiwan Depository & Clearing Corporation.
The provisions of Article 80 of the TPEx Trading Rules apply mutatis mutandis when a securities dealer performs the payment/delivery and settlement of repo trades in convertible corporate bonds or exchangeable corporate bonds.
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| Article 18 |
Except where these Rules provide otherwise, the provisions of the TPEx Trading Rules and other rules and bylaws with respect to TPEx listed stocks apply mutatis mutandis to the handling of payment/delivery and settlement, out-trades, and defaults in trading of convertible corporate bonds, exchangeable corporate bonds, and bond conversion entitlement certificates.
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| Article 19 |
TPEx provisions with respect to TPEx listed stocks apply mutatis mutandis to the rates for fees collected by a securities firm trading on the TPEx when handling brokerage trading in convertible corporate bonds, exchangeable corporate bonds, or bond conversion entitlement certificates.
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| Article 20 |
TPEx provisions with respect to TPEx listed stocks apply mutatis mutandis to the rates for business service fees charged by the TPEx to securities firms trading on the TPEx, with the exception of bond repo transactions, to which bond fee rates will apply.
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| Article 21 |
These Rules, and any amendments hereto, shall enter into force after submission to and approval by the competent authority.
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