| Article 21 |
Recommending securities firms shall abide by the following provisions in trading Emerging Stocks:
- Report to the TPEx through the Internet information reporting system designated by the TPEx the volume, ratio, subscription date and price, and the basis of the calculation thereof, of the recommended Emerging Stock held by such recommending securities firm within 3 business days from the day the recommended Emerging Stock is approved by the TPEx for registration. The aforesaid subscription information will be disclosed on the TPEx website together with the company overview information. However, if the securities firm joins the recommendation after trading of such Emerging Stock on the TPEx has already begun, the recommending securities firm shall report such information to the TPEx when applying to become a recommending securities firm for such Emerging Stock.
- Offer buy and sell quotes for at least a certain volume of the recommended Emerging Stock through the Click System prior to the commencement of trading hours each business day; furthermore, the spread between its buy and sell quotes shall not exceed 5 percent of the sell quote.
- Assume the responsibility to continuously quote for the recommended Emerging Stock through the Click System during the trading hours of each business day; furthermore, the spread between its buy and sell quotes shall not exceed 5 percent of the sell quote.
- Respond immediately to price inquiries from customers or other securities firms.
- Assume the obligation to buy or sell the recommended Emerging Stock when a trading order price meets the price quoted for that stock; provided that for a trading order for 1,000 shares or an integral multiple thereof, the order shall only be executed in the volume of 1,000 shares or an integral multiple thereof.
- A trading order not meeting the price quoted may be executed through a click-and-trade transaction only when both sides of the two-way quote are validly existing, provided that price trade-through shall be prohibited, and the clicked trading order price shall be deemed as the changed quoted price.
- Assume the obligation to buy or sell the recommended Emerging Stock when a certain reasonable spread exists between buy and sell orders.
- Perform its obligation to make price quotations based on professional judgment, and not to give a quote that deviates from a reasonable price, thereby impairing the formation of fair prices.
The volume of shares of a recommended securities firm held by a recommending securities firm may not exceed 1 percent of the shares of the recommended securities firm already traded on the TPEx or 500,000 shares (whichever is lower).
The "certain volume" in paragraph 1, subparagraph 2 shall be as follows:
- 5,000 shares if the quoted price is less than NT$20.
- 3,000 shares if the quoted price is NT$20 or more but less than NT$100.
- 2,000 shares if the quoted price is NT$100 or more.
The term "continuously quote" as used in paragraph 1, subparagraph 3 means that a recommending securities firm shall continuously provide buy and sell quotes for no less than the certain volume specified in the preceding paragraph, of shares of the recommended Emerging Stock to meet the purchasing and selling obligations through the Click System during trading hours. In the event that a previous quote is canceled or less than 1,000 shares remain after trading for the quoted volume has been executed through the Click System, the recommending securities firm shall enter new quote information for the stock into the Click System within 3 minutes.
The "obligation to buy or sell when a trading order price meets the price quoted" in paragraph 1, subparagraph 5 means that when the trading order price input into the Click System by a buyer (or seller) of the Emerging Stock recommended by a recommending securities firm meets that firm's quoted selling price (or higher), or quoted buying price (or lower), the firm shall have the obligation to execute the transaction. The Click System will assist in the automatic execution of the transaction. If a trading order price meets the prices quoted by two or more recommending securities firms, the price priority principle shall apply to the prices quoted by the recommending securities firms; if the prices are the same, the time priority principle shall apply in the automatic execution of the transaction.
When a recommending securities firm, pursuant to paragraph 1, subparagraph 6, clicks and trades a trading order not meeting the price quoted, if at the time of the click-and-trade the sell (or buy) quote price is lower (or higher) than the sell (or buy) price clicked, the transaction shall be executed in full, and price trade-through shall be prohibited. The clicked sell (or buy) order price may not be higher (or lower) than the sell (or buy) quote price, and the clicked trading order price shall be deemed as the changed quoted price. If the quantity of shares for execution in a click-and-trade transaction is lower than the certain volume in paragraph 3, the Click System will disclose the remaining volume; the buy or sell quote corresponding to the changed quoted price shall remain at the original price and quantity and continuously be disclosed.
The "obligation to buy or sell when a certain reasonable spread exists between buy and sell orders" in paragraph 1, subparagraph 7 means that when the trading order price input into the Click System by a buyer or seller for an Emerging Stock recommended by a recommending securities firm meets the trading order spread ratio set by that firm's internal operating rules for the trading of Emerging Stocks through price negotiation, that firm shall execute click-and-trade transactions for buy or sell orders within the scope of the corresponding executable volume.
If the recommending securities firm holds less than the minimum quoted volume of the Emerging Stock, it may be exempted from the obligation to provide sell quotes as provided in paragraph 1, subparagraphs 2 and 3 above; provided that it shall, within 1 business day, make corrections and perform the obligation to provide sell quotes.
With respect to an Emerging Stock that it recommends, a recommending securities firm may not, within a short time after the issuer is registered for Emerging Stock trading, sell in a large volume the shares that it has subscribed. The recommending securities firm also may not, for purposes other than market making, sell in a large volume the shares of the Emerging Stock that it holds.
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| Article 22 |
A recommending securities firm shall handle the purchase and sale of the Emerging Stocks it recommends in the following manners:
- Price negotiation through the Click System with securities brokers executing customer trades or with securities dealers; or
- Conduct trades at its place of business through price negotiation in the following manners:
- Price negotiation with a securities broker that is executing customer trades, with each trade having a volume of no less than 100,000 shares or a transaction amount of NT$5 million or more as well as satisfying one of the following conditions:
- The recommending securities firm is conducting brokerage trading of one purchase and of one sale on the same trading day, and the trading counterparty is not an insider of the issuer of the Emerging Stock.
- Other circumstances approved by the TPEx.
- Price negotiation with a securities broker that is using its error account.
- For price negotiations with other recommending securities firms, a description of the trade and approval procedures shall be stated in the internal operating rules pursuant to the TPEx Directions Governing the Particulars to be Recorded in the Internal Operating Rules of Recommending Securities Firms of Emerging Stocks.
- Price negotiation with a securities dealer, with each trade having a volume of no less than 30,000 shares.
The spread between the execution price in subparagraph 2 of the preceding paragraph and the price quoted at that time by the recommending securities firm may not exceed 10 percent of the price quoted, provided that when a recommending securities firm conducts brokerage trading of one purchase and of one sale on the same trading day, the execution price shall fall between the buy price and the sell price quoted at that time by the recommending securities firm.
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| Article 23 |
A recommending securities firm executing trades of Emerging Stocks for its own account through price negotiation with customers at its place of business may do so by the following methods:
- Face-to-face price negotiation;
- Price negotiation by telephone, letter, or telegram;
- Price negotiation via IC card, Internet, or other electronic means of trading.
- Other trading methods approved by the TPEx.
The recommending securities firm trading Emerging Stocks at its place of business through direct price negotiation with a customer shall synchronously record price negotiations made over the telephone and keep the telephone recordings at its place of business.
The provisions of paragraphs 6 to 7 of Article 62 of the TPEx Trading Rules regarding telephone recording affairs shall apply mutatis mutandis to the keeping of telephone recordings under the preceding paragraph and to the handling of the cases of malfunctioning of recording equipment or procedural omissions.
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| Article 24 |
A recommending securities firm shall quote prices for Emerging Stocks through the Click System.
The quotes referred to in the preceding paragraph shall be valid for that day only.
When reporting trades, the recommending securities firm shall enter the securities firm code number, stock name, price, volume, type of trade, and other relevant information into the Click System in the prescribed format. Once the system has accepted the information, it will report it back in sequence through the transmission system in confirmation. The same shall apply to any changes thereto.
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| Article 25 |
Once a recommending securities firm completes a trade of an Emerging Stock through price negotiation via the Click System, the system will promptly report the trade information back in sequence in confirmation.
A recommending securities firm directly trading Emerging Stocks with a customer at its place of business shall, swiftly after the execution of the trade is confirmed, enter the trade information into the Click System in the format prescribed by the TPEx. If both the selling and buying parties are recommending securities firms, the selling party shall enter the information.
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| Article 26 |
A recommending securities firm buying and selling Emerging Stocks through price negotiation may not charge any handling fee from the counterparty of a trade.
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| Article 27 |
A securities dealer trading Emerging Stocks for its own account shall enter the information such as its securities firm code number and the names, prices, and volumes of the stocks it intends to buy or sell into the Click System in the prescribed format and trade such shares through price negotiation with the recommending securities firms for the given Emerging Stocks.
Once accepted by the Click System, the quote information in the preceding paragraph will promptly be reported back in sequence through the transmission system in confirmation. The same shall apply to any changes thereto.
A trading quote made by a securities dealer is valid only in the session in which the quote is made.
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| Article 28 |
When a securities dealer trades Emerging Stocks for its own account, after the recommending securities firms for those stocks have executed trades through price negotiation via the Click System, the system will promptly report back the trade information in sequence.
When a securities dealer purchases Emerging Stocks under Article 22, paragraph 1, subparagraph 2, item D, it shall, within 5 business days after the trade date, apply to become a recommending securities firm for the stocks pursuant to the applicable provisions of the TPEx Rules Governing the Review of Emerging Stocks for Trading on the TPEx.
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| Article 29 |
When a securities broker trades Emerging Stock for a customer, the customer shall set the price limit, and place its order with the securities broker to make the quote on the customer's behalf.
Upon receiving a customer order to trade Emerging Stocks, a securities broker shall promptly enter the information such as the customer's account and the names, prices, and volumes of the stocks specified in the buy or sell order into the Click System in the prescribed format, and negotiate prices with the recommending securities firms for the given Emerging Stocks; however, this rule shall not apply if the customer requests, upon submitting the order, to negotiate prices with the recommending securities firm by the method in Article 22, paragraph 1, subparagraph 2, item A.
Once accepted by the Click System, the customer order information in the preceding paragraph will promptly be reported back in sequence through the transmission system in confirmation. The same shall apply to any changes thereto.
A trading quote made by a securities broker is valid only in the session in which the quote is made.
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| Article 29-1 |
When a securities dealer trades Emerging Stocks for its own account or a securities broker trades Emerging Stocks for a customer, except during the first 5 business days from the beginning of TPEx trading of a stock, the difference between the quoted price and the control basis price may not exceed 30 percent of the control basis price.
The control basis price in the preceding paragraph is, at the time a trading quote is made, the average of the highest bid price and the lowest ask price among the quotes by all recommending securities firms for the stock. However, if any of the following circumstances exists, the price shall be determined by the following principles:
- If there is only a highest bid price, it is the average of the highest bid price and the current day's most recent lowest ask price; if on the current day there is no most recent lowest ask price, it is the highest bid price.
- If there is only a lowest ask price, it is the average of the lowest ask price and the current day’s most recent highest bid price; if on the current day there is no most recent highest bid price, it is the lowest ask price.
- If there are no trading quotes, it is the current day's most recent control basis price; if there is no most recent control basis price on the current day, it is the last control basis price of the preceding business day.
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| Article 30 |
When a securities broker receives a customer order to trade Emerging Stocks, after the recommending securities firms for those stocks have executed trades through price negotiation via the Click System, the system will promptly report the trading information back in sequence, and the securities broker shall report the trading information back to the customer in confirmation.
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| Article 31 |
A securities broker receiving a customer order to trade Emerging Stocks shall collect a handling fee from the customer after the trade has been executed.
A securities broker may set its standard handling fee rate for Emerging Stock trades based on the transaction amount, and may separately set discounts and minimum fees per order. If the fee rate set by the securities broker exceeds 0.5 percent of the transaction amount, the securities broker shall notify its customers of this fact by an appropriate method before implementing the rate, and retain a record of that notification, provided that offshore overseas Chinese and foreign nationals may be notified before clearing and settlement.
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| Article 32 |
The following provisions of the TPEx Trading Rules shall apply mutatis mutandis to the trading of Emerging Stocks on the TPEx: the provisions of Chapter III, Articles 18 to 30 regarding securities firms trading on the TPEx; the provisions of Article 36, paragraph 2 regarding changes to the content of trading quotes; the provisions of Chapter V, Article 62 (except the provisions of paragraph 2, subparagraph 3 regarding price and time in force), Article 62-2, Article 63, and Articles 66 to 68 regarding securities firms trading for the account of customers; and the provisions of Chapter VI, Article 70, Article 70-1, Article 74, and Articles 77 to 78 regarding propriety trading by securities firms.
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