| Article 1 |
These Directions are adopted pursuant to Articles 82-1 and 83 of the Taipei Exchange Rules Governing Securities Trading on the TPEx ("TPEx Rules").
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| Article 2 |
With the exception of transactions executed through price negotiations at securities firms' places of business, clearing and settlement operations for securities traded on the TPEx shall be conducted through the TPEx by securities firms and securities finance enterprises. Receipt and delivery of the securities will be performed by the central securities depository appointed by the TPEx.
Securities transactions made by the branch offices of a securities firm shall first be consolidated by the head office and handled in accordance with the preceding paragraph.
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| Article 3 |
Payment and delivery of funds and securities for securities traded by a principal via the TPEx automated trade matching system, block trading system, or odd-lot trading system shall be done by book-entry transfer except where otherwise provided by law and regulation or the TPEx.
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| Article 4 |
A securities firm conducting funds settlement for securities traded on the TPEx shall open separate current deposit settlement accounts, for the respective types of business it operates, at the bank where it transacts business.
The funds in the settlement account opened by a securities broker ("broker") pursuant to the preceding paragraph may not be used for any purpose other than the payment and receipt or the transfer of funds in connection with securities trades brokered by it, except where otherwise provided by law or regulation or the TPEx. If a broker has mandated two or more financial institutions to perform payment and receipt of customer funds on its behalf, only one of them may conduct account transfers of funds for settlements through the TPEx settlement account. Accounts at other financial institutions may only be used as for transitional purposes, and each day, customers' settlement funds in those accounts shall be cleared into the account of the abovementioned financial institution or remitted to the customer's book-entry funds transfer account. No residual balance may be retained in those accounts. Each of a broker's customers may open a book-entry funds transfer account for securities trading at only one of those financial institutions.
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| Article 5 |
In addition to appointment by the TPEx of a central securities depository to print statements relating to clearing and settlement, securities firms and securities finance enterprises shall each respectively print such statements.
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| Article 6 |
If the clearing and settlement for the TPEx automated trade matching system, after-market fixed-price trading system, block trading system, and odd-lot trading system takes place on a T + 2 basis, the clearing and settlement operations shall be conducted on a delivery versus payment basis pursuant to the following rules:
- A securities firm is obligated to the TPEx to perform clearing and settlement for trades it conducts through the TPEx. The TPEx is obligated to make counter-prestation clearing and settlement for trades employing multilateral net clearing and settlement.
- For trades employing multilateral net clearing and settlement, the TPEx will perform clearing and settlements for securities firms and securities finance enterprises after offsetting the amounts of securities and funds receivable and payable by each.
- Securities firms and securities finance enterprises have the obligation of advance performance with respect to securities deliverable or funds payable. Until that obligation has been performed, the TPEx may retain the funds and securities receivable by a securities firm or securities finance enterprise.
- Securities firms and securities finance enterprises shall complete clearing and settlement procedures with the TPEx for the prices and securities that are payable and receivable on securities trades within the following time limits:
- Securities deliverable to the TPEx shall be delivered by 10 a.m. of the second business day following the trade date.
- Prices payable to the TPEx shall be paid by 11 a.m. of the second business day following the trade date.
- Securities receivable from the TPEx shall be received after 11 a.m. of the second business day following the trade date.
- Prices receivable from the TPEx shall be received after 11 a.m. of the second business day following the trade date.
- If the balance of securities on deposit in the custodial book-entry account of the securities firm representing the seller is insufficient for the performance of clearing and settlement obligations, the shortfall shall be handled pursuant to Article 86-1 of the TPEx Rules.
- A broker, following execution of a trade, shall collect from the customers the price payable for the securities bought, or collect the securities sold, pursuant to Article 5 of the Account Opening Contract for Trading of Securities on the TPEx.
- A broker filing a report with the TPEx of delayed clearing and settlement by an offshore overseas Chinese, foreign national, or Mainland Area investor, shall do so in compliance with the TPEx's Guidelines for Securities Brokers in Reporting Delayed Clearing and Settlement and Default by Customers, and shall notify the principal or the custodian institution pursuant to their stipulations.
- In the case of brokerage orders for margin trades, the securities broker shall collect from its customers the margin for the margin purchase or the margin for the short sale, as the case may be, pursuant to Article 5 of the Account Opening Contract for Trading of Securities on the TPEx.
- Where a securities firm is unable to fulfill its clearing and settlement obligations, the TPEx may halt the firm's trading through the TPEx and report by letter to the competent authority, and may appoint other securities firms to complete its clearing and settlement obligations. The TPEx may also handle the matter in accordance with the procedures prescribed in the TPEx Regulations for Administration of the Joint Responsibility System Clearing and Settlement Fund. The purchased securities shall be transferred to the centralized depository account of the TPEx, and the money shall be deposited into the dedicated bank account of the TPEx for further processing by the TPEx.
- In the event of the violation of its clearing and settlement obligations by a securities finance enterprise, the TPEx shall report to the competent authority for handling on a case by case basis.
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| Article 7 |
When a securities dealer trades bonds through the TPEx electronic bond trading system (EBTS), the clearing and settlement operations shall be conducted pursuant to the TPEx Regulations Governing the Electronic Bond Trading System.
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| Article 8 |
When a bond trade is made by price negotiation at the business premises of the securities firm, the securities firm shall directly complete receipt or delivery of the price or securities with the customer or the counterparty securities dealer of the trade, or shall itself deliver the securities in accordance with the relevant provisions of the operating rules of the central securities depository, or deliver the securities in accordance with the provisions regarding transfer and registration under the Directions for the Operation of Book-Entry Central Government Securities. However, in when-issued trading of central government bonds, the receipt or delivery of the price or securities and the delivery of the trade confirmation, delivery statement, and clearing and settlement statement to the customer or the securities dealer of the trade counterparty for their signature or seal shall be completed in accordance with the above provisions by 3 p.m. on the issuance date of the government bonds. If, however, bond trading through the TPEx Electronic Bond Trading System is suspended under applicable regulations on the business day prior to the originally scheduled date of issue of the central government bonds because of a natural disaster or force majeure, the receipt or delivery of the price or securities for the when-issued trading of the central government bonds shall be completed by 3 p.m. on the first business day following the issuance date of the government bonds. If a trade made through price negotiation is an RP/RS trade of bonds, except in the case where the subject of the trade is a convertible corporate bond, exchangeable corporate bond, or corporate bond with warrants, a bond passbook issued by a custodian institution designated by the securities firm or a certificate of RP/RS transactions of book-entry central government bonds issued by a book-entry central government bond clearing bank may be used in lieu of delivery. With the exception of clearing and settlement through delivery of certificated bonds, and when the subject of an outright purchase or sale is convertible corporate bonds, exchangeable corporate bonds, or corporate bonds with warrants, when a securities firm engages in trading of bonds by price negotiation at its place of business, if the customer or the securities firm of the trade counterparty has signed a letter of consent and a record is kept of receipt and payment of the price, then the trade confirmation, delivery statement, and clearing and settlement statement shall be delivered by mail or by e-mail to the address designated by the customer or the securities firm of the trade counterparty on the business day following the trade date, without the requirement of a signature or seal, provided that a record of the delivery or e-mail shall be kept. If the subject of the trade through negotiation is a convertible corporate bond or exchangeable corporate bond, the delivery may be made by book-entry transfer pursuant to the operating rules of the central securities depository. If the trade confirmation, delivery statement, and clearing and settlement statement are to be delivered via e-mail as set out above, the customer's written consent shall be obtained and appropriate measures taken to ensure accurate and secure delivery of the information.
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| Article 9 |
If the clearing and settlement operations for a block trade of TPEx listed securities are on the trade date, clearing and settlement operations shall be conducted on the day of the transaction.
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| Article 10 |
These Directions, and any amendment hereto, shall be implemented after being passed by the TPEx board of directors and reported to and ratified by the competent authority.
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