Search Result

Title	Taiwan Depository and Clearing Corporation Directions for the Handling of Book-Entry Transfer Operations for Foreign Currency Denominated Bonds CH
Date	2016.08.26 ( Amended )

Article Content

Chapter 1 General Principles

Article 1

These Directions are adopted pursuant to Articles 4, 33, 33-1, 35, 55, 56, 57, 57-1, 62, 62-1, 64-1, 66, 67, 71-8, 76, 88, 91, 100, and 101 of the Operating Rules of the Taiwan Depository & Clearing Corporation.

Article 2

The term "foreign currency denominated bonds" in these Directions means securities regulated under the Taipei Exchange Rules Governing Management of Foreign Currency Denominated International Bonds (hereinafter, "international bonds"), and foreign currency bonds issued overseas by Taiwan nationals or foreign nationals and approved by the Taipei Exchange (TPEx) for registration.
The term "record date for principal and interest payments" in these Directions means the business day before the day of principal and interest payments. However, if information published or announced in the prospectus or by a foreign depository, book-entry, or clearing institution provides otherwise, those provisions shall govern.

Chapter 2 Account Opening and Contract Signing

Article 3	The Taiwan Depository and Clearing Corporation (TDCC) has opened accounts with foreign depository, book-entry, or clearing institutions (account name: Taiwan Depository & Clearing Corporation; Euroclear account number 99793; Clearstream account number 70500; Hong Kong Monetary Authority account number TDCC001), to be used for operations such as cross-border transfers, book-entry transfers, and principal and interest payments for foreign currency denominated bonds that are registered with or in the custody of a foreign depository, book-entry, or clearing institution and are in circulation in Taiwan.
Article 4	Where an issuer engages TDCC to handle book-entry delivery of international bonds that the issuer has registered with a foreign depository, book-entry, or clearing institution, the issuer or its underwriter shall sign an agreement with TDCC, and fill out an Application to Register Bond Issuance Information and Process Principal and Interest Payments and notify TDCC. If the issuer authorizes another person to sign the agreement under the preceding paragraph, it shall submit a written legal opinion or other sufficient supporting documentation with respect to the following: If the governing law of the agreement is not the law of the Republic of China, the legality and effectiveness of the authorization. That the authorizing person has the power to make the authorization.
Article 5	To register international bonds with TDCC, the issuer shall sign an account opening agreement with TDCC to become a TDCC participant, as a basis for handling the registration of the international bonds and the processing of book-entry delivery. If the issuer authorizes another person to sign the account opening agreement under the preceding paragraph, paragraph 2 of the preceding article shall apply mutatis mutandis.
Article 6	A securities dealer or a foreign depository, book-entry, or clearing institution shall sign an account opening agreement and open a depository account with TDCC to become a TDCC participant, as a basis for discharging performance obligations and other matters pertaining to international bonds. It shall also open a foreign currency deposit account at a bank and carry out a Book-Entry Funds Transfer Account User Registration transaction (transaction code 159) to input its basic identification data for the account, and carry out a Chinese/English Account Name Maintenance transaction (transaction code 179) to input the English account name, for purposes of processing principal and interest payments.
Article 7	A customer or a foreign depository, book-entry, or clearing institution shall open a depository account with a TDCC participant that it does business with, for purposes of discharging performance obligations and other matters pertaining to foreign-currency denominated bonds. It shall also open a foreign currency deposit account at a bank and, through the TDCC participant that it does business with, carry out a Book-Entry Funds Transfer Account User Registration transaction (transaction code 159) to input its basic identification data for the account, and carry out a Chinese/English Account Name Maintenance transaction (transaction code 179) to input the English account name, for purposes of processing the principal and interest payments. A customer subscribing to international bonds may provide to the issuer or its underwriter the foreign currency deposit account data for purposes of principal and interest payments, whereupon the issuer or its underwriter shall transmit that data to TDCC. When the foreign currency deposit account data under the preceding paragraph is not available for the customer, the principal and interest payment may be processed based on the information provided by the issuer or its underwriter.
Article 8	To provide foreign currency denominated bond trade statistics and holder data to the Central Bank, a participant shall follow the procedures below to carry out registration of account type: When opening a depository account under Article 6 or 7, the participant shall carry out a Bond Trading Account Type Serial Number Registration transaction (transaction code B41) to input data including the account number and account type of the customer and notify TDCC. After TDCC conducts international bond book-entry delivery procedures, in any case in which the participant has not registered the bond trading account type, TDCC on the next business day after the delivery date shall prepare an Itemized Statement of Failure to Register Bond Trading Account Type and deliver it to the participant. When international bonds are purchased through the TPEx trading system, in any case in which the participant has not registered the bond trading account type, TDCC on the next business day after the settlement date shall prepare an Itemized Statement of Failure to Register Bond Trading Account Type and deliver it to the participant. After a participant receives an Itemized Statement of Failure to Register Bond Trading Account Type under subparagraph 2 or 3, it shall register the account type data in accordance with subparagraph 1. When owners of foreign currency denominated bonds conduct trades negotiated at securities firms and account transfer operations, in any case in which the participant has not registered the account type, the participant shall register the account type data in accordance with subparagraph 1 before the account transfer may be carried out.

Chapter 3 Registration and Book-Entry Delivery of Dematerialized Bonds

Article 9

An issuer that has registered international bonds with a foreign depository, book-entry, or clearing institution shall abide by the following provisions in handling book-entry delivery of international bonds subscribed to by a TDCC participant or a customer thereof.

Prior to the book-entry delivery date, the issuer or its underwriter shall apply to TDCC for processing of book-entry delivery of international bonds by submitting an Application for Book-entry Delivery or Modified Delivery of Dematerialized Bonds with a book-entry delivery list or computer storage media. After TDCC has reviewed the materials and confirmed that they are free of error, it will notify the foreign depository, book-entry, or clearing institution of the quantities, dates, and other particulars furnished in the inward transfer instruction for the international bonds.
The issuer or its underwriter shall apply to the foreign depository, book-entry, or clearing institution to have the international bonds, which were subscribed to by a TDCC participant or a customer thereof, transferred into the account opened by TDCC with the foreign depository, book-entry, or clearing institution.
For a credit instruction received from the foreign depository, book-entry, or clearing institution by 5 p.m. on the book-entry delivery date, after the instruction has been checked against the book-entry delivery application submitted by the issuer or its underwriter and been found free of error, TDCC will transfer the international bonds into the depository account of the participant or its customer on the book-entry transfer date. If the credit instruction is received after 5 p.m. on the book-entry delivery date, TDCC will process the inward transfer on the following business day. If TDCC receives the credit instruction after the book-entry transfer date, it will process the inward transfer on either the day it receives the instruction, or on the following business day, depending on whether the instruction is received by or after 5 p.m.
On the next business day following completion of book-entry delivery, TDCC will prepare a Securities Distribution Book-entry Transfer List and send it to the participant and the issuer or its underwriter to be checked. If the participant, or the issuer or its underwriter, discovers any inaccuracies, it shall inform TDCC to verify and handle the situation.

Article 10

When an issuer has engaged TDCC to handle registration and book-entry delivery of its international bonds, the associated operations shall be handled in accordance with the TDCC Directions for the Handling of Book-Entry Transfer Operations for Fixed-Income Securities. When TDCC has been engaged to handle on behalf of the issuer the collection and payment of funds in connection with the offering and issuance of the bonds, the associated operations shall be handled in accordance with the TDCC Directions for the Handling of Fund Collection and Payment Operations for Fixed-Income Securities

Chapter 4 Bond Stripping and Reconstitution

Article 11

When a securities dealer applies for the stripping of interest-bearing international bonds into principal only bonds (POs) and interest only bonds (IOs), or for the reconstitution of POs and IOs into interest-bearing international bonds, the associated operations shall be handled in accordance with the TDCC Directions for the Handling of Book-Entry Transfer Operations for Fixed-Income Securities.

Chapter 5 Bond Trade Clearing and Settlement and Book-Entry Transfer

Section 1 Trading Through the TPEx Electronic Bond Trading System

Article 12	When a securities dealer conducts trades through the International Bond Trading System, which is a subsystem of the TPEx Electronic Bond Trading System, the performance and settlement operations shall be conducted in the following manner: Prior to 1:30 p.m. on the third business day after the trade date, if the dealer's total sell trades exceed total buy trades, TDCC will transfer the net surplus from the dealer's depository account into the TPEx depository account on the basis of the Calculation Table for Performance and Settlement. From 1:30 p.m. onward on the third business day after the trade date, if the dealer's total buy trades exceed total sell trades, TDCC will, upon notice from the TPEx, transfer the net surplus from the TPEx depository account into the dealer's depository account on the basis of the Calculation Table for Performance and Settlement.
Article 13	When a securities dealer conducts trades through the International Bond Trading System, queries and account transfer operations shall be conducted in the following manner: On the first business day after the trade date, the securities dealer shall execute a Query on Settlement Information for International Bonds transaction (transaction code A43) and print out a Query on Settlement Information for International Bonds, which will be used to handle performance and settlement operations for the international bonds. Prior to 1:30 p.m. on the third business day after the trade date the securities dealer shall execute a Query on Settlement Instruction for International Bonds (transaction code A43) and print out a Query on Settlement Information for International Bonds, which it should review. If there is a shortfall it shall execute a Settlement and Transfer for International Bonds transaction (transaction code A42) and make a transfer to cover the shortfall.
Article 14	When a securities dealer, through the International Bond Trading System, makes a sale of which the underlying is a PO or IO issued by a domestic issuer, the operations for the withholding of tax on the interest shall be conducted by the following procedures: Outright transactions The selling securities dealer may execute a Principal and Interest Payment Institution Query transaction (transaction code A19) to query information on the account designated by the issuer for income tax on interest. On the third business day after the trade date, the selling securities dealer shall execute a Strip Bond Interest Income Tax Withholding Statement Query transaction (transaction code B52) and print out a Strip Bond Interest Income Tax Withholding Statement Query Form, and perform income tax withholding on the interest from the period of holding by the seller. By the fifth business day after the trade date, it furthermore shall remit the withholding tax into the account designated by the issuer for income tax on interest. On the fourth business day after the trade date, TDCC shall prepare a strip bond interest income tax withholding and exemption roll and deliver it to the institution responsible for principal and interest payments, for that institution to check the status of tax payment, and to perform associated tax reporting matters. Repo transactions For a repo transaction, when the original seller has not repurchased at the agreed date, the principal and interest for the given period and the interest income for the period of holding by the original seller are attributed to the buyer.
Article 15	(Deleted)

Section 2 Trades Negotiated at Securities Firms

Article 16

When a participant handles operations for trades negotiated at securities firms, unless otherwise provided in these Directions, the operations shall be handled in accordance with the TDCC Directions for the Handling of Book-Entry Transfer Operations for Fixed-Income Securities. When TDCC has been engaged to handle on its behalf the collection and payment of funds in connection with the negotiated trades, the associated operations shall be handled in accordance with the relevant provisions of the TDCC Directions for the Handling of Fund Collection and Payment Operations for Fixed-Income Securities.

Article 17

When a customer makes an outright sale of international bonds to a securities dealer in accordance with the procedures prescribed by the TPEx for transactions exempted from the requirement of in-person settlement at the counter, the procedures below shall be followed:

On the transaction date, the securities dealer shall transmit to the TPEx the information on the over-the-counter negotiated transaction that is exempted from in-person settlement, and the TPEx shall then notify TDCC of information including the buyer and the seller's depository account numbers, the bond identification number, the transaction quantity, transaction date, and the transaction reference number.
The selling participant, after receiving the customer's notice of exemption from in-person settlement, shall on the settlement date execute a Negotiated International Bond Trade Exempted From In-Person Settlement Query transaction (transaction code B95), and after checking it against the trade information of which it has been notified by the customer and finding it accurate, shall fill out an Application for Account Transfer for a Negotiated Bond Trade－Substitute for Expenditure Voucher, and execute an Account Transfer Notice for an International Bond Trade Exempted From In-Person Settlement transaction (transaction code B96), and input data including the buyer's account number, the seller's account number, the bond identification number, the transaction quantity, and transaction reference number and notify TDCC.
TDCC, after checking the information of which it was notified by the selling participant against the information of which it was notified by the TPEx and finding it accurate, and confirming the balance in the seller's account, will transfer the international bonds from the customer account under the selling participant's depository account into the proprietary account under the securities dealer's depository account.
In a sale of which the underlying is a PO or IO issued by a domestic issuer, the selling participant shall, by the second business day after the transaction date, remit the withholding tax into the account designated by the issuer for income tax on interest in accordance with Article 14, subparagraph 1. The institution responsible for principal and interest payments shall then perform account reconciliation and associated tax reporting matters.

Section 3 Account Transfer Operations

Article 18

    A participant that handles operations for a direct trade between private parties or for inheritance/donation shall do so in accordance with the Directions for the Handling by Participants of Book-Entry Transfer Operations for Transfer of Securities.
    A participant that handles a repurchase/redemption, creation of pledge, trust or another such operation shall do so in accordance with the TDCC Directions for the Handling of Book-entry Transfer Operations for Fixed-Income Securities.
    TDCC may decline an application by a participant for the handling of operations relating to a direct trade between private parties, donation, repurchase/redemption, trust, cross-border inward or outward transfer, pledge, or futures if the application is submitted after the record date for principal and interest payment at maturity.

Article 19

When foreign currency denominated bonds are registered with or in the custody of a foreign depository, book-entry, or clearing institution, a participant may apply to TDCC for processing of cross-border transfers.
When the participant applies to have foreign currency denominated bonds transferred from an account of its designation at a foreign depository, book-entry, or clearing institution to its domestic depository account, it shall observe the following procedures:

The participant shall fill out a Foreign Currency Denominated Bonds Cross-Border Transfer Application－Substitute for Voucher and execute a Foreign Currency Denominated Bonds Cross-Border Transfer Application transaction (transaction code: G13), and input data including the depository account number, bond identification code, ISIN code, date, and quantity of the inward transfer to notify TDCC.
When TDCC receives the application referred to in the preceding subparagraph, it will notify the foreign depository, book-entry, or clearing institution of the transfer quantity, date, and other data.
After TDCC receives a credit notice from the foreign depository, book-entry, or clearing institution and checks it against the data furnished in the participant's application for the inward transfer and found it accurate, TDCC will make the entry to the account of the participant, and notify the participant to make the necessary entry to the account of its customer. If its check reveals a mismatch in the data, TDCC will notify both parties to make a correction. If it is not possible to make a correction within five business days, TDCC will notify the foreign depository, book-entry, or clearing institution to reverse the transfer.
After TDCC has received the notice of the data from the participant's application for inward transfer, if TDCC on the settlement date has not yet received a credit notice from the foreign depository, book-entry, or clearing institution, it will notify the participant to handle the matter within five business days. If the matter is not handled within that time period, TDCC will deem the application invalid, and will inform the participant.

When the participant applies to have foreign currency denominated bonds transferred from its depository account to an account of its designation at a foreign depository, book-entry, or clearing institution, it shall observe the following procedures:

The participant shall fill out a Foreign Currency Denominated Bonds Cross-Border Transfer Application－Substitute for Voucher and execute a Foreign Currency Denominated Bonds Cross-Border Transfer Application transaction (transaction code: G13), and input data including the depository account number, bond identification code, ISIN code, date, and quantity of the outward transfer to notify TDCC.
When TDCC receives the application referred to in the preceding subparagraph, it will earmark the quantity that is to be outwardly transferred, and will notify the foreign depository, book-entry, or clearing institution of the outward transfer quantity, date, and other data.
After TDCC receives a debit notice instruction from the foreign depository, book-entry, or clearing institution and checks it against the data furnished in the participant's application for the outward transfer and found it accurate, TDCC will make the entry to the account of the participant, and notify the participant to make the necessary entry to the account of its customer. If its check reveals a mismatch in the data, TDCC will notify both parties to make a correction. If it is not possible to make a correction within five business days, TDCC will notify the foreign depository, book-entry, or clearing institution to reverse the entry.
After TDCC has received the notice of the data from the participant's application for outward transfer, if TDCC on the settlement date has not yet received a debit notice from the foreign depository, book-entry, or clearing institution, it will notify the participant to handle the matter within five business days. If the matter is not handled within that time period, TDCC will deem the application invalid, and will remove the earmark on the quantity that was to be outwardly transferred, and inform the participant.

To cancel an application for cross-border transfer, the participant shall fill out a Foreign Currency Denominated Bonds Cross-Border Transfer Application－Substitute for Voucher and execute a Foreign Currency Denominated Bonds Cross-Border Transfer Application transaction (transaction code: G13), and input data including the depository account number, bond identification code, ISIN code, and original settlement serial number to notify TDCC. Once the TDCC has confirmed cancellability, it will perform the cancellation procedures and notify the participant. In the case of cancellation of an outward cross-border transfer, it additionally will remove the earmark on the quantity that was to be outwardly transferred.
The participant may execute a Foreign Currency Denominated Bonds Cross-Border Transfer Query transaction (transaction code: G14) to query the data related to a foreign currency denominated bonds cross-border transfer and the status of handling of the transfer.

Article 19-1

If the international bonds are registered with the TDCC, the procedures for account transfer operations between a foreign depository, book-entry, or clearing institution and another participant are as follows:

The transferring party shall fill out a Foreign Depository Transfer Application－Substitute for Expenditure Voucher and execute a Foreign Depository Transfer Transaction (transaction code C58), and input data including the transferring and receiving account numbers, the bond identification code, the quantity, the ISIN code, and the type of participant of the foreign depository to notify the TDCC.
After receiving the notice of the preceding subparagraph and reviewing the relevant data and finding it accurate, the TDCC will transfer the international bonds from the proprietary account or customer account under the transferring party's participant depository account into the proprietary account or customer account under the receiving party's participant depository account.
A participant may execute a Foreign Depository Transfer Transaction Query (transaction code C59) to query the status of transfer of the international bonds.

Chapter 6 Principal and Interest Payments and Taxation

Article 20	When foreign currency denominated bonds are registered with or in the custody of a foreign depository, book-entry, or clearing institution, TDCC will handle principal and interest payment operations in the following manner: One month prior to, and during the period from the third business day to the first business day prior to, the record date for principal and interest payments on foreign currency denominated bonds, TDCC shall, respectively, prepare a Table of Basic Identification Data of Holders of Foreign Currency Denominated Bonds, and provide to the participant or underwriter the depository account number of any customer that has not left on file with the participant or underwriter such information as the foreign currency deposit account or English account name. The participant shall then promptly notify its customer to supplement or correct the data, and then carry out registration. The participant shall prepare a list of information including the holders and the redeemers of foreign currency denominated bonds who have their bonds in central custody at TDCC as of the record date for principal and interest payments on the foreign currency denominated bonds, and shall deliver the list to TDCC on the record date. TDCC shall conduct a secondary review, checking the data of the preceding paragraph against the credit instructions issued by the foreign depository, book-entry, or clearing institution on the record date for principal and interest payments, and shall compile the data into a list of bondholders. After receiving a principal and interest payment credit notice from a foreign depository, book-entry, or clearing institution, TDCC will notify it to transfer payment to a TDCC-designated exclusive account for receipts and disbursements. After receiving the funds referred to in the preceding subparagraph, TDCC will notify the bank where the designated special account for receipts and disbursements is maintained, to transfer by the next business day principal and interest in the amounts due, minus remittance fees and other related fees, to the foreign currency deposit accounts of the bondholders included in the list of bondholders furnished by TDCC. Unless otherwise provided in the bond issuance rules, the amounts of principal and interest due shall be calculated in pips in the currency in which the bond principal and interest payments are made. Any bondholders who are still owed a fractional remainder smaller than one pip after the final such payment will be ranked in sequential order from largest to smallest based on the amount of their unpaid remainders, and will receive one pip each in order of their ranking until all unpaid remainders have been distributed. If two or more bondholders are owed an equal remainder, one of them will be randomly selected to receive distribution. For foreign currency denominated bonds that are under attachment, TDCC shall notify the executing authorities of the information relating to any redemption of principal, and shall then deliver the amount of the principal that is remittable, minus the remittance fees, to the executing authorities in accordance with their instructions.
Article 21	If there occurs any discrepancy between the actual credit notice given by the foreign depository, book-entry, or clearing institution on the principal and interest payment date and the amount of principal and interest calculated by TDCC based on the prospectus, TDCC will notify the foreign depository, book-entry, or clearing institution for confirmation. If the foreign depository, book-entry, or clearing institution completes the confirmation by the deadline specified in the prospectus for payment by TDCC of the funds to the bondholders, and confirms that the credit instruction amount is correct, TDCC will carry out the principal and interest payment transfer operations in accordance with subparagraph 4 of the preceding article. If the foreign depository, book-entry, or clearing institution fails to complete the confirmation by the deadline specified in the prospectus for payment by TDCC of the funds to the bondholders, TDCC will perform the operations for transfer of the funds, minus remittance fees and other related fees, as follows: If the actual credit notice is greater than the amount of principal and interest calculated by TDCC based on the prospectus, TDCC will notify the foreign depository, book-entry, or clearing institution to transfer payment of the amount of principal and interest as calculated by TDCC to the TDCC-designated exclusive account for receipts and disbursements, and to retain the amount of the difference in the account of the foreign depository, book-entry, or clearing institution for follow-up handling. If the actual credit notice is less than the amount of principal and interest calculated by TDCC based on the prospectus, TDCC will notify the foreign depository, book-entry, or clearing institution to transfer payment of the amount specified in the actual credit notice to the TDCC-designated exclusive account for receipts and disbursements, and will carry out the principal and interest payment transfer operations. Then, once the foreign depository, book-entry, or clearing institution has confirmed and made up the amount of the difference, TDCC will notify the foreign depository, book-entry, or clearing institution to transfer payment of that amount to the TDCC-designated exclusive account for receipts and disbursements, and will carry out the principal and interest payment transfer operations.
Article 22	When the TDCC handles principal and interest payment operations for foreign currency denominated bonds registered with or in the custody of a foreign depository, book-entry, or clearing institution, if there is any failure in the transfer of the amount of any principal and interest payments, the procedures for re-remittance are as follows: The securities broker and the securities dealer shall execute a Foreign Currency Denominated Bond Principal and Interest Payment Remittance Failure Query (transaction code A93), to query the reason for the remittance failure. The securities broker furthermore shall notify the customer to apply for re-remittance. When carrying out re-remittance, the customer and the securities dealer must submit a photocopy of the foreign currency deposit account passbook and fill out an Application for Re-Remittance of Foreign Currency Denominated Bond Principal and Interest Payment. The in-charge personnel of the securities broker and the securities dealer shall execute an Application for Re-Remittance of Foreign Currency Denominated Bond Principal and Interest Payment (transaction code A94), and input the participant identification code, account serial number, bond identification code, principal and interest payment date, and system reference number to notify the TDCC of the application for re-remittance of principal and interest payment, and print the information in the certification column of the application and submit it to the supervisory personnel for review. The supervisory personnel of the securities broker and the securities dealer shall execute a Foreign Currency Denominated Bond Principal and Interest Payment Re-Remittance Release Operation (transaction code A95), and input the participant identification code, account serial number, and re-remittance serial number to notify the TDCC to carry out the re-remittance.
Article 23	When an issuer has engaged TDCC to handle registration and book-entry delivery of its international bonds, and the issuer, itself or through a third party engaged by it, handles principal redemption and interest payment operations, the principal and interest payment operations shall be handled in accordance with the TDCC Directions for the Handling of Book-Entry Transfer Operations for Fixed-Income Securities. If the issuer has designated the TDCC to handle the principal redemption and interest payment operations, the principal and interest payment operations shall be handled in accordance with the TDCC Directions for the Handling of Fund Collection and Payment Operations for Fixed-Income Securities.
Article 24	After the end of each fiscal year, TDCC shall, with respect to the previous year's countable interest income and tax withholding data of holders of instruments comprising POs or IOs issued by domestic issuers, compile and prepare Strip Bond Interest Income Withholding and Exemption Rolls and submit them to the institutions responsible for principal and interest payments, for them to carry out the issuance and delivery of withholding and exemption certificates.

Chapter 7 Supplementary Provisions

Article 25	When TDCC handles book-entry transfer and cross-border transfer operations for foreign currency denominated bonds, it will charge fees in accordance with the TDCC Rules Governing Charges for Fixed-Income Instruments.
Article 26	All matters on which these Directions are silent will be governed by the Operating Rules of the Taiwan Depository & Clearing Corporation and other applicable laws and regulations.