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Title	Taipei Exchange Rules Governing Management of Foreign Currency Denominated International Bonds CH
Date	2023.03.09 ( AMENDMENT )

Article Content

Chapter 1 General Principles

Article 1	These Rules are adopted pursuant to Articles 7 and 8 of the Regulations Governing Trading of Securities on the Taipei Exchange (TPEx).
Article 2	Except as otherwise provided by law or regulation, the TPEx listing review and TPEx trading of international bonds shall comply with these Rules. Matters for which these Rules make no provision shall be governed by the Taipei Exchange Rules Governing Securities Trading on the TPEx ("TPEx Trading Rules") and other relevant bylaws and rules.
Article 2-1	For the purposes of these Rules, "professional investor" refers to an investor that meets one of the following conditions: A qualified institutional investor set forth in Article 4, paragraph 2 of the Financial Consumer Protection Act. A juristic person or fund that meets each of the following requirements and has applied in writing to the securities firm for the status of professional investor: Its CPA-audited or reviewed financial report for the most recent period shows total assets in excess of NT$50 million. However, the financial reports of juristic persons outside of the ROC need not be CPA-audited or reviewed. The persons authorized by the investor to conduct trades possess adequate professional knowledge and trading experience with respect to bonds. The investor fully understands that the securities firm may be exempted from liability for bond trades conducted with a professional investor, and consents to sign for trades as a professional investor. A natural person who meets each of the following conditions and has applied in writing to the securities firm for the status of professional investor: Proof of financial resources of NT$30 million or more; or, a single trade in excess of NT$3 million combined with total investment assets at the given securities firm in excess of NT$15 million, along with provision of a written statement of financial resources declaring that the person has total assets of NT$30 million or more. The investor possesses adequate professional knowledge and trading experience with respect to bonds. The investor fully understands that the securities firm may be exempted from liability for bond trades conducted with a professional investor, and consents to sign for trades as a professional investor. The securities firm shall carry out to the full its responsibility to make a reasonable investigation of the qualifications required of a professional investor under the preceding paragraph, and shall obtain reasonable and reliable supporting evidence from the investor. The securities firm's method for evaluation of whether a professional investor possesses adequate professional knowledge and trading experience with respect to bonds shall be included in its know-your-customer procedures and be submitted for adoption by the board of directors. However, if a foreign securities firm's branch within the territory of the ROC has no board of directors, the evaluation method shall be agreed to by its responsible person within the territory of the ROC. When a professional investor under paragraph 1, subparagraph 2 or 3 obtains an international bond sold only to professional investors by either subscription in the primary market or first-time purchase from a securities firm in the secondary market, the securities firm shall present a risk disclosure statement to be signed by the investor and retained by the securities firm on file. The risk disclosure statement under the preceding paragraph shall be prescribed by the TPEx.
Article 2-2	For the purposes of these Rules, "credit rating" means a credit rating assigned by a credit rating agency approved or recognized by the competent authority.

Chapter 2 TPEx Trading Review

Article 3	For the purposes of these Rules, "international bond" means one of the following foreign currency denominated securities: An international organization bond or a government bond, straight corporate bond, or Sukuk (Islamic fixed income security) issued by a foreign issuer, as approved by the Financial Supervisory Commission ("the competent authority") pursuant to Article 22, paragraph 1 of the Securities and Exchange Act. A straight corporate bond or overseas straight corporate bond offered and issued, or a straight corporate bond privately placed, by a domestic issuer or a TPEx (or TWSE) primary listed company. Convertible corporate bonds, overseas convertible corporate bonds, corporate bonds with warrants, and overseas corporate bonds with warrants, offered and issued by a domestic issuer or a TPEx (or TWSE) primary listed company. Convertible corporate bonds and corporate bonds with warrants offered and issued by a foreign issuer that has sponsored the issuance of TWSE listed or TPEx listed Taiwan Depositary Receipts. A financial bond, or overseas financial bond, offered and issued by a domestic financial institution. Straight corporate bonds that are domestically offered and issued or privately placed by a foreign issuer that is not a TPEx (or TWSE) primary listed company or emerging stock company. Straight corporate bonds that are issued offshore by a foreign issuer that is not a TPEx (or TWSE) primary listed company or emerging stock company and that are fully sold by an offshore banking unit or an offshore securities unit located within the territory of the Republic of China (ROC). Straight corporate bonds and overseas straight corporate bonds offered and issued by a foreign issuer that is an emerging stock company. Overseas convertible corporate bonds and overseas bonds with warrants offered and issued by a foreign issuer that is an emerging stock company. Straight corporate bonds denominated in Renminbi issued by other issuers meeting the requirements set out by the TPEx.
Article 3-1	If a financial bond offered and issued by a domestic financial institution under subparagraph 5 of the preceding article is linked to a financial derivative or is a structured bond, its examination for TPEx listing and its trading on the TPEx shall additionally be handled in compliance with the TPEx Rules Governing Foreign Currency Denominated International Bonds that are Linked to Financial Derivatives or are Structured Bonds. Those Rules shall be separately adopted by the TPEx.
Article 4	Announcement of TPEx trading of an international bond issued by any of the following issuers will be carried out by the TPEx upon receipt of written notice from the competent authority: An international organization. A foreign issuer that has a long-term credit rating of AAA or higher and that is wholly owned by the government of its home country, or a bond from such issuer that is fully guaranteed by the government of the issuer's home country. A foreign central government with a sovereign rating not lower than the sovereign rating of the ROC.
Article 4-1	When a foreign issuer offers and issues in the ROC foreign currency denominated government bonds, straight corporate bonds, or Sukuk that are sold only to professional investors, if the competent authority has approved the bonds as being exempt from the requirement of effective registration under Article 22, paragraph 1 of the Securities and Exchange Act, the issuer may apply to the TPEx for TPEx trading of the bonds in accordance with these Rules. The scope and qualifying requirements of a foreign issuer under the preceding paragraph shall be as follows: Government: the issuer is a foreign central government with a sovereign rating not lower than BBB or an equivalent rating; or a foreign local government that has submitted a credit rating report showing that the credit rating of the bond or the issuer is not lower than BBB or an equivalent rating. Supranational entity: Means a multilateral international entity established by multiple nations or organizations (see Appendix 1). A company organized, registered, or established under the laws of a foreign nation, or a subsidiary thereof; however, this does not include a foreign issuer that is a TPEx (or TWSE) primary listed company or emerging stock company. The company organized, registered, or established under the laws of a foreign nation meets any of the following qualifying requirements: Its stock is already listed and traded on a foreign securities market approved by the competent authority. Its depositary receipts are already listed and traded on a US national securities exchange approved by the competent authority, and the depositary receipts are Sponsored Level II ADRs or Sponsored Level III ADRs. Its stock is listed on a securities exchange admitted as a full member of the World Federation of Exchanges (WFE), and the competent authority for the securities exchange has signed an agreement for supervisory cooperation with the competent authority of Taiwan. Its total assets exceed US$200 million or the net worth exceeds US$20 million according to its latest CPA-audited or reviewed financial report. A subsidiary of a company under the preceding item: A subsidiary of which a company under the preceding item directly or indirectly holds 100 percent of the shares, and the parent company provides a 100 percent guarantee for the bonds and undertakes that it will perform all public announcement and reporting obligations pursuant to the regulations of the competent authority and the TPEx. A foreign financial institution or a branch or subsidiary thereof: A foreign financial institution: Meets any of the requirements in subparagraph 3, item A, sub-items a, b, or c; or its total assets exceed US$20 billion or its net worth exceeds US$1.5 billion according to its latest CPA-audited or reviewed financial report. A branch of the foreign financial institution: The foreign financial institution or its share-holding parent company meets any of the requirements in subparagraph 3, item A, sub-items a, b, or c, and its total assets or net worth meets the requirements of the preceding item. The foreign financial institution and the branch are permitted to offer and issue the present issue of bonds under the laws and regulations of the nation of registration of the institution. The foreign financial institution has issued a statement undertaking that it will bear full liability for the actions of the branch in the issuance of the bonds and for performance of the branch's debts. The foreign financial institution or its share-holding parent company undertakes that it will perform all public announcement and reporting obligations pursuant to the regulations of the competent authority and the TPEx. A subsidiary of the foreign financial institution: A subsidiary of which a financial institution under item A directly or indirectly holds 100 percent of the shares, and the financial institution provides a 100 percent guarantee for the bonds and undertakes that it will perform all public announcement and reporting obligations pursuant to the regulations of the competent authority and the TPEx. A special purpose vehicle: A special purpose vehicle company formed by an obligor(s) for the purpose of issuing Sukuk, where the obligor(s) must meet the qualifying requirements set out in one of subparagraphs 1 to 4. The obligor(s) furthermore shall provide a 100 percent guarantee or bear joint and several liability for the bonds and undertake that it will perform all public announcement and reporting obligations pursuant to the regulations of the competent authority and the TPEx. The term "share-holding parent company" in subparagraph 4, item B in the preceding paragraph means an entity that directly or indirectly holds a total of more than half of the equity rights and voting rights in the financial institution, and that includes the financial institution as an entity in its consolidated financial reports. The "Sukuk" referred to in paragraph 1 shall be limited solely to asset-based Ijarah Sukuk or asset-based Wakalah Sukuk that are offered and issued in the ROC for sale only to professional investors by a foreign issuer acting in accordance with customary practices in international financial markets and that are furthermore approved by a Shariah advisory council or consultants which state that the Sukuk meet Shariah criteria.
Article 5	When an issuer applies for TPEx trading of an international bond, the bond must have a credit rating of BBB or higher, with the exception of bonds that meet the criteria set out in Article 3, subparagraph 1, 3, 4, 5, 7, or 9 or that conform to one of the circumstances below: The bond has been guaranteed by a financial institution within the territory of the ROC. The issuer has provided an issuer credit rating report with a credit rating of BBB or higher. Sale of the bond is restricted to professional investors.
Article 5-1	When application is made for TPEx trading of an international bond that is either issued by a foreign branch of a domestic bank or privately placed by a foreign issuer, if the bond has a credit rating of A or higher, the contract appended to the issuance plan may be governed by law other than ROC law. Where the contract is governed by law other than ROC law, the court with jurisdiction over an action may also be other than an ROC court, unless the contract separately provides for arbitration.
Article 5-2	A foreign issuer, before applying for TPEx trading, shall first obtain a letter of consent issued by the TPEx indicating that the issuer is permitted to engage in TPEx trading. Within 1 month from the issuance date of that consent letter, the issuer shall file for registration of offering and issuance under the Regulations Governing the Offering and Issuance of Securities by Foreign Securities Issuers, or apply for exemption from the requirement of effective registration with the Competent Authority under Article 22, paragraph 1 of the Securities and Exchange Act or apply to the Central Bank for private placement. Upon failure to do so by that deadline, the letter of consent shall become void. However, the foreign issuer may be exempted from obtaining the letter of consent if the international bonds are issued under Article 3, subparagraph 7, Article 4, or Article 4-1, or are straight corporate bonds filed for effective registration under the Regulations Governing the Offering and Issuance of Securities by Foreign Securities Issuers. An issuer issuing an international bond under Article 3, subparagraph 10 shall, before filing with the Central Bank for recordation, obtain a letter of consent issued by the TPEx indicating that the issuer is permitted to engage in TPEx trading. Within 1 month from the issuance date of that consent letter, the issuer shall complete the offering and issuance of the international bond and begin TPEx trading of the international bond. Upon failure to do so by that deadline, the letter of consent shall become void. A foreign issuer issuing an international bond under Article 4-1, before applying for TPEx trading, shall file for recordation with the Central Bank, submitting materials including the planned issuance rules, basic information of the issuer, and the use for the funds, with a copy to the TPEx; if the foreign issuer is a special purpose vehicle, it shall additionally submit the basic information of the obligor; if the foreign issuer or obligor is a government, it shall additionally submit the credit rating report or evidentiary documents.
Article 6	With the exception of the bonds referred to in Article 4, an issuer of international bonds that applies for TPEx trading of an international bond shall submit an Application for TPEx Trading of International Bonds (Appendices 1-1 to 2-2) to the TPEx, filling out all required particulars and including the required attachments. An application submitted pursuant to the preceding paragraph shall be in Chinese, provided that the application may be in English for the bonds under Article 3, subparagraph 7 or Article 4-1. For international bonds under Article 3, subparagraph 7 or under Article 4-1, the foreign issuer is additionally required to provide a statement, with the following content, in its public prospectus and in other related sales documents provided to investors: That the Taipei Exchange is not responsible for any of the content appearing in the document, and makes no statement regarding its accuracy or completeness; the content must further clearly indicate that the TPEx bears no liability for any loss incurred due to the content of the document as a whole or any of its parts, or due to any reliance on such content.
	APPENDIX 2-1-Application for TPEx Trading of International Bonds
Article 6-1	With the exception of the bonds referred to in Article 3, subparagraph 7 [which may not be stripped], an issuer applying to the TPEx for TPEx trading of principal-only international bonds and interest-only international bonds after stripping the principal and interest of international bonds ("stripped international bonds") shall meet each of the following requirements: The prospectus or private placement memorandum shall specify that such international bonds are strippable. Such international bonds may not have attached conversion rights, exchange rights, share options, issuer repurchase rights, or investor early redemption rights. When an issuer commits to repurchasing principal-only international bonds, its repayment obligation for the interest-only international bonds remains unchanged. If the bonds are registered at a domestic central securities depository enterprise, the amount of stripped international bonds that may be applied for is limited to the current outstanding balance; if the bonds are registered at a foreign securities depository enterprise, the amount that may be applied for is limited to the book balance of bonds in the accounts that the domestic centralized securities depository enterprise has opened at such foreign securities depository enterprise. If international bonds are strippable, the issuer shall submit at the time of application for TPEx trading an "Application for TPEx Trading of International Bonds" in which it is specified that such international bonds are strippable, and shall also specify the method for interest and redemption payments for the international bonds in the Agreement on Interest and Redemption Payments, Agency Agreement, or Prospectus on the Method for Interest and Redemption Payments. When a securities firm that has obtained permission for dealing in corporate bonds applies to the TPEx to strip or reconstitute the principal and interest in international bonds, it shall submit an "Application for Stripping of International Bonds" or "Application for Reconstitution of International Bonds." When applications to strip international bonds of the same type are made at different times, the Interest Allocation Basis Table used for the first application shall be used in subsequent applications.
Article 6-2	A foreign issuer meeting the following criteria may issue TLAC (total loss-absorbing capacity)-eligible (or bail-in eligible) international bonds or subordinated international bonds: If the issuer is a bank organized, registered, or established under the laws of a foreign country or a branch unit thereof, it shall meet the requirements of Article 4-1, paragraph 2, subparagraph 4. If the issuer is a holding company that controls a bank that meets the aforementioned condition, the bonds it may issue under this article shall be limited to TLAC-eligible (or bail-in eligible) international bonds. The issuer shall enhance information disclosure in the prospectus, final terms, and pricing supplements. The international bonds may not be perpetual. The international bonds may not have equity conversion rights, exchange rights, or subscription rights, or principal write-down clauses. However, this restriction does not apply to circumstances in which the competent authority of the issuer's home country deems it necessary to convert the bonds into common shares of the issuer or to carry out a principal write-down of the bonds because the issuer is no longer viable. The international bonds may be sold only to qualified institutional investors as defined in Article 2-1, paragraph 1, subparagraph 1. The monetary sum of the subordinated international bonds that the issuer applies to issue, plus the outstanding balance of subordinated international bonds already issued by the head office and branches may not exceed the outstanding balance of all other international bonds issued by the head office and branches. The term "subordinated international bond" in the preceding paragraph means that the issuer stipulates that the international bond is subordinate to other debts of the company in priority of repayment. The term "TLAC-eligible (or bail-in eligible) international bonds" in paragraph 1 means bonds that must absorb loss through write-down or conversion into equity, as and when instructed by the competent authorities of the country of registration to protect the public interest or upon obvious deterioration in the issuer's business or financial status resulting in a likelihood of its assets being insufficient to meet its liabilities, inability to pay its liabilities when due, or other possible detriment to the interests of depositors.
Article 7	After accepting an application for TPEx trading of international bonds, the TPEx shall commence a document review of the application and its attachments. Review guidelines, procedures, deadlines, and date for commencement of TPEx trading are as follows: The application form: If, after completion of the relevant checklist by the TPEx, the review reveals omission or incomplete disclosure of any required information, the applicant shall be requested to supplement the information within a prescribed period. If the applicant fails to make supplementation within that period, a notice of rejection shall be issued, with a copy sent to the competent authority. Conditions for TPEx trading: Based on the Application for TPEx Trading of International Bonds and its attachments, the application shall be reviewed for compliance with the conditions for TPEx trading set out in these Rules. When the document review shows that all required documents have been submitted and conditions for TPEx trading are met, such TPEx trading shall be announced. If it is the initial time that the issuer applies for TPEx trading, the TPEx shall separately prepare relevant documents, including the contract for TPEx trading entered into with the given issuer, and submit them by mail to the competent authority for recordation. The review period: The TPEx shall complete review within 3 business days from the day on which it accepts an application for processing. Notwithstanding the above, under special circumstances the TPEx may file for approval of an extended review period. Date for commencement of TPEx trading: When an issuer applies for trading of straight corporate bonds on the TPEx, unless the bonds are exempt from the requirement of filing for effective registration, the bonds are a further issue within the prescribed time period under an effective shelf registration, or the bonds are issued by a financial holding company with the approval of the competent authority, the issuer shall, within 7 business days after the date of effective registration, proceed pursuant to Article 252 of the Company Act, and complete the offering and issuance and commence TPEx trading.
Article 7-1	When a securities firm applies to the TPEx to strip or reconstitute the principal and interest in an international bond, the case handler shall check that all required documents have been submitted before making a public announcement to the market, and shall notify the domestic securities centralized depository enterprise.
Article 8	The issuer of an international bond shall pay to the TPEx on a yearly basis a TPEx listing fee equal to 3/10,000 of the total nominal value of the international bond issue, or the balance of outstanding shares, provided that the minimum listing fee is NT$50,000 and the maximum is NT$500,000. The issuer of an international bond shall pay to the TPEx an international bond TPEx administrative fee as follows: For an issuer that offers and issues international bonds in accordance with the applicable laws and regulations of the ROC, and is approved by the competent authority or has obtained effective registration with the competent authority, the administrative fee is NT$15,000 for bonds of each maturity. For an issuer that does not meet the requirements of the preceding subparagraph, the administrative fee is NT$100,000 for bonds of each maturity. However, for a secondary issue under the same base prospectus, the administrative fee is NT$70,000 for bonds of each maturity. If the international bond under application by the issuer is strippable, the issuer shall also pay in full the principal-only international bond and interest-only international bond TPEx administrative fee of NT$3,000 for each bond. The issuer of an international bond shall pay to the TPEx a TPEx listing fee at the rate specified in paragraph 1either by a lump-sum payment at the time of application or once every year before the end of January; after payment is made, however, a refund may not be requested upon the approval of suspension or termination of trading. The TPEx fees set out above may be paid in US Dollar, or foreign currency equivalents, using the denominating currency of the bond issue. The TPEx listing fee mentioned in paragraphs 1 and 4 shall be calculated pro rata based on the actual period of TPEx listing, with partial months counted as whole months.
Article 9	An international organization or a foreign issuer may engage an agent institution within the territory of the ROC to handle matters in connection with its international bond issue. If an agent institution is engaged, its place of business and the name of its responsible person, and any amendment thereto, shall be reported to the TPEx.
Article 10	The issuer of an international bond shall enter the following information, in Chinese or English, into the TPEx-designated information reporting website prior to the date on which TPEx trading of the bond begins: Basic issuer data. Bond issue data. Other required announcements.
Article 11	When any of the following circumstances applies to an international bond issued by a foreign issuer other than a TPEx (or TWSE) primary listed or TPEx (or TWSE) secondary listed company, the TPEx may suspend or terminate TPEx trading of the bond, and report to the competent authority for recordation: The issuer's organization and registration have been revoked or dissolved by the country of registration, or it has been placed in bankruptcy by court order, or it has received a court ruling approving reorganization or its petition for reorganization has been denied. Trading of the underlying subject of conversion or execution obligations for share options has been suspended or terminated by the securities market at the location of trading. Transfer of the securities issued by the issuer has been prohibited by a court ruling at the place of registration. The issuer is guilty of a severe violation of government acts and regulations, TPEx bylaws and announcements, or contracts for TPEx trading. The TPEx deems it necessary to suspend or terminate TPEx trading of the international bonds due to circumstances that may affect market order or in order to protect investor rights and interests. When trading of the international bonds is suspended due to any of the circumstances in the preceding paragraph, then upon the extinguishment of the cause and in the absence of a cause under any other subparagraph of the preceding paragraph, the issuer may apply for resumption of trading by submitting relevant evidentiary documentation. The TPEx may publicly announce resumption of trading, and report to the competent authority for recordation. The provisions of Articles 12, 12-1, 12-2, 12-5, 12-6 and 12-7 of the TPEx Trading rules apply to the suspension or termination of TPEx trading of an international bond issued by a domestic issuer, a TPEx (or TWSE) primary listed company, or a TPEx (or TWSE) secondary listed company. Following full repayment of principal at maturity or an earlier time, however, the TPEx and may immediately announce termination of TPEx trading in the international bond.

Chapter 3 Market Trading

Section 1 General Provisions

Article 12	With the exception of the bonds referred to in Article 3, subparagraph 7, securities dealers (below, "securities firms") shall carry out outright or repo transactions in international bonds as follows: Through the international bond trading system ("the IBTS"), a subsystem of the Computerized Negotiation System of the TPEx Electronic Bond Trading System (EBTS). Through negotiated transaction over the counter at a securities firm. The counterparties of outright transactions and repo transactions of bonds under Article 3, subparagraph 7 shall be as provided in the Offshore Banking Act.
Article 13	(Deleted)
Article 14	The issuer of an international bond shall register the bond issue with a domestic or foreign securities depository enterprise recognized by the TPEx. If an international bond is registered at issuance with a domestic securities depository enterprise, physical certificates will not be produced, and securities firms trading that bond shall be restricted to book-entry delivery through a domestic centralized securities depository enterprise. If an international bond is registered at issuance with a foreign securities depository enterprise, then unless the trading counterparty is a professional investor, securities firms trading that bond shall carry out the relevant book entries through an account established by a domestic centralized securities depository enterprise at a securities depository enterprise of the country in question.
Article 14-1	A strip international bond shall be delivered through book-entry transfer at a domestic central securities depository enterprise. When a securities firm acquires interest-only international bonds repaid at the first maturity following its application to strip international bonds offered and issued or privately placed by a domestic issuer, it shall hold the bonds and may not sell them, provided that the securities firm may conduct repo-style sale of such bonds through the delivery of the bond passbook in accordance with Article 80 of the TPEx Trading Rules. When a securities firm acquires interest-only international bonds repaid at the second and subsequent maturities following the stripping of floating rate international bonds, and conducts outright negotiated transactions over the counter, it shall provide the trading counterparty with a risk disclosure statement in which it indicates in boldface or other prominent typeface the associated tax burden and maximum possible risks. If strip international bonds are acquired from a seller through repo-style purchase, the bonds may not be resold before maturity, provided that a securities dealer may conduct repo-style sale of the bonds through the delivery of bond passbook in accordance with Article 80 of the TPEx Trading Rules.
Article 15	(Deleted)
Article 16	When a securities firm engages in trading of a privately placed international bond over the counter, its trading counterparts shall comply with one of the following: The provisions of Article 43-6, paragraph 1, subparagraphs 1 to 3 of the Securities and Exchange Act. Requirements, as set out in circulars of the competent authority, relating to issuer identity in private bond placements by foreign issuers. When a securities firm buys or sells over the counter an international bond that is for sale only to professional investors, the counterparty of the transaction may only be a professional investor; at the same time, the securities firm shall expressly inform the buyer that any further sale of the bond may only be made to a professional investor. However, this rule does not apply to repo transactions.
Article 16-1	When a securities firm sells international bonds over the counter to a domestic natural person by means of negotiated transaction, if the governing law or the court of jurisdiction for the rights and obligations of the issuer of the bonds in question is not a law or court of the ROC, the securities firm shall clearly notify the investor, record its notification in one of the following forms, and maintain the record on file for at least 1 year for future reference: For price negotiations made over the phone: The securities firm shall record the phone conversation as it takes place. For transactions carried out through face-to-face price negotiations, through price negotiations by written correspondence or telegram, or via chip card, the Internet, or another electronic transaction format, or other methods approved by the TPEx: The securities firm shall keep on file a confirmation message or a confirmation statement indicating that the customer has understood that the transaction is subject to the provisions of the governing law for international bonds. Where a customer trades via email, the securities firm shall print or save the computer screen carrying the message indicating that the customer is aware of the governing law.
Article 17	A securities firm trading bonds through participation in the IBTS shall enter into a Contract for Securities Firm Participation in the Trading System for International Bonds adopted by the TPEx (Appendix 3) and pay a bond transaction performance and settlement reserve to the TPEx. Deposit, supplementation, and application for withdrawal of the bond transaction performance and settlement reserve set forth in the preceding paragraph shall be made in compliance with applicable provisions of the TPEx Securities Market Regulations Governing Bond Payment Settlement Reserves for the Electronic Bond Trading System.

Section 2 Trading Principles

Article 18	Trading hours for international bonds are as follows: The IBTS may be used for outright transactions from 9:00 am to 1:30 pm, and for repo transactions from 9:00 am to 1:30 pm and 2:00 to 3:00 pm. For negotiated transactions over the counter, hours are 9:00 am to 3:00 pm. However, if a securities firm has already adopted internal operating rules for extended trading hours, it may extend its trading hours and publicly announce the extended hours at its place of business or on its website. If a securities firm adopts internal operating rules as under paragraph 1, subparagraph 2, those rules, and any amendments to them, shall be approved by the chairman of the board of directors.
Article 19	Where international bonds are traded through the IBTS, they shall be traded in the currency of their denomination, and trading and quotation units are as follows: Outright transactions shall be quoted on a price-per-hundred basis with a tick size of 1/100 of a currency unit; repo transactions shall be quoted on an interest rate basis, with a tick size of 1/10,000 of a percentage point. A trading unit is 100,000 US Dollars, 100,000 Euros, or 10 million Japanese Yen par value. Trading units of bonds denominated in other currencies will be separately prescribed by the TPEx. Quotes must be in volumes of one trading unit or integral multiples of that amount. No individual quote may exceed nine trading units in volume. Where international bonds are traded over the counter at a securities firm, they shall be traded in the currency of their denomination, and quotation and trading units are as follows: Outright transactions shall be quoted on a yield basis or on a price-per-hundred basis, with a tick size of 1/10,000 of a percentage point or 1/10,000 of one currency unit; repo transactions shall be quoted on an interest rate basis, with a tick size of 1/10,000 of a percentage point. The minimum trading unit is 1,000 US Dollars, 1,000 Euros, or 100,000 Japanese Yen par value. Minimum trading units for bonds denominated in other currencies will be separately prescribed by the TPEx. Trading units for international bonds which may only be sold to professional investors shall be as prescribed in subparagraph 2 of the preceding paragraph.
Article 20	The duration of an international bond repo transaction begins from the date on which the seller delivers the subject security to the buyer, and continues until the resale date. The subject securities in an international bond repo transaction belong to the buyer until the resale date, and subject securities obtained in a repo transaction may be sold outright by the buyer to another party. For international bond repo transactions carried out through the IBTS, the initial dollar amount is the cum-dividend price, calculated on the basis of the next day's per-hundred reference price for the subject security. The durations of international bond repo transactions carried out through the IBTS are1, 5, and 10 business days, provided that the resale dates may not span the period that: (1) begins 5 business days prior to the date of interest and redemption payments for the subject securities; and (2) continues up through the date of interest and redemption payments. When a securities firm conducts international bond repo transactions, it may not convert into New Taiwan Dollars for the purpose of receiving or making foreign currency payments.
Article 21	For an international bond repo transaction made through negotiated transaction over the counter at a securities firm and settled by book entry through a domestic centralized securities depository enterprise, the price receivable and price payable for a transaction in which payment is made on the record date of interest and redemption payments shall include the amount of the principal repayment and interest payment, while the current-period principal and interest shall still belong to the person as registered in the account of the domestic centralized securities depository enterprise at close of business on the record date of interest and redemption payments. "Record date of interest and redemption payments" as used in these Rules means the business day before the date of interest and redemption payments; provided, if the record date for interest and redemption payments is otherwise specified in the prospectus for the international bond in question, that stipulation shall govern.
Article 22	International bond transactions are without exception ex-dividend transactions. Interest receivable by the seller on the performance and settlement date shall be paid to the seller by the buyer together with the transaction price. Interest receivable pursuant to the preceding paragraph shall be calculated from the interest accrual date to the performance and settlement date, inclusive of the first day but exclusive of the last. For outright transactions, interest shall be calculated by the method specified in the prospectus for the international bond in question. A buyer who purchases an international bond through the IBTS on the second business day prior to the record date of interest payment or later is not entitled to receipt of current-period interest. The third business day prior to an international bond's record date of redemption payment at maturity is the last trading day on which transactions in that international bond may take place through the IBTS. Where an international bond is traded through price negotiation over the counter, the record date of interest and redemption payments is the last trading day for that international bond. For international bonds that are Sukuk, the periodic income distribution shall be subject mutatis mutandis to the provisions of the preceding 3 paragraphs with respect to interest.
Article 23	When a securities firm uses the IBTS to make quotes, it shall enter information in each field shown on the IBTS screen, and after acceptance by the IBTS, it will be confirmed in sequence via a transmission system. The same shall be true for any revised quote. At 1:40 pm each day, the TPEx will calculate the current-day net long position in international bonds taken by each securities firm through the IBTS, and issue through the IBTS a repo ask quote for a certain percentage of each such position under conditions of anonymity, a zero interest rate, and a duration of 1 business day. Notwithstanding the foregoing, a securities firm may revise the quoted interest rate; where it has already sold bonds of that maturity through price negotiation over the counter, or as needed for performance of obligations, it may also revise or cancel the quote by 2 pm by providing relevant documentation. Once trading quotes entered as described in paragraphs 1 and 2 are executed through the EBTS, the execution details will be confirmed in sequence via a transmission system. The TPEx may, via the Internet and through a market information service, publicly disclose the six best bid and ask quotes on the IBTS and the name of the entity providing each such quote, together with the prevailing execution prices. Provided, however, that where a securities firm provides quotes anonymously, the TPEx will only disclose the price information. A market information service as referred to in the preceding paragraph shall duly enter into a Contract for Supply and Use of Trading Information with the TPEx. When a securities firm, between 9:00 am and 3:00 pm, conducts an outright transaction of an international bond over the counter, then within 60 minutes after the transaction is executed, the securities firm shall enter the transaction information into the TPEx information system in the format prescribed by the TPEx. If the transaction is conducted between 3:00 pm and 9:00 am of the next business day, the transaction information shall be reported by 10:00 am of the next business day. When trading the international bonds of Article 3, subparagraph 7, an offshore banking unit or an offshore securities unit shall enter transaction information into the TPEx information system, in accordance with the TPEx's prescribed time frame and format, immediately after the confirmation of a transaction, and apply mutatis mutandis the provisions of the preceding paragraph regarding the reporting of transaction information.
Article 24	A securities firm may exercise sole discretion in the choice of counterparty to which it provides a quote or with which it executes a trade, provided that no trade may be executed between a securities firm's head office and a branch unit, or between two of its branch units.
Article 24-1	Except when issuing the bonds referred to in Article 3, subparagraph 7, an issuer shall designate liquidity providers, to provide trading quotes during the period of TPEx trading of its international bonds. The term "liquidity provider" in the preceding paragraph means a securities dealer or a bank that does not concurrently operate as a securities dealer. Operation directions related to such liquidity providers will be separately prescribed by the TPEx.
Article 25	Where a securities firm conducts outright transactions through the IBTS, each quote shall first be identified as either a firm quote or a reference quote and be executed as follows: When a firm quote is provided, the trade will be executed upon its confirmation by another securities firm. When a reference quote is provided, upon confirmation by another securities firm, the securities firm providing the quote may respond within twenty seconds by answering whether or not to execute the trade. When the securities firm that provided the quote confirms execution, the trade will be promptly executed; when it confirms non-execution of the trade, or fails to respond within 20 seconds, the trade will be deemed to have not been executed, and the IBTS will automatically cancel the quote. The other securities firm, however, may cancel its confirmation at any time before the securities firm that provided the quote has responded regarding execution. A securities firm using the IBTS may seek a quote from another securities firm. The quote provided in response by the other securities firm is a firm quote, and will be executed as follows: When the securities firm that sought the quote confirms execution of the trade at the price quoted by the other securities firm within 20 seconds, the trade will be promptly executed. The securities firm that received the quote request may cancel its own quote at any time before the securities firm that sought the quote confirms execution of the trade. Any quote provided by a securities firm through the IBTS for a repo transaction or for any transaction set out in Article 23, paragraph 2 is a firm quote and will be promptly executed upon its confirmation by another securities firm. Notwithstanding the foregoing, trades cannot be executed under any of the following circumstances: When the cumulative outstanding balance of repo transactions at a given maturity exceeds one-half of that bond issue's outstanding balance, the IBTS will suspend confirmation and execution of trading quotes by securities firms for the bonds of that maturity. When the cumulative outstanding balance of reverse repo transactions at a given maturity by a single securities firm exceeds one-tenth of that bond issue's outstanding balance, the IBTS will suspend confirmation and execution of trading quotes by securities firms for the bonds of that maturity. A securities firm that has posted an ask quote for a repo transaction to the IBTS after 2 pm may neither place a bid quote for a repo transaction involving a bond of the same maturity, nor may it confirm execution of any repo transaction with another securities firm that has placed an ask quote for bond of that maturity. The system will execute each trade one trading unit at a time.
Article 26	When, for a securities firm participating through the IBTS, an error occurs in a bid or ask quote and a trade is executed pursuant to Article 25, then upon consent of the counterparty, the securities firm may report a correction of the error or cancellation of the transaction (below, "account change") to the TPEx by 4 pm that day. For any account change made pursuant to the preceding paragraph, both parties shall provide substantiating written documentation.
Article 27	The reference price for outright transactions on the first business day for an international bond shall be on a price-per-hundred basis. Each business day's reference price for an international bond shall be calculated as follows: As the IBTS weighted average price-per-hundred for the preceding business day. When there is no record of trades for the previous business day, as the per-hundred reference price for the most recent previous business day. The TPEx shall on a daily basis calculate and publicly announce the per-hundred reference price.

Section 3 Performance and Settlement

Article 28	When an international bond trade is executed over the counter, then except where these Regulations provide otherwise, a trade confirmation statement, delivery statement, and performance and settlement statement shall be produced at the time of the transaction, and after transfer to the customer for signing, payment and delivery shall be completed directly with the customer by the third business day following the transaction date. In addition, where the securities firm has already furnished the TPEx with a "Consent Form for Book-entry Transfer of International Bonds" (Appendix 4), it shall process the customer's payment and delivery in accordance with the TPEx's publicly announced book-entry settlement procedures when an over-the-counter trade in an international bond meets either of the following criteria: The transaction is an outright transaction in which the securities dealer is the buyer and the customer is the seller. The dollar amount of the transaction is not greater than five times the minimum trading unit for privately negotiated over-the-counter transactions in international bonds. The provisions of the preceding paragraph notwithstanding, where the securities firm applies to and receives approval from the TPEx on a case-by-case basis, it may be allowed until the seventh business day following the transaction date to complete payment and delivery. Where an international bond is registered with a foreign securities depository, a securities firm that engages in an over-the-counter transaction in that international bond with an overseas customer may apply to a domestic central securities depository to carry out a cross-border wire transfer to complete delivery of the bonds with the overseas customer. When a securities firm conducts a transaction with an offshore qualified institutional investor, it may observe international market conventions for payment and settlement and retaining the transaction and payment and settlement records. When a securities firm conducts a negotiated trade of international bonds over the counter, if the customer has already signed a Consent Form and a record of the payment is retained, the trade confirmation statement, delivery statement, and performance and settlement statement for the trade shall on the day next business day following the transaction date be delivered to the customer’s designated address or sent by email. The documents need not be signed by the customer, but a record of the delivery or email transmission shall be retained. If the trade confirmation statement, delivery statement, and performance and settlement statement are to be sent by email, the customer’s written consent shall be obtained, and appropriate measures shall be taken to ensure the correct and secure delivery of the materials.
Article 29	A securities firm participating in trading of international bonds through the IBTS shall establish a dedicated bond clearing account for international bonds and a dedicated funds settlement account for international bonds at, respectively, a TPEx-designated domestic centralized securities depository enterprise and a TPEx-designated foreign currency clearing bank. These accounts shall be reported to the TPEx prior to the beginning of trading; any subsequent change in the accounts shall also be reported.
Article 30	The IBTS performance and settlement date is the third business day after the transaction date. On the performance and settlement date, a securities firm participating through the IBTS shall carry out performance and settlement with the TPEx of the net amount, after offsetting of the payable and receivable amounts for the bonds and transaction prices shown in the Performance and Settlement Statement prepared by the TPEx for each currency, in accordance with the following provisions: When there are net funds payable, the securities firm shall directly deposit such amount into the TPEx funds settlement account for international bonds by 1:30 pm on the performance and settlement date. When there are net bonds deliverable, the securities firm shall perform the bond transaction in accordance with a domestic centralized securities depository enterprise's rules by 1:30 pm on the performance and settlement date. When there are net funds receivable, after verification by the TPEx pursuant to subparagraph 2, the TPEx will directly deposit the amount to the securities firm's funds settlement account at 1:30 pm or later on the performance and settlement date. When there are net bonds receivable, after verification by the TPEx pursuant to subparagraphs 1 and 2, the TPEx will at 1:30 pm or later on the performance and settlement date notify the domestic securities depository enterprise to make a book-entry transfer. When a securities firm's branch units trade bonds through the IBTS, the head office shall first aggregate their trades and proceed as in the preceding paragraph.
Article 31	When a securities firm participating in trading of international bonds through the IBTS is incapable of carrying out performance and settlement, it is in default, and the TPEx may temporarily suspend its participation in trading through the IBTS.
Article 32	When a securities firm participating through the IBTS defaults and does not have sufficient funds for performance and settlement that has come due, the TPEx may take the following measures with respect to the original bond purchase: Disposing of the bonds obtained by the securities firm in the original purchase. Contacting another securities firm to carry out a repo transaction, then taking the measures under the preceding subparagraph. Contacting another financial institution to loan funds, then taking the measures under subparagraph 1.
Article 33	When a securities firm participating through the IBTS defaults and does not have sufficient bonds for transaction performance and settlement that has come due, the TPEx may take the following measures with respect to the proceeds obtained by the securities firm from the original sale, or with respect to other bonds purchased by the securities firm: Disposing of the proceeds obtained by the securities firm from the original sale. Contacting another securities firm to carry out a repo transaction, then taking the measures under the preceding subparagraph. Contacting another financial institution to arrange a loan of the bonds, then taking the measures under subparagraph 1. If the securities firm has purchased other types of bonds, they may be disposed of as given in the preceding article.
Article 34	A securities firm shall pay a monthly service fee for international bond business, calculated as follows: For bond transactions made through the IBTS, a maximum fee of 5/1,000,000 of aggregate transaction amounts for the month, and a minimum fee of 5/10,000,000 of total transaction amounts for the month. For over-the-counter bond transactions of a securities firm, the fee will be assessed at 5/10,000,000 of its total trading business volume for the month. The total transaction amounts and the total business volume referred to in the preceding paragraph shall be converted to New Taiwan Dollars based on the average of the mid-market exchange rates during the given month at TPEx-designated foreign exchange banks.

Chapter 4 Information Reporting

Article 35	The issuer of an international bond shall report the following information in Chinese or English on a regular basis, provided that this does not apply if the issuer or obligor falls under Article 4, subparagraph 3 or Article 4-1, paragraph 2, subparagraph 1: Any change in issuance data for the preceding month shall be entered into the TPEx-designated information reporting website within 10 days after the end of each month. Within 20 days after the completion or printing date of the annual report, an electronic file containing the annual report shall be transmitted to a TPEx-designated information reporting website; if the issuer is a branch of a foreign financial institution, or is a company controlled by another company, and has not prepared an annual report, it shall file the annual report of its head office or the other company. If a foreign issuer issues an international bond under Article 4-1 that furthermore is guaranteed by a financial institution, the issuer may replace its annual report with the annual report of the guarantor financial institution.
Article 36	The issuer of an international bond shall report the following information on a non-regular basis: Information for which prompt reporting is required by the laws and regulations of the issuer's home country or the place where its shares are traded; a branch of a foreign financial institution, or a company controlled by another company, shall additionally include information for which prompt reporting is required by the laws and regulations of the home country of its home office or another company, or of the place where the shares thereof are traded. The issuance, maturity, or repurchase of bonds, or the allotment of shares in accordance with regulations. Any change in the credit rating of the issuer or the bond. Information related to the liquidity providers. Any other matter having a material influence on the price or value of the bond.
Article 37	Upon the occurrence of any of the matters in the preceding article with respect to the issuer of an international bond, the issuer shall enter the information, in Chinese or English, into the TPEx-designated information reporting website prior to the beginning of trading hours on the next business day following the date of the event's occurrence. For the international bonds that are referred to in Article 3, subparagraph 7 or Article 4-1, a foreign issuer may provide a source of information in Chinese or English that is accessible through a single website hyperlink, and must provide a statement containing the following content: That the Taipei Exchange is not responsible for any of the content appearing in the public disclosure, and makes no statement regarding its accuracy or completeness; the content must further clearly indicate that the TPEx bears no liability for any loss incurred due to the content of the public disclosure as a whole or any of its parts, or due to any reliance on such content.
Article 38	A foreign issuer may engage an agent institution within the territory of the ROC to report the matters it is required to report on a regular or non-regular basis.
Article 39	Upon discovering that an issuer has failed to report material information of the kind referred to in Article 36 of these Rules, the TPEx may first make telephone inquiries with the issuer or its agent institution, and as it deems necessary, by means of a written form stating the source of the information and its content, request that the issuer or its agent institution enter an explanation of the given matter into the TPEx-designated information reporting website.
Article 40	When information reported by the issuer of an international bond is found to contain an inaccuracy, upon such a discovery or upon receipt of notification from the TPEx, the issuer shall promptly make correction by entering accurate information. The TPEx may, as it deems necessary, make inquiries with the issuer or request it to submit related information.

Chapter 5 Penal Provisions

Article 41	When any of the following circumstances applies to the issuer of an international bond, the TPEx may, in view of the circumstances, impose a default penalty of NT$30,000, or suspend it from trading and report to the competent authority for recordation: Violation of any provision of these Rules. Willful release of any unconfirmed information, or public disclosure of inaccurate information. If the issuer of an international bond violates a provision of the preceding paragraph and is required to make a supplementary disclosure, the TPEx shall issue a letter notifying the issuer to do so within 2 days from receipt of the letter, and should the issuer fail to do so within that period, the TPEx may impose a default penalty of NT$10,000 per day until the day on which the issuer effects disclosure. If a branch of a foreign financial institution, or a company controlled by another company, violates any provision in Chapter 4 of these Regulations, the TPEx may demand that its head office or another company either act in the issuer's stead, or lend the issuer its assistance, to file a disclosure.
Article 42	When a securities firm defaults through the IBTS, in addition to bearing the price differential and costs resulting from TPEx handling of the default pursuant to Article 32 or 33, the firm shall pay to the TPEx a default penalty of one percent of the shortfall in bonds or funds required for transaction performance and settlement.
Article 43	When the TPEx calculates that the bond transaction performance and settlement reserve deposited by a securities firm that has defaulted through the IBTS is insufficient to pay the price differential and costs resulting from TPEx handling of the default pursuant to Article 32 or 33, and when the defaulting securities firm fails to make up that shortfall on the same day in accordance with a notice from the TPEx, the TPEx may, with respect to the shortfall in bonds or funds required for transaction performance and settlement, make a distribution among the securities firm's trading counterparties based on their relative percentages as shown in the records of the original transactions, and offset that portion of the bonds or funds through cash settlement. The defaulting securities firm shall pay the trading counterparties a compensatory sum of one percent of the shortfall in the bonds or funds. The cash settlement price referred to in the preceding paragraph shall be calculated from the next day's per-hundred reference price for bonds of that maturity. If the per-hundred reference price thus calculated is obviously unreasonable, however, the TPEx will determine the price.
Article 44	For a securities firm that defaults through the IBTS, the TPEx may use or dispose of the performance and settlement reserve deposited by the defaulting securities firm and the interest accrued thereon to pay the default penalty and the price differential and costs that result from the TPEx's handling of the default pursuant to Article 32, 33, and 42. In handling a default, the TPEx may designate a securities firm to assist in carrying out performance and settlement operations in accordance with the Contract for Securities Firm Participation in the Trading System for International Bonds. The defaulting securities firm may not reject or raise objection to the price for and manner in which the TPEx coordinates handling of the relevant money or bonds.
Article 45	When a securities firm reports an account change pursuant to Article 26, except where there is a legitimate reason that is recognized by the TPEx, the TPEx may take the following measures pursuant to applicable regulations: When any of following circumstances applies to the securities firm, the TPEx may notify it to make correction within a prescribed period: It reports two or more account changes on a given day. It reports four or more account changes in a given month. There are three or more instances in which it reports account changes in a given month. When any of following circumstances applies to the securities firm, the TPEx may issue a warning: It reports three or more account changes on a given day. It reports six or more account changes in a given month. There are four or more instances in which it reports account changes in a given month. It fails to make correction within the prescribed period under the preceding subparagraph. When any of following circumstances applies to the securities firm, in addition to notifying it to issue a warning to the negligent personnel managers, the TPEx may impose a default penalty of not less than NT$50,000 but not more than NT$200,000: It reports five or more account changes on a given day. It reports eight or more account changes in a given month. There are six or more instances in which it reports account changes in a given month. The TPEx has issued a warning pursuant to the preceding subparagraph two or more times during the preceding half year. When any of following circumstances applies to the securities firm, the TPEx may handle the matter by mutatis mutandis application of Article 96 of the TPEx Trading Rules: A default penalty has been imposed on the securities firm under the preceding paragraph three times or more within the last half year. The securities firm fails to pay the default penalty under the preceding paragraph. If the securities firm makes any false statement when reporting an account change, the TPEx may handle the matter under Article 97 of the TPEx Trading Rules.
Article 46	When a securities firm trading international bonds through the IBTS violates any provision of these Rules, the TPEx may additionally penalize the violation in accordance with the TPEx Trading Rules.

Chapter 6 Supplementary Provisions

Article 47

These Rules, and any amendments hereto, shall enter into force after they have been passed by the TPEx board of directors and submitted to the competent authority for approval and/or recordation. Any addition, deletion, or amendment to the appendices of these Rules shall take force after approval by the president of the TPEx.