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Title	Taiwan Depository and Clearing Corporation Directions for the Handling of Cross-Border Custody of Foreign Securities CH
Date	2024.05.13 ( Amended )

Article Content

Chapter 1 General Principles

Article 1	These Directions are adopted pursuant to Articles 3, 8-1, 66, 67, 95-1 to 95-8, and 101 of the Operating Rules of the Taiwan Depository & Clearing Corporation (TDCC).
Article 2	A cross-border custody participant authorizing TDCC to handle cross-border custody of foreign securities is required to have an electronic certificate recognized by TDCC, and to submit the following documents: Custody agreement. Application for opening/cancellation/amendment of account for cross-border custody of foreign securities. Photocopy of the document evidencing company or business registration. Seal specimen card. Other documents as required. After TDCC receives the application from a cross-border custody participant and checks the relevant documents for accuracy, the following procedures shall be followed: TDCC will submit the application to the foreign depository and clearing institution (hereinafter, "foreign depository") to open a cross-border custody participant segregated account ("segregated account"), which shall be used for matters in connection with securities held by the participant, including settlement of cash and securities, transferring of cash and securities, foreign exchange, securities lending, cross-border securities transfers, tax identity registration, corporate actions, and account book entries for cash and securities. After TDCC has input the cross-border custody participant's code, authorized user name, and certificate identification number into the cross-border custody system, it will notify the cross-border custody participant.
Article 3	After the cross-border custody participant receives the notice from TDCC, it shall perform a “User Password Change” transaction, and after changing its initial password, it shall also perform a “User Maintenance” transaction to set up the user’s ID and set the user permissions, so that the designated personnel can carry out relevant operations.
Article 4	After TDCC has opened a segregated account with the foreign depository, it will notify the cross-border custody participant, and then the participant shall perform a “Sub-Account Setup” transaction to create a sub-account. After the cross-border custody participant has completed the account opening procedures under the preceding paragraph, TDCC shall set up a cross-border custody account book for the participant, recording its name, location, uniform ID as a profit-seeking enterprise or tax withholding entity, transaction details, and the balance of cash and securities in custody.
Article 4-1	The cross-border custody participant shall follow the procedures below when making any amendment to its basic information. When making any amendment to the participant name, foreign depository account name, company uniform ID, or business location, it shall complete an application form, affix its seals identical to the seals on the company amendment registration form, and submit the application, together with a photocopy of the first page of the company amendment registration form, to TDCC. When making any amendment to its contact person, telephone, or the contact person information left on record for the opening of the Clearstream account, it shall complete an application form, affix its seal on file, and submit the application to TDCC; alternatively, it may make the amendment through operation of the cross-border custody system. The cross-border custody participant shall choose and follow one of the procedures below when making any amendment to information used in the cross-border custody system: Complete an application form, affix its seal on file, and submit the application to TDCC (if applying for amendment to the certificate, it must additionally submit documentation evidencing its certificate identification number). Make the amendment through operation of the cross-border custody system and print the application, affix its seal on file, and submit the application to TDCC. The amendments mentioned above shall take effect after TDCC has checked the relevant documents for accuracy and notified the cross-border custody participant, except for amendments made through the system as set out in the latter part of paragraph 1, subparagraph 2, which shall take effect after rechecking by the cross-border custody participant's officer in charge.
Article 4-2	If a cross-border custody participant for some reason applies to cancel the account, it shall, by 20 days before the agreement termination date, complete an Application for Opening/Cancellation/Amendment of Account for Cross-Border Custody of Foreign Securities and issue it in a letter to TDCC to apply for cancellation of the account for cross-border custody of foreign securities. After TDCC has received the application under the preceding paragraph from the cross-border custody participant and confirmed that it has settled the account and settled any fees payable, it will notify the foreign depository to cancel the cross-border custody participant's segregated account.
Article 4-3	To apply to use or to cancel any services provided by the foreign depository involving automatic generation of settlement instructions (for example, Execution to Custody), a cross-border custody participant shall first complete an application form, affix its seal on file, and deliver it to TDCC. After TDCC has verified the seal on file, it will notify the foreign depository to process the application or cancellation for the services under the preceding paragraph or other relevant matters. After TDCC has been notified by the foreign depository of activation or termination of the services involving automatic generation of settlement instructions, it will forward the notice to the cross-border custody participant, and will make a notation and set the relevant permissions in the cross-border custody system.
Article 4-4	To apply to the foreign depository for activation or cancellation of credit facility services, a cross-border custody participant shall complete an application form, affix its seal on file, and deliver it to TDCC. After TDCC has verified the seal on file, it will notify the foreign depository to process the application or cancellation for the services under the preceding paragraph or other relevant matters. After TDCC has been notified by the foreign depository of activation or termination of the credit facility services, it will forward the notice to the cross-border custody participant. The provisions of the preceding paragraph shall apply mutatis mutandis in the event that the foreign depository, based on its own evaluation results, terminates the provision of the credit facility services to the cross-border custody participant.

Chapter 2 Cross-Border Custody Operations

Article 5	When a cross-border custody participant applies to TDCC for handling of settlement of cash and securities or transferring of securities, unless the settlement of cash and securities is being handled through the use of services involving automatic generation of settlement instructions, it shall perform a “Settlement Instruction” transaction, or submit by fax to TDCC a Settlement Instruction Letter affixed with its seal on file. The participant shall ensure that the cash or securities payable are on deposit in its segregated account before the settlement date. After checking the information under the preceding paragraph for accuracy, TDCC will notify the foreign depository to carry out the settlement operations. After TDCC has received notification from the foreign depository that it has completed the settlement process and made the relevant account book entries of cash and securities for the segregated account, TDCC will record them in the cross-border custody participant's account book, and notify the cross-border custody participant. When a cross-border custody participant carries out the operation under paragraph 1, but finds no transaction-counter-party-information provided in TDCC’s cross-border custody system for execution, the participant shall notify TDCC to create the transaction counterparty file in the cross-border custody system, and then perform the transaction under paragraph 1 over again.
Article 5-1	When a cross-border custody participant uses services involving automatic generation of settlement instructions to handle the cash and securities settlement operations for securities trades, when TDCC receives notice from the foreign depository of settlement instruction execution status for services involving automatic generation of settlement instructions, TDCC will update the relevant status in the cross-border custody system. The cross-border custody participant may perform an "E2C Awaiting Settlement Instructions" transaction to query the status. To cancel or modify settlement instructions under the preceding paragraph, the cross-border custody participant shall first perform an "E2C Awaiting Settlement Instructions" transaction and, after confirming that the status of the relevant instruction is "Settlement Not Yet Completed," further perform a "Settlement Instruction (Sub-Brokerage)" transaction to notify TDCC of cancellation or modification of the instruction content, whereupon TDCC will forward notice to the foreign depository. After TDCC has received notice from the foreign depository that it has completed the settlement instructions under the preceding two paragraphs and made the relevant account book entries of cash and securities for the segregated account, TDCC will perform account book entry operations as provided in paragraph 3 of the preceding article.
Article 6	When a cross-border custody participant applies to TDCC for handling cash movement from its segregated account to a different financial institution, or to another account at the same foreign depository, it shall perform respectively an “Outward Cash Remittance” transaction or a “Cash Transfer” transaction, or submit by fax to TDCC a Cash Instruction Letter affixed with its seal on file. After checking the information under the preceding paragraph for accuracy, TDCC will notify the foreign depository to carry out the remittance or transfer. Once the foreign depository has notified TDCC of the completion of the cash movement process and made the relevant entries, TDCC will record them in the cross-border custody participant's account book, and notify the cross-border custody participant.
Article 7	When a cross-border custody participant applies to TDCC for receipt of cash with its segregated account, it shall perform an “Inward Cash Remittance” transaction, or submit by fax to TDCC a Cash Instruction Letter affixed with its seal on file. After checking the information under the preceding paragraph for accuracy, and once the foreign depository has completed the inward remittance operation and made the relevant entries for the segregated account, TDCC will record them in the cross-border custody participant's account book, and notify the cross-border custody participant.
Article 8	When a cross-border custody participant applies to TDCC for transfer of securities and cash between its own sub-accounts, it shall perform respectively a “Securities Transfer-sub a/c” transaction or “Cash Transfer-sub a/c” transaction, or submit by fax to TDCC a Settlement Instruction Letter or Cash Instruction Letter affixed with its seal on file. After checking the information under the preceding paragraph for accuracy, TDCC will record it in the cross-border custody participant's account book, and notify the cross-border custody participant.
Article 9	When a cross-border custody participant applies to TDCC for foreign exchange, it shall perform a “Foreign Exchange” transaction, or submit by fax to TDCC an FX Instruction Letter affixed with its seal on file. After checking the information under the preceding paragraph for accuracy, TDCC will notify the foreign depository to carry out the foreign exchange conversion. After the foreign depository has notified TDCC of completion of foreign exchange and made the relevant entries for the segregated account, TDCC will record them in the cross-border custody participant's account book and notify the cross-border custody participant.
Article 10	When a cross-border custody participant applies to TDCC for securities lending service, it shall submit an application indicating whether it will use the basic securities lending service on an automatic basis or on a non-automatic (opportunity, case-by-case) basis, or will use the securities lending extended (plus) service, and deliver the application form affixed with its seal on file to TDCC. After checking the information under the preceding paragraph for accuracy, TDCC will notify the foreign depository to proceed. Once the foreign depository has notified TDCC of the completion of the operation for setting up of the service, TDCC will inform the cross-border custody participant. When a cross-border custody participant applies to use the basic securities lending service on an automatic basis or securities lending extended (plus) service, the foreign depository will automatically carry out the securities lending operation based on market needs. When a cross-border custody participant applies to use the basic securities lending service on a non-automatic (opportunity, case-by-case) basis, TDCC will receive a notice from the foreign depository of the need for securities borrowing and forward the notice to the cross-border custody participant. TDCC will then notifying the foreign depository to carry out the securities lending operation after obtaining the confirmation from the participant. Once the foreign depository has notified TDCC of the completion of the securities borrowing operation and made the relevant entries for the segregated account, TDCC will record them in the cross-border custody participant's account book, and notify the cross-border custody participant with relevant statements.
Article 11	When a cross-border custody participant applies to TDCC for transfer of securities, including those regulated by the Taipei Exchange (TPEx) Rules Governing Management of Foreign Currency Denominated International Bonds, and foreign currency denominated bonds issued overseas by Taiwan nationals or foreign nationals and registered by the securities dealer with the TPEx, from its segregated account at the foreign depository to its depository account in TDCC, or from its depository account in TDCC to its segregated account at the foreign depository, the transfer shall be handled in accordance with Article 19 of the TDCC Directions for the Handling of Book-Entry Transfer Operations for Foreign Currency Denominated Bonds.
Article 12	When a cross-border custody participant carries out any operation under Articles 5 to 11 with any shortfall in cash or securities TDCC will notify the participant to take further measures.
Article 12-1	The provisions of Articles 8 and 10 of this Chapter do not apply to foreign securities traded in brokerage trading by the cross-border custody participant.

Chapter 3 Corporate Action

Article 13	When TDCC receives notices from the foreign depository of information about corporate actions by issuers of securities, it will immediately generate the corporate action information accordingly into the cross-border custody system, and notify the participant to take further measures. The cross-border custody participant may perform a "Corporate Action Information Query" transaction to query information under the preceding paragraph.
Article 13-1	If the content of the corporate action information requires a response from the cross-border custody participant, the participant shall, within the deadline indicated by TDCC, perform a “Corporate Action Information Query and Response” transaction, or notify TDCC by submitting by fax an application affixed with its seal on file. TDCC will then forward the notice to the foreign depository to take further measures. If the cross-border custody participant wishes to cancel or modify the content of a response under the preceding paragraph, it shall, within the deadline indicated by TDCC, perform a "Corporate Action Information Query and Response" transaction and execute the cancellation or modification, or notify TDCC by submitting by fax an application affixed with its seal on file. TDCC will then forward the notice to the foreign depository to take further measures.
Article 13-2	If a corporate action involves any change of the balance of cash or securities, once the foreign depository has notified TDCC of completion of book entries of the change in the cash or securities in the segregated account, TDCC will perform the operations for distribution of the cash or securities to the sub-accounts, and record the change in the cash or securities in the cross-border custody participant's account book, and notify the cross-border custody participant. When TDCC performs distribution operations under the preceding paragraph, the amounts of cash or securities to be distributed shall be calculated to the smallest unit of the foreign currency or the securities amount. If there is any remainder, the sub-accounts will be ranked in sequential order from largest to smallest based on the amount of their distributable portion, and the sub-accounts will receive one smallest unit each in order of their ranking until all of the remainder has been distributed. If two or more sub-accounts are owed an equal cash amount or securities amount, distribution to them shall be made in random order.
Article 13-3	After TDCC receives a notification from the foreign depository to reverse a transaction, TDCC will forward the notification to the cross-border custody participant. After the operations to reverse the transaction under the preceding paragraph are completed, TDCC will make the corresponding entries in the cross-border custody participant's account book and forward notification to the cross-border custody participant. If there is any shortfall in the balance of cash or securities, the cross-border custody participant shall make up the shortfall immediately.
Article 14	When any interest is accrued or expense incurred in a cross-border custody participant's segregated account, the foreign depository will make a credit or debit on its own discretion to the participant's segregated account and make the relevant book entries. Once the foreign depository has completed the cash credit or debit operation, TDCC will record it in the participant's account book, and notify the cross-border custody participant.
Article 15	When a cross-border custody participant applies for tax identity registration operations to any market in any country, it shall submit an application affixed with its seal on file and complete the application document provided by the foreign depository, and deliver them together to TDCC. However, if the foreign depository does not provide tax services, TDCC will not process the application. After checking the information under the preceding paragraph for accuracy, TDCC will forward the application documents to the foreign depository. Once the foreign depository has notified TDCC of completion of the tax registration operation, TDCC will forward the notice to the cross-border custody participant upon receiving the annual tax withholding information from the foreign depository and will subsequently send it to the cross-border custody participant. TDCC does not provide related tax refund services to cross-border custody participants and their customers.
Article 16	(Deleted)

Chapter 4 Other Operations

Article 17

A cross-border custody participant may perform an "Asset Valuation Statement Query" transaction to query for an Asset Valuation Statement of the securities that it holds daily.

Article 18

A cross-border custody participant may perform an “Inventory Balance Statement Query”, “Cash Balance Statement Query”, “Settlement Statement Query”, or “Cash Movement Statement Query” transaction, to check the balance of cash and securities with its details in its cross-border custody account book. When the participant finds any discrepancy, it shall promptly notify TDCC to undertake a joint investigation to determine the cause and make a correction.

Chapter 5 Supplementary Provisions

Article 19

All matters on which these Directions are silent shall be governed by the Operating Rules of the Taiwan Depository & Clearing Corporation and other applicable regulations.