IV. Book-entry Transfers for Short-Term Bills Settlement
Article 11 |
The hours for a bills dealer to input settlement instructions shall be from 9 a.m. to 4:30 p.m. on each business day.
If the bills dealer is a securities firm that concurrently operates a bills financing business, it shall engage an agent clearing bank to carry out fund payment and receipt on its behalf for short-term bills denominated in New Taiwan Dollars. Agent clearing banks shall return "funds deducted" confirmations on business days from 9 a.m. to 4:30 p.m.
A bills dealer that does not participate in the Financial Information Service Company's Foreign Exchange Clearing System shall engage an agent clearing bank to carry out fund payment and receipt on its behalf for short-term bills denominated in a foreign currency. The preceding paragraph shall apply mutatis mutandis to the hours during which the agent clearing bank returns "funds deducted" confirmations.
The TDCC may, as necessary for business purposes, extend the time periods set out in the preceding three paragraphs, and bills dealers shall make accommodations in accordance with TDCC notification.
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Article 12 |
A bills dealer shall handle the procedures for settlement of repo and reverse repo transactions in accordance with the following procedural principles:
- When the bills dealer uses the short-term bills purchased in a reverse repo transaction to conduct a repo transaction, the execution date of the second leg of the repo transaction shall be earlier than or the same as the execution date of the second leg of the reverse repo transaction.
- The execution date of the second leg of a repo or reverse repo transaction shall be earlier than the stated maturity date of the short-term bills.
- For the duration of a repo-style transaction between the bills dealer and a special tax-exempt entity, neither the bills dealer nor the special tax-exempt entity is allowed to use the short-term bills to carry out a repo-style transaction.
- When the bills dealer and a special tax-exempt entity carry out a repo-style transaction, they shall do so with short-term bills in the proprietary positions of their account books.
- The bills dealer may prohibit its counterparty, for the duration of a repo transaction, from using the short-term bills to carry out a repo-style transaction.
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Article 13 |
When a bills dealer and a special tax-exempt investor handle settlement of an outright short-term bills transaction, they shall calculate the dollar amount of the investor's tax exemption and input it into the BCSS.
Principles for input of the tax exemption of the preceding paragraph are as follows:
- When the bills dealer sells short-term bills to the special tax-exempt entity, it shall input the dollar amount of the tax exemption from the settlement date of the outright purchase to the stated maturity date.
- When the bills dealer buys short-term bills from the special tax-exempt entity, it shall input the dollar amount of the tax exemption for the period during which the short-term bills were held by the special tax-exempt entity.
When a bills dealer and a special tax-exempt entity handle settlement of an outright short-term bills transaction, the BCSS will reassign a new subcode to the short-term bills certificate code.
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Article 14 |
When a bills dealer and a tax-exempt investor handle settlement of an outright short-term bills transaction, it shall calculate the dollar amount of the investor's tax exemption and input it to the BCSS.
The method for input of the tax exemption of the preceding paragraph is as follows:
- When the bills dealer sells short-term bills to the tax-exempt entity, it shall input the dollar amount of the tax exemption from the settlement date of the outright purchase to the stated maturity date.
- When the bills dealer buys short-term bills outright from the tax-exempt entity, it shall input "zero" for the dollar amount of the tax exemption.
When a bills dealer and a tax-exempt entity handle settlement of an outright short-term bills transaction, the BCSS will reassign a new subcode to the short-term bills certificate code.
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Article 15 |
When fund settlement is not completed prior to the close of a business day, with the result that a bills dealer receives a "settlement incomplete" message from the BCSS, that settlement shall be invalid.
If, during the period for settlement operations set out in Article 11, the settlement of the second leg of a bills dealer's repo-style transaction has not been input or the settlement is invalidated, the BCSS will proceed directly to initiate settlement of the second leg of the repo-style transaction. If it is still not possible to complete settlement, the BCSS will handle the matter in accordance with the following procedure and conduct follow-up book adjustment operations:
- If settlement cannot be completed because the seller is unable to pay the funds to settle the second leg of the repo, the BCSS will transfer the short-term bills for settlement of the second leg into the buyer's proprietary position.
- If settlement cannot be completed because the buyer is unable to deliver the short-term bills to settle the second leg of the repo, the BCSS will not make any book-entry transfer.
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Article 16 |
When a bills dealer withdraws short-term bills in physical form, in the case of an incomplete underwriting or initial purchase of bills, it shall send a "withdraw bills" instruction to the BCSS prior to 3 p.m. on the date of the BCSS's deadline for extending the custody of registration information for the short-term bills, and shall fill out a Short-Term Bills Withdrawal Statement to withdraw the bills from the physical securities deposit bank with which they had been deposited.
A bills dealer that fails to carry out the procedure of the preceding paragraph, after receiving a "withdraw bills" notice from the BCSS at 4 p.m. on that same afternoon, shall fill out a Short-Term Bills Withdrawal Statement and withdraw the bills from the physical securities deposit bank with which they had been deposited.
The term "deadline" in paragraph 1 means the second business day after the underwriting date or initial purchase date as specified in the deposit instruction for the short-term bills in physical form.
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Article 17 |
When a bills dealer conducts firm commitment underwriting or initial purchase of short-term bills, it shall send a settlement instruction to the BCSS for the firm commitment underwriting or initial purchase, and handle the book-entry procedure for the firm commitment underwriting or initial purchase of the short-term bills.
If the short-term bills acquired by a bills dealer in an initial purchase under the preceding paragraph were previously held by a special tax-exempt entity, the bills dealer shall input the dollar amount of the tax exemption from before the entry of the bills into the BCSS.
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Article 18 |
When a bills dealer underwrites short-term bills on a best-efforts basis, the settlement method shall be as follows:
- The bills dealer shall send a settlement instruction to the BCSS for the best-efforts underwriting.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from an investor, an investor custodian bank, or the buyer's bills dealer, it shall determine the reason and address the problem.
- When the BCSS receives a "settlement confirmed" message from an investor, an investor custodian bank, or the buyer's bills dealer, unless the same bank serves as both the investor custodian bank (or the buyer's bills dealer) and the physical securities deposit bank, the BCSS will notify either the Central Bank's Department of Banking or the FISC to handle payment and receipt—between accounts of the physical securities deposit bank and either the investor custodian bank or the buyer's bills dealer (or its agent clearing bank)—of the funds payable by the buyer.
- After the BCSS completes the transfer of the bills dealer's best-efforts underwriting fee and the book-entry transfer for the best-efforts underwriting, it will notify the bills dealer of settlement completion and notify the physical securities deposit bank to remit the funds receivable by the issuer to the funds account at the bank that is designated in the settlement instruction to handle fund receipt and payment.
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Article 19 |
When a bills dealer purchases short-term bills underwritten by another bills dealer on a best efforts basis, the settlement method shall be as follows:
- When the bills dealer receives a notice of best-efforts underwritten sale from the BCSS, it shall handle settlement confirmation in accordance with the content of the notice.
- If the bills dealer has any doubt about the content of the notice of best-efforts underwritten sale, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the best-efforts underwriting bills dealer to handle the matter.
- After the bills dealer completes settlement confirmation, it shall return a "settlement confirmed" message.
- Unless the same bank serves as both the bills dealer and the physical securities deposit bank, when the BCSS receives a "settlement confirmed" message it will notify either the Central Bank's Department of Banking or the FISC to handle fund payment and receipt between accounts of the physical securities deposit bank and the bills dealer (or the agent clearing bank).
- After the BCSS completes the book-entry procedure for the best-efforts underwriting, it will notify the bills dealer of settlement completion.
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Article 20 |
The settlement of a short-term bills trade between a bills dealer and an investor or an investor custodian bank shall be as follows:
- The bills dealer shall send to the BCSS a settlement instruction for an outright transaction, a repo-style transaction, or the second leg of a repo-style transaction.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from the investor or the investor custodian bank, it shall determine the reason and address the problem.
- Unless the same bank serves as both the bills dealer (or the agent clearing bank) and the investor custodian bank, when the BCSS receives a "settlement confirmed" message from the investor or the investor custodian bank it will notify either the Central Bank's Department of Banking or the FISC to handle fund payment and receipt between deposit accounts at the bills dealer (or the agent clearing bank) and the investor custodian bank.
- After the BCSS completes the book-entry operation for an outright transaction, a repo-style transaction, or the second leg of a repo-style transaction, it will notify the bills dealer of settlement completion.
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Article 21 |
The settlement procedure for bills dealers handling trades of short-term bills between investors is as follows:
- The bills dealer shall send to the BCSS a settlement instruction for a brokered transaction.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from an investor, it shall determine the reason and address the problem.
- Unless the same bank serves as the investor custodian bank for both the purchasing and selling parties to the transaction, when the BCSS receives "settlement confirmed" messages from the buyer and seller it will notify either the Central Bank's Department of Banking or the FISC to handle fund payment and receipt between the investor custodian bank deposit accounts of the purchasing and selling parties.
- After the BCSS completes the book-entry operations for the brokered transaction, it will notify the bills dealer of settlement completion.
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Article 22 |
The settlement procedure for trades of short-term bills between bills dealers is as follows:
- The buying and selling bills dealers shall each send to the BCSS a settlement instruction for an outright transaction, a repo-style transaction, or the second leg of a repo-style transaction.
- After the BCSS receives the settlement instructions from both the buying and selling bills dealers, it will match the two bills dealers' settlement instructions.
- When the bills dealer receives a "matching failed" message from the BCSS, it shall determine the reason and address the problem.
- After the BCSS completes the matching procedure, except in the case of internal fund payment and receipt by the same bank, the BCSS will immediately notify the Central Bank's Department of Banking or the FISC to carry out fund payment and receipt between the deposit accounts of the buying and selling bills dealers (or of the bills dealer and the agent clearing bank).
- After the BCSS completes the book-entry operation for an outright transaction, a repo-style transaction, or the second leg of a repo-style transaction, it will notify the buying and selling bills dealers of settlement completion.
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Article 23 |
When the bills dealer handles the settlement of transactions between itself and an investor or an investor custodian bank under Article 20, or it handles settlement when that investor engages the bills dealer to conduct firm commitment underwriting or initial purchase of short-term bills issued or held by the investor, if batch net settlement (BNS) is employed, the following procedure shall be observed:
- The bills dealer shall separately input BNS settlement instructions to the BCSS for the transaction, firm commitment underwriting or initial purchase according to the situation. The aforementioned settlement instructions shall specify the BNS settlement code and the total number of transactions.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from the investor or the investor custodian bank, it shall determine the reason and address the problem.
- Unless the same bank serves as both the bills dealer (or the agent clearing bank) and the investor custodian bank, or unless the net amount of funds due is zero, when the BCSS receives a "settlement confirmed" message from the investor or the investor custodian bank it will notify either the Central Bank's Department of Banking or the FISC to handle payment and receipt of net funds due between accounts of the bills dealer (or the agent clearing bank) and the investor custodian bank.
- After the BCSS completes the book-entry operations for BNS settlement, it will notify the bills dealer of settlement completion.
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Article 24 |
When a bills dealer handles settlement of a trade between itself and another bills dealer under Article 22, if BNS settlement is employed, the following procedure shall be observed:
- The buying and selling bills dealers shall each send to the BCSS a batch settlement instruction. The aforementioned settlement instructions shall specify the BNS settlement code and the total number of transactions.
- After the BCSS receives the batches of settlement instructions from both the buying and selling bills dealers, it will match each pair of corresponding settlement instructions.
- When the bills dealer receives a "matching failed" message from the BCSS, it shall determine the reason and address the problem.
- After the BCSS completes the matching procedure, except in the case of internal fund payment and receipt by the same bank, or if the net amount of funds due is zero, the BCSS will immediately notify the Central Bank's Department of Banking or the FISC to carry out payment and receipt of net funds due between the accounts of the buying and selling bills dealers (or of the bills dealer and the agent clearing bank).
- After the BCSS completes the book-entry operations for BNS settlement, it will notify the buying and selling bills dealers of settlement completion.
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Article 25 |
When a bills dealer handles termination of a repo-style transaction in progress between itself and either an investor or an investor custodian bank, the following procedure shall be observed:
- The bills dealer shall send a "terminating repo-style transaction in progress" instruction to the BCSS.
- If the bills dealer receives an "unconfirmed" message forwarded by the BCSS from the investor or the investor custodian bank, it shall determine the reason and address the problem.
- When the BCSS receives a "procedure confirmed" message from the investor or the investor custodian bank, after completing the procedure for termination of the repo-style transaction in progress, it will notify the bills dealer that the procedure has been completed.
- Follow-up performance and settlement after the termination of a repo-style transaction between the bills dealer and the investor shall be handled by the mutatis mutandis application of the provisions of Articles 20 and 23.
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Article 26 |
When a bills dealer handles termination of a repo-style transaction in progress between itself and another bills dealer, the following procedure shall be observed:
- The two bills dealers shall each send a "terminating repo-style transaction in progress" instruction to the BCSS.
- After the BCSS receives the instructions from both bills dealers, it will match the two parties' instructions.
- When the bills dealer receives a "matching failed" message from the BCSS, it shall determine the reason and address the problem.
- After the BCSS completes the procedure for termination of the repo-style transaction in progress, it will notify both bills dealers that the procedure has been completed.
- Follow-up performance and settlement after the termination of a repo-style transaction in progress between the bills dealer and another bills dealer shall be handled by the mutatis mutandis application of the provisions of Articles 22 and 24.
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Article 27 |
When a bills dealer buys short-term bills issued by itself, it shall fax an Application by Bills Dealer for Early Retirement of Commercial Paper Issued by Itself to the TDCC by 4 p.m. on the settlement date to handle retirement of bills in the bills dealer account book, and within 5 business days after the settlement date shall go to the physical securities deposit bank to complete the tax payment procedure. If tax payment is not completed by the deadline, the TDCC shall refer the matter to the tax authorities for handling in an official letter.
The bills dealer shall send the original of the application of the preceding paragraph to the TDCC to be filed for future reference. If the purchased short-term bills are in physical form, the bills dealer may also fill out a Short-Term Bills Withdrawal Statement and submit it to the physical securities deposit bank to withdraw the bills.
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Article 28 |
When a bills dealer handles the procedure for account transfers between its head office and a branch thereof, the following procedure shall be observed:
- The outward transfer and inward transfer units shall each send an "account transfer settlement" instruction to the BCSS.
- After the BCSS receives the settlement instructions from both parties, it will match the settlement instructions.
- When the bills dealer receives a "matching failed" message from the BCSS, it shall determine the reason and address the problem.
- After the BCSS completes the book-entry procedure for the account transfer, it will notify the outward transfer and inward transfer units of settlement completion.
The procedure of the preceding paragraph shall be handled only by a bills dealer whose head office and branch have each established book-entry accounts.
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Article 29 |
A bills dealer may act at its own discretion to send a settlement instruction to the BCSS to handle the setting and lifting of settlement restrictions on its proprietary holdings of short-term bills.
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Article 30 |
To create a pledge on an investor's short-term bills in favor of a bills dealer, the following procedure shall be observed:
- The bills dealer shall send a "create pledge" instruction to the BCSS based on the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills filled out by the investor, and shall go to the investor custodian bank to handle the pledge creation procedure.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from the investor custodian bank, it shall determine the reason and address the problem.
- After the BCSS receives a "settlement confirmed" message from the investor custodian bank and completes the book-entry transfer procedure for the creation of a pledge, it will notify the bills dealer of settlement completion.
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Article 31 |
To create a pledge on a bills dealer's short-term bills in favor of another bills dealer, the following procedure shall be observed:
- Both bill dealers shall send a "create pledge" instruction to the BCSS based on an Application for Creation of Pledge Between Bills Dealers on Short-Term Bills filled out by themselves.
- After the TDCC receives notice of pledge from both bills dealers, it will match the settlement instructions.
- If the bills dealers receive a "matching failed" message from the BCSS, they shall determine the reason and address the problem.
- After the BCSS completes the book-entry transfer procedure for the creation of pledge, it will notify both bills dealers of settlement completion.
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Article 32 |
When an investor will purchase short-term bills from a bills dealer and create a pledge thereon in favor of the bills dealer, the following procedure shall be observed:
- The bills dealer shall send a "carrying out investor's purchase of short-term bills and creation of pledge thereon" instruction to the BCSS based on the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills filled out by the investor, and shall go to the investor custodian bank to handle the pledge creation procedure.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from the investor custodian bank, it shall determine the reason and address the problem.
- Unless the same bank serves as both the bills dealer (or the agent clearing bank) and the investor custodian bank, when the BCSS receives a "settlement confirmed" message from the investor custodian bank it will notify either the Central Bank's Department of Banking or the FISC to handle fund payment and receipt between accounts of the bills dealer (or the agent clearing bank) and the investor custodian bank.
- After the BCSS completes the book-entry operations for an investor's purchase of short-term bills from a bills dealer and creates a pledge in favor of the bills dealer, it will notify the bills dealer of settlement completion.
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Article 33 |
When an investor or a bills dealer will cancel a pledge created on short-term bills in favor of a bills dealer, the following procedure shall be observed:
- The pledgee bills dealer shall fill out either a Notice of Cancellation of a Pledge of Short-Term Bills Between an Investor and a Bills Dealer or a Notice of Cancellation of a Pledge of Short-Term Bills Between Bills Dealers, submit it to the pledgor, and send a "cancel pledge" instruction to the BCSS.
- After the BCSS completes the book-entry operations for the pledge cancellation, it will notify the bills dealer of settlement completion.
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Article 34 |
When a pledge is exercised by a court, the bills dealer shall handle book-entry transfers in accordance with the TDCC's notification.
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Article 35 |
When a bills dealer intends to obtain title to an investor's short-term bills through exercise of a pledge, the following procedure shall be observed:
- The bills dealer shall fill out and submit an Application to Exercise Pledge Rights Between Investor and Bills Dealer on Short-Term Bills and send an "exercise pledge" instruction to the BCSS. Unless the subject of the pledge is short-term bills in the investor's reverse repo position, the bills dealer may designate a third party for the exercise of pledge rights.
- The bills dealer shall fill out the Application to Exercise Pledge Rights Between Investor and Bills Dealer on Short-Term Bills of the preceding subparagraph, the third copy of the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills submitted when the parties created the pledge, and the contract under which the pledgor agrees that the pledgee may obtain the title to the pledged object, and shall then go to the investor custodian bank to handle the procedure for exercise of pledge rights.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from the investor custodian bank, it shall determine the reason and address the problem.
- After the BCSS receives a "settlement confirmed" message from the investor custodian bank and completes the book-entry transfer procedure for the exercise of pledge rights, it will notify the bills dealer of settlement completion.
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Article 36 |
When a bills dealer intends to obtain title to a pledgor bills dealer's short-term bills through exercise of pledge, the following procedure shall be observed:
- The pledgee bills dealer shall fill out and submit an Application for Exercise of Pledge Rights Between Bills Dealers on Short-Term Bills, and send an "exercise pledge" instruction to the BCSS.
- The pledgee bills dealer shall fill out and submit the Application for Exercise of Pledge Rights Between Bills Dealers on Short-Term Bills of the preceding subparagraph, the second copy of the Application for Creation of Pledge Between Bills Dealers on Short-Term Bills submitted when the parties created the pledge, and the contract under which the pledgor agrees that the pledgee may obtain title to the pledged object, and shall then go to the TDCC to handle the procedure for the exercise of pledge rights.
- After the TDCC has received the pledgee bills dealer's notification of its exercise of pledge rights, and then cross-checked them against the documents of the preceding subparagraph and found no discrepancy, it will handle the book-entry transfer procedure for the exercise of pledge rights and notify both bills dealers of settlement completion. If any uncertainty arises during the cross-checking of the documents, the TDCC shall notify the pledgee bills dealer to handle the matter.
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Article 37 |
When an investor substitutes the subject of a pledge made in favor of a bills dealer, the following procedure shall be observed:
- The bills dealer shall send a "substitute the subject of pledge" instruction to the BCSS based on the Application to Substitute Subject of a Pledge Between Investor and Bills Dealer on Short-Term Bills filled out by the investor, and the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills (the short-term bills on which the new pledge is established), and shall go to the investor custodian bank to handle the procedure for substituting the subject of the pledge.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from the investor custodian bank, it shall determine the reason and address the problem.
- After the BCSS receives a "settlement confirmed" message from the investor custodian bank and completes the book-entry transfer procedure for substituting the subject of the pledge, it will notify the bills dealer of settlement completion.
When the bills dealer handles the procedure for substituting the subject of the pledge under the preceding paragraph, it shall do so prior to the stated maturity date (not including the stated maturity date itself).
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Article 38 |
When a pledgor bills dealer intends to substitute the subject of a pledge, the following procedure shall be observed:
- The two bills dealers shall send a "substitute the subject of pledge" instruction to the BCSS based on the Application to Substitute Subject of Pledge Between Bills Dealers on Short-Term Bills and the Application for Creation of Pledge Between Bills Dealers on Short-Term Bills (the short-term bills on which the new pledge is established) filled out by themselves.
- After the TDCC receives "settlement for substitution of the subject of a pledge" instructions from both bills dealers, it will match the settlement instructions.
- If the bills dealers receive a "matching failed" message from the BCSS, they shall determine the reason and address the problem.
- After the BCSS completes the book-entry transfer procedure for substitution of the subject of the pledge, it will notify both bills dealers of settlement completion.
When the pledgor bills dealer handles the procedure for substituting the subject of the pledge under the preceding paragraph, it shall do so prior to the stated maturity date (not including the stated maturity date itself).
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Article 39 |
When an investor intends to sell short-term bills originally under pledge to a bills dealer and purchase short-term bills from the bills dealer to substitute the subject of the pledge, the following procedure shall be observed:
- The bills dealer shall send a "substitute the subject of pledge" instruction and a "trade transaction" instruction to the BCSS based on the Application to Substitute Subject of a Pledge Between Investor and Bills Dealer on Short-Term Bills filled out by the investor, and the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills submitted when the new pledge was created on the short-term bills, and shall go to the investor custodian bank to handle the procedure for substituting the subject of the pledge.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from the investor custodian bank, it shall determine the reason and address the problem.
- Unless the same bank serves as both the bills dealer (or the agent clearing bank) and the investor custodian bank, or unless the net amount of funds due is zero, when the BCSS receives a "settlement confirmed" message from the investor custodian bank it will notify either the Central Bank's Department of Banking or the FISC to handle payment and receipt of net funds due between deposit accounts at the bills dealer (or the agent clearing bank) and the investor custodian bank.
- After the BCSS completes the book-entry operations for the investor's substitution of the subject of the pledge and for the purchase/sell transactions, it will notify the bills dealer of settlement completion.
When the bills dealer carries out the procedure for substituting the subject of the pledge and for the purchase transaction as set out in the preceding paragraph, it shall do so prior to the stated maturity date (not including the stated maturity date itself).
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Article 40 |
When short-term bills in the investor's reverse repo position are used to create a pledge in favor of a bills dealer, once the repo-style transaction reaches its execution date, the procedure for substituting the subject of the pledge is as follows:
- The bills dealer shall send a "substitute the subject of pledge" instruction, and a "new repo-style transaction" instruction, to the BCSS based on the Application to Substitute Subject of a Pledge Between Investor and Bills Dealer on Short-Term Bills filled out by the investor, and the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills submitted when the new pledge was created on the short-term bills, and shall go to the investor custodian bank to handle the procedure for substituting the subject of the pledge.
- If the bills dealer receives a "settlement unconfirmed" message forwarded by the BCSS from the investor custodian bank, it shall determine the reason and address the problem.
- Unless the same bank serves as both the bills dealer (or the agent clearing bank) and the investor custodian bank, or unless the net amount of funds due is zero, then when the BCSS receives a "settlement confirmed" message from the investor custodian bank it will notify either the Central Bank's Department of Banking or the FISC to handle payment and receipt of net funds due between deposit accounts at the bills dealer (or the agent clearing bank) and the investor custodian bank.
- After the BCSS completes the book-entry operations for the investor's substitution of the subject of the pledge, and for the new repo-style transaction, it will notify the bills dealer of settlement completion.
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Article 41 |
If, for short-term bills in an investor's reverse repo position that have been pledged in favor of a bills dealer, at the execution date of the second leg of the repo-style transaction, the bills dealer or the investor custodian bank has not completed the settlement procedure by canceling the pledge, exercising pledge rights, or substituting the subject of the pledge by the required deadline, the TDCC will proceed directly to initiate the exchange of the original repo-style position that was pledged for the investor's proprietary position for the pledge.
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Article 42 |
When a bills dealer buys short-term bills from an investor or an investor custodian bank, or it sells short-term bills to another bills dealer for best-efforts underwriting, in the event of cancellation, the following procedure shall be observed:
- Before an investor, an investor custodian bank, or another bills dealer confirms settlement, the bills dealer may unilaterally cancel settlement.
- When an investor, an investor custodian bank, or another bills dealer has already confirmed settlement but has not yet completed the transfer of funds or securities, the bills dealer shall handle the matter as follows:
- The bills dealer shall send a cancellation instruction to the BCSS.
- If the bills dealer receives an "unconfirmed" message forwarded by the BCSS from an investor, an investor custodian bank, or another bills dealer, it shall determine the reason and address the problem.
- After the BCSS receives a confirmation message from an investor, an investor custodian bank, or another bills dealer and completes the procedure for settlement cancellation, it will notify the bills dealer of completion of settlement cancellation.
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Article 43 |
The settlement for short-term bills sold by a bills dealer to an investor or an investor custodian bank (including those underwritten on a best-efforts basis) may be unilaterally cancelled by the bills dealer at any time before the investor or investor custodian bank has confirmed settlement.
After the investor or investor custodian bank completes settlement confirmation, the bills dealer may not carry out the settlement cancellation of the preceding paragraph.
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Article 44 |
When a bills dealer, acting upon an investor's instruction, cancels the settlement of a short-term bills trade between investors, the following procedure shall be observed:
- Before the seller confirms settlement, the bills dealer may instruct the BCSS to cancel the settlement.
- When the seller confirms settlement but the buyer has not yet confirmed settlement, the bills dealer shall send a cancellation instruction to the BCSS. When the BCSS receives the bills dealer's cancellation instruction, it will notify the seller to carry out confirmation of settlement cancellation, and after the seller confirms cancellation of settlement and the TDCC has completed the settlement cancellation procedure, it will issue notifications.
- When the buyer and seller have already confirmed settlement but not yet completed the transfer of funds and securities, the bills dealer shall send a cancellation instruction to the BCSS. When the BCSS receives the bills dealer's cancellation instruction, it will notify both buyer and seller to carry out confirmation of settlement cancellation, and after both parties confirm cancellation of settlement and the TDCC has completed the settlement cancellation procedure, it will issue notifications.
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Article 45 |
When a bills dealer purchases short-term bills underwritten by another bills dealer on a best efforts basis, if, before returning a "settlement confirmed" message, the bills dealer receives the underwriting bills dealer's settlement cancellation notice forwarded by the BCSS, it shall cancel the settlement confirmation notice previously delivered by the BCSS.
If, after returning the "settlement confirmed" message, the bills dealer receives the best-efforts underwriting bills dealer's settlement cancellation notice forwarded by the BCSS, it shall handle the matter in accordance with the following procedure:
- The bills dealer shall verify the content of the cancellation notice.
- If the bills dealer has any doubt about the content of the cancellation notice, it shall return an "unconfirmed" message, and the BCSS will in turn notify the best-efforts underwriting bills dealer to handle the matter.
- After verifying the content of the cancellation notice, the bills dealer shall return a confirmation message.
- After the BCSS receives the bills dealer's confirmation message, it will cancel the settlement procedure and notify the bills dealer of completion of settlement cancellation.
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Article 46 |
When a bills dealer handles cancellation of the settlement of a trade of short-term bills with another bills dealer or of the procedure for account transfer between its head office and a branch thereof, the following procedure shall be observed:
- Before the BCSS completes its matching of instructions, the bills dealer may unilaterally cancel settlement.
- When the BCSS has completed its matching of instructions but not yet completed the transfer of funds and securities, the bills dealer shall observe the following procedure:
- Both bills dealers, or the head office and the branch, shall each send separate cancellation instructions.
- After the BCSS receives the cancellation instructions from both parties, it will match the parties' instructions.
- When the bills dealer receives a "matching failed" message from the BCSS, it shall determine the reason and address the problem.
- After the BCSS completes its matching procedure, it will cancel the settlement and notify both parties of completion of cancellation.
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Article 47 |
When a bills dealer carries out the procedure for termination of a repo-style transaction in progress with another bills dealer, before the BCSS has completed its matching of the instructions, it may unilaterally revoke the procedure for cancellation.
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Article 48 |
When a bills dealer handles cancellation of a BNS settlement procedure under Article 23, the following procedure shall be observed:
- If neither the investor nor the investor custodian bank has yet completed settlement confirmation, the bills dealer may unilaterally cancel the BNS settlement.
- When the investor or the investor custodian bank has already confirmed settlement but not yet completed the transfer of funds and securities, the bills dealer shall handle the matter in the following manner:
- The bills dealer shall send a cancellation instruction to the BCSS.
- If the bills dealer receives an "unconfirmed" message forwarded by the BCSS from an investor or an investor custodian bank, it shall determine the reason and address the problem.
After the BCSS has received a confirmation message from an investor or an investor custodian bank, and completed the settlement cancellation procedure, it will notify the bills dealer of completion of settlement cancellation.
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Article 49 |
When a bills dealer handles cancellation of a BNS settlement procedure under Article 24, the following procedure shall be observed:
- Before the BCSS has completed its matching of all the settlement instructions in the batch, the bills dealer may cancel the individual settlements one by one.
- When the BCSS has completed its matching procedure but not yet completed the transfer of funds and securities, the bills dealer shall observe the following procedure:
- Each bills dealer shall send separate cancellation instructions.
- After the BCSS receives the cancellation instructions from both parties, it will match the two parties' instructions.
- When the bills dealer receives a "matching failed" message from the BCSS, it shall determine the reason and address the problem.
- After the BCSS completes its matching procedure, it will cancel the batch settlement and notify both parties of completion of cancellation.
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Article 50 |
The provisions of Articles 22, 24, 26, 46, 47, and 49 will apply mutatis mutandis to the handling by a bills dealer of the procedure for settlement of short-term bills transactions between the bills dealer itself and the Central Bank or of a trade in foreign currency denominated negotiable certificates of deposit between itself and a foreign depository, book-entry, or clearing institution.
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