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Title Taiwan Depository & Clearing Corporation Directions for the Handling by Investor Custodian Banks of Account Opening, and Settlement and Withdrawal of Short-Term Bills CH
Date 2018.12.28 ( Amended )

Article Content

I. General Principles
Article 1     These Directions are adopted pursuant to Article 15 of the Taiwan Depository & Clearing Corporation Operating Rules for Short-Term Bills.
Article 2     The competent authority under the Act Governing Bills Finance Business is the competent authority for these Directions.
II. Opening and Management of Depository Accounts
Article 3     To conduct investor custodian bank operations, a bank shall use a deposit account opened with the Central Bank's Department of Banking or with a foreign currency clearing bank to conduct payments and receipts, and shall submit the following documents to the Taiwan Depository & Clearing Corporation (TDCC) by official letter to open a book-entry depository account:
  1. Participant agreement.
  2. Agreement for the opening by the investor custodian bank of a short-term bills depository account.
  3. Application form for opening/closure/changes of a depository account.
  4. Specimen seal card of the investor custodian bank.
  5. Photocopy of the company registration certificate or other document evidencing registration as a juristic person.
  6. List of the participant's contact persons.
  7. Investor Custodian Bank Agreement for Transfer of Accounts.
  8. Documentary proof that the competent authority has granted approval for the conduct of investor custodian bank operations.
  9. Other documents required by TDCC.
    When an investor custodian bank opens a deposit account with a foreign currency clearing bank, it shall open it as a jointly established interbank fund transfer guarantee segregated account, and shall agree to engage the Financial Information Service Co., Ltd. (FISC) to act as its agent in using the account to carry out payment and receipt of funds on its behalf for short-term bills denominated in a foreign currency.
Article 4     An investor custodian bank shall establish investor accounts to record the following information:
  1. The personal or organizational name and uniform ID number (national ID number, business administration number, or withholding agency tax code number) of the investor or its legal representative.
  2. Depository account number.
  3. Domicile and correspondence address.
  4. Notes indicating whether an investor is an ordinary investor, a special tax-exempt entity, an ordinary tax-exempt entity, or an entity exempt from supplementary National Health Insurance premiums ("supplementary insurance premiums").
  5. Proprietary positions, reverse repo positions, repo positions, pledgor positions, pledgee positions, restricted (non-presentment) positions, restricted (settlement restricted) positions, restricted (settlement prohibited) positions, and restricted (dishonored) positions.
  6. Type and number of short-term bills, and the issuers' names.
  7. Increases or decreases in the number of short-term bills, and the causes thereof.
  8. Other items required by the competent authority.
Article 5     An investor custodian bank shall designate a business unit at its head office as the designated central processing unit to conduct accounting operations for the bank's proprietary depository account and the depository accounts of investors, and to conduct applications for other related business.
Article 6     An investor custodian bank shall conduct the procedures for the opening by an investor of a book-entry depository account in accordance with the provisions of the Regulations Governing Issuance Registration, Central Deposit, and Book-Entry Operations for Short-Term Bills.
    The investor shall designate a current deposit account as the funds settlement account.
Article 7     After the investor custodian bank completes the account opening procedure for an investor it shall issue the investor a short-term bills passbook, and shall also upload the investor's account opening information via a computer network connection to TDCC's Bills Clearing and Settlement System (BCSS) to open the investor's depository account. The specifications for the passbook format shall accord with the Directions for the Use of Short-Term Bills Passbooks.
Article 8     When an investor custodian bank changes the basic identification data for an investor's depository account, or closes such an account, after completing the account change or closing procedure it shall change or close the depository account that the investor opened with the BCSS immediately via a computer network.
Article 9     An investor custodian bank applying to close its depository account shall handle the matter in accordance with the following procedure:
  1. The investor custodian bank shall fill out an application form for opening/closure/changes of a depository account and submit it to TDCC by official letter to close the depository account.
  2. The investor custodian bank shall, within one month prior to the record date for the account closing, instruct its investors to settle and close the depository accounts that they have opened with the bank.
  3. The investor custodian bank shall, prior to the record date for the account closing, clear all of the short-term bills positions in its proprietary depository account.
  4. On the record date for the account closing, any depository accounts of the bank's investors for which the settlement and account closing operation have not been completed shall be transferred by TDCC to the transferee investor custodian bank as designated in the Investor Custodian Bank Agreement for Transfer of Accounts.
  5. By the end of the business day preceding the record date for the account closing, the investor custodian bank shall transfer the investor accounts and related account opening documents, all of which shall have been checked by TDCC, to the transferee investor custodian bank.
  6. The investor custodian bank shall notify the investors to go to the transferee investor custodian bank to conduct remaining procedures for the opening of a depository account, funds settlement account, or for other related documents.
Article 10     When an investor custodian bank has been ordered by the competent authority to suspend business operations, unless the Competent Authority provides otherwise, TDCC shall suspend that bank's proprietary depository account. However, matters pertaining to transfer of the investors' depository accounts shall be subject to mutatis mutandis application of Article 9, subparagraphs 4 to 6.
Article 11     When an investor custodian bank applies to TDCC to change the basic identification data for its depository account, it may do so by either of the following methods:
  1. Notify TDCC through the BCSS.
  2. Fill out an application form for opening/closure/changes of a depository account and submit it to TDCC.
Article 12     By the end of each business day, an investor custodian bank shall reconcile its accounts against the statements of accounts provided by TDCC.
    If the investor custodian bank has any doubt about the accounts of the preceding paragraph, it shall promptly work together with the TDCC joint administrators to determine the reason, and any error shall be promptly corrected.
Article 13     The investor custodian bank shall retain investor account records and documentation of investor deposits and settlements for a minimum of five years from the date of registration.
III. Book-Entry Transfers For Short-Term Bills Settlement
Article 14     The hours for inputting instructions related to business that an investor custodian bank conducts for its own account or on behalf of investors, and the hours for carrying out settlement confirmations for its own account or on behalf of investors, shall be from 9 a.m. to 4:30 p.m. on each business day.
    TDCC may, as necessary for business purposes, extend the time periods set out in the preceding paragraph, and investor custodian banks shall make accommodations in accordance with TDCC notification.
Article 15     An investor custodian bank shall provide investors with methods for making confirmations of settlements and of cancellations of settlements, such as handling confirmations at a service counter, via telephone voice menu system, online, or other methods.
    An investor may, with the consent of the investor custodian bank, sign a Power of Attorney for Short-term Bill Settlements to authorize the investor custodian bank to make settlement confirmations on its behalf.
    The specifications of the form used by an investor to confirm settlements or cancellations of settlements at a service counter shall accord with the Directions for Handling by Investors of Settlement Confirmations at a Service Counter.
Article 16     When payment and receipt of settlement funds is not completed prior to the close of a business day, with the result that an investor custodian bank receives a "settlement incomplete" message from the BCSS, that settlement shall be invalid. If the investor is the party liable for payment, the investor custodian bank shall transfer the funds already paid by the investor back into the investor's funds settlement account.
Article 17     When an investor custodian bank conducts an investor's purchase of short-term bills underwritten by a bills dealer on a best efforts basis, the settlement method shall be as follows:
  1. When the investor custodian bank receives a notice of the best-efforts underwritten sale from the BCSS, it shall provide the content of the notice to the investor for confirmation.
  2. When the investor custodian bank receives notice that the investor has a doubt about the content of the notice of the best-efforts underwritten sale, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. When the investor confirms settlement, the investor custodian bank, after deducting the funds payable by the investor, shall return a "settlement confirmed" message. When the investor custodian bank confirms settlement on behalf of the investor, the procedure is the same.
  4. Unless the same bank serves as both physical securities deposit bank and investor custodian bank, when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of funds between deposit accounts at the physical securities deposit bank and the investor custodian bank.
  5. When the investor custodian bank receives a "settlement completed" message from the BCSS, it shall transfer the purchased quantity into the proprietary position in the investor account.
Article 18     When an investor custodian bank uses its proprietary depository account to purchase short-term bills underwritten by a bills dealer on a best efforts basis, the settlement method shall be as follows:
  1. When the investor custodian bank receives a notice of the best-efforts underwritten sale from the BCSS, it shall confirm the settlement instructions in accordance with the content of the notice.
  2. If the investor custodian bank has any doubt about the content of the notice of the best-efforts underwritten sale, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. After the investor custodian bank confirms settlement, it shall return a "settlement confirmed" message.
  4. Unless the same bank serves as both physical securities deposit bank and investor custodian bank, when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of funds between deposit accounts at the physical securities deposit bank and the investor custodian bank.
  5. After the BCSS completes the book-entry operation for a best-efforts underwritten sale, it will notify the investor custodian bank of settlement completion.
Article 19     When an investor custodian bank conducts an investor's purchase of short-term bills from a bills dealer, the settlement method shall be as follows:
  1. When the investor custodian bank receives a settlement confirmation notice from the BCSS for an outright purchase or a reverse repo transaction, it shall provide the content of the notice to the investor for confirmation.
  2. When the investor custodian bank receives notice that the investor has a doubt about the content of the settlement confirmation notice, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. When the investor confirms settlement, the investor custodian bank, after deducting the amount payable by the investor, shall return a "settlement confirmed" message. When the investor custodian bank confirms settlement on behalf of the investor, the procedure is the same.
  4. When the investor custodian bank receives a settlement confirmation notice from the BCSS regarding settlement by the investor of the second leg of a one-time repo transaction or a multi-step repo transaction, after proceeding forthwith to deduct the funds for the settlement of the second leg from the investor's funds settlement account, it shall return a "settlement confirmed" message.
  5. Unless the same bank serves as both investor custodian bank and bills dealer (or agent clearing bank), when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of funds between deposit accounts at the investor custodian bank and the bills dealer (or the agent clearing bank).
  6. When the investor custodian bank receives a "settlement completed" message from the BCSS, it shall conduct the book-entry procedure in accordance with the following procedure:
    1. In the case of an outright purchase, the bank shall transfer the purchased quantity into the proprietary position in the investor account.
    2. In the case of settlement of the second leg of a one-time repo transaction, the bank shall deduct the purchased quantity from the repo position of investor's account and transfer it into the proprietary position.
    3. In the case of a reverse repo transaction, the bank shall transfer the purchased quantity into the reverse repo position in the investor account.
    4. In the case of settlement of the second leg of a multi-step repo transaction, the bank shall deduct the purchased quantity from the investor account repo position and transfer it into the reverse repo position.
Article 20     When an investor custodian bank conducts an investor's sale of short-term bills to a bills dealer, the settlement method shall be as follows:
  1. When the investor custodian bank receives a settlement confirmation notice from the BCSS for an outright sale, a one-time repo transaction, or a multi-step repo transaction, it shall provide the content of the notice to the investor for confirmation.
  2. When the investor custodian bank receives notice that the investor has a doubt about the content of the settlement confirmation notice, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. After the investor confirms settlement, the investor custodian bank shall return a "settlement confirmed" message. When the investor custodian bank confirms settlement on behalf of the investor, the procedure is the same.
  4. Unless the same bank serves as both investor custodian bank and bills dealer (or agent clearing bank), when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of funds between deposit accounts at the investor custodian bank and the bills dealer (or the agent clearing bank).
  5. When the investor custodian bank receives a "settlement completed" message from the BCSS, it shall transfer the investor's transaction proceeds into the investor's funds settlement account, and shall conduct the book-entry procedure in accordance with the following procedure:
    1. In the case of an outright sale, the bank shall deduct the sold quantity from the proprietary position in the investor account.
    2. In the case of a one-time repo transaction, the bank shall deduct the sold quantity from the proprietary position in the investor account and transfer it into the repo position.
    3. In the case of a multi-step repo transaction, the bank shall deduct the sold quantity from the reverse repo position in the investor account and transfer it into the repo position.
    4. In the case of settlement of the second leg of a reverse repo transaction, the bank shall deduct the sold quantity from the reverse repo position in the investor account.
Article 21     When an investor custodian bank conducts the settlement of a short-term bills trade between investors, the following procedure shall be observed:
  1. When the investor custodian bank receives a settlement confirmation notice from the BCSS for a brokered transaction it shall provide the content of the notice to the investor for confirmation.
  2. When the investor custodian bank receives notice that the investor has a doubt about the content of the settlement confirmation notice, the bank shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. When the purchasing investor confirms settlement, its investor custodian bank, after deducting the amount payable by the investor, shall return a "settlement confirmed" message. When the investor custodian bank conducts settlement confirmations on behalf of the purchasing investor, the procedure is the same.
  4. Unless the same bank serves as the investor custodian bank for both the purchasing and selling investors, when the BCSS receives a "settlement confirmed" message, it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of funds between the investor custodian bank deposit accounts of the purchasing and selling investors.
  5. When the investor custodian banks of the purchasing and selling investors receive "settlement completed" messages from the BCSS, the following procedure shall be observed:
    1. The selling investor's custodian bank shall transfer the investor's transaction proceeds into the investor's funds settlement account, and shall deduct the sold quantity from the proprietary position in the investor account.
    2. The purchasing investor's custodian bank shall transfer the purchased quantity into the proprietary position in the investor account.
Article 22     When an investor custodian bank uses its proprietary depository account to purchase/sell short-term bills from/to a bills dealer, the settlement method shall be as follows:
  1. When the investor custodian bank receives a settlement confirmation notice from the BCSS for settlement of an outright transaction, a repo-style transaction, or the second leg of a repo transaction, it shall confirm settlement in accordance with the content of the notice.
  2. If the investor custodian bank has any doubt about the content of the settlement confirmation notice, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to conduct the matter.
  3. After the investor custodian bank confirms settlement, it shall send a "settlement confirmed" message.
  4. Unless the same bank serves as both investor custodian bank and bills dealer (or agent clearing bank), when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or a foreign currency clearing bank to conduct payment and receipt of funds between deposit accounts at the investor custodian bank and the bills dealer (or the agent clearing bank).
  5. 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 investor custodian bank of settlement completion.
Article 23     When an investor custodian bank conducts the settlement of a transaction between an investor and a bills dealer under Article 19 or 20, or it conducts settlement when that investor engages a 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:
  1. When the investor custodian bank receives a BNS confirmation notice (including the settlement of the second leg of a repo or reverse repo transaction), it shall provide the content of the notice to the investor for confirmation.
  2. When the investor custodian bank receives notice that the investor has a doubt about the content of the settlement confirmation notice, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. When the investor confirms settlement, if the investor is the party liable for payment in the BNS process, the investor custodian bank, after deducting the amount payable by the investor, shall return a "settlement confirmed" message. When the investor custodian bank conducts settlement confirmations on behalf of the investor, the procedure is the same.
  4. Unless the same bank serves as both investor custodian bank and bills dealer (or agent clearing bank), or unless the net amount of funds due is zero, when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of net funds due between deposit accounts of the investor custodian bank and the bills dealer (or the agent clearing bank).
  5. When the investor custodian bank receives a BNS "settlement completed" message from the BCSS, the provisions of Articles 19 and 20 will apply mutatis mutandis to the bank's handling of book-entry operations for each settlement.
Article 24     When an investor custodian bank conducts the settlement of a transaction under Article 22, if BNS is employed, the following procedure shall be observed:
  1. When the investor custodian bank receives a BNS settlement confirmation notice, it shall confirm settlement in accordance with the content of the notice.
  2. If the investor custodian bank has any doubt about the content of the settlement confirmation notice, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. After the investor custodian bank confirms settlement, it shall return a "settlement confirmed" message.
  4. Unless the same bank serves as both investor custodian bank and bills dealer (or agent clearing bank), or unless the net amount of funds due is zero, when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of net funds due between deposit accounts at the investor custodian bank and the bills dealer (or the agent clearing bank).
  5. After the BCSS completes the book-entry operations for BNS settlement, it will promptly notify the investor custodian bank of settlement completion.
Article 25     When an investor custodian bank conducts an investor's early termination of a repo-style transaction, the following procedure shall be observed:
  1. When the investor custodian bank receives a procedure confirmation notice from the BCSS, it shall provide the content of the notice to the investor so the investor can conduct confirmation.
  2. When the investor custodian bank receives notice that the investor has a doubt about the content of the procedure confirmation notice, it shall return an "unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. After the investor completes confirmation, the investor custodian bank shall return a "procedure confirmed" message. When the investor custodian bank conducts confirmations on behalf of the investor, the procedure is the same.
  4. When the investor custodian bank receives a "procedure completed" message from the BCSS, it shall record the terminated quantity in the investor account.
  5. The provisions of Articles 19, 20, and 23 will apply mutatis mutandis to the follow-up performance and settlement of repo-style transactions that are terminated early by the investor.
Article 26     When a repo-style transaction involving short-term bills in an investor custodian bank's proprietary depository account is terminated early, the following procedure shall be observed:
  1. When the investor custodian bank receives a procedure confirmation notice from the BCSS, it shall conduct confirmation in accordance with the content of the notice.
  2. If the investor custodian bank has any doubt about the content of the procedure confirmation notice, it shall return an "unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. After the investor custodian bank completes confirmation, it shall return a "procedure confirmed" message.
  4. After the BCSS completes the procedure for early termination of the repo-style transaction, it will notify the investor custodian bank that the procedure has been completed.
  5. The provisions of Articles 22 and 24 will apply mutatis mutandis to the follow-up performance and settlement after the early termination of a repo-style transaction involving short-term bills in an investor custodian bank's proprietary depository account.
Article 27     If, during the settlement of the second leg of a repo-style transaction of an investor or an investor custodian bank, 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 will conduct follow-up book adjustment operations:
  1. If settlement cannot be completed because the seller is unable to pay the funds to settle the second leg of the transaction, the BCSS will transfer the short-term bills for settlement of the second leg into the buyer's proprietary position.
  2. If settlement cannot be completed because the buyer is unable to deliver the short-term bills to settle the second leg of the transaction, the BCSS will not make any book-entry transfer.
    When the investor custodian bank receives a "settlement completed" message regarding the second leg of a repo-style transaction under the preceding paragraph, the provisions of Articles 19 and 20 will apply mutatis mutandis to book-entry operations for the investor account. If it is not possible to complete settlement, the book-entry operations shall be conducted in accordance with the following procedure:
  1. When the investor is the buyer under subparagraph 1 in the preceding paragraph, the quantity of short-term bills for settlement of the second leg shall be deducted from the reverse repo position in the investor account and transferred into the buyer's proprietary position; when the investor is the seller, the quantity of short-term bills for settlement of the second leg shall be deducted from the repo position in the investor account.
  2. When the investor is the buyer or the seller under subparagraph 2 of the preceding paragraph, no book-entry transfer will be made.
Article 28     When an investor custodian bank handles interbank account transfers of an investor's short-term bills, the following procedure shall be observed:
  1. The investor custodian bank making an outward transfer (the outward-transfer bank) shall send a settlement instruction to the BCSS in accordance with the Application for Short-Term Bills Transfer filled out by the investor.
  2. When the investor custodian bank receiving an inward transfer (the inward-transfer bank) receives a notice from the BCSS, after checking to confirm that the inward-transfer account is in fact the investor's account, it shall return a "settlement confirmed" message.
  3. If the inward-transfer bank has any doubt about the content of the settlement confirmation notice, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the outward-transfer bank to handle the matter.
  4. After the outward-transfer bank and the inward-transfer bank receive a "settlement completed" message from the BCSS, they shall conduct book-entry in accordance with the following manner:
    1. The outward-transfer bank shall deduct the outward transfer amount from the proprietary position in the investor account.
    2. The inward-transfer bank shall transfer the inward transfer amount into the proprietary position in the investor account.
    The handling by an investor of an interbank account transfer of short-term bills under the preceding paragraph shall be limited to transfers between proprietary positions in the investor's own depository accounts.
Article 29     When an investor custodian bank conducts account transfers of an investor's short-term bills between affiliated banks, the following procedure shall be observed:
  1. The investor custodian bank shall send a settlement instruction to the BCSS in accordance with the Application for Short-Term Bills Account Transfer filled out by the investor.
  2. After the investor custodian bank receives a "settlement completed" message from the BCSS, it shall deduct the outward transfer amount from the proprietary position in the investor account outward-transfer account and transfer it into the proprietary position in the inward-transfer account.
    The handling by an investor of an account transfer of short-term bills between affiliated banks under the preceding paragraph shall be limited to transfers between proprietary positions in the investor's own depository accounts.
Article 30     When an investor custodian bank sets or lifts settlement restrictions on an investor's short-term bills, the following procedure shall be observed:
  1. The investor custodian bank shall send a settlement instruction to the BCSS in accordance with the Application to Set/Lift Settlement Restrictions on Short-Term Bills filled out by the investor.
  2. After the investor custodian bank receives a "setting/lifting of settlement restrictions completed" message from the BCSS, it shall conduct book-entry in accordance with the following procedure:
    1. When setting settlement restrictions, the investor custodian bank shall deduct the restricted quantity from the proprietary position in the investor account and transfer it into the restricted (settlement restricted) position.
    2. When lifting settlement restrictions, the investor custodian bank shall deduct the quantity in the investor account's restricted (settlement restricted) position from which the restriction has been lifted, and shall transfer it into the proprietary position.
Article 31     An investor custodian bank may act at its own discretion to send a settlement instruction to the BCSS to conduct the setting and lifting of settlement restrictions on its proprietary holdings of short-term bills.
Article 32     When an investor custodian bank has been notified by an enforcing authority or competent authority to set or lift a prohibition on settlement of an investor's short-term bills, the bank shall refer the matter to TDCC for handling. After the investor custodian bank receives notice that TDCC has completed the aforementioned handling procedure, the bank shall conduct book-entry in accordance with the following procedure:
  1. When setting a settlement prohibition: The quantity subject to the settlement prohibition shall be deducted from the proprietary position in the investor account and transferred into the restricted (settlement restricted) position.
  2. When lifting a settlement prohibition: The quantity from which the prohibition has been lifted shall be deducted from the investor's restricted (settlement prohibited) position in the investor account and transferred into the proprietary position.
Article 33     When an investor custodian bank conducts the creation of a pledge on an investor's short-term bills in favor of another investor, the following procedure shall be observed:
  1. The pledgor's investor custodian bank (hereinafter, the pledgor bank) shall send a settlement instruction to the BCSS in accordance with the Application to Create Pledge Between Investor and Investor (Investor Custodian Bank) on Short-Term Bills filled out by the pledgor.
  2. After the pledgor bank and the pledgee's investor custodian bank (hereinafter, the pledgee bank) receive a "settlement completed" message from the BCSS, they shall conduct the book-entry procedure in accordance with the following procedure:
    1. The pledgor bank shall deduct the pledged quantity from the proprietary position in the pledgor account, and shall record the pledged quantity in the pledgor position.
    2. The pledgee bank shall transfer the pledged quantity into the pledgee position in the pledgee account.
Article 34     When an investor custodian bank conducts the creation of a pledge on an investor's short-term bills in favor of an investor custodian bank, the following procedure shall be observed:
  1. The investor custodian bank shall send a settlement instruction to the BCSS in accordance with the Application to Create Pledge Between Investor and Investor (Investor Custodian Bank) on Short-Term Bills filled out by the investor.
  2. After the investor custodian bank receives a "settlement completed" message from the BCSS, it shall deduct the pledged quantity from the proprietary position in the investor account and record the pledged quantity in the pledgor position.
Article 35     When an investor custodian bank conducts the creation of a pledge on an investor's short-term bills in favor of a bills dealer, the following procedure shall be observed:
  1. The investor custodian bank shall cross-check the notice of pledge sent by the BCSS against the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills filled out by the investor.
  2. If the investor custodian bank has any doubt about the content of the notice of pledge, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter. If the cross-check confirms the accuracy of the information, the bank shall return a "settlement confirmed" message.
  3. After the investor custodian bank receives a "settlement completed" message from the BCSS, it shall deduct the pledged quantity from the proprietary position in the investor account, or from the reverse repo position of the one-time repo transaction, and shall note the pledged quantity in the pledgor position.
Article 36     When an investor custodian bank conducts an investor's purchase of short-term bills from a bills dealer and creation of a pledge in favor of the bills dealer, the following procedure shall be observed:
  1. The investor custodian bank shall cross-check the "notice of an investor's purchase and creation of a pledge on short-term bills" sent by the BCSS against the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills filled out by the investor.
  2. If the investor custodian bank has any doubt about the content of the "notice of an investor's purchase and creation of a pledge on short-term bills," it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter. If the cross-check confirms the accuracy of the information, the bank, after deducting the amount payable by the investor, shall return a "settlement confirmed" message.
  3. Unless the same bank serves as both investor custodian bank and bills dealer (or agent clearing bank), when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of funds between deposit accounts at the investor custodian bank and the bills dealer (or the agent clearing bank).
  4. After the investor custodian bank receives a "settlement completed" message from the BCSS, it shall conduct the book-entry procedure in the investor account as follows:
    1. Outright purchase: The bank shall transfer the purchased quantity into the proprietary position.
    2. Creation of pledge: The bank shall deduct the pledged quantity from the proprietary position in the pledgor account, and record the pledged quantity in the pledgor position.
Article 37     When an investor custodian bank conducts the cancellation of a pledge created on short-term bills by an investor in favor of another investor, the following procedure shall be observed:
  1. The pledgee bank shall send a settlement instruction to the BCSS in accordance with the Application to Cancel Pledge Between Investor and Investor (Investor Custodian Bank) on Short-Term Bills filled out by the pledgee.
  2. After the pledgor bank and the pledgee bank receive a "settlement completed" message from the BCSS, they shall conduct the book-entry procedure in accordance with the following procedure:
    1. The pledgor bank shall record the pledge cancellation quantity in the pledgor position of the pledgor account, and shall transfer it into the proprietary position.
    2. The pledgee bank shall deduct the pledge cancellation quantity from the pledgee position of the pledgee account.
Article 38     When an investor custodian bank conducts the cancellation of a pledge created on short-term bills by an investor in favor of a custodian bank, the following procedure shall be observed:
  1. The pledgee investor custodian bank shall fill out an Application to Cancel Pledge Between Investor and Investor (Investor Custodian Bank) on Short-Term Bills and then send a settlement instruction to the BCSS.
  2. After the pledgor bank receives a "settlement completed" message from the BCSS, it shall record the pledge cancellation quantity in the pledgor position in the investor account, and shall transfer it into the proprietary position.
Article 39     When an investor custodian bank conducts the cancellation of a pledge created on short-term bills by an investor in favor of a bills dealer, after receiving a "settlement completed" message from the BCSS it shall record the pledge cancellation quantity in the pledgor position in the investor account and transfer it into the proprietary position or the reverse repo position.
Article 40     When a pledge is exercised by a court, the investor custodian bank shall conduct book-entry transfers in accordance with TDCC's notification.
Article 41     When a pledge is created on short-term bills in an investor's proprietary position and title to the bills is obtained through exercise of the pledge, the investor custodian bank shall observe the following procedure:
  1. The pledgee shall fill out and submit a contract under which the pledgor agrees that the pledgee may obtain the title to the pledged object.
  2. If the pledgee is an investor:
    1. After the pledgee bank has checked and confirmed the accuracy of the Application to Exercise Pledge Rights Between Investor and Investor (Investor Custodian Bank) on Short-Term Bills filled out by the pledgee, the third copy of the Application to Create Pledge Between Investor and Investor (Investor Custodian Bank) on Short-Term Bills submitted when the two parties created the pledge, and the contract under the preceding subparagraph, it shall send a settlement instruction to the BCSS.
    2. After the pledgor bank and the pledgee bank receive a "settlement completed" message from the BCSS, they shall conduct the book-entry procedure in accordance with the following procedure:
      1. The pledgor bank shall record the quantity of the exercised pledge rights in the pledgor position of the pledgor account.
      2. The pledgee bank shall deduct the quantity of the exercised pledge rights from the pledgee position of the pledgee account, and shall transfer it into the proprietary position.
  3. If the pledgee is an investor custodian bank:
    1. The pledgee investor custodian bank shall submit an Application to Exercise Pledge Rights Between Investor and Investor (Investor Custodian Bank) on Short-Term Bills, the third copy of an Application to Create Pledge Between Investor and Investor (Investor Custodian Bank) on Short-Term Bills submitted when the two parties created the pledge, and the contract mentioned in subparagraph 1, and shall send a settlement instruction to the BCSS.
    2. After the pledgor bank receives a "settlement completed" message from the BCSS, it shall record the quantity of the exercised pledge rights in the pledgor position in the investor account.
  4. If the pledgee is a bills dealer:
    1. The pledgor bank shall cross-check the notice of exercise of pledge sent by the BCSS against the Application to Exercise Pledge Rights Between Investor and Bills Dealer on Short-Term Bills submitted by the bills dealer, the third copy of the Application to Create Pledge Between Investor and Bills Dealer on Short-Term Bills submitted when the two parties created the pledge, and the contract under subparagraph 1.
    2. If the pledgor bank has any doubt about the content of the notice of exercise of pledge rights, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter. If the cross-check confirms the accuracy of the information, the bank shall return a "settlement confirmed" message.
    3. After the pledgor bank receives a "settlement completed" message from the BCSS, it shall record the quantity of the exercised pledge rights in the pledgor position of the pledgor account.
  5. When the pledgee has designated another investor as an assignee for the exercise of pledge rights over the short-term bills, the investor custodian bank shall conduct the book-entry procedure in accordance with the following procedure:
    1. The pledgor bank shall record the quantity of the exercised pledge rights in the pledgor position of the pledgor account.
    2. The pledgee bank shall deduct the quantity of the exercised pledge rights from the pledgee position of the pledgee account.
    3. The assignee's investor custodian bank shall transfer the quantity of the exercised pledge rights into the proprietary position of the assignee account.
    When a pledge is created on an investor's reverse repo position in short-term bills, the pledgee may not designate a third party as an assignee for the exercise of pledge rights. The provisions of subparagraph 4 of the preceding paragraph will apply mutatis mutandis to the procedure by which a pledgee obtains title to those short-term bills through the exercise of pledge rights.
Article 42     When an investor custodian bank conducts substitution by an investor of the subject of a pledge with a bills dealer, the following procedure shall be observed:
  1. The investor custodian bank shall cross-check the "notice of substitution of the subject of a pledge" sent by the BCSS against the Application to Substitute Subject of a Pledge Between Investor and Bills Dealer on Short-Term Bills submitted by the investor, and against 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.
  2. If the investor custodian bank has any doubt about the content of the notice of substitution of the subject of a pledge, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter; if the cross-check confirms the accuracy of the information, the bank shall return a "settlement confirmed" message.
  3. When the investor custodian bank receives a "settlement completed" message, it shall conduct the book-entry procedure in the investor account as follows:
    1. Cancellation of pledge: The bank shall take the quantity of short-term bills originally under pledge to a bills dealer and record it as the pledge cancellation quantity in the pledgor position, and shall transfer it into the proprietary position.
    2. Creation of pledge: The bank shall deduct from the proprietary position the quantity of short-term bills newly pledged to a bills dealer, and shall record the pledged quantity in the pledgor position.
Article 43     When an investor custodian bank conducts an investor's sale of short-term bills originally under pledge to a bills dealer, and purchases short-term bills from the bills dealer in order to substitute the subject of the pledge with the bills dealer, the following procedure shall be observed:
  1. The investor custodian bank shall cross-check the "notice of substitution of the subject of a pledge" and the notice of the transactions sent by the BCSS against the Application to Substitute Subject of a Pledge Between Investor and Bills Dealer on Short-Term Bills submitted by the investor, and against 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.
  2. If the investor custodian bank has any doubt about the content of the notice of substitution of the subject of a pledge or the notice of the transactions, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. After the investor custodian bank checks the notices of the preceding subparagraph and confirms their accuracy, it shall return a "settlement confirmed" message, but if the investor is the party liable for payment, the investor custodian bank shall first deduct the amount payable by the investor.
  4. Unless the same bank serves as both investor custodian bank and bills dealer (or agent clearing bank), or unless the net amount of funds due is zero, when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of net funds due between deposit accounts at the investor custodian bank and the bills dealer (or the agent clearing bank).
  5. When the investor custodian bank receives a "settlement completed" message from the BCSS, it shall conduct book-entry for the investor in accordance with the following procedure:
    1. Pledge cancellation: The bank shall take the quantity of short-term bills originally under pledge to a bills dealer and record it as the pledge cancellation quantity in the pledgor position, and shall transfer it into the proprietary position.
    2. Settlement of an outright sale: The bank shall deduct from the proprietary position the quantity sold to the bills dealer.
    3. Settlement of an outright purchase: The bank shall transfer into the proprietary position the quantity purchased from the bills dealer.
    4. Creation of pledge: The bank shall deduct from the proprietary position the quantity of short-term bills newly pledged to a bills dealer, and shall record the pledged quantity in the pledgor position.
  6. If the investor of the preceding subparagraph is the party with funds receivable, the investor custodian bank shall transfer the amount received into the investor's funds settlement account.
Article 44     When an investor custodian bank uses the short-term bills of an investor's reverse repo position to create a pledge in favor of a bills dealer and the repo-style transaction reaches its execution date, the procedures for substituting the subject of the pledge are as follows:
  1. The investor custodian bank shall cross-check the "notice of substitution of the subject of a pledge" and the "notice of new repo-style transaction" sent by the BCSS against the Application to Substitute Subject of a Pledge Between Investor and Bills Dealer on Short-Term Bills submitted by the investor, and against 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.
  2. If the investor custodian bank has any doubt about the content of the "notice of substitution of the subject of a pledge," or about the "notice of new repo-style transaction," it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. After the investor custodian bank checks the notices of the preceding subparagraph and confirms their accuracy, it shall return a "settlement confirmed" message, but if the investor is the party liable for payment, the investor custodian bank shall first deduct the amount payable by the investor.
  4. Unless the same bank serves as both investor custodian bank and bills dealer (or agent clearing bank), or unless the net amount of funds due is zero, when the BCSS receives a "settlement confirmed" message it will promptly notify either the Central Bank's Department of Banking or the FISC to conduct payment and receipt of net funds due between deposit accounts at the investor custodian bank and the bills dealer (or the agent clearing bank).
  5. When the investor custodian bank receives a "settlement completed" message from the BCSS, it shall conduct book-entry for the investor in accordance with the following procedure:
    1. Pledge cancellation: The bank shall take the quantity of short-term bills originally under pledge to a bills dealer and record it as the pledge cancellation quantity in the pledgor position, and shall transfer it into the reverse repo position.
    2. Settlement of the second leg of the investor's repo-style transaction: The bank shall deduct the quantity sold to the bills dealer from the reverse repo position.
    3. Settlement of the investor's repo-style transaction: The bank shall transfer the quantity purchased into the reverse repo position.
    4. Creation of pledge: The bank shall deduct from the reverse repo position the quantity of short-term bills newly pledged to a bills dealer, and shall record the pledged quantity in the pledgor position.
  6. If the investor of the preceding subparagraph is the party with funds receivable, the investor custodian bank shall transfer the amount received into the investor's funds settlement account.
Article 45     If, for the short-term bills of an investor's reverse repo position pledged in favor of a bills dealer, the investor custodian bank has not completed the settlement procedure by canceling the pledge, exercising pledge rights, or substituting another pledged subject by the execution date of the repo-style transaction, 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.
Article 46     When an investor custodian bank conducts the transaction settlement procedure under Articles 17, 19, 20, 35, 36, 41 subparagraph 4, 42, or 43, or it conducts the BNS settlement procedure under Article 23, if, before returning a "settlement confirmed" message to the investor, the bank receives the bills dealer's settlement cancellation notice forwarded by the BCSS, it shall cancel the settlement confirmation notice previously delivered by the BCSS.
    After the investor custodian bank returns a "settlement confirmed" message to the investor—unless the transaction is one of those set out in Article 17 or 19, or the investor is the party liable for payment in a transaction subject to the BNS settlement procedure, in which cases cancellation of settlement is not allowed—if the bank receives the bills dealer's settlement cancellation notice forwarded by the BCSS, the bank shall handle the matter in accordance with the following procedure:
  1. The investor custodian bank shall provide the content of the notice to the investor to confirm settlement cancellation.
  2. When the investor custodian bank receives notice that the investor has a doubt about the content of the confirmation of settlement cancellation, it shall return a "cancellation unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  3. After the investor completes confirmation of settlement cancellation, the investor custodian bank shall return a "settlement cancellation confirmed" message.
  4. After the BCSS receives a "settlement cancellation confirmed" message, it will cancel the settlement (or BNS settlement).
  5. After the investor custodian bank receives a "settlement cancellation" message from the BCSS, if the investor is the party liable for payment, the bank shall transfer the funds already paid by the investor back into the investor's funds settlement account.
Article 47     When an investor custodian bank handling the settlement of a short-term bills trade between investors under Article 21 receives the bills dealer's settlement cancellation notice forwarded by the BCSS, the following procedure shall be observed:
  1. When the selling investor's custodian bank, before returning a "settlement confirmed" message to the investor, receives the bills dealer's settlement cancellation notice forwarded by the BCSS, the bank shall cancel the settlement confirmation notice previously delivered by the BCSS.
  2. When the selling investor's custodian bank, after returning a "settlement unconfirmed" message, receives the bills dealer's settlement cancellation notice forwarded by the BCSS, the bank shall cancel the settlement.
  3. If the selling investor's custodian bank, after returning a "settlement confirmed" message to the investor, receives the bills dealer's settlement cancellation notice forwarded by the BCSS, the bank shall handle the matter in accordance with the following procedure:
    1. The investor custodian bank shall provide the content of the notice to the investor to confirm settlement cancellation.
    2. When the investor custodian bank receives notice that the investor has a doubt about the content of the confirmation of settlement cancellation, it shall return a "cancellation unconfirmed" message and the BCSS will in turn notify the bills dealer to handle the matter. After the investor completes confirmation of settlement cancellation, the investor custodian bank shall return a "settlement cancellation confirmed" message.
    3. After the investor custodian bank receives a "settlement cancellation" message from the BCSS, the bank shall cancel the settlement.
  4. When the buyer and seller have both completed settlement confirmation but have not yet completed the transfer of funds and securities, if the bank receives a bills dealer's settlement cancellation notice forwarded by the BCSS, the bank shall advise both the buyer and seller to confirm settlement cancellation, and after both parties have confirmed settlement cancellation and received a "settlement cancellation" message from the BCSS, the bank shall cancel the settlement.
Article 48     When an investor custodian bank conducts the transaction settlement procedure under Article 18 or 22, or it conducts the BNS settlement procedure under Article 24, if, before returning a "settlement confirmed" message, the bank receives the bills dealer's or the outward-transfer bank's settlement cancellation notice forwarded by the BCSS, it shall cancel the settlement confirmation notice previously delivered by the BCSS.
    If the investor custodian bank, after returning the "settlement confirmed" message, receives the bills dealer's or the outward-transfer bank's settlement cancellation notice forwarded by the BCSS, it shall handle the matter in accordance with the following procedure:
  1. The investor custodian bank shall conduct confirmation of settlement cancellation in accordance with the content of the notice.
  2. When the investor custodian bank has a doubt about the content of the confirmation of settlement cancellation, it shall send a "cancellation unconfirmed" message, and the BCSS will in turn notify the bills dealer or the outward-transfer bank to handle the matter.
  3. After the investor custodian bank confirms settlement cancellation, it shall send a "settlement cancellation confirmed" message.
  4. After the BCSS receives a "settlement cancellation confirmed" message, it will cancel the settlement (or BNS settlement) and notify the investor custodian bank to complete settlement cancellation.
Article 49     The provisions of Articles 46 and 48 will apply mutatis mutandis to early termination by an investor custodian bank of a repo-style transaction involving an investor's short-term bills or short-term bills in the bank's proprietary depository account.
Article 50     The provisions of Articles 19, 20, 22 to 27, 46, and 48 will apply mutatis mutandis to the procedure for an investor custodian bank's operation of the settlement of a short-term bills trade between the bank itself and the Central Bank, or between a financial institutional investor and the Central Bank.
IV. Redemption of Bills at Maturity
Article 51     After short-term bills held by an investor custodian bank or an investor have been presented by the BCSS at the stated maturity date for redemption and the funds have been paid in full, unless the same bank serves as both investor custodian bank and physical securities deposit bank, the redemption funds (less taxes and supplementary National Health Insurance premiums) will be deducted and transferred into the deposit account opened by the investor custodian bank with the Central Bank's Department of Banking or with a foreign currency clearing bank, and the investor custodian bank will be notified.
    When the investor custodian bank receives the notification of the preceding paragraph, if the redeemed short-term bills are held by an investor, the bank shall deduct the redeemed quantity from the proprietary position in the investor account and transfer the investor's redemption funds into the investor's funds settlement account.
Article 52     When an investor custodian bank conducts a purchase of reissued Commercial Paper II (CP II) or foreign currency denominated commercial paper held by itself or by an investor and underwritten by a bills dealer on a best efforts basis, if the transaction is subject to net settlement, the following procedure shall be observed:
  1. When the BCSS receives notice from the bills dealer of a reissuance, it will transfer the quantity of the matured commercial paper from the proprietary position of the investor custodian bank or the investor into the pending settlement position, and will also notify the investor custodian bank.
  2. When the investor custodian bank receives notice from the BCSS of a reissuance underwritten on a best efforts basis, it shall confirm the settlement instructions in accordance with the content of the notice, or shall provide the content of the notice to the investor for settlement confirmation.
  3. If the investor custodian bank has any doubt about the content of the notice of a reissuance underwritten on a best efforts basis, or if it receives notice that an investor has a doubt about the content of the notice of a reissuance underwritten on a best efforts basis, it shall return a "settlement unconfirmed" message, and the BCSS will in turn notify the bills dealer to handle the matter.
  4. When the BCSS receives a "settlement confirmation" message from the investor custodian bank it will use the following procedure for payment and receipt of funds between the deposit accounts of the investor custodian bank and the physical securities deposit bank at the Central Bank's Department of Banking or a foreign currency clearing bank:
    1. If the issuer is the net payer, then when the BCSS has received a "reissuance confirmed" message from the physical securities deposit bank it will notify the Central Bank's Department of Banking or the FISC to deduct the tax amount payable on the commercial paper at maturity plus the additional insurance premiums payable and best-efforts underwriting fees from the issuer's net funds payment and transfer the payment from the deposit account of the physical securities deposit bank into the deposit account of the investor custodian bank.
    2. If the investor custodian bank or the investor is the net payer, the BCSS will notify the Central Bank's Department of Banking or the FISC to transfer the investor custodian bank's or the investor's net funds payment from the deposit account of the investor custodian bank into the deposit account of the physical securities deposit bank.
    3. If the issuer and either the investor custodian bank or the investor are both required to make payments, then after receiving a "reissuance confirmed" message from the physical securities deposit bank, the BCSS will notify the Central Bank's Department of Banking or the FISC to transfer the amount payable by the investor custodian bank or the investor from the deposit account of the investor custodian bank into the deposit account of the physical securities deposit bank.
  5. After the BCSS has completed payment and receipt of funds, it will conduct book-entry transfers of matured and reissued commercial paper in accordance with the following procedure:
    1. If the investor custodian bank buys reissued commercial paper, TDCC will deduct the quantity of the matured commercial paper from the investor custodian bank's pending settlement positions and transfer the quantity of reissued commercial paper into the investor custodian bank's proprietary position.
    2. If the investor buys reissued commercial paper, the investor custodian bank will deduct the quantity of the matured commercial paper from the investor's positions pending settlement and transfer the quantity of reissued commercial paper into the investor's proprietary position.
  6. After the procedure of the preceding subparagraph has been completed, the BCSS will notify the bills dealer and the investor custodian bank of settlement completion. If the investor custodian bank or the investor is the net payer, the BCSS will also notify the physical securities deposit bank to remit the funds receivable by the issuer into the designated monetary funds account.
  7. When the investor custodian bank receives notification from the BCSS, if the investor is the net payee, the bank shall transfer the funds payable to the investor into the investor's funds settlement account.
Article 53     When short-term bills held proprietarily by an investor custodian bank or by an investor are not to be presented for redemption, the following procedure shall be observed by the investor custodian bank:
  1. For any of its proprietarily held short-term bills that are not to be presented for redemption, the investor custodian bank shall handle the matter by sending a "non-presentment" instruction to the BCSS.
  2. For any short-term bills held by an investor that are not to be presented for redemption, the investor custodian bank shall send a "non-presentment" instruction to the BCSS based on the Application for Non-Presentment of Short-Term Bills / Withdrawal of Unpresented Short-Term Bills filled out by the investor.
  3. When the investor custodian bank receives a message that the BCSS has completed the procedure for non-presentment of short-term bills held by an investor, the bank shall deduct the quantity of the unpresented bills from the proprietary position in the investor account and transfer it into the restricted (non-presentment) position.
    The "non-presentment" instruction of the preceding paragraph shall at the latest be sent three business days prior to the stated maturity date in the case of all short-term bills other than CP II and foreign currency denominated commercial paper, in which case it may be sent on the stated maturity date.
    The provisions of the preceding two paragraphs are not applicable with respect to beneficial securities and asset-backed securities.
Article 54     When, upon redemption at maturity, an investor custodian bank does not receive payment for short-term bills in physical form held proprietarily by the bank or held by an investor, the following procedure shall be observed:
  1. When the investor custodian bank receives a dishonor notice from the BCSS, if the bills are held by the investor, the bank shall deduct the amount of the dishonored bills from the proprietary position in the investor account and transfer it to the restricted (dishonored) position.
  2. When the investor custodian bank receives dishonored physical bills and a statement of reasons for the dishonor of the bills, which the physical securities deposit bank has sent via registered mail with advice of delivery, if the bills are held by the investor, the bank shall notify the investor to come to the bank to withdraw the bills.
  3. After the investor custodian bank completes the procedure set out in the preceding subparagraph, it shall deduct the quantity of withdrawn bills from the restricted (dishonored position in the investor account, and shall notify TDCC to remove the balance.
    When the investor custodian bank applies in person to withdraw the dishonored physical bills and collect a statement of reasons for the dishonor of the bills under the preceding paragraph, it shall fill out a Short-Term Bills Withdrawal Itemized Statement and submit it to the physical securities deposit bank's branch in charge of the matter to withdraw the bills.
    When the investor custodian bank conducts the procedure set out in the preceding paragraph, it shall notify the physical securities deposit bank by telephone no later than 9:30 a.m. on the business day following the dishonor.
    If the bank branch where the bills were deposited and which is returning the physical bills by the procedure in paragraph 2 is the physical securities deposit bank's branch in charge of the matter, the bills shall be withdrawn on the application date; if the bank branch where the bills were deposited and the physical securities deposit bank's branch in charge of the matter are located in the same county or city, the bills shall be withdrawn on the first business day after the application date; if they are not located in the same county or city, the bills shall be withdrawn on the second business day after the application date.
Article 55     When, upon redemption at maturity, the payment is not received in full for dematerialized short-term bills held proprietarily by the investor custodian bank or held by an investor, the following procedure shall be observed:
  1. When the investor custodian bank receives a notice of insufficient payment from the BCSS, if the bills are held by the investor, the bank shall deduct the quantity of matured or unredeemed bills from the proprietary position in the investor account and transfer that quantity into the restricted (dishonored) position.
  2. When the investor custodian bank collects a certificate of claim and documentary proof of presentment and dishonor in person, or receives the same sent by TDCC via registered mail with advice of delivery, if the bills are held by the investor, the investor bank shall notify the investor to come to the bank to collect those documents.
  3. After the investor custodian bank completes the procedure set out in the preceding subparagraph, it shall deduct the quantity of bills for which the documents are collected from the restricted (dishonored) position in the investor account, and shall notify TDCC to remove the balance.
    When the investor custodian bank applies to collect a certificate of claim and documentary proof of presentment and dishonor in person under the preceding paragraph, it shall submit an Application for a Certificate of Claim and Documentary Proof of Presentment and Dishonor of Dematerialized Short-Term Bills to TDCC to collect the documents.
    When the investor custodian bank conducts the procedure set out in the preceding paragraph, it shall notify TDCC by telephone no later than 9:30 a.m. on the next business day following the dishonor.
    If the investor custodian bank of the preceding paragraph is located in the same county or city as TDCC, it shall collect the documents in person by 5 p.m. on the date of notification; if it is not located in the same county or city, it shall collect the documents in person by 5 p.m. on the third business day after the date of notification.
    If the deadline set out in either of the preceding two subparagraphs passes without notification being made or the documents collected, TDCC shall proceed forthwith to handle the matter by registered mail with advice of delivery as set out in paragraph 1, subparagraph 2.
Article 56     When an investor creates a pledge on short-term bills in favor of another investor, an investor custodian bank, or a bills dealer, and the bills reach the stated maturity date without the pledge having been cancelled, the BCSS, on the stated maturity date, will proceed directly to initiate cancellation of the pledge on those short-term bills and carry out redemption.
    When a pledgor bank or pledgee bank receives a pledge cancellation notice regarding the short-term bills of the preceding paragraph, the provisions of Articles 37 to 39 will apply mutatis mutandis to the handling of book-entry operations.
    The pledgor bank shall establish an account in which the redemption funds (less taxes and supplementary National Health Insurance premiums) for the short-term bills of paragraph 1 are listed for oversight as restricted funds, shall record the terms of the original pledge, and shall handle these matters in accordance with one of the procedure below, as set out in the pledge application form submitted when the two parties created the pledge. In the event of non-payment, the bank shall handle the matter subject to mutatis mutandis application of the provisions of Articles 54 and 55, and shall notify the pledgor to come to the bank to withdraw the physical bills and either a statement of reasons for the dishonor of the bills or a certificate of insufficient payment.
  1. The pledgor agrees, with respect to the debt that it has secured, while the debt has not yet come to term, that the pledgee may still collect amounts payable for the pledged subject. The investor custodian bank shall take the redemption funds (less taxes and supplementary National Health Insurance premiums), deduct related processing fees, and transfer the remaining amount into the account designated by the pledgee.
  2. The pledgee bills dealer shall use the redemption funds (less taxes and supplementary National Health Insurance premiums) to conduct the investor's purchase of short-term bills from the bills dealer and creation of pledge in favor of that bills dealer. However, if there are extra funds, the bills dealer may notify the investor custodian bank to transfer the funds, after deduction of the related processing fees, into the account designated by the bills dealer or into the investor's funds settlement account.
  3. The pledgor bank shall retain the redemption funds (less taxes and supplementary National Health Insurance premiums).
    When the pledgee or the pledgor applies to withdraw the redemption funds required to be retained by the pledgor bank under subparagraph 3 of the preceding paragraph, the investor custodian bank shall handle the matter in accordance with the Application to Withdraw Redemption Funds for the Subject of a Pledge submitted by the applicant. When the investor custodian bank conducts the procedure for the pledgee's bills dealer under subparagraph 2 of the preceding paragraph, it shall be subject to the mutatis mutandis application of Article 36.
Article 57     When the short-term bills of an investor custodian bank and an investor that are subject to restricted settlement reach the stated maturity date and the restriction has not yet been lifted, the BCSS, on the stated maturity date, will proceed directly to initiate lifting of the settlement restrictions on the short-term bills and carry out redemption.
    When the investor custodian bank receives a notice of redemption or dishonor of the short-term bills of the preceding paragraph, the bank shall conduct the lifting of settlement restrictions on, or redemption of, the investor's short-term bills, subject to the mutatis mutandis application of Articles 30 and 51. In the event of non-payment or insufficient payment, the provisions of Articles 54 and 55 will apply mutatis mutandis.
Article 58     The procedures for an investor custodian bank to conduct re-presentment of dishonored short-term bills held proprietarily by the bank or held by an investor are as follows:
  1. The investor custodian bank shall apply with the physical securities deposit bank to conduct re-presentment of the dishonored bills by filling out an Application by Investor Custodian Bank for Re-Presentment of Dishonored Bills or an Application by Investor Custodian Bank to Conduct Re-Presentment of Dishonored Bills on Behalf of Investor and submitting the application to the physical securities deposit bank together with its own or the investor's dishonored physical bills as well as a statement of reasons for the dishonor of the bills, or a certificate of claim and documentary proof of presentment and dishonor.
  2. After the physical securities deposit bank has completed the operations in connection with the re-presentment of the dishonored short-term bills and deducted related fees from the redemption funds, it shall transfer the remaining amount into the account designated by the investor custodian bank, or into the investor's funds settlement account.
  3. If the physical securities deposit bank is still unable to complete redemption, it shall carry out the procedure for return of the bills, and the investor custodian bank shall withdraw its own or the investor's dishonored physical bills and collect a statement of reasons for the dishonor of the bills subject to the mutatis mutandis application of Article 54, or shall collect a certificate of claim and documentary proof of presentment and dishonor subject to the mutatis mutandis application of Article 55.
Article 59     The procedures for an investor custodian bank to carry out deferred presentment for redemption after the stated maturity date of unpresented short-term bills held proprietarily by the bank or held by an investor are as follows:
  1. To carry out deferred presentment for redemption of unpresented short-term bills in its proprietary holdings, the investor custodian bank shall send a "deferred presentment for redemption" instruction to the BCSS.
  2. To carry out deferred presentment for redemption of an investor's short-term bills that have not been presented for redemption, the investor custodian bank shall send a "deferred presentment for redemption" instruction to the BCSS in accordance with the Application for Deferred Presentment of Short-Term Bills for Redemption filled out by the investor.
  3. When the investor custodian bank receives a message that the BCSS has completed the procedure for deferred presentment for redemption by the investor, it shall record the quantity to be deferredly presented for redemption in the restricted (non-presentment) position in the investor account.
    The "deferred presentment for redemption" instruction of the preceding paragraph shall be sent no later than three business days prior to the date of deferred presentment in the case of all short-term bills other than CP II and foreign currency denominated commercial paper, in which case it shall be sent no later than one business day prior to the date of deferred presentment.
    When the investor custodian bank receives notice of completed redemption on the date of deferred presentment, if the bills are held by the investor, the bank shall deduct the redeemed quantity from the restricted (non-presentment) position in the investor account and transfer the investor's redemption funds into the investor's funds settlement account.
Article 60     An investor custodian bank shall, after the stated maturity date (not including the stated maturity date itself), withdraw unpresented short-term bills in physical form held proprietarily by the bank or held by an investor, and the following procedures shall be observed:
  1. Procedure of withdrawal by investor of unpresented short-term bills in physical form:
    1. To complete the procedure for payment of taxes and supplementary National Health Insurance premiums, the investor custodian bank shall instruct the investor to fill out an Application for Non-Presentment of Short-Term Bills / Withdrawal of Unpresented Short-Term Bills and to remit any taxes and supplementary National Health Insurance premiums payable by the investor into the segregated tax payment account and segregated additional insurance premium account opened by TDCC at the physical securities deposit bank. In the remittance slip's "remitter" field, the investor shall fill in the account number of its depository account.
    2. To withdraw the investor's unpresented short-term bills, the investor custodian bank shall fill out a Short-Term Bills Withdrawal Itemized Statement and submit it, together with a photocopy of the investor's remittance slip, to the physical securities deposit bank's branch in charge of the matter.
    3. After withdrawing the bills, the investor custodian bank shall notify the investor to bring the Withdrawal Copy of the Application for Non-Presentment of Short-Term Bills to the bank to withdraw the bills, and shall deduct the quantity of the withdrawn bills from the restricted (non-presentment) position in the investor account.
  2. The investor custodian bank shall fill out a Short-Term Bills Withdrawal Itemized Statement and, after having paid taxes due into the segregated tax payment account opened by TDCC at the physical securities deposit bank, shall submit it to the physical securities deposit bank's branch in charge of the matter to withdraw the unpresented short-term bills in physical form that it holds proprietarily.
    The investor and the investor custodian bank shall conduct the procedure for withdrawing the bills of the preceding paragraph in one of the following two ways:
  1. Withdraw all the bills.
  2. On or after the date of deferred presentment for redemption, withdraw all of the bills that remain.
    The investor custodian bank may withdraw the unpresented short-term bills in physical form under paragraph 1 either by collecting in person or by sending registered mail with advice of delivery. If the bank chooses to collect in person, its handling of the matter will be subject to mutatis mutandis application of the provisions of Article 49, paragraph 4.
Article 61     The investor custodian bank may, after the stated maturity date (not including the stated maturity date itself), collect a claim certificate for unpresented dematerialized short-term bills held proprietarily by the investor custodian bank or held by an investor, and the following procedure shall be observed:
  1. Procedure for collecting the claim certificate for unpresented dematerialized short-term bills:
    1. To complete the procedure for payment of taxes and supplementary National Health Insurance premiums, the investor custodian bank shall instruct the investor to fill out an Application for Non-Presentment of Short-Term Bills / Withdrawal of Unpresented Short-Term Bills and to remit any taxes and supplementary National Health Insurance premiums payable by the investor into the segregated tax payment account and segregated additional insurance premium account opened by TDCC at the physical securities deposit bank. In the remittance slip's "remitter" field, the investor shall fill in the account number of its depository account.
    2. The investor custodian bank shall fill out an Application to Collect Claim Certificate for Dematerialized Short-Term Bills and a certificate of claim and documentary proof of presentment and dishonor and submit it to TDCC to collect the certificate of claim.
    3. After the investor custodian bank completes its procedures for collection of the claim certificate, it shall notify the investor to bring the Withdrawal Copy of the Application for Non-Presentment of Short-Term Bills to the bank to collect the claim certificate, and shall deduct the quantity of the bills for which the claim certificate is collected from the restricted (non-presentment) position in the investor account.
  2. The investor custodian bank shall fill out an Application to Collect Claim Certificate for Dematerialized Short-Term Bills and a certificate of claim and documentary proof of presentment and dishonor and, after having paid taxes due into the tax payment account opened by TDCC at the physical securities deposit bank, shall submit it to TDCC to collect the claim certificate.
V. Supplementary Provisions
Article 62     Any matters not set forth herein shall be governed by the TDCC Operating Rules for Short-Term Bills and other applicable requirements.
Article 63     These Directions, and any amendments hereto, shall be implemented following recordation by the competent authority and the Central Bank of the Republic of China (Taiwan).
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