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1     These Procedures were enacted according to Letter No. 1995-Taiwan-Finance Securities-3-00618 of the Securities and Exchange Commission, Ministry of Finance, on March 21, 1995.
2     The Taiwan Stock Exchange Corporation (hereinafter, "TWSE") will immediately conduct a review if it finds upon analysis that any securities investment trust fund (hereinafter, " Trust Fund") raised by a securities dealer and securities investment trust enterprise has bought or sold a single security within the past five business days resulting in the following:
  1. If the combined volume of that security bought or sold within a given time frame by the securities dealer and the Trust Fund which are in an affiliated relationship exceeds either the total volume of securities bought or sold in that time frame by five percent or more or 2000 trade units; or if the combined volume of that security bought or sold by all the securities dealer and Trust Funds within a given time frame exceeds either the total amount of securities bought or sold in that time frame by 10 percent or more or 5000 trade units, provided the standards prescribed in this paragraph do not apply if the total amount bought or sold by a single securities dealer or by Trust Funds raised by the same securities investment trust enterprise in the above time period does not exceed the total volume of such security in that time frame by two percent.
  2. If the combined amount bought or sold by the securities dealer and the Trust Fund which are in an affiliated relationship exceeds either the total amount of securities bought or sold over one business day by 10 percent or more or 500 trade units for two or more business days; or if the combined amount of that security bought or sold by all the securities dealers and Trust Funds exceeds either the total amount of securities bought or sold over one business day by 20 percent or more or 1000 trade units, provided the standards prescribed in this paragraph do not apply if the combined amount traded by a single securities dealer or by Trust Funds raised by the same securities investment trust enterprise reaches the daily limit mentioned above and the amount bought and sold by such dealer and enterprise respectively does not exceed the volume of that security over such day by three percent.
The "securities dealer and securities investment trust enterprise which are in an affiliated relationship" mentioned in Paragraphs 1 and 2 above are identified as follows:
  1. The chairman or general manager of one company is also the chairman or general manager of the other company, or is the spouse, first-degree relative, or second-degree relative of the chairman or general manager of the other company.
  2. One company has control over the other company or has material influence over the management or financial policies of the other company.
  3. Both companies are controlled by the same person or entity.
  4. Other factors for identifying the companies are affiliated.
3     TWSE shall take the following measures in regard to a securities dealer and securities investment trust enterprise which meets the trading limits in the previous article:
  1. Review and analyze information on the trading transactions of the securities dealer and Trust Fund, including the shareholding and internal audit reports of the securities dealer to determine if there are irregularities in trading.
  2. Securities dealers that meet the criteria of Article 99 of TWSE Operating Rules will be requested to provide written explanations of the relevant investment decisions and sources of funding. If TWSE determines that the written explanations provided by the securities dealer are obviously untrue, depending on the severity, TWSE may impose sanctions on the responsible employee of the securities dealer according to Article 144 of the TWSE Operating Rules, or restrict the trading volume of a portion or all of the securities of the securities dealer if the trading of the securities dealer is capable of affecting normal market conditions.
4     After TWSE completes the identification and review procedures according to Article 2 and Article 3, it shall make a detailed analysis report for submission to the competent authority within two weeks for approval and for further action to be taken.
5     These Procedures shall be take effect after having been submitted to and approved by the competent authority. Subsequent amendments thereto shall be effected in the same manner.