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Title: Operating Rules of the Taiwan Futures Exchange Corporation
Date: 2018.11.13 ( Amended )

Article Content

 
Chapter 5 Trading on the Exchange
Article 33     Except as otherwise permitted by the Competent Authority, trading of futures trading contracts on the Exchange shall be conducted via the automated computer trading system.
Article 34     Except as otherwise permitted by the Competent Authority, futures trading contracts publicly announced by the TAIFEX for listed trading shall be traded on the Exchange.
Article 35     The validity of orders for purchase and sale of futures trading contracts on this Exchange shall be limited to the session during which the orders are entered. Except where otherwise provided, futures commission merchants may key in orders in the chronicle sequence in which the orders are placed by the principles, starting from 15 minutes prior to the opening of the trading hours of the regular trading session, and 10 minutes prior to the opening of the trading hours of the after-hours trading session. Such order-entry shall include the futures commission merchant code number, clearing member code number, order form serial number, account number of the principal, contract ticker symbol, price, volume, type of transaction (sale/purchase), and whether a new position is being established or old position offset. Upon acceptance by the computer of the TAIFEX, the order confirmation or execution report shall be given to the participating futures commission merchant. The information to be included on the purchase/sale order-entry confirmation or execution report forms may be adjusted by the TAIFEX depending on actual needs.
    The serial numbers of order forms shall be sequentially assigned in the order that the orders are received from principals by the futures commission merchant. The serial numbers of orders for proprietary trading by futures commission merchants shall be sequentially numbered in the order that the orders are entered.
Article 35-1      The TAIFEX's computerized trading system accepts market orders, limit orders, and market with protection orders.
    A "market order" means a buy or sell order for which no price limit is designated and for which the trade price is determined by competitive bidding procedures.
     A "limit order" means a buy or sell order for which a price is designated. The trade price may be equal to or lower than the price designated in the case of purchases and may be equal to or higher than the price designated in the case of sales.
     A "market with protection order (MWP)" means a buy or sell order for which no price limit is designated, but after the MWP order has been received by the TAIFEX trading system, a buy MWP will be converted to a limit order with the price of the current best bid plus a protected range, and a sell MWP will be converted to a limit order with the price of the current best offer minus a protected range. However, when no corresponding bid/offer is available, the MWP will be rejected.
     The protected range referring in the preceding paragraph will be prescribed by the TAIFEX.
     Market with protection orders shall be placed during trading session only.
Article 35-2      Limit orders may specify that the order must be executed immediately or canceled, or executed immediately in full or canceled. Market orders and market with protection orders shall specify that the order must be executed immediately or canceled (an "immediate-or-cancel" order), or executed immediately in full or canceled (a "fill-or-kill" order).
     Trading orders specifying immediate execution in full or else cancellation ("fill-or-kill") as referred to in the preceding paragraph may be entered during trading session only.
Article 35-3     Orders for purchase or sale of futures trading contracts are divided into single orders for the same contracts, and combination orders for simultaneous trading of different contracts.
     Combination orders shall be confined to the trading session for the relevant contracts. Except as otherwise specified, combination order price shall be quoted as the spread between, or the sum of, the relevant contracts.
     Types of combination orders shall be publicly announced by the TAIFEX.
Article 36      Futures commission merchants applying for cancellation or alteration of trading orders, or making inquiries about order information, shall without exception do so via computer, no order can be cancelled or altered during the last 2 minutes prior to the opening of trading session.
    Application for alteration of trading order details shall be accomplished by first canceling the original order and then placing a new order, except under the circumstances listed below:
  1. merely reducing the quantity of a trading order;
  2. in the case of a limit order that is not an immediate-or-cancel (IOC) or fill-or-kill (FOK) order, merely changing the price of the order or changing it into a market order or a market with protection order.
     Order cancellations or order alterations as referred to in the preceding paragraphs shall be confined to orders not yet executed after their entry into the computer trading system. If an existing order mentioned in subparagraph 2 of the preceding paragraph has already been partially executed, the order may not be changed into a fill-or-kill market order or a fill-or-kill market with protection order.
     A futures commission merchant applying to simultaneously cancel multiple trading orders shall do so in compliance with the TAIFEX Operation Directions for the Use of Kill Switch by Futures Commission Merchants. Those Directions shall be separately prescribed by the TAIFEX.
Article 37     The priority for order matching shall be determined based upon the following principles:
  1. Market orders shall have priority over limit orders.
  2. Higher-priced buy orders shall have priority over lower-priced buy orders. Lower-priced sell orders shall have priority over higher-priced sell orders.
  3. For market orders and equal-price limit orders, priority shall be determined by the chronological sequence in which the orders were placed.
     Market with protection orders will be deemed as limit orders after the prices have been converted, and their priority will be determined in accordance with the principles set forth in the preceding paragraph.
Article 38     Order matching methods shall be divided into call market method and continuous market method.
    Trade prices generated by call market shall be determined by the following principles:
  1. Satisfying the maximum trade volume, buy orders with prices higher than the determined price and sell orders with prices lower than the determined price shall be all satisfied.
  2. Where there are buy and sell orders with prices equal to the determined price, at least one side shall be all satisfied.
  3. Where two or more prices conform to the principles in the preceding two subparagraphs, the price closest to the settlement price of the previous day shall be used at market opening and the price closest to the price of the most recently concluded transaction shall be used after market opening.
    Trade prices generated by continuous market shall be determined by the following principles:
  1. Where a newly entered order finds counterparties with limit orders, the determined price shall be the best bid or offer price of the counterparties.
  2. Where a newly entered order finds counterparties without limit orders, the determined price shall be the most recently traded price in the current session; if there is no traded price for the current session, the determined price shall be the settlement price of the preceding trading day.
  3. Where a newly entered order is a limit order and where a counterparty has placed a market order and no determined price can be generated by the principles in the preceding two subparagraphs, the determined price shall be the bid or offer price of the newly entered order.
  4. Where a buy limit order higher than the determined price, a sell limit order lower than the determined price, or a market order, is not fully satisfied, the traded price of the unsatisfied portion shall then be determined pursuant to the preceding three subparagraphs.
    The determination of the trading price in the preceding paragraph, unless otherwise provided, shall be in the range of immediate prices prescribed in the Regulations Governing Dynamic Price Stabilization Measures of the TAIFEX.
     The applicable regulations such as eligible contracts and the range of immediate prices in paragraph 4 shall be in accordance with the Regulations Governing Dynamic Price Stabilization Measures of the TAIFEX, the said Regulations shall be separately prescribed by the TAIFEX.
     If a newly entered order under paragraph 3 is a market with protection order, it will be deemed as a limit order after the price has been converted, and its trade price will be determined in accordance with the principles set forth in paragraph 3.
    The daily price limits and the minimum fluctuation of futures trading contracts shall be specified in each respective contract.
Article 38-1     Unless a combination order for futures contracts is executed against a combination order comprising identical component contracts, at least one among the counterparties against which the component contracts of the combination order are executed shall be a single order.
    The counterparties against which a combination order for options contracts is executed shall be confined to single orders.
Article 39     The TAIFEX's computer records shall be the authoritative version of information of which a futures commission merchant is notified by the TAIFEX such as execution reports, trade price, position balance, and calculation of margins.
Article 40     Buy and sell orders for futures trading contracts shall be priced within the price limit on the current trading session.
Article 41     The intended volume of a futures trading contract order may be executed in part unless the order states that it must be executed immediately in full or else canceled.
    The unexecuted portion, except for the following conditions, shall be satisfied by continued matching based on the original order price:
  1. The order states that it must be executed immediately or else canceled.
  2. For contracts which the Regulations Governing Dynamic Price Stabilization Measures of the TAIFEX is applicable, the order shall be cancelled when the bid price is higher than the highest price in the range of immediate prices, or when the offer price is lower than the lowest price in the range of immediate prices.
Article 42     Disclosures of the prices and volumes of buy and sell orders entered shall be determined by the TAIFEX.
Article 42-1     In addition to placing buy and sell orders, futures commission merchants may handle requests for quotes via computer.
    Market makers engaging in market making business shall accept quote requests and two-way quotes pursuant to regulations.
    Guidelines for market makers engaging in market making business shall be separately prescribed by the TAIFEX.
Article 43     The volume per order entered for the same futures trading contract by a futures commission merchant trading for its own account or for the account of a customer may not exceed the standard specified by the TAIFEX; however, this restriction does not apply if the trade is conducted pursuant to the TAIFEX Operational Rules Governing Block Trades.
    The standard volume per trading quote referred to in the preceding paragraph may be adjusted by the TAIFEX based on market conditions.
    The Operational Rules Governing Block Trades referred to paragraph 1 shall be separately prescribed by the TAIFEX.