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Chapter I General Principles
Article 1     These Rules are specially promulgated to maintain orderly trading of Taiwan Futures Exchange Corporation (TAIFEX) Stock Option Contracts, so as to ensure secure and fair trading on the market.
Article 2     A futures commission merchant (FCM) engaging in trading of Stock Option Contracts shall comply with these Rules as well as the Futures Trading Act and other applicable acts and regulations. Matters on which these Rules are silent shall be governed by the bylaws, public announcements, and official letters of the TAIFEX.
Article 3     The terms used in these Rules shall have the following meanings:
  1. Stock Option Contract: An option contract in which the underlying is a stock or beneficial certificate selected pursuant to TAIFEX regulations.
  2. Call Option: a right of an option holder to buy the Underlying Assets from the option writer, or to settle the difference in cash on a given expiration date under specific trading terms including strike price and quantity.
  3. Put Option: a right of an option holder to sell the Underlying Assets to the option writer, or to settle the difference in cash on a given expiration date under specific trading terms including strike price and quantity.
  4. Option Series: Stock Option Contracts that have the same Underlying Securities, type of option, expiration month, and strike price.
  5. Underlying Assets: The underlying content deliverable by a Call Option writer or a Put Option holder under a Stock Option Contract at the time of settlement.
  6. Underlying Securities: Securities encompassed by the Underlying Assets of a Stock Option Contract.
  7. "Beneficial certificate," as used in these Rules, includes:
    1. Any beneficial certificate for an offering of an exchange-traded securities investment trust fund offered by a securities investment trust enterprise pursuant to the Regulations Governing Securities Investment Trust Funds ("ETF"). If the component securities of the underlying index of the fund are all domestic securities, the fund is referred to as a domestic component securities ETF; if one or more of the component securities of the underlying index are foreign securities, or the fund is an ETF under Article 37 paragraph 4 of the Regulations Governing Securities Investment Trust Funds ("linked ETF"), the fund is referred to as an ETF with foreign component securities.
    2. Any beneficial certificate, fund share, or investment unit issued for an offering of any offshore ETF by an offshore fund manager or its designated institution pursuant to the Regulations Governing Offshore Funds ("offshore ETF").
Chapter II Stock Selection Criteria
Article 4     If the Underlying Security of a TAIFEX Stock Option Contract is a stock, the Underlying Security or the issuer thereof shall comply with each of the following requirements:
  1. Common stock listed with the Taiwan Stock Exchange Corporation (TWSE) or the Taipei Exchange (TPEx).
  2. Market value of at least NT$10 billion.
  3. Trading volume during the most recent 3 calendar months equal to 20 percent or more of the total amount for all TWSE listed or TPEx listed shares, or average monthly trading volume for the most recent 3 calendar months of 100 million shares or more.
  4. No deficit on the most recent financial statement audited and attested or reviewed by a CPA, or a deficit in the most recent period but no accumulated deficit.
  5. Have not in the most recent three years been partially or completely suspended from trading by order of the competent authority due to any circumstance in Article 156 of the Securities and Exchange Act.
  6. Have not in the past year been subject to imposition of an altered trading method by the TWSE or TPEx, or an announcement of suspended trading under Article 50 or 50-3 of the TWSE Operating Rules or Article 12-1 of the TPEx Rules Governing Securities Trading on the TPEx.
  7. Have not in the most recent three months been subject to any sanction imposed by the TWSE pursuant to the TWSE or TPEx Rules Governing Implementation of the Stock Market Surveillance System with respect to the Underlying Securities.
  8. Are not been subject to a public announcement by the TWSE or TPEx to halt margin purchase and short sale transactions pursuant to Article 4 of the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale.
  9. Are not marked with any warning indicator in the Key Financials Section of the Market Observation Post System (MOPS).
  10. There is no other factor arising out the nature of the enterprise or special circumstances that may be deemed to have an adverse effect on the price of the Underlying Securities.
    If the shares of the issuer of the Underlying Securities of a TAIFEX Stock Option Contract are delisted from the TWSE or TPEx due to the issuer's transformation into a financial holding company or an investment holding company through a 100 percent share exchange in accordance with the Financial Holding Company Act or the Business Mergers and Acquisitions Act, and if the day when the TWSE or TPEx has approved the listing of the financial holding company or the investment holding company on the TWSE or TPEx is the share exchange record date, the TAIFEX may select the financial holding company or the investment holding company as [the issuer of] the Underlying Securities of a Stock Option Contract, and the restrictions set forth in subparagraphs 2 to 10 of the preceding paragraph shall not apply.
Article 4-1      If the Underlying Security of a TAIFEX Stock Option Contract is a beneficial certificate, the Underlying Security shall comply with each of the following requirements:
  1. It is a beneficial certificate for an ETF or offshore ETF listed on the TWSE or the TPEx.
  2. The net asset value reaches NT$2 billion or more.
  3. The number of beneficial interest units traded in the most recent three months accounts for 20 percent or more of the total number of issued beneficial interest units, or the average monthly trading volume for the most recent three months reaches 100 million beneficial interest units or more.
  4. There has been no partial or complete suspension of trading of the beneficial certificate by order of the competent authority during the most recent three years due to any circumstance under Article 156 of the Securities and Exchange Act.
  5. In the most recent three months the Underlying Securities have not been subject to any sanction imposed by the TWSE pursuant to the TWSE Rules Governing Implementation of the Stock Market Surveillance System or by the TPEx pursuant to the TPEx Regulations Governing Implementation of the Over-the-Counter Securities Market Surveillance System.
  6. There has been no public announcement by the TWSE or TPEx halting margin purchases and short sales of the beneficial certificate pursuant to Article 5 of the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale.
  7. There is no other special circumstance that could be deemed to adversely affect the price of the Underlying Security.
Article 5     Except where otherwise provided, each 3 months the TAIFEX will select securities qualified as Underlying Securities of Stock Option Contracts under Articles 4 and 4-1, and will examine and publicly announce the Underlying Securities of listed Stock Option Contracts on the basis of market conditions.
Chapter III Contracts
Section I General Provisions
Article 6     There are two types of options on the various Underlying Securities of Stock Option Contracts: Call Options and Put Options.
    The name and ticker symbol of each option on Underlying Securities shall be separately designated by the TAIFEX.
Article 7      If the Underlying Security is a stock or a domestic component securities ETF, Stock Option Contracts are traded from 8:45 am to 1:45 pm on the same trading days as the Underlying Securities. While the trading hours for a contract of a given expiration month on the relevant last trading day shall be from 8:45 am to 1:30 pm. If the Underlying Security is an ETF with foreign component securities or an offshore ETF, the trading hours are from 8:45 a.m. to 4:15 p.m., while the trading hours for a contract of a given expiration month on the relevant last trading day shall be from 8:45 am to 1:30 pm. However, if the TAIFEX has made other provisions, those provisions shall govern.
     If the Underlying Securities market announces a halt of trading for any reason before market opening of the Stock Option Contracts, or there are other factors affecting trading of the Stock Option Contracts, trading of the Contracts may be halted. If the Underlying Securities market announces a halt of trading during trading hours of the Stock Option Contracts, trading of the Contracts will still continue. As necessary, however, the TAIFEX may announce a halt of trading based on the current situation, and report the halt to the competent authority for recordation on the next business day.
     When the Underlying Securities market changes its trading hours, or when other factors influence trading of the Stock Option Contracts, or in response to a suggestion by a futures industry association or the National Federation of Futures Industry Associations, the TAIFEX may change the trading days and trading hours for the Contracts after reporting to the competent authority for approval.
Article 8     Trading orders for Stock Option Contracts are automatically matched by computer, except where otherwise provided. The matching shall be by call auction at market opening and by continuous trading after market opening.
Article 9      Except where otherwise provided, when trading for its own account or for the account of a customer, the quantity of a single trading order for the same Stock Option Contracts entered by a futures commission merchant shall be less than 500 contracts.
    The TAIFEX may adjust the limit on the maximum quantity of contracts per trading order under the preceding paragraph in view of market trading conditions.
Article 10     When accepting an order for purchase of Stock Option Contracts, an FCM shall first collect the required premium from the buyer according to the aggregate buy order quantity.
    When accepting an order for sale of Stock Option Contracts, an FCM shall first collect the required trading margin from the writer according to the aggregate sell order quantity. Upon execution of the trade, the FCM shall credit the premium income received from the sale of the contracts to the principal's margin account balance, and mark to market daily, from the transaction date until liquidation of the position, the margin required for the short position held by the principal. No additional margin is required for a short position taken to offset an existing long position.
    If the principal's margin account balance is lower than the required maintenance margin, the FCM shall promptly notify the principal to, within a prescribed time limit, deposit the cash difference between its margin account balance and the total trading margin amount required for the open position. If the principal fails to deposit the margin deficit within the time limit, the FCM may offset the principal's position on its behalf.
    The trading margin and maintenance margin referred to in the preceding two paragraphs shall not be lower than the initial and maintenance margin requirements publicly announced by the TAIFEX.
    The initial margin and maintenance margin publicly announced by the TAIFEX shall be calculated by multiplying the clearing margin, as determined under the TAIFEX Standards and Methods for Receipt of Clearing Margins, by a percentage prescribed by the TAIFEX.
Article 11     A Stock Option Contract holder may liquidate the contractual rights and obligations by selling or buying back in part or in whole the original long or short positions on the TAIFEX centralized exchange prior to the expiration date.
Section II Contract Specifications
Article 12     If the Underlying Security of a Stock Option Contract is a stock, the Underlying Assets of each Stock Option Contract are 2,000 shares of the Underlying Security. If the Underlying Security is an ETF, the Underlying Assets of each contract are 10,000 beneficial units of the Underlying Security. If the Underlying Security is an offshore ETF, the quantity of the Underlying Assets of each contract will be separately prescribed by the TAIFEX. However, these restrictions shall not apply when there is contract adjustment in accordance with regulations.
Article 13     If the Underlying Security of a Stock Option Contract is a stock, the strike price multiplier is 2,000. If the Underlying Security is an ETF, the strike price multiplier is 10,000. If the Underlying Security is an offshore ETF, the strike price multiplier will be separately prescribed by the TAIFEX.
    Except where otherwise provided, the settlement value of a Stock Option Contract upon expiration shall be calculated by the difference between the value of the underlying assets, as determined based on the final settlement price, and the exercise amount, with the resultant amount rounded down to the new Taiwan Dollar.
    The exercise amount under the preceding paragraph is the strike price multiplied by the strike price multiplier.
Article 14     Stock Option Contract premiums shall be quoted in points. If the Underlying Security of a Stock Option Contract is a stock, the premium multiplier is NT$2,000 per point. If the Underlying Security is an ETF, the premium multiplier is NT$10,000 per point. If the Underlying Security is an offshore ETF, the premium multiplier will be separately prescribed by the TAIFEX.
    The minimum movement (tick) for a premium quote is as follows:
  1. A quote of less than 5 points: 0.01 point.
  2. A quote of 5 points to less than 15 points: 0.05 point.
  3. A quote of 15 points to less than 50 points: 0.1 point.
  4. A quote of 50 points to less than 150 points: 0.5 point.
  5. A quote of 150 points to less than 1,000 points: 1 point.
  6. A quote of 1,000 points or more: 5 points.
Article 15     If the Underlying Security of a Stock Option Contract is a stock or a domestic component securities ETF, the daily fluctuation limit of the premium of a Stock Option Contract is the daily price fluctuation limit of the Underlying Assets divided by the premium multiplier; if the Underlying Security is an ETF with foreign component securities or an offshore ETF, the daily fluctuation limit of the premium is 15 percent of the opening reference price of the Underlying Security on the given day, provided that this shall not apply when there is a contract adjustment in accordance with regulations.
     If the Underlying Security under the preceding paragraph is an ETF with foreign component securities or an offshore ETF, the TAIFEX may adjust the daily fluctuation limit of the premium based on market conditions.
Article 16     Expiration months for a Stock Option Contract shall be the 2 successive calendar months, and 3 nearest quarter months of March, June, September, and December, from the spot month, namely a total of 5 contract months, concurrently listed for trading.
    The last trading day for a Stock Option Contract shall be the third Wednesday of the expiration month. This shall not apply, however, under any of the following circumstances:
  1. If the last trading day falls on a holiday or if trading may not proceed on that day due to a force majeure event, the next business day shall become the last trading day.
  2. If the TAIFEX has made other provisions for other particular circumstances, those provisions shall govern.
    The trading of a contract reaching maturity ends at close of market on the last trading day. The last trading day is the expiration day of the contract.
    The next business day following the last trading day of the contract in the expiration month is the first trading day for the contract of the next nearest expiration month.
    The TAIFEX may change the delivery months, first trading days, last trading days, and expiration days referred to in the preceding four paragraphs when it deems necessary after reporting to and receiving approval from the competent authority.
Article 17     At the time of listing and during the duration of series of a new expiration month, the TAIFEX shall, based on the given day's opening reference price of the Underlying Securities, consecutively introduce contracts with in-the-money and out-of-the money strike prices at the strike price interval until the highest and lowest strike prices cover 15 percent above and below the base price.
    The strike price intervals referred to in the preceding paragraph shall be determined as follows:
  1. For a strike price of less than NT$10: the interval is NT$0.2 for near-month contracts and NT$0.4 for quarter-month contracts, and the minimum strike price is NT$2.
  2. For a strike price of NT$10 and above but less than NT$25: the interval is NT$0.5 for near-month contracts and NT$1 for quarter-month contracts .
  3. For a strike price of NT$25 and above but less than NT$50: the interval is NT$1 for near-month contracts and NT$2 for quarter-month contracts.
  4. For a strike price of NT$50 and above but less than NT$100: the interval is NT$2.5 for near-month contracts and NT$5 for quarter-month contracts.
  5. For a strike price of NT$100 and above but less than NT$250: the interval is NT$5 for near-month contracts and NT$10 for quarter-month contracts.
  6. For a strike price of NT$250 and above but less than NT$500: the interval is NT$10 for near-month contracts and NT$20 for quarter-month contracts.
  7. For a strike price of NT$500 and above but less than NT$1,000: the interval is NT$25 for near-month contracts and NT$50 for quarter-month contracts.
  8. For a strike price of NT$1,000 and above: the interval is NT$50 for near-month contracts and NT$100 for quarter-month contracts.
    When a quarter-month contract becomes a near-month contract, based on the strike price interval of the near-month contract, contracts shall be introduced to supply all the required strike prices covering 15 percent above and below the base price.
    In addition to listing contracts of different strike prices as described in paragraphs 1 and 2, the TAIFEX may, according to market conditions, list contracts with other strike prices.
Article 18     Except where otherwise prescribed by the TAIFEX, the aggregate open positions on the same side of the market in option contracts representing the same Underlying Securities held by a trader at any time shall be subject to the following tiered position limits:
  1. Tier 1: The position limit is 8,000 contracts for individual investors, 24,000 contracts for institutional investors, and 60,000 contracts for market makers.
  2. Tier 2: The position limit is 4,000 contracts for individual investors, 12,000 contracts for institutional investors, and 30,000 contracts for market makers.
  3. Tier 3: The position limit is 2,000 contracts for individual investors, 6,000 contracts for institutional investors, and 15,000 contracts for market makers.
    The aggregate open positions on the same side of the market referred to in the preceding paragraph means the combined positions in Call Options bought and Put Options sold or in Call Options sold and Put Options bought.
     The TAIFEX may adjust the limits on aggregate open positions held by market makers under paragraph 1 as it deems necessary in view of market conditions.
    The tiers applicable to Underlying Securities under paragraph 1 are as follows:
  1. Tier 1: Where the total trading volume of the Underlying Securities in the past 3 calendar months reached 1.6 billion or more shares or units; or total trading volume in the past 3 calendar months reached 1.2 billion or more shares or units, and the current number of outstanding shares, total issued beneficial units of an ETF, or total number of units domestically offered and sold by an offshore ETF, has reached 3.2 billion or more shares or units.
  2. Tier 2: Where the total trading volume of the Underlying Securities in the past 3 calendar months reached 800 million or more shares or units; or total trading volume in the past 3 calendar months reached 600 million or more shares or units, and the current number of outstanding shares, total issued beneficial units of an ETF, or total number of units domestically offered and sold by an offshore ETF, has reached 1.6 billion or more shares or units.
  3. Tier 3: Where the requirements of the two preceding subparagraphs are not met.
    The "number of outstanding shares" in the preceding paragraph and in Article 18-1, paragraph 1 means the total number of shares issued by the issuer of the Underlying Securities, less the following:
  1. The total percentage of shares held by directors and supervisors under statutory shareholding ratio requirements.
  2. Number of pledged shares.
  3. The number of shares that companies newly listed on the TWSE or TPEx are required to place in compulsory central custody.
  4. Shares repurchased under the Regulations Governing Share Repurchase by Listed and OTC Companies, but not yet retired.
  5. Shares on which the competent authority imposes a restriction with respect to listing or trading on the TWSE or TPEx.
    The TAIFEX will, once every 3 months or according to market status, examine the tier grade of the Underlying Securities based upon the criteria set out in the paragraph 4.
    Any raising of the position limit will take effect from the TAIFEX announcement date, and any lowering of the position limit will take effect upon expiration of the next-nearest month contract that is already listed on the announcement date; provided, the TAIFEX may adjust this according to circumstances.
     When the position limit is lowered under the preceding paragraph, a position held by a trader prior to the effective date that surpasses the lowered limit standard may be held until the expiration date of the Contracts. However, no new position may be added until the lowered limit standard has been complied with.
    Where a trader violates the provisions regarding position limit, the TAFIEX may restrict the trader from adding new positions, or instruct the FCM concerned to liquidate the trader's positions under conditions where this will not affect market price.
    An institutional investor may apply to the TAIFEX for a position limit increase based on hedging needs.
    The aggregate open positions in Stock Option Contracts held in omnibus accounts are not subject to the limits in paragraph 1, with the exception of undisclosed omnibus accounts, which accounts are subject to the limits for institutional investors.
    In addition to complying with the provisions of this article, a trader shall also comply with the TAIFEX Rules Governing Surveillance of Market Positions in holding open positions in Stock Option Contracts.
Article 18-1     If the Underlying Security of Single Stock Futures and Stock Options is a stock, then when the aggregate number of shares represented by the open positions of the Single Stock Futures and Stock Options in the same Underlying Security after close of market on any trading day exceeds 15 percent of the total number of outstanding shares of the Underlying Security, unless otherwise provided, the TAIFEX may impose a restriction to the effect that no trades in those Options are allowed except to close out existing positions, starting from the next trading day. When the above percentage falls below 12 percent, the TAIFEX may remove the restriction starting from the next trading day.
     If the Underlying Security of Single Stock Futures and Stock Options is an ETF, then when the aggregate number of beneficial units represented by the open positions of the Single Stock Futures and Stock Options in the same Underlying Security after close of market on any trading day exceeds 70 percent of the total number of outstanding beneficial units of the Underlying Security, unless otherwise provided, the TAIFEX may impose a restriction to the effect that no trades in those Options are allowed except to close out existing positions, starting from the next trading day. When the above percentage falls below 56 percent, the TAIFEX may remove the restriction starting from the next trading day.
    If the Underlying Security of Single Stock Futures and Stock Options is an offshore ETF, then when the aggregate number of beneficial units represented by the open positions of the Single Stock Futures and Stock Options in the same Underlying Security after close of market on any trading day exceeds 70 percent of the total number of the domestically offered and sold beneficial units of the Underlying Security, unless otherwise provided, the TAIFEX may impose a restriction to the effect that no trades in those Options are allowed except to close out existing positions, starting from the next trading day. When the above percentage falls below 56 percent, the TAIFEX may remove the restriction starting from the next trading day.
Article 19     The daily settlement price for a Stock Option Contract shall be determined as follows:
  1. The daily settlement price for a Stock Contract Option shall be the execution price of the last matched trade of that day.
  2. The daily settlement price shall be decided by the TAIFEX where no execution price is available 15 minutes before close of market on that day, or where the settlement price in the preceding subparagraph is obviously unreasonable.
Article 19-1     The final settlement price for a Stock Option Contract shall be determined by the arithmetic mean of the prices of the Underlying Securities on the securities market on the expiration date that are available within the 60 minutes immediately preceding the close of market that day. If the Taiwan Stock Exchange postpones market closing or matching, the TAIFEX may extend the aforementioned 30-minute sampling time.
    The method of the calculation under the preceding paragraph shall be as separately adopted by the TAIFEX.
    If the expiration date of a Stock Option Contract falls on a day on which the Underlying Securities are suspended from trading, the day for determining the final settlement price shall be substituted by the business day before the first day on which the trading is suspended.
Article 20     A Stock Option Contract may be exercised on the expiration date only. An open position that is in-the-money on the expiration date shall be settled in cash by the net difference between the value of the Underlying Assets, as calculated based on the final settlement price, and the exercise amount.
    An in-the-money position referred to in the preceding paragraph means a Call Option position when the value of the Underlying Assets, as calculated based on the final settlement price, is higher than the exercise amount, or a Put Option position when the value of the underlying assets, as calculated based on the final settlement price, is lower than the exercise amount. Writers of in-the-money positions shall pay the difference described in the preceding paragraph, while buyers are entitled to receive the difference.
    Settlement of an exercised Stock Option Contract shall be handled in accordance with point 6 of the TAIFEX Directions for Clearing and Settlement by Futures Commission Merchants and Clearing Members.
Article 20-1     Buyers who intend to exercise a Stock Option Contract shall make a declaration on the expiration date. An in-the-money position, however, shall be deemed automatically exercised if an in-the-money position within the meaning of Article 20 falls in the range announced by the TAIFEX, unless the buyer declares waiver of the right to exercise in advance.
    Futures commission merchants shall submit notice within the prescribed time set out by the TAIFEX indicating exercise or waiver of right.
Article 21     The TAIFEX shall randomly assign a writer to perform the contract.
Chapter IV Contract Adjustment
Article 22     If the Underlying Security of a Stock Option Contract is a stock, and any of the following circumstances applies to the issuer, the TAIFEX shall adjust the terms and condition of the contract and publicly announce the adjusted contract content prior to the effective date of the adjustment:
  1. Distribution of cash dividends.
  2. Conversion of capital reserves or earnings into capital.
  3. Cash capital increase. However, this shall not apply if the shareholders do not have preemptive rights to subscribe common shares.
  4. The company will be a non-surviving company after a corporate merger.
  5. Capital reduction. However, this shall not apply to cancellation of shares upon share repurchase or upon a shareholder's waiver of shares in accordance with regulations.
  6. Exchange of shares for those of a subsidiary of another company.
  7. Any other event causing a change to the name, type, or quantity of shares held by shareholders, or distribution of other benefits to shareholders.
Article 22-1     If the Underlying Security of a Stock Option Contract is a beneficial certificate, and there is any of the following circumstances, the TAIFEX shall adjust the contract terms and publicly announce the adjusted terms prior to the date on which the adjustment takes effect:
  1. A distribution of income.
  2. The fund will be a non-surviving fund after a merger.
  3. Any other circumstance causing a change in the name, type, or number of beneficial certificates held by beneficial owners, or the receipt of a distribution of other benefits.
Article 23     The effective date of Stock Option Contract adjustment shall be the second business day prior to the book closure date of the Underlying Securities or the date of suspension of changes to entries in the register of beneficial owners. However, this shall not apply if the Underlying Security is a stock and any of the following circumstances applies to the issuer:
  1. In the case of a statutory consolidation or an exchange of shares for those of a newly established company, the effective date of Contract adjustment shall be the record date of the merger or the record date of the share exchange.
  2. In the case of a capital reduction to cover losses, or a capital reduction by returning share capital in cash only, the effective date of Contract adjustment shall be the date when the trading of the Underlying Securities is resumed.
    On a case-by-case basis, the TAIFEX may otherwise set the date of Contract adjustment referred to in the preceding paragraph.
    A trader shall handle all trading and liquidation operations in compliance with the content of the post-adjustment Stock Option Contract, both for positions in the option contract already held prior to the effective date of contract adjustment and those opened thereafter.
Article 24     After a Stock Option Contract has been adjusted, the ticker symbol shall be changed. However, this shall not apply if only the last trading day is adjusted.
Article 25     Where contract adjustment is made in any circumstances under subparagraphs 1 through 3 of Article 22, the Underlying Assets shall be adjusted to the total of the following items:
  1. 2,000 shares of the ex-rights Underlying Securities.
  2. Gratis capitalization issue or certificates of entitlement to new shares, allocated to 2,000 shares of the Underlying Securities.
  3. Cash dividend distributed to 2,000 shares of the Underlying Securities, rounded down to the new Taiwan dollar.
  4. Fair value of preemptive rights to participate in cash capital increase granted to 2,000 shares of the Underlying Securities, rounded down to the new Taiwan dollar.
    The term "fair value of preemptive rights to participate in cash capital increase" in subparagraph 4 of the preceding paragraph is computed as follows:
  1. The difference between the closing price of the Underlying Securities on the deadline for payment [for shares] and the subscription price of the cash capital increase, multiplied by the number of shares that may be subscribed with the preemptive rights to participate in the cash capital increase granted to 2,000 shares of the Underlying Securities. Provided, where the closing price of the Underlying Securities on the deadline for payment is lower than the subscription price of the cash capital increase, computation is excluded.
  2. Where the deadline for payment under the preceding subparagraph is later than the expiration date, the difference between the closing price of the Underlying Securities on the expiration date and the subscription price of the cash capital increase, multiplied by the number of shares that may be subscribed with the preemptive rights to participate in the cash capital increase granted to 2,000 shares of the Underlying Securities. Provided, where the closing price of the Underlying Securities on the expiration date is lower than subscription price of the cash capital increase, computation is excluded.
Article 25-1     When contract adjustment is made under Article 22-1, subparagraph 1, the Underlying Assets shall be adjusted to the total of the following:
  1. The quantity of the Underlying Securities of the Underlying Assets as defined in Article 12.
  2. The income distributed on the quantity of the Underlying Securities of the Underlying Assets as defined in Article 12, rounded down to the New Taiwan Dollar.
Article 26     A contract adjustment under Article 22, subparagraph 4 or 6 shall be made in the following manner:
  1. If the shareholders of the issuer of the Underlying Securities receive distribution only of stock of a single company, and the distributed stock is, on the effective date of Contract adjustment, the Underlying Securities of a Stock Option Contract listed by the TAIFEX, the Underlying Assets shall be adjusted to the distributed stocks or certificates of entitlement to new shares, and the quantity shall be the quantity of the distributed stock for which 2,000 shares of the Underlying Securities may be exchanged. If the shareholders at the same time receive distribution of cash, however, the Underlying Assets shall be adjusted to the distributed stocks or certificates of entitlement to new shares, and the quantity shall be the quantity of the distributed stock for which 2,000 shares of the Underlying Securities may be exchanged, and additionally the cash amount distributed that is equivalent to 2,000 shares of the Underlying Securities, rounded down to the nearest New Taiwan Dollar.
  2. When the distribution received by the shareholders of the issuer of the Underlying Securities is not the interests referred to in the preceding subparagraph, the Stock Option Contracts that have the stock of the company as Underlying Securities shall be delisted from the TAIFEX.
    On a case-by-case basis, the TAIFEX may otherwise provide for Contract adjustment referred to in the preceding paragraph.
Article 26-1     A contract adjustment under Article 22-1, subparagraph 2 shall be made in the following manner:
  1. If the beneficial owners of the Underlying Securities receive distribution only of a single type of beneficial certificate, and the distributed beneficial certificates are, on the effective date of Contract adjustment, the Underlying Securities of a TAIFEX Stock Option Contract, the Underlying Assets shall be adjusted to the distributed beneficial certificates, and the quantity shall be the quantity of the distributed beneficial certificates for which the quantity of the Underlying Securities of the Underlying Assets as defined in Article 12 may be exchanged. If the shareholders at the same time receive distribution of cash, however, the Underlying Assets shall be adjusted to the distributed beneficial certificates, and the quantity shall be the quantity of the distributed beneficial certificates for which the quantity of the Underlying Securities of the Underlying Assets as defined in Article 12 may be exchanged, and additionally the cash amount distributed that is equivalent to the quantity of the Underlying Securities of the Underlying Assets as defined in Article 12, rounded down to the nearest New Taiwan Dollar.
  2. When the distribution received by the beneficial owners of the Underlying Securities is not the interests referred to in the preceding subparagraph, the Stock Option Contracts that have the beneficial certificates as the Underlying Securities shall be delisted from the TAIFEX.
    On a case-by-case basis, the TAIFEX may otherwise provide for Contract adjustment referred to in the preceding paragraph.
Article 27     The contract adjustment under Article 22, subparagraph 5 shall be made in the following manner:
  1. When the issuer of the Underlying Securities carries out a capital reduction to cover losses, the Underlying Assets shall be adjusted to the Underlying Securities after capital reduction, by the quantity of 2,000 shares less the number of shares representing the percentage of the capital reduction.
  2. When the issuer of the Underlying Securities carries out a capital reduction in connection with return of share capital:
    1. When the shareholders receive only a cash distribution, the Underlying Assets shall be adjusted to the Underlying Securities after capital reduction, by the quantity of 2,000 shares less the number of shares representing the percentage of the capital reduction, and the cash amount distributed that is equivalent to 2,000 shares of the Underlying Securities prior to capital reduction, with the amount rounded down to the nearest New Taiwan Dollar.
    2. When the distribution received by the shareholders is not the interests referred to in the preceding item, the last trading day for each of the listed contracts shall be adjusted to the third business day prior to the book closure date of the Underlying Securities.
  3. When the issuer of the Underlying Securities carries out a capital reduction in connection with demerger:
    1. When the issuer of the Underlying Securities is a surviving company, and the shareholders receive distribution of non-cash interests, the last trading day of each of the listed contracts shall be adjusted to the third business day prior to the book closure date of the Underlying Security.
    2. When the issuer of the Underlying Securities is not a surviving company, and the shareholders receive distribution only of stock of a single company, and the distributed stock is, on the effective date of Contract adjustment, the Underlying Securities of a Stock Option Contract listed by the TAIFEX, the Underlying Assets shall be adjusted to the distributed stocks or certificates of entitlement to new shares, in the same amount as 2,000 shares of the Underlying Security may be exchanged for the shares of the distributed stock.
    3. When the issuer of the Underlying Securities is not a surviving company, and the distribution received by the shareholders is not the interest referred to in the preceding item, the Stock Option Contracts that have the stock of the company as Underlying Securities shall be delisted from the TAIFEX.
    On a case-by-case basis, the TAIFEX may otherwise provide for Contract adjustment referred to in the preceding paragraph.
Article 28     The TAIFEX may execute contract adjustments under Article 22, subparagraph 7, or Article 22-1, subparagraph 3, on a case-by-case basis.
Article 29     Where during its duration an adjusted contract is subject to further adjustment under Article 22 or Article 22-1, the Underlying Securities in the Underlying Assets shall be adjusted pursuant to the relevant provisions of Articles 25 through 28, and the figure of 2,000 shares referred to in Articles 25 through 27, or the quantity of the Underlying Assets as defined in Article 12, shall be calculated as the number of shares or units of the Underlying Securities subsequent to the prior adjustment of the contract.
Article 30     (deleted)
Article 31     The TAIFEX will add no new series to a contract that has been adjusted; any of its series that has no open positions left after close of market on any business day will be delisted from the next business day.
Article 32     On the effective date of a contract adjustment under Article 22 or Article 22-1, the TAIFEX may add new series to the adjusted contract, for the quantity of the Underlying Securities as defined in Article 12.
    Article 16, paragraph 1 and Article 17, paragraph 1 shall apply mutatis mutandis to adding of new series under the preceding paragraph.
Article 33     Upon adjustment of a Stock Option Contract in any circumstances under Article 22 or Article 22-1, the position limit shall be computed by inclusion of all options on the same Underlying Securities held by the trader; if there is any adjustment in the number of Underlying Securities, it shall also be based upon the total number of shares or the total number of units of the Underlying Assets.
    Adjustment contents and reversion dates for position limits under the preceding paragraph shall be publicly announced by the TAIFEX.
Chapter V Suspension of Adding New Series
Article 34     If the Underlying Security of a Stock Option Contract is a stock, the TAIFEX shall suspend the adding of new series in any of the following circumstances with respect to the Underling Securities or the issuer thereof:
  1. Where the market value of the Underlying Securities is less than NT$5 billion.
  2. The volume of shares of the Underlying Securities traded during the most recent 3 calendar months account for less than 8 percent of the total amount for all TWSE or TPEx listed shares, and the average volume of shares traded in the most recent 6 calendar months is less than 40 million shares.
  3. Where it is publicly announced that the issuer will be a non-surviving company after a corporate merger.
  4. Where the competent authority has ordered the partial or complete suspension of trading of the Underlying Securities.
  5. Where the TWSE or TPEx has publicly announced a change of trading method for the Underlying Securities.
  6. Where suspension of trading of the Underlying Securities has been announced by the TWSE pursuant to Article 50 or 50-3 of the TWSE Operating Rules or by the TPEx pursuant to Article 12-1 of the TPEx Rules Governing Securities Trading on the TPEx.
  7. Where the TWSE or TPEx has announced the halting of margin purchase and short sale transactions pursuant to Article 4 of the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale, or the TPEx listed Underlying Securities are changed to a listing on the TWSE and the TWSE has announced that the securities are not eligible for margin purchase and short sale.
    The TAIFEX shall make a quarterly examination and announcement with respect to any suspension of adding new series under subparagraphs 1 and 2 of the preceding paragraph; with respect to suspension of adding new series under any of the other subparagraphs, it shall make the announcement upon learning of the event.
    In addition to complying with the provisions of paragraph 1, the TAIFEX may suspend the adding of new series based upon the condition of the issuer of the Underlying Securities or upon market conditions.
    In the circumstances under subparagraphs 1 or 2 of paragraph 1, the TAIFEX may keep adding new series [to a Stock Option Contract] to meet market needs.
     If the financial holding company or the investment holding company that may serve as [the issuer of] the Underlying Securities under Article 4, paragraph 2 is announced by the TWSE or TPEx as having its securities prohibited from margin purchases and short sales, no new series will be listed from the share exchange record date.
Article 34-1     If the Underlying Security of a Stock Option Contract is a beneficial certificate and any of the following circumstances exists, the TAIFEX shall suspend the adding of new series of the contract:
  1. Where the net asset value is lower than NT$1 billion.
  2. Where the number of beneficial interest units traded in the most recent three months accounts for less than 8 percent of the total number of issued beneficial interest units, and the average monthly trading volume for the most recent three months is less than 40 million beneficial interest units.
  3. Where it is publicly announced that the fund will be a non-surviving fund after a merger.
  4. Where the competent authority has ordered the partial or complete suspension of trading of the Underlying Securities.
  5. Where the TWSE or TPEx has announced the halting of margin purchase and short sale transactions pursuant to Article 5 of the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale.
     With respect to any suspension of adding new series under subparagraphs 1 or 2 of the preceding paragraph, the TAIFEX shall review the announcement on a quarterly basis; with respect to any suspension of adding new series under the other subparagraphs, the TAIFEX shall make the announcement upon learning of the event.
    In addition to complying with the provisions of paragraph 1, the TAIFEX may suspend the adding of new series based upon the condition of the Underlying Securities or upon market conditions.
     Despite the existence of circumstances under subparagraphs 1 or 2 of paragraph 1, the TAIFEX nevertheless may continue to add new series to meet market needs.
Article 35     Where adding of new series to a Stock Option Contract is suspended, the TAIFEX may resume the addition of new series thereto in either of the following circumstances:
  1. In the case of suspension of adding new series in any of the circumstances under subparagraphs 1 or 2 of paragraph 1 of Article 34: the Underlying Securities or the issuer thereof meets the requirements under Article 4.
  2. In the case of suspension of adding new series in any of the circumstances under subparagraphs 1 or 2 of paragraph 1 of Article 34-1: the Underlying Securities meet the requirements under Article 4-1.
  3. In the case of suspension of adding new series in any of the circumstances under subparagraphs 3 or 7 of paragraph 1, or under paragraph 3, of Article 34, or under subparagraphs 1 or 3 of paragraph 1, or under paragraph 3, of Article 34-1: the circumstances which led to the suspension cease to exist.
     Where the financial holding company or the investment holding company that may serve as [the issuer of] the Underlying Securities under Article 4, paragraph 2 does not list new series due to Article 34, paragraph 5, if the cause therefor ceases to exist, the TAIFEX may resume listing new series.
    Upon resumption of adding or listing new series to a stock option, the TAIFEX shall introduce new contracts for each expiration month under Article 16, and consecutively introduce contracts with in-the-money and out-of-the money strike prices at the strike price interval until the highest and lowest strike prices cover 15 percent above and below the opening reference price of the Underlying Securities on the given day.
Article 36     After suspension of adding new series to a Stock Option Contract, or no new series will be listed to a Stock Option Contract pursuant to Article 34, paragraph 5, the contract shall be delisted [from the TAIFEX] upon expiration of all series already listed.
     Where the financial holding company or the investment holding company that may serve as [the issuer of] the Underlying Securities under Article 4, paragraph 2 does not list new series in accordance with Article 34, paragraph 5, and there are zero open positions with respect to the contract adjustment conducted under Article 26, the Stock Option Contract shall be delisted on the share exchange record date.
Chapter VI Suspension of Trading and Delisting
Article 37     Where trading of Underlying Securities of a Stock Option Contract is suspended by the TWSE or TPEx, trading of the Stock Option Contract shall also be suspended.
    The TAIFEX may, pursuant to applicable laws and regulations or TAIFEX bylaws, or as it deems necessary based on any other cause sufficient to affect market order or the rights and interests of investors, halt trading of the Stock Option Contract or, following approval by the competent authority, suspend trading, or terminate the listing, of the Stock Option Contract, or proceed directly to announce suspension of trading of the Stock Option Contract and then report to the competent authority for recordation.
Article 38     If a Stock Option Contract expires during a period in which its trading is suspended, a trader shall handle exercise and settlement matters in accordance with Article 20, paragraph 3 hereof except where otherwise prescribed by the TAIFEX.
Article 39     During a period of suspended trading of a Stock Option Contract, when the TWSE or TPEx resumes trading of the Underlying Securities, the TAIFEX shall promptly resume the trading of Stock Option Contracts for those Underlying Securities.
    When the trading in a Stock Option Contract is resumed, the provisions of Article 35, paragraph 3 shall apply mutatis mutandis to the listing of series thereof.
Article 40     A Stock Option Contract whose trading is suspended shall, unless its trading is resumed, be delisted upon expiration of all of its series.
Article 41     The TAIFEX shall terminate the listing of a Stock Option Contract in any of the following circumstances with respect to the Underlying Securities:
  1. Where the competent authority has ordered the suspension of all trading of Underlying Securities.
  2. Where the TWSE or TPEx has terminated the TWSE or TPEx listing of Underlying Securities after approval by the competent authority.
  3. Where an issuer of Underlying Securities applies for delisting from the TWSE or TPEx, and the application is approved. This shall not apply, however, to the changing of Underlying Securities from TPEx to TWSE listing.
  4. Other events confirmed by the competent authority as requiring delisting of Underlying Securities from the TWSE or TPEx.
    The delisting date for a Stock Option Contract shall be the date on which the trading in the Underlying Securities is suspended on, or the Underlying Securities are delisted from, the TWSE or TPEx.
Article 42     Upon delisting, a Stock Option Contract is deemed to reach maturity, and, except where otherwise prescribed by the TAIFEX, its open positions shall all be handled pursuant to Article 20, paragraph 3.
Chapter VII Supplementary Provisions
Article 43     These Rules, and any amendments hereto, shall be publicly announced and implemented upon approval by the competent authority.