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Chapter 1 General Principles
Article 1     These Operating Rules are adopted pursuant to Article 25 of the Regulations Governing Issuance of Permits for and Regulation of Central Depository and Clearing Houses for Short-term Bills.
Article 2     The TDCC, in addition to observing related laws and regulations, will undertake management of short-term bills business in accordance with these Operating Rules.
Article 3     The competent authority under these Operating Rules is the competent authority of the Act Governing Bills Finance Business.
Article 4     Terms used in these Operating Rules are defined as follows:
  1. The Bills Clearing and Settlement System ("the System"): The information system established and operated by the TDCC for the custody, registration, and trade clearing of short-term bills, and the book-entry operations for the trade clearing.
  2. Physical securities deposit bank: A bank designated by the TDCC to undertake the custody of short-term bills in physical form, the presentment and redemption of short-term bills at maturity, and payment and receipt of funds in connection with underwriting, initial purchases, and redemptions of short-term bills at maturity.
  3. Batch net settlement (BNS): A method of net settlement of funds for a batch of settlement instructions involving multiple transactions in the same currency between two settlement counterparties, including between a bills dealer and an investor, a bills dealer and an investor custodian bank, and between two bills dealers.
  4. Special tax-exempt entities: Government agencies that, pursuant to regulations of the tax authority, are exempt from payment of tax on interest income from the trading of short-term bills.
  5. Commercial Paper I (CPI): A promissory note drawn by a buyer for payment of the seller's price in commercial trading activity.
  6. Commercial Paper II (CPII): A promissory note issued by a company or public enterprise for the purpose of raising funds.
  7. Foreign currency commercial paper: A foreign-currency-denominated promissory note issued by a company or public enterprise.
  8. Banker's acceptance: A draft arising out of foreign or domestic commodities trading or services that is accepted by a bank.
  9. Local government treasury bills: Short-term debt instruments issued by a local government following approval by the competent authority.
  10. Certificate code: An identification code used by the System to distinguish short-term bills subject to different settlements, comprising a 20-place code with a separate batch code, par value code, and sub-code. The "batch code" is the identifying code for short-term bills issued in a particular batch. It is a 12-place alpha-numeric code in which the first six places are the first six digits of the financial institution codes for the bills dealer's head and branch offices, and the final six places are the issuer's own flow number. The "par value" code represents the face value of the bill with a five-digit number derived by dividing the face value by 10,000 and rounding down the decimals. The "sub-code" is an identification number representing different pricing bases (after-tax realized return at maturity), consisting of a three-digit number with a preset value of "000."
  11. One-time repo transaction: An agreement for a transaction between a buyer and seller, in which a bills dealer sells short-term bills from its proprietary positions to an investor, an investor custodian bank, or another bills dealer and repurchases the bills on a stipulated date at a stipulated price.
  12. Multi-step repo transaction: An agreement for a transaction between a buyer and seller, in which a bills dealer sells short-term bills from its reverse repo positions to an investor, an investor custodian bank, or another bills dealer and repurchases the bills on a stipulated date at a stipulated price.
  13. One-time reverse repo transaction: An agreement for a transaction between a buyer and seller, in which a bills dealer buys short-term bills from the proprietary position of an investor, an investor custodian bank, or the proprietary position of another bills dealer and resells the bills on a stipulated date at a stipulated price.
  14. Multi-step reverse repo transaction: An agreement for a transaction between a buyer and seller, in which a bills dealer buys short-term bills from the reverse repo position of an investor, an investor custodian bank, or another bills dealer and resells the bills on a stipulated date at a stipulated price.
    The term "notification," except as used in Article 53, Article 58, Articles 76 through 79, Article 81, and Article 82, means notification made by online transmission of information through an information system.
Chapter 2 Business Hours
Article 5     TDCC business hours are 9:00 a.m. to 5:00 p.m., Monday through Friday.
    The TDCC may publicly announce a change to the above business hours as it deems necessary for business and after reporting to and receiving approval from the competent authority and the Central Bank.
Article 6     TDCC holidays will be the bank holidays publicly announced by the competent authority.
Article 7     Methods will be separately adopted by the TDCC for the handling of circumstances in which the TDCC cannot carry out centralized clearing, settlement, and depositary operations for short-term bills due to the occurrence of a natural disaster, election of public officials, or other force majeure event.
Chapter 3 Printing, Distribution, and Receipt of Blank Commercial Paper II (CPII) Notes and Foreign-Currency Commercial Paper Notes
Article 8     The TDCC shall handle the designing and printing of blank Commercial Paper II (CPII) notes and foreign-currency commercial paper notes and their distribution and use by bills dealers.
    The operating procedures for the preceding paragraph will be separately adopted by the TDCC.
Chapter 4 Opening, Cancellation, and Management of Participant Accounts
Article 9     "Participant," as used in these Operating Rules, refers to any of the following who have established a book-entry transfer account or an issuance and registration account with the TDCC:
  1. Bills dealers.
  2. Investor custodian banks.
  3. Issuers.
  4. Other entities as approved by the competent authority.
    Standards governing approval of the participants of the preceding paragraph shall be as given in the Act Governing Bills Finance Business, Regulations Governing Issuance of Permits for and Regulation of Central Depository and Clearing Houses for Short-term Bills, Regulations Governing Book-Entry Operations for the Issuance, Registration, and Central Custody of Short-Term Bills, and related laws and regulations.
    The Central Bank may open a book-entry account at the TDCC for the settlement of purchases and sales of short-term bills in open market operations.
Article 10     A participant that applies to the TDCC to establish a book-entry transfer account or an issuance and registration account shall submit an application to open an account along with its company seal and related documents.
    Procedures for account opening under the preceding paragraph will be separately adopted by the TDCC.
Article 11     The TDCC shall set up account books for participants, including issuer account books, bills dealer account books, and investor custodian bank account books.
    The issuer account book of the preceding paragraph shall contain the following items:
  1. The issuer's name and its company uniform serial number.
  2. The address and telephone number of the issuer's location.
  3. The name, location, and company uniform serial number of the underwriter or guarantor, if any.
  4. The type, interest rate, issue amount, date of issuance, and date of maturity of short-term bills in book-entry form.
  5. The name and place of payment of the payer or paying agent.
  6. Other items required by the competent authority.
    The bills dealer account book of paragraph 1 shall contain the following items:
  1. The name of the bills dealer and its company uniform serial number.
  2. The address and telephone number of the bills dealer's location.
  3. The number of the deposit account opened by the bills dealer with the Central Bank's Department of Banking, foreign currency clearing bank, or the bills dealer's designated bank.
  4. The bills dealer's proprietary positions, positions pending settlement, reverse repo positions, repo positions, pledgor positions, pledgee positions, restricted (not presented for payment) positions, restricted positions (settlement restricted), restricted (settlement prohibited) positions, and restricted (returned notes) positions.
  5. The type and number of short-term bills and the issuers' names.
  6. Increases or decreases in the number of short-term bills and their causes.
  7. Other items required by the competent authority.
    The investor custodian bank account book of paragraph 1 shall include the following items:
  1. The name of the investor custodian bank and its company uniform serial number.
  2. The address and telephone number of the investor custodian bank's location.
  3. The number of the deposit account opened by the bills dealer with the Central Bank's Department of Banking or foreign currency clearing bank.
  4. The investor custodian bank's proprietary positions, positions pending settlement, reverse repo positions, repo positions, pledgor positions, pledgee positions, restricted (not presented for payment) positions, restricted (settlement restricted) positions, restricted (settlement prohibited) positions, and restricted (returned notes) positions.
  5. Investor names and proprietary positions, positions pending settlement, reverse repo positions, repo positions, pledgor positions, pledgee positions, restricted (not presented for payment) positions, restricted (settlement restricted) positions, restricted (settlement prohibited) positions, and restricted (returned notes) positions.
  6. The types and numbers of short-term bills and issuers' names.
  7. Increases or decreases in the number of short-term bills and their causes.
  8. Other items required by the competent authority.
    The TDCC shall set up an account book for the Central Bank, in which the items as listed in paragraph 3 shall be entered. The period and method of retention of the account books shall be as given in Article 13.
Article 12     Given any of the following circumstances on the part of a participant, the TDCC may cancel a participant's account or suspend its use:
  1. Loss of participant status.
  2. Liquidation or dissolution.
  3. An order for suspension of business from the competent authority.
Article 13     The TDCC shall retain participant account books, and documentation of participant deposits and settlements, for a minimum of 5 years from the date of registration.
    The TDCC may keep the account books of the preceding paragraph in electronic storage media or in printed forms and statements.
    The provisions of the preceding two paragraphs apply mutatis mutandis to physical securities deposit banks.
Chapter 5 Operations for Bills Dealers and Investor Custodian Banks
Article 14     A bills dealer shall perform the deposit, underwriting and initial purchase, trading and settlement, pledging, redemption, and withdrawal of short-term bills in physical form in accordance with these Operating Rules.
    If the bills dealer is a securities firm that concurrently operates a bills financing business, it shall select a bank (an "agent clearing bank") at which it shall establish a deposit account, and engage the agent clearing bank to undertake payment of funds on its behalf for New Taiwan Dollar ("NTD") denominated short-term bills.
    If the bills dealer of the preceding paragraph is the payer of the funds, the TDCC shall first notify the agent clearing bank to undertake confirmation of the deduction of funds.
    The TDCC will separately adopt procedural methods for the matters in the preceding three paragraphs.
Article 15     An investor custodian bank shall establish investor account books, and shall carry out trading and settlement, pledging, redemption, and withdrawals for investors and their proprietary holdings of short-term bills, in accordance with these Rules.
    The TDCC will separately adopt procedural methods for the matters in the preceding paragraph.
Article 15-1     In response to the needs of the Joint Credit Information Center in establishing credit information, credit information on notes and bills may be transmitted through the TDCC to the Joint Credit Information Center by bills dealers and investor custodian banks. The TDCC shall guarantee the security of any information so transmitted.
Chapter 6 Issuance and Registration of Short-Term Bills in Book-Entry Form
Article 16     An issuer that issues short-term bills in book-entry form shall engage a bills dealer to deliver the issuance and registration documents to the TDCC for processing of the issuance and registration.
    The procedures of the preceding paragraph and related operations directions shall be adopted by the TDCC in consultation with the R.O.C. Bills Finance Association ("Bills Finance Association"), and shall be submitted to the competent authority and the Central Bank by letter for recordation.
    When a bank issues negotiable certificates of deposit (NCD), the bank may itself deliver the issuance and registration documents to the TDCC for processing of the issuance and registration.
Article 17     The TDCC shall make a copy of its records of the issuance and registration of short-term bills in book-entry form, and shall keep the copy at a second location.
    The issuance and registration records of the preceding paragraph shall be retained permanently for any bills not yet redeemed, and for other bills shall be retained for a minimum of 5 years.
Article 18     Upon application by the holder, and after the relevant tax amounts and additional premiums for National Health Insurance (below, "additional insurance premiums") have been paid into the TDCC tax payment account and additional insurance premium account at the physical securities deposit bank, the TDCC will issue a claim certificate for short-term bills in book-entry form that are registered with the TDCC and which have passed the stated maturity date without being redeemed.
    When the holder of the preceding paragraph is an investor, the investor custodian bank shall be requested to make the application on behalf of the holder.
    The TDCC shall consult with the Bills Finance Association regarding adoption of a template for the claim certificate of paragraph 1, which shall then be submitted to the competent authority for recordation.
Article 19     If short-term bills in book-entry form are not paid at maturity, the TDCC shall deliver a certificate of non-payment and related claim certificates to the holder of the bills.
Chapter 7 Types of Short-Term Bills in Physical Form Under Custody and Custody Procedures
Article 20     The short-term bills in physical form which the TDCC keeps in custody are the following:
  1. Commercial Paper I (CPI).
  2. Commercial Paper II (CPII).
  3. Foreign-currency commercial paper.
  4. Banker's acceptances.
  5. Other short-term debt instruments approved by the competent authority.
Article 21     The short-term bills in physical form of all participants are held by the TDCC in fungible custody, with participant holdings determined by the balances of the participant account books.
    The TDCC, with approval from the competent authority, may engage banks (hereinafter, "physical securities deposit banks") to handle custodial operations for the short-term bills in physical form of the preceding paragraph.
Article 22     With respect to short-term bills in physical form delivered by bills dealers, a physical securities deposit bank shall prepare a list of the bills and carry out vault storage procedures, keeping the bills in proper custody in the vault.
Article 23     When the short-term bills of the preceding article have reached maturity, are returned, or are not presented for redemption and need to be removed from vault storage to record their redemption or for delivery to a holder, the physical securities deposit bank shall remove the bills from vault storage in accordance with an itemized statement prepared on the date of their removal, or in accordance with an itemized statement of withdrawal submitted by the bills dealer and the investor custodian bank.
Article 24     After the close of each business day, a physical securities deposit bank shall compile an inventory summary table of bills entered into vault storage, removed from vault storage, and withdrawn, and produce a daily inventory transaction statement; the inventory summary table and inventory transaction statements shall be reconciled with TDCC records.
    A register shall be made of entries into and removals from vault storage and inventory balances, which shall be retained for a minimum of 5 years. The TDCC shall also, within 10 days after the beginning of each quarter, submit the end-of-quarter register for the previous quarter to the competent authority.
Article 25     A register of short-term bills in physical form held in custody by a physical securities deposit bank shall be produced after redemptions are made.
    The register of the preceding paragraph shall be retained for a minimum of 5 years.
Article 26     In outsourcing to a physical securities deposit bank the operations with respect to the custody of short-term bills in physical form and reviews thereof, the TDCC shall adopt an outsourcing process manual and an outsourcing contract as the basis on which outsourcing is to be performed.
Chapter 8 Deposit and Withdrawal Procedures for Short-Term Bills in Physical Form
Article 27     The time during which a physical securities deposit bank engaged by the TDCC handles deposit and withdrawal operations for short-term bills in physical form shall be from 9:00 a.m. to 4:30 p.m. each business day.
    The TDCC may publicly announce a change in the period of operations of the preceding paragraph, as business needs, after reporting to and receiving approval from the competent authority and the Central Bank.
Article 28     Procedures for a physical securities deposit bank handling bills dealers' deposits of short-term bills in physical form are as follows:
  1. The physical securities deposit bank shall inspect the sealed envelope delivered by the bills dealer for any sign of damage or alteration, and shall check the number of bills and their par value against the electronic file or itemized statement delivered by the bills dealer.
  2. The physical securities deposit bank shall check whether the short-term bills in physical form delivered by the bills dealer are consistent with the content of the deposit notice transmitted by the System. If they are consistent, the TDCC shall be notified that acceptance of the bills has been completed, and the bills deposited into the vault; if there is any uncertainty, the TDCC shall be notified that acceptance of the bills has failed.
Article 29     Computer operations for short-term bills in physical form delivered for deposit by bills dealers are as follows:
  1. When the System receives deposit instructions transmitted by a bills dealer, it shall notify the physical securities deposit bank to check the computer notice of delivery for deposit for consistency with the content of the bills in physical form delivered for deposit by the bills dealer.
  2. When the System is informed by the physical securities deposit bank that acceptance of the bills has been completed, it shall immediately register the batch of short-term bills that was delivered for deposit, and shall notify the bills dealer that deposit operations have been completed. If the System is informed that acceptance has failed, it shall notify the bills dealer that delivery for deposit has failed.
Article 30     When the TDCC handles the withdrawal of short-term bills in physical form by a bills dealer in the case of an incomplete underwriting or an initial purchase of bills, it shall notify the physical securities deposit bank of the number of bills withdrawn by the bills dealer.
    The physical securities deposit bank shall deliver the bills to the bills dealer after inspecting the withdrawal statement filled out by the bills dealer and finding it without error.
Article 31     When a bills dealer purchases short-term bills in physical form issued by itself and needs to carry out a withdrawal, the physical securities deposit bank shall deliver the bills to the bills dealer after inspecting the withdrawal statement filled out by the bills dealer and finding it without error, confirming that cancellation procedures for the bills have been completed, and properly stamping the short-term bills under application for withdrawal with a stamp indicating their cancellation.
Article 32     When a bills dealer or an investor custodian bank holds short-term bills in physical form and fails to receive payment or receives insufficient payment upon redemption at maturity, the bills shall be handled respectively according to the following provisions:
  1. In the case of Commercial Paper I (CPI) and banker's acceptances that are not paid on redemption at maturity, their return for insufficient payment shall be carried out in accordance with the regulations of the Taiwan Clearing House, and the physical certificates shall be delivered along with a statement of reasons for their return.
  2. In the case of Commercial Paper II (CPII) and foreign- currency commercial paper that is not paid at redemption on maturity, the TDCC will immediately notify the physical securities deposit bank and request it to issue a statement of the reasons for their return, and after notifying the Taiwan Clearing House in accordance with relevant regulations, to deliver the physical certificates and the statement of reasons for their return. The physical securities deposit bank shall carry out related procedures on the basis of a photocopy of the underwriting agreement certified by the issuer and provided by the underwriting bills dealer of the commercial paper, with the underwriting agreement being properly stamped with the bills dealer's company seal retained by the TDCC.
    When the short-term bills of the preceding paragraph are held by an investor, the physical certificates and statement of reasons for the return of the notes or the certificate of insufficient payment shall be delivered to the investor's investor custodian bank.
Article 33     When a bills dealer or investor custodian bank withdraws its short-term bills in physical form that were not presented for redemption, the physical securities deposit bank shall confirm that the bills dealer or investor custodian bank has already deposited any tax amounts payable into the dedicated account for tax payments opened by the TDCC at the physical securities deposit bank, and after inspecting the withdrawal statement and finding no discrepancy, shall stamp the short-term bills under application for withdrawal with a seal indicating completed tax payment and deliver the bills to the bills dealer or investor custodian bank.
    When the short-term bills of the preceding paragraph are held by an investor, the physical securities deposit bank shall confirm that any taxes and any additional premiums for National Health Insurance payable by the investor have been paid into the TDCC tax payment account and additional insurance premium account at the physical securities deposit bank, and withdrawal of the certificates shall be carried out through the investor's investor custodian bank.
    The bills dealer, investor custodian bank, or investor shall perform the withdrawal operations of the preceding two paragraphs in one of the following two ways:
  1. Withdrawing the full number of certificates.
  2. Withdrawing the remaining number of certificates on or after the deferred redemption date.
    After the physical securities deposit bank completes the operations in paragraphs 1 and 2 above, it shall notify the TDCC to deduct the number of certificates that were withdrawn from the account books of the bills dealer and the investor custodian bank.
Article 34     When a bills dealer withdraws already-redeemed short-term bills in physical form on behalf of an issuer, the physical securities deposit bank shall deliver the bills to the bills dealer after inspecting the withdrawal statement filled out by the bills dealer and finding no discrepancy.
    When a guarantor withdraws short-term bills in physical form that it has redeemed on behalf of an issuer, the physical securities deposit bank shall deliver the bills under application for withdrawal to the guarantor after inspecting the withdrawal statement filled out by the guarantor and the proof of advance payment presented by the guarantor and finding no discrepancy.
Article 35     When a physical securities deposit bank handles over-the-counter withdrawal operations for the bills dealers, investor custodian banks, and guarantors of Articles 30 through 34, if the bank branch making application is the same bank branch that originally sent the short-term bills in physical form for deposit, delivery shall be made on the date of application. If the bank branch that originally sent the bills for deposit is located in the same county or municipality, delivery shall be made on the first business day after the date of application; if not located in the same county or municipality, delivery shall be made on the second business day after the date of application.
Chapter 9 Settlement and Pledging Procedures for Short-Term Bills and Related Book-Entry Transfer and Account Settlement Procedures
Section 1 Hours for Settlement Procedures
Article 36     The hours during which the TDCC accepts settlement notifications from bills dealers and investor custodian banks are each business day from 9:00 a.m. to 3:00 p.m.; investor custodian bank settlement confirmations are accepted each business day from 9:00 a.m. to 3:30 p.m.; confirmations of deductions of funds by agent clearing banks are accepted each business day from 9:00 a.m. to 3:40 p.m.
    The provisions of the preceding paragraph regarding hours apply mutatis mutandis to settlement procedures for purchases and sales of short-term bills in Central Bank open market operations.
Article 37     Each business day at 3:30 p.m. the TDCC will cancel all trades pending settlement for which trade confirmation or trade matching have not been completed; each business day at 3:40 p.m. it will cancel all trades pending settlement for which confirmations of deductions of funds by agent clearing banks have not been completed; each business day at 4:00 p.m. it will cancel all trades pending settlement for which settlement of funds between bills dealers or between bills dealers and investor custodian banks have not been completed; at 4:30 p.m. it will settle accounts.
    After completing the procedures of the preceding paragraph, the TDCC shall notify bills dealers and investor custodian banks.
    The provisions of paragraph 1 apply mutatis mutandis to TDCC handling of the transactions of purchases and sales of short-term bills in Central Bank open market operations. When the TDCC has finished such procedures it shall notify the Central Bank.
Article 38     As the TDCC deems necessary according to business requirements, it may carry out time-extension procedures; the procedures for such extensions will be separately adopted by the TDCC.
Section 2 The Primary Market
Article 39     Settlement procedures for a bills dealer that undertakes firm commitment underwriting or an initial purchase of short-term bills are as follows:
  1. When the TDCC receives a settlement notification for firm commitment underwriting or an initial purchase by a bills dealer, then except in the case of internal funds payments and receipts at the physical securities deposit bank or a zero amount of settlement funds, it will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to undertake settlement of funds.
  2. After completion of funds payments and receipts, the number of bills for the firm commitment or initial purchase will be transferred into the proprietary position of the bills dealer, and the TDCC will notify the physical securities deposit bank to remit the funds receivable by the issuer or the holder into its designated monetary funds account at the receiving bank.
Article 40     Settlement procedures for best-efforts underwriting of short-term bills by a bills dealer are as follows:
  1. When the TDCC receives settlement notification for best-efforts underwriting from a bills dealer, it will immediately notify the buyer to undertake confirmation.
  2. After confirmation has been made, then except in the case of internal payments and receipts by the physical securities deposit bank, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to carry out settlement of funds.
  3. After completion of book-entry transfers of certificates, the TDCC will immediately notify the physical securities deposit bank to remit the funds receivable by the issuer into its designated monetary funds account at the receiving bank.
Section 3 The Secondary Market
Article 41     Settlement procedures for bills dealers selling short-term bills to investors (not including bills dealers) are as follows:
  1. After the TDCC receives settlement notification from a bills dealer, it will transfer the proprietary or reverse-repo position of the bills dealer into its pending settlement position and immediately notify the buyer to undertake confirmation.
  2. After confirmation is completed, then except in the case of internal payment and receipt of funds by the same bank, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to carry out settlement of funds.
  3. After completion of payment and receipt of funds, the bills will be transferred from the bills dealer's pending settlement position into the buyer's proprietary or reverse repo position and notifications will be issued.
Article 42     Settlement procedures for a bills dealer purchasing short-term bills from an investor (not including a bills dealer) are as follows:
  1. After the TDCC receives settlement notification from a bills dealer, it will transfer the proprietary or reverse-repo position of the seller into its pending settlement position and immediately notify the seller to undertake confirmation.
  2. After confirmation is completed, then except in the case of internal payment and receipt of funds by the same bank, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to carry out settlement of funds.
  3. After payment and receipt of funds is completed, the bills will be transferred from the seller's pending settlement position into the proprietary or reverse repo position of the bills dealer and notifications will be issued.
Article 42-1     Settlement procedures for bills dealers handling trades of short-term bills between investors are as follows:
  1. After the TDCC receives settlement notification from a bills dealer, it will transfer the seller's proprietary position into its pending settlement position and immediately notify the seller to undertake confirmation.
  2. After TDCC receipt of the seller's confirmation, it will immediately notify the buyer to carry out confirmation.
  3. After confirmation by the buyer, then except in the case of internal payment and receipt of funds by the same bank, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to undertake settlement of funds.
  4. After payment and receipt of funds is completed, the bills will be transferred from the seller's pending settlement position into the buyer's proprietary position and notifications will be issued.
Article 43     Settlement procedures for trades between bills dealers are as follows:
  1. After the TDCC has received settlement notifications from the buying and selling bills dealers and compared them and found no discrepancy, the TDCC will transfer the seller's proprietary or reverse repo position into its pending settlement position, and except in the case of internal payment and receipt of funds at the same bank, will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to carry out settlement of funds.
  2. After payment and receipt of funds is completed, the bills will be transferred from the seller's pending settlement position into the buyer's proprietary or reverse-repo position and notifications will be issued.
Article 44     Settlement procedures for trades in the primary and secondary markets, including a bills dealer's trades with an investor (not including another bills dealer), firm commitment underwriting, or initial purchases of short-term bills, and which employ batch net settlement (BNS) shall be as follows:
  1. When the TDCC receives a BNS settlement notification from a bills dealer, it will transfer the seller's short-term bills into its pending settlement position and, after calculation of the net amount of funds for the batch settlement, immediately notify the trading counterparty to undertake confirmation.
  2. After confirmation has been made, then except in the case of internal payment and receipt of funds at the same bank or a net amount of zero funds due, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to carry out settlement of funds.
  3. After payment and receipt of funds is completed, the provisions of Articles 39, 41, and 42 will apply mutatis mutandis, and after transfer of certificates is completed notifications will be issued.
Article 45     Settlement procedures for trades between bills dealers employing BNS are as follows:
  1. After the TDCC has received settlement notifications from the buying and selling bills dealers and compared them and found no discrepancy, the provisions of Article 43 will apply mutatis mutandis for the settlement of each transaction in the batch. The TDCC will transfer the seller's short-term bills into its pending settlement position, and after calculation of the net amount of funds for the batch settlement, and except in the case of internal receipt and payment of funds by the same bank or a net amount of zero funds due, it will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to carry out settlement of funds.
  2. After payment and receipt of funds is completed, the provisions of Article 43 will apply mutatis mutandis, and after transfer of certificates is completed notifications will be issued.
Article 46     Procedures for cancellation of a repo transaction in progress between a bills dealer and an investor (not including another bills dealer) are as follows:
  1. After the TDCC receives notification of the cancellation of a repo transaction already in progress, it will immediately notify the counterparty of the trade to undertake confirmation.
  2. After confirmation has been made, the TDCC will immediately carry out procedures for cancellation of the repo transaction in progress and will issue notifications.
Article 47     Procedures for cancellation of a repo transaction in progress between two bills dealers are as follows:
  1. After the TDCC has received notifications from the two bills dealers of the cancellation of a repo transaction already in progress and compared them and found no discrepancy, the TDCC will immediately carry out procedures for cancellation of the repo transaction in progress.
  2. After the procedures of the preceding paragraph are completed the TDCC will issue notifications.
Article 48     When notification for settlement of a repo transaction cannot be made during the period for settlement operations given under Article 36, or when payment and receipt of funds has not been completed, such that the TDCC cancels the settlement procedures, the TDCC will itself initiate delivery and settlement of the given repo transaction, and after settlement is completed it will issue notifications. If settlement still cannot be completed, it will be handled by the TDCC as follows, and subsequent account adjustments will be made:
  1. If settlement cannot be completed because the seller is unable to pay the funds to settle the repo, the TDCC will transfer the short-term bills for delivery into the buyers proprietary position.
  2. If settlement cannot be completed because the buyer is unable to deliver the short-term bills to settle the repo, the TDCC will not make a book-entry transfer.
    The provisions of Articles 41 through 43 will apply mutatis mutandis to the book-entry transfers for performance and settlement of the repo transactions of the preceding paragraph.
Article 48-1     The provisions of Articles 42, 43, and 48 apply mutatis mutandis to TDCC handling of settlement procedures for purchases and sales of short-term bills in Central Bank open market operations.
Section 4 Account Transfer Procedures
Article 49     Interbank account transfer procedures for the short-term bills of an investor are as follows:
  1. When the TDCC receives notification of an interbank account transfer from the investor custodian bank making an outward transfer (the outward-transfer bank), it will immediately transfer the investor's proprietary position from the outward-transfer bank into its pending settlement position, and will notify the investor custodian bank receiving the transfer (the inward-transfer bank) to undertake confirmation.
  2. After confirmation is made, the TDCC will immediately make a transfer from the investor's pending settlement position at the outward-transfer bank into the investor's proprietary position at the inward-transfer bank.
  3. After book-entry transfer of certificates is completed the TDCC will issue notifications.
Article 50     Account transfer procedures for transfers of an investor's short-term bills between affiliated banks are as follows:
  1. When the TDCC receives notification of an account transfer between affiliated banks, it will make a transfer from the investor's proprietary position into the proprietary position in its inward-transfer account.
  2. After book-entry transfer of certificates is completed the TDCC will issue notifications.
Article 51     Account transfer procedures between the head and branch offices of a bills dealer are as follows:
  1. When the TDCC has received notifications of account transfer between the outward-transfer and inward transfer units of the bills dealer and compared them and found no discrepancy, it will immediately make a transfer from the proprietary position in the outward-transfer unit to the proprietary position of the inward-transfer unit.
  2. After book-entry transfer of certificates is completed, the TDCC will issue notifications.
    The procedures of the preceding paragraph are restricted to bills dealers whose head and branch offices have both established book-entry accounts.
Section 5 Procedures with Respect to Settlement Restrictions or Settlement Prohibitions
Article 52     Procedures for the setting and lifting of settlement restrictions on short-term bills are as follows:
  1. When the TDCC receives notification of the setting or lifting of settlement restrictions on a holder's short-term bills, it will perform book-entry transfers as follows:
    1. When setting settlement restrictions: The TDCC will make a transfer from the holder's proprietary position into the holder's restricted (settlement restricted) position.
    2. When lifting settlement restrictions: The TDCC will make a transfer from the holder's restricted (settlement restricted) position into the holder's proprietary position.
  2. After completing the procedures of the preceding subparagraph, the TDCC will issue notifications.
Article 53     TDCC procedures for setting or lifting a prohibition on settlement of short-term bills in response to its receipt of notification from an enforcing authority or competent authority are as follows:
  1. When the TDCC receives notification from an enforcing authority or competent authority to set or lift a prohibition on settlement of short-term bills, it will perform book-entry transfers as follows:
    1. When setting settlement prohibition: The TDCC will make a transfer from the holder's proprietary position into the holder's restricted (settlement prohibited) position.
    2. When lifting settlement prohibition: The TDCC will make a transfer from the holder's restricted (settlement prohibited) position into the holder's proprietary position.
  2. After completing the procedures of the preceding subparagraph the TDCC will issue notifications.
Section 6 Pledging Procedures
Article 54     Procedures for an investor pledging short-term bills in favor of a party other than a bills dealer are as follows:
  1. When the TDCC receives notification from an investor (pledgor) of the establishment of a pledge, it will make a transfer from the pledgor's proprietary position into the pledgor's pledged position, then will make a transfer into the pledgee's pledge position.
  2. After completing the procedures of the preceding subparagraph, the TDCC will issue notifications.
Article 55     Procedures for pledge of an investor's short-term bills in favor of a bills dealer are as follows:
  1. When the TDCC receives notification from a bills dealer of the establishment of a pledge, it will make a transfer from the investor's proprietary position or the resell position of the one-time repo transaction into the investor's pending settlement position, then will notify the pledgor to undertake confirmation.
  2. After confirmation has been made, the TDCC will make a transfer from the investor's pending settlement position into its pledged position, then a transfer into the pledge position of the bills dealer, after which it will issue notifications.
Article 55-1     Procedures for a bills dealer pledging its short-term bills in favor of another bills dealer are as follows:
  1. After the TDCC has received notifications from the two bills dealers of the establishment of a pledge and compared them and found no discrepancy, the TDCC will transfer the short-term bills from the proprietary position of the pledgor bills dealer to its pledgor position, and further transfer them into the pledge position of the pledgee bills dealer.
  2. After completion of the procedures of the preceding subparagraph, the TDCC will issue notifications.
Article 56     Procedures for an investor's outright purchase of short-term bills from a bills dealer which are then pledged in favor of the same bills dealer are as follows:
  1. When the TDCC receives notification of an investor's purchase and establishment of a pledge on short-term bills, it will immediately transfer the bills purchased by the investor from the bills dealer's proprietary position into its pending settlement position and notify the investor to undertake confirmation.
  2. After confirmation has been made, then except in the case of internal payment and receipt of funds at the same bank, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to undertake settlement of funds.
  3. After payment and receipt of funds has been completed, the TDCC will carry out transfers as follows:
    1. Transfer from the bills dealer's pending settlement position to the investor's proprietary position (settlement of investor's outright purchase).
    2. Transfer from the investor's proprietary position to the investor's pledged position, and further transfer into the bills dealer's pledge position (establishment of pledge).
  4. After book-entry transfer has been completed, the TDCC will issue notifications.
Article 57     Procedures for an investor or a bills dealer canceling a pledge of short-term bills are as follows:
  1. After the TDCC receives a pledgee's notification of cancellation of a pledge, it will make a transfer from the pledgee's pledge position into the pledgor's proprietary position or reverse repo position, and make a deduction from the pledgor's pledged position.
  2. After completion of the procedures of the preceding subparagraph, the TDCC will issue notifications.
Article 58     When pledge rights are exercised by a court, the TDCC will carry out book-entry transfers in accordance with the court's notification.
Article 59     When a pledge is established on an investor's proprietary position of short-term bills and ownership of the bills is obtained through exercise of the pledge rights, procedures are as follows:
  1. When the pledgee is other than a bills dealer:
    1. After receiving notification of a pledgee's exercise of pledge rights, the TDCC will make a transfer from the pledgee's pledge position into the pledgee's proprietary position, and make a deduction from the pledgor's pledged position.
    2. After completion of the procedures of the preceding subparagraph, the TDCC will issue notifications.
  2. When the pledgee is a bills dealer:
    1. After receiving a bills dealer's notification of its exercise of pledge rights, the TDCC will make a transfer from the bills dealer's pledge position into its pending settlement position, and will notify it to undertake confirmation.
    2. After confirmation has been made, the TDCC will make a transfer from the bills dealer's pending settlement position into its proprietary position, and a deduction from the pledgor's pledged position.
  3. When the pledgee has designated a third party as an assignee for the exercise of pledge rights over the short-term bills, transfers will be made according to the following procedures:
    1. When the assignee is an investor, a transfer will be made into the investor's proprietary position.
    2. When the assignee is an investor custodian bank, a transfer will be made into the investor custodian bank's proprietary position.
    When a pledge is established 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 2 of the preceding paragraph apply mutatis mutandis to the procedures by which a pledgee obtains ownership of the short-term bills through exercising pledge rights.
Article 59-1     Procedures for a pledgee bills dealer to obtain ownership of the short-term bills of a pledgor bills dealer by exercising pledge rights are as follows:
  1. The pledgee bills dealer shall submit the relevant documents to the TDCC.
  2. After the TDCC has received the pledgee bills dealer's notification of its exercise of pledge rights, and verified them against the relevant documents and found no discrepancy, the TDCC will transfer the short-term bills from the pledge position of the pledgee bills dealer into its proprietary position, and deduct them from the pledgor position of the pledgor bills dealer; if any uncertainty arises during verification of documents, the TDCC shall notify the pledgee bills dealer for handling of the matter.
  3. After completion of the procedures of the preceding subparagraph, the TDCC will issue notifications.
Article 60     The procedures by which an investor makes a substitution of the subject of a pledge with a bills dealer are as follows:
  1. When the TDCC receives a bills dealer's notification of settlement for the substitution of a subject of a pledge, it will immediately transfer the short-term bills originally pledged from the bills dealer's pledgee position into its pending settlement position, and will notify the investor to undertake confirmation.
  2. After confirmation is made, transfers will be made according to the following procedure:
    1. A transfer will be made from the bills dealer's pending settlement position into the investor's proprietary position, and a deduction made from the investor's pledgor position (cancellation of pledge).
    2. The short-term bills on which the new pledge is established will be transferred from the investor's proprietary position into the investor's pledgor position, and then transferred into the bills dealer's pledgee position (establishment of pledge).
Article 60-1     Procedures for substitution of subject matter of a pledge by a pledgor bills dealer are as follows:
  1. When the TDCC has received settlement notifications from the two bills dealers for substitution of the subject of the pledge and compared them and found no discrepancy, it will make transfers according to the following procedures:
    1. A transfer of short-term bills will be made from the pledge position of the pledgee bills dealer into the proprietary position of the pledgor bills dealer, and a deduction made from the pledgor position of the pledgor bills dealer (cancellation of pledge).
    2. Short-term bills on which the new pledge is to be established will be transferred from the proprietary position of the pledgor bills dealer into its pledgor position, and then transferred into the pledge position of the pledgee bills dealer (establishment of pledge).
  2. After completion of the procedures of the preceding subparagraph, the TDCC will issue notifications.
Article 61     Procedures by which an investor sells short-term bills originally under pledge to a bills dealer and purchases short-term bills from the bills dealer to make a substitution of the pledged subject with the bills dealer are as follows:
  1. When the TDCC receives a settlement notification from a bills dealer for substitution of the pledged subject (including the purchase and sale transactions), it will immediately transfer the short-term bills originally under pledge from the pledgee position of the bills dealer into its pending settlement position, and after calculation of the net funds due for settlement of the purchase and sale transactions will notify the investor to undertake confirmation.
  2. When confirmation has been made, then except in the case of internal payment and receipt of funds at the same bank or a net amount of zero funds due, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to undertake settlement of funds.
  3. After payment and receipt of funds is completed, transfers will be made according to the following procedures:
    1. A transfer will be made from the bills dealer's pending settlement position into the investor's proprietary position, and a deduction made from the investor's pledgor position (cancellation of pledge).
    2. A transfer of the short-term bills sold by the investor will be made from the investor's proprietary position into the proprietary position of the bills dealer (settlement of investor's outright sale).
    3. A transfer of the short-term bills purchased by the investor will be made from the proprietary position of the bills dealer into the investor's proprietary position (settlement of investor's outright purchase).
    4. A transfer of the short-term bills on which the new pledge is established will be made from the investor's proprietary position into the investor's pledgor position, and will then be transferred into the bills dealer's pledgee position (establishment of pledge).
Article 61-1     When the short-term bills of an investor's reverse repo position are used to establish a pledge in favor of a bills dealer and the repo transaction reaches its end date, the procedures for substituting the subject of the pledge are as follows:
  1. When the TDCC receives settlement notification from a bills dealer for a substitution of the subject of a pledge (including the new repo transaction), it will immediately transfer the short-term bills on which the pledge was originally established from the bills dealer's pledgee position into its pending settlement position, and after calculation of the net funds due for settlement, will notify the investor to undertake confirmation.
  2. After confirmation has been made, then except in the case of internal payment and receipt of funds at the same bank or a net amount of zero funds due, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to undertake settlement of funds.
  3. After payment and receipt of funds is completed, transfers will be made according to the following procedures:
    1. A transfer will be made from the pending settlement position of the bills dealer into the investor's reverse repo position, and a deduction made from the investor's pledgor position (cancellation of pledge).
    2. The short-term bills of the preceding item in the investor's reverse repo position will be transferred into the proprietary position of the bills dealer (settlement of the investor's repo transaction).
    3. The short-term bills sold to the investor in the repo transaction will be transferred from the bills dealer's proprietary position into the investor's reverse repo position (settlement of the investor's repo transaction).
    4. The short-term bills of the preceding item in the investor's reverse repo position will be transferred into the investor's pledgor position, and then transferred into the pledgee position of the bills dealer (establishment of pledge).
Article 61-2     If, for short-term bills of an investor's reverse repo position pledged in favor of a bills dealer, the bills dealer or the investor custodian bank has not completed settlement procedures by canceling the pledge, exercising pledge rights, or substituting another pledged subject by the end date of the repo transaction, the TDCC will itself initiate the exchange of the original repo position that was pledged for the investor's proprietary position for the pledge.
Section 7 Procedures for Cancellation of Settlement
Article 62     The procedures for a bills dealer canceling settlement of a trade (including best-effort underwriting and BNS settlements), a pledge, or cancellation of a repo transaction in progress between it and an investor (not including another bills dealer) are as follows:
  1. When, prior to receipt of a settlement confirmation from the bills dealer's trading counterparty, the TDCC receives notification of cancellation of settlement from the bills dealer, it will immediately cancel settlement of the given trade (or batch) and issue notifications.
  2. If the TDCC, after the bills dealer's trading counterparty has confirmed settlement but prior to completing payment and receipt of funds, receives notification of cancellation of settlement from the bills dealer, it will immediately notify the trading counterparty to undertake confirmation of the settlement cancellation. After the trading party confirms cancellation of the settlement and the TDCC has completed settlement cancellation procedures, it will issue notifications.
    The above procedures for cancellation of settlement apply mutatis mutandis to a bills dealer canceling sale of short-term bills to another bills dealer for best-effort underwriting.
Article 62-1     Procedures for a bills dealer canceling settlement of a trade between two investors are as follows:
  1. Prior to confirmation of settlement by the seller, if the TDCC receives the bills dealer's notification of cancellation of settlement, it will immediately cancel settlement of the given trade and issue notifications.
  2. If, after confirmation of settlement by the seller but prior to confirmation of settlement by the buyer, the TDCC receives notification of cancellation of settlement from the bills dealer, it will immediately notify the seller to undertake confirmation of the settlement cancellation, and after the seller confirms cancellation and the TDCC has completed settlement cancellation procedures, it will issue notifications.
  3. If, after confirmation of settlement by both buyer and seller but prior to completing payment and receipt of funds, the TDCC receives notification from the bills dealer of cancellation of settlement, it will immediately notify buyer and seller respectively to undertake confirmation of cancellation of the settlement. After buyer and seller confirm cancellation and the TDCC has completed settlement cancellation procedures, it will issue notifications.
Article 63     TDCC procedures for a bills dealer's cancellation of settlement of a trade with another bills dealer (including BNS settlements) are as follows:
  1. If, prior to matching settlement notifications, the TDCC receives a bills dealer's notification of cancellation of settlement, it will immediately cancel settlement of the given trade (or batch).
  2. If, after matching settlement notifications but prior to completing payment and receipt of funds, the TDCC receives notifications from both bills dealers of cancellation of settlement, then after matching both side's notifications of cancellation of settlement and finding no discrepancy, the TDCC will immediately cancel the given settlement operation and issue notifications.
Article 63-1     The provisions of Articles 62 and 63 apply mutatis mutandis to TDCC handling of settlement procedures for purchases and sales of short-term bills in Central Bank open market operations.
Chapter 10 Presentment and Redemption of Short-Term Bills at Maturity
Article 64     Short-term bills registered or in custody with the TDCC shall be presented for redemption by the TDCC on behalf of the holder at the stated maturity date, in accordance with the following procedures:
  1. Procedures for deposit (or remittance) of redemption funds into the redemption account ("redemption account") established by the TDCC at the physical securities deposit bank:
    1. Commercial Paper II (CP II), foreign-currency commercial paper, and local government bonds: The issuer shall deposit (remit) the redemption funds into the redemption account on the stated maturity date.
    2. Commercial Paper I (CP I) and banker's acceptances: On the second business day prior to the stated maturity date, the TDCC will notify the physical securities deposit bank to present the Commercial Paper I (CPI) or banker's acceptances for exchange, obtain the redemption funds, and remit the funds into the redemption account.
    3. Negotiable Certificates of Deposit (NCD): On the NCD's stated date of maturity, the issuing bank, by means of a scheduled account transfer through the Central Bank Department of Banking, will deposit the redemption funds in the deposit account opened by the physical securities deposit bank at the Department of Banking. The physical securities deposit bank will then deposit the redemption funds in the TDCC's redemption account. When the issuing bank is also the physical securities deposit bank, it shall directly deposit the redemption funds into the TDCC's redemption account on the NCD's stated date of maturity.
    4. Beneficial securities and asset-backed securities: The trustee or the special-purpose company shall deliver the redemption funds distribution statement to the TDCC on the stated maturity date of the security, and shall deposit (remit) the redemption funds into the TDCC redemption account. The TDCC will distribute the redemptions in accordance with the redemption funds distribution statement.
  2. On the stated maturity date of the physical certificates, the TDCC will notify the physical securities deposit bank of the number, redemption amount, tax amount, and additional insurance premium amount due on the holder's short-term bills to be redeemed on that date and other related information, and after completing redemption, will remit the redemption amount, after deduction of taxes and additional insurance premiums, from the TDCC redemption account into the deposit account of the bills dealer, investor custodian bank, or agent clearing bank, and will deduct from the holder's proprietary position the number of certificates redeemed.
  3. After completing the procedures of the preceding subparagraph, the TDCC will notify the bills dealer, investor custodian bank, or agent clearing bank redemptions have been completed.
    The physical securities deposit bank shall remit the tax amounts and additional insurance premiums deducted pursuant to the preceding paragraph, along with the tax amounts and additional insurance premiums collected pursuant to Articles 18, 33, and 67, to the National Tax Administration and Bureau of National Health Insurance by the 10th day of the following month and the end of the following month respectively.
    The provisions of paragraph 1, subparagraphs 2 and 3 apply mutatis mutandis to TDCC handling of redemptions of short-term bills in Central Bank open market operations.
Article 65     (deleted)
Article 66     Procedures for a bills dealer presenting short-term bills underwritten by it for redemption prior to their stated maturity date are as follows:
  1. When the TDCC receives a short-term bills issuer's "Consent to Early Redemption of Short-Term Bills" delivered to it by a bills dealer, it will retain the second copy of the Consent for its records and send the third copy to the physical securities deposit bank to document that the given short-term bills are to be presented for redemption prior to their stated maturity date.
  2. When the TDCC receives notification of a presentment of short-term bills for redemption prior to their stated maturity date, it will immediately amend the redemption date of the given short-term bills, and will present the bills for redemption on the amended redemption date. If payment is not received, it will not return the bills, but will instead automatically reinstate the original stated maturity date of the bills as their redemption date.
    The short-term bills of the preceding paragraph are restricted to Commercial Paper II (CPII) and foreign-currency commercial paper. The provisions of Article 64 will apply mutatis mutandis to their presentment and redemption.
Article 67     Procedures for the renewal and net settlement of Commercial Paper II (CP II) and foreign-currency commercial paper at their stated maturity dates are as follows:
  1. When the TDCC receives a bills dealer's notification of renewal, it will immediately transfer the quantity of commercial paper that has matured from the proprietary position of the bills holder into its pending settlement position, and after carrying out settlement of funds according to the principles listed below, will notify the physical securities deposit bank of the quantity of the commercial paper, the amount payable by the issuer, and related information. If the holder of the bills is not a bills dealer, the TDCC will also notify the holder of the bills or its investor custodian bank:
    1. If there is a net amount payable by the issuer which exceeds the tax payable on the commercial paper at maturity plus the additional insurance premiums and underwriting fee, then the issuer is the net payer, and the net dollar amount payable will be the net of the redemption amount of the commercial paper at maturity and the underwriting amount of the renewed commercial paper (not including related processing fees).
    2. If there is a net amount payable by the holder of the bills which exceeds the tax payable on the commercial paper at maturity plus the additional insurance premiums and underwriting fee, then the holder of the bills is the net payer, and the net dollar amount payable will be the net of the underwriting amount of the renewed commercial paper (not including related processing fees) and the redemption amount of the commercial paper at maturity after deduction of the taxes and additional insurance premiums payable.
    3. If there are net amounts payable by both the issuer and the holder of the bills, the formulas set out in the preceding two items will apply mutatis mutandis to calculation of the net dollar amounts payable by each.
  2. The TDCC will use the following procedures for payment and receipt of funds between the deposit accounts of the bills dealer, investor custodian bank, or agent clearing bank and the physical securities deposit bank at the Central Bank's Department of Banking or the foreign currency clearing bank:
    1. If the issuer is the net payer, then when the TDCC has received confirmation of renewal from the physical securities deposit bank, it will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to deduct the tax amount payable on the commercial paper at maturity plus the additional insurance premiums payable and underwriting fees from the issuer's net funds payment and transfer that amount from the deposit account of the physical securities deposit bank into the deposit account of the bills dealer, investor custodian bank, or agent clearing bank.
    2. If the holder of the bills is the net payer, the TDCC will immediate notify the Central Bank's Department of Banking or the foreign currency clearing bank to transfer the bills holder's net funds payment from the deposit account of the bills dealer, investor custodian bank, or agent clearing bank into the deposit account of the physical securities deposit bank.
    3. If the issuer and the holder of the bills are both required to make payments, then after receiving confirmation of renewal from the physical securities deposit bank, the TDCC will immediately notify the Central Bank's Department of Banking or the foreign currency clearing bank to transfer the amount payable by the holder of the bills from the deposit account of the bills dealer, investor custodian bank, or agent clearing bank into the deposit account of the physical securities deposit bank.
  3. After payment and receipt of funds is completed, the TDCC will deduct the quantity of the commercial paper that has matured from the bills holder's positions pending settlement and transfer the quantity of commercial paper renewed into the bills holder's proprietary position.
  4. After the procedures of the preceding subparagraph have been completed, the TDCC will immediately notify the bills dealer and the bills holder or its investor custodian bank.
Article 68     When short-term bills are not presented for redemption, the TDCC will transfer the number of bills not presented for redemption from the holder's proprietary position into the holder's restricted (not presented for payment) position in accordance with the notification of the bills dealer or the investor custodian bank, and issue notification to the bills dealer or the investor custodian bank when the procedure has been completed.
    An investor not presenting short-term bills for redemption as under the preceding paragraph shall engage its investor custodian bank to carry out the procedure with the TDCC.
    The notice of non-presentment of the preceding paragraph, for Commercial Paper II (CP II) and foreign-currency commercial paper, may be made on the stated maturity date; for beneficial securities and asset-backed securities, 1 business day prior to the stated maturity date; and for other short-term bills, notification shall be made, at the latest, 3 business days prior to the stated maturity date.
Article 69     When an issuer makes a deposit (or remittance) of redemption funds on the stated maturity date in accordance with Article 64, the TDCC shall notify the physical securities deposit bank to carry out the return of the given batch of short-term bills in accordance with the applicable regulations of the Taiwan Clearing House.
    If there is a shortfall in the amount of redemption funds delivered by the issuer, the TDCC shall choose at random which short-term bills from among the given batch will be returned by it, and will notify the physical securities deposit bank to carry out the return of those short-term bills in accordance with the applicable regulations of the Taiwan Clearing House.
    The provisions of the preceding two paragraphs are not applicable with respect to beneficial securities and asset-backed securities.
Article 70     When a dishonor of short-term bills occurs to a particular issuer, the issuer may carry out procedures for recordation of the credit status of the bills with the physical securities deposit bank in accordance with the applicable regulations of the Taiwan Clearing House.
Article 71     When short-term bills (not including beneficial securities and asset-backed securities) are not paid upon redemption at maturity, the TDCC shall deduct from the holder's proprietary position the number of bills not redeemed, and transfer that number into the holder's restricted (returned bills) position, after which it shall issue notifications.
    When insufficient payments are made for beneficial securities and asset-backed securities upon redemption at maturity, the TDCC will deduct from the holder's proprietary position the number of securities reaching maturity, transferring that number of matured securities into the holder's restricted position and then issuing notifications.
Article 72     When the short-term bills of an investor or a bills dealer on which a pledge has been established reach the stated maturity date but the pledge has not been cancelled, the TDCC, on the stated maturity date, will itself undertake cancellation of the pledge on the given short-term bills, and carry out redemption on its own authority.
    The provisions of Article 57 will apply mutatis mutandis to the cancellation of pledge of the preceding paragraph.
    The provisions of Article 64 will apply mutatis mutandis to the redemption procedures of paragraph 1. The TDCC will notify the investor's investor custodian bank or physical securities deposit bank to establish an account in which the redemption funds shall be listed for oversight as restricted funds, and the terms of the original pledged shall be recorded. In the event of non-payment or insufficient payment, the provisions of Article 71 will apply mutatis mutandis.
Article 73     When the short-term bills of a holder that are subject to restricted settlement reach the stated maturity date and the restriction has not yet been lifted, the TDCC, on the stated maturity date, will itself initiate lifting of the settlement restrictions on the short-term bills and carry out redemption on its own authority. In the event of non-payment or insufficient payment, the provisions of Article 71 will apply mutatis mutandis.
    When the short-term bills of a bills dealer, investor custodian bank, or investor that are subject to a settlement prohibition reach the stated maturity date and the prohibition has not yet been lifted, the TDCC will carry out redemption of the bills on its on authority on the stated maturity date, and will carry out subsequent payments of funds and related matters in accordance with the instructions of the enforcing authority or competent authority.
Article 75     When a holder of bills, after the stated maturity date of the bills, carries out deferred presentment and redemption for holdings of short-term bills not yet presented for redemption, then the TDCC, in accordance with the holder's notification, will make a notation of the number of bills for deferred redemption in the holder's restricted (not presented for payment) position, and notify the holder of the bills that the procedure has been completed.
    The notice of deferred redemption of the preceding paragraph, for short-term bills, shall at the latest be made 3 business days prior to the deferred redemption date, and for Commercial Paper II (CP II) and foreign-currency commercial paper, shall at the latest be made 1 business day prior to the deferred redemption date.
    The provisions of Article 64 will apply mutatis mutandis to the TDCC procedures for presentment and redemption carried out by it on the deferred redemption date, provided that after completion of the redemptions, the number of bills redeemed shall be deducted from the holder's restricted (not presented for redemption) position.
Article 76     An issuer may engage the underwriting bills dealer to withdraw the redemption funds for short-term bills issued by it.
    The underwriting bills dealer of the preceding paragraph shall submit an "Issuer's Letter of Authorization to Apply for Withdrawal of Funds from the Redemption Account" and photocopies of documentation of the related deposit or remittance of funds, or photocopies of other documentation, to the TDCC.
    The TDCC, after verifying that the application of the preceding paragraph is correct, will notify the physical securities deposit bank to deposit (or remit) the redemption funds of the issuer, after deducting the relevant processing fees, into the issuer's designated account.
Article 77     A financial institution that serves as a guarantor and applies to withdraw the funds for redemption at maturity that it advanced on behalf of the issuer shall submit photocopies of documentation of the relevant deposit or remittance of funds, or photocopies of other documentation, in an official letter to the TDCC.
    The TDCC, after verifying that the application of the preceding paragraph is correct, will notify the physical securities deposit bank to deposit (or remit) the redemption funds disbursed by the guarantor, after deducting the relevant processing fees, into the guarantor's designated account.
Chapter 11 Reconciliation Procedures for Short-Term Bills
Article 78     The TDCC shall each business day perform internal reconciliation procedures for the accounts of each participant. If any account entry is in error, it shall make an internal adjustment; if reconciliation produces no errors, it shall produce reconciliation statement information for provision to the bills dealers, investor custodian banks, and physical securities deposit banks for purposes of related inquiries.
    When a bills dealer, investor custodian bank, or physical securities deposit bank has any question regarding the reconciliation statement information of the preceding paragraph, it shall notify the TDCC and investigate the reason jointly with the TDCC, after which a correction will be made.
    The provisions of the preceding two paragraphs regarding account reconciliation apply mutatis mutandis to TDCC handling of purchases and sales of short-term bills in Central Bank open market operations.
Article 79     When performing daily account settlements, the TDCC shall provide information on the current day's account transfers of funds at the Central Bank's Department of Banking and foreign currency clearing banks to bills dealers, investor custodian banks, agent clearing banks, and physical securities deposit banks for purposes of verification of deposit accounts at the Central Bank's Department of Banking and foreign currency clearing banks.
    When a bills dealer, investor custodian bank, agent clearing bank, or physical securities deposit bank has any question regarding the account transfer information of the preceding paragraph, it shall notify the TDCC to contact the Central Bank's Department of Banking or foreign currency clearing bank, investigate the reason, and handle as necessary.
Article 80     After daily deposit and redemption procedures have concluded, the TDCC shall verify account information for short-term bills in physical form with the physical securities deposit bank.
Chapter 12 Handling of the Damage, Loss, or Destruction of Short-Term Bills in Physical Form Held in Central Custody
Article 81     When the TDCC deems that there is a defect in associated rights, a related legal dispute, or any other cause for uncertainty with regard to short-term bills in physical form sent for deposit by a bills dealer, it may refuse to accept the bills; if such a defect, dispute, or other cause is discovered after the deposit, it may notify the bills dealer to substitute other short-term bills in physical form which have no such defects.
Article 82     If short-term bills in physical form held in central custody are destroyed or lost after their receipt by the physical securities deposit bank, follow-up legal procedures will be carried out in the courts in accordance with the Taiwan Clearing House Directions for Handling of Stop Payments on Negotiable Instruments.
    On the stated maturity date of the bills, the TDCC shall notify the physical securities deposit bank to set aside, from the redemption funds paid by the issuer, the dollar amount of short-term bills reported lost.
Article 83     If short-term bills in physical form held in central custody are damaged after their deposit, the TDCC shall assist the bills dealer that sent the bills for deposit in taking measures for remediation.
Chapter 13 Internal Control Systems
Article 84     To ensure the effective implementation of each of the provisions of these Rules, the TDCC shall establish an internal control system and internal auditing system, and shall periodically review the systems for means of improvement in order to ensure their effectiveness and applicability.
Article 85     The TDCC's internal control system shall cover internal functions and such procedures and rules as are necessary for all its business activities, and the TDCC shall carry out implementation of a system of oversight over clearing and settlement procedures. The following items shall be included:
  1. Organizational structure and departmental duties.
  2. Principles of TDCC management and its operational policies.
  3. Operating procedures for business, information processing, and administration and key aspects of their control.
Article 86     To ensure the implementation of the internal control system of the preceding article, the TDCC shall adopt enforcement directions for self-auditing procedures, which shall be observed by all TDCC departments.
Article 87     The TDCC shall establish an internal auditing department and one general auditor reporting directly to the board of directors, which shall independently carry out auditing procedures and submit periodic reports to the board of directors and the supervisors.
    The TDCC's internal auditing system shall include the items of each of the following subparagraphs, as a basis for the internal auditing department's auditing of each department's implementation of internal control system provisions and working procedures, and its assessment of the results:
  1. Business management
  2. Information management
  3. Administrative management
Article 88     For the purpose of actual implementation of the internal auditing system of paragraph 2 of the preceding article, the TDCC shall adopt regulations governing its internal auditing system, which shall include the following:
  1. Internal auditing organization and personnel.
  2. Internal auditing procedures and methods.
  3. Business inspection and auditing reports.
  4. Follow-up management in relation to auditing opinions.
Chapter 14 Supplementary Provisions
Article 89     Other directions for business-related matters will be separately adopted by the TDCC.
Article 90     Matters for which these Rules make no provision shall be handled in accordance with other applicable laws and regulations, or TDCC operation directions, guidelines, business manuals or technical manuals.
Article 91     These Rules, and any subsequent amendments, will be implemented following their submission to the competent authority and the Central Bank of the Republic of China for recordation.