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Article 1     These Directions are adopted pursuant to Article 4 of the Taipei Exchange Rules Governing the Review of Exchange-Traded Fund Beneficial Certificates for Trading on the TPEx.
Article 2     The compiler of the underlying index shall meet all the following requirements:
  1. Has 3 years or more experience in index compilation, and the ability to establish and review index compilation rules, and to maintain or update the index component files on a daily basis. If the index compiler is a securities firm, bank, or an interested party of the issuer, the compiler must establish an internal firewall system for the index compilation rules, file maintenance, and related operations.
  2. Has the ability to calculate real-time index values during trading hours. However, if the index provided is a bond price index, the compiler is required only to have the ability to calculate end-of-day index values. An index provider may sign a contract with a market information supplier for the calculation of index values.
  3. Has the ability to transmit the intraday real-time or end-of-day index values to make them known throughout the market, or enters into contracts with two or more market information suppliers for the transmission of the index value.
Article 3     The components of the underlying index shall satisfy the requirements below:
  1. Meet one or more of the following qualifications:
    1. Be traded on the TPEx.
    2. Be listed and traded on the TWSE.
    3. Be traded overseas on a centralized exchange or an OTC market approved by the competent authority, and conform to the types and scopes of foreign securities in which a securities investment trust fund is permitted to invest.
    4. Be listed and traded on the TAIFEX.
    5. Be futures-related spot instruments that are traded overseas on a futures trading market, or whose futures trading has been approved by the competent authority, and that comply with applicable regulations or rules with respect to the scope of utilization of a futures trust fund.
    6. Other products approved by the competent authority.
  2. Have the following required standard properties:
    1. The index components must be sufficiently dispersed; the component accounting for the highest share of market capitalization of the index may not exceed 30 percent of the total market capitalization of the index, and the cumulative portion of the top five components of the index may not exceed 65 percent of the total market capitalization of the index. However, if the circumstance set out in Article 10-1, paragraph 3, subparagraph 3 of the Regulations Governing Futures Trust Funds exists with respect to a fund due to the features of the underlying index, this restriction does not apply, and also the TPEx may adjust the above percentages depending on the characteristics of the components of the index or market restrictions.
    2. The index components must have a definite degree of liquidity. The TPEx may set required liquidity standards depending on the characteristics of the components of the index.
Article 4      If the underlying index of the ETF for which the issuer is applying for TPEx listing is not compiled by the TPEx solely or in cooperation with another index provider, the issuer shall, before applying to the competent authority for approval or filing with it for effective registration to offer the fund, fill out a written application (see attachment) for a letter of consent from the TPEx and, after paying an application review fee, apply to the TPEx for a letter of consent by submitting the application with the following documents attached:
  1. Photocopy of the index license agreement or letter of intent entered into with the index compiler.
  2. Relevant written documents proving that the index compiler complies with all requirements stated in Article 2 of these Directions.
  3. Relevant written documents proving that the components of the underlying index comply with Article 3 of these Directions.
  4. Analysis of the liquidity of the components of the underlying index and related reference documents.
  5. A detailed description of the method for and basis of the calculation of the underlying index, and the principles for selecting and replacing the components of the underlying index.
  6. Historical archive of the underlying index for at least the most recent one year.
  7. All the channels through which domestic investors, in the future after the ETF has been listed on the TPEx, will be able to access information related to the index, and relevant information.
    For every application for a letter of consent, the TPEx will conduct a review of each of the documents listed in the preceding article, and may require the issuer to provide supplementary information and explanations depending on the circumstances. A letter of consent will be issued to the applicant and copied to the competent authority once the application has been reviewed and passed the review.
    The issuer shall apply to or file with the competent authority for approval or effective registration to offer the fund, within 6 months from the date the issuer receives written notice from the TPEx, provided that if an application for extension with justifiable reason is filed prior to the deadline and the application is approved by the TPEx, a 6-month, one-time-only extension may be made, which shall be filed with the competent authority for recordation.
Article 5     Issuers are required to submit the following documents to the TPEx for recordation before applying to the competent authority for approval or filing with it for effective registration to offer the fund, if the benchmark index to which the ETF is linked is prepared by the TPEx solely or in cooperation with another index provider:
  1. A brief introduction to the qualifications and experience of the ETF manager and the product development team.
  2. An introduction to the underlying index and the licensing agreement for the index.
  3. Plans for the ETF offering:
    1. Minimum asset size during the early stages of the offering.
    2. List of participating securities firms.
    3. The scheduled timeline of the TPEx listing of the ETF offering.
    4. The design and subscription and redemption procedures of the ETF product.
    5. Portfolio management (including a summary description of how the fund will be managed to track index performance, e.g.: full replication, optimized replication, representative sampling, or other method, and the status of simulation of the index by investment in the fund ).
  4. Marketing and promotion plan.
  5. Any other documents requested by the TPEx.
    If there is any deficiency or omission in the information provided under the preceding paragraph, the TPEx may request the issuer to provide relevant supplementary information or explanations.
Article 6     These Directions, and any amendments hereto, shall be implemented from the date of issuance.