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Article 1     These Trading Rules are specially prescribed to maintain orderly trading of the Gold Options Contract ("the Contract") of the Taiwan Futures Exchange Corporation ("TAIFEX"), so as to ensure secure and fair trading of the Contract.
Article 2     Futures commission merchants that engage in trading of the Contract shall observe these Trading Rules in addition to the Futures Trading Act and applicable acts and regulations. Matters on which these Trading Rules are silent shall be handled in accordance with the applicable bylaws and rules, public announcements, and circulars of the TAIFEX.
Article 3     The Contract is abbreviated as "Gold Options" with the ticker symbol "TGO".
Article 4     The underlying of the Contract is 5 Taiwan taels (187.5 grams) of refined gold of 0.9999 fineness.
Article 5     The Contract comes in call options and put options.
    A call option is a contract giving the buyer (holder) the right to purchase from the seller (writer) a specified quantity of the underlying at the strike price, or settle the price difference in cash on the expiration date under specified trading terms.
    A put option is a contract giving the buyer (holder) the right to sell to the seller (writer) a specified quantity of the underlying at the strike price, or settle the price difference in cash on the expiration date under specified trading terms.
Article 6     The settlement value of the Contract on the expiration date shall be equal to the difference between the final settlement price and the strike price, multiplied by the strike price multiplier.
    The strike price multiplier under the preceding paragraphs shall be 50.
Article 7     The premium prices for the Contract shall be quoted in points. The premium multiplier shall be NT$50. The minimum price fluctuations (tick size) for quoting shall be 0.5 point.
Article 8     The daily price limit of the premium for the Contract shall be 15 percent of the previous business day's settlement price of the spot-month NT Dollar-Denominated Gold Futures Contract (TGF).
Article 9     The delivery months for the Contract shall be the six successive even calendar months from the spot month, concurrently listed for trading. The last trading day for the Contract of any delivery month shall be the third to last business day of the month in which the Contract reaches expiration. Trading of the contract reaching expiration shall cease at close of market on the last trading day, and the next business day following the last trading day shall be the expiration day of the delivery month in which the Contract expires.
    If the last trading day referred to in the preceding paragraph falls on a domestic holiday or a trading holiday of the London gold market or if trading cannot proceed on that day due to a force majeure event, the next business day shall be the last trading day, provided that the TAIFEX may adjust the last trading day as warranted by the circumstances.
    The expiration day of a delivery month shall be the first trading day for the next delivery month.
    The TAIFEX may change the delivery months, first trading days, last trading days, and expiration days referred to in the preceding three paragraphs when it deems necessary after reporting to and receiving approval from the competent authority.
Article 10     To list series of new expiration months, the TAIFEX shall list one contract with an at-the-money strike price set based on the previous business day's settlement price of the spot-month NT Dollar-Denominated Gold Futures Contract (TGF) rounded down to the nearest multiple of the strike price interval. Based on the above-stated strike price interval, five other series shall be listed, each with in-the-money and out-of-the-money strike prices at intervals of the strike price interval.
    The "strike price interval" referred to in the preceding paragraph shall be determined as follows:
  1. When the strike price is less than NT$2,000, the interval is NT$25.
  2. When the strike price is NT$2,000 or greater but less than NT$4,000, the interval is NT$50.
  3. When the strike price is NT$4,000 or greater, the interval is NT$100.
    During the duration of a contract, whenever there exists a total of less than five contracts with a strike price either above or below the current day's settlement price of the spot-month NT Dollar-Denominated Gold Futures Contract (TGF), then on the next business day contracts with new strike prices shall be introduced sequentially based on the strike price interval until the total number of contracts with a strike price above or below the previous business day's settlement price of the spot-month NT Dollar-Denominated Gold Futures Contract (TGF), as the case may be, reaches five.
    In addition to listing contracts with different strike prices in accordance with the preceding paragraph, the TAIFEX may, depending on market conditions, introduce contracts with other strike prices.
Article 11     The trading days for the Contract shall be the same as the business days of the TAIFEX. The trading hours are 8:45 am to 4:15 pm. When exceptional circumstances occur that affect trading of the Contract, however, the TAIFEX may halt trading as dictated by the circumstances at the time, and immediately report to the competent authority for recordation.
    The trading days and trading hours referred to in the preceding paragraph are subject to change with the approval of the competent authority.
Article 12     Trading orders for the Contract are matched by call auction at the opening of market, and then by continuous auction during market hours.
Article 13     When accepting an order to buy the Contract, a futures commission merchant shall first collect from the buyer the premium required for the total quantity on the buy order.
    When accepting an order to sell the Contract, a futures commission merchant shall first collect from the seller the initial margin required for the total quantity of the sell order. The futures commission merchant shall credit the proceeds of the premium received from selling the Contract to the Client Margin Account of the said customer after transaction, and from the day of the transaction until the liquidation of the position shall mark to market the margins required for the short position of the customer on a daily basis. A short position that is created to offset an earlier long position does not require additional margin.
    If the balance in the customer's margin account falls below the required maintenance margin, a futures commission merchant shall promptly issue a margin call to the customer and demand the deposit of cash to cover the difference between the margin account balance and the required margin for all open positions within a prescribed time period. If the customer fails to meet the margin call within the prescribed time limit, the futures commission merchant may proceed to liquidate the customer's open positions.
    The initial margin and the maintenance margin referred to in the preceding two paragraphs shall not be lower than the initial margin and maintenance margin requirements announced by the TAIFEX.
    The initial margin and maintenance margin announced by the TAIFEX shall be based on the clearing margin calculated according to the Taiwan Futures Exchange Corporation Methods and Standards for Receipt of Clearing Margins plus a percentage prescribed by the TAIFEX.
Article 14     Before expiration, a holder of the Contract may liquidate the contractual rights and obligations by selling or buying back part or all of his positions in the exchange.
Article 15     The daily settlement price of the Contract shall be determined based on the following:
  1. The last transaction price on the given day; or
  2. To be determined by the TAIFEX if there is no transaction price in the last 15 minutes before the close of market on the given day or the settlement price referred to in the preceding subparagraph is deemed unreasonable.
Article 16     The final settlement price of the Contract shall be based on the LBMA Gold Price AM announced by ICE Benchmark Administration Limited (IBA) on the same calendar day as the last trading day and the spot foreign exchange rate for NT dollars to US dollars at 11 am announced by Taipei Forex Inc. on the last trading day, after conversion for weight and fineness. The formula for its calculation is as follows:

    (LBMA Gold Price AM / 31.1035 * 3.75 * 0.9999 / 0.995) * NTD/USD spot rate at 11am.

    In the event that the LBMA Gold Price AM or the spot foreign exchange rate for NT dollars to US dollars at 11 am announced by Taipei Forex Inc. referred to in the preceding paragraph has for any reason not yet been generated before the TAIFEX executes procedures for settlement, the final settlement price shall be determined in accordance with the “Taiwan Futures Exchange Corporation (TAIFEX) Operational Guidelines for Determining the NT Dollar Denominated Gold Futures and Options Contract Final Settlement Price.

    *Note: One fine troy ounce is 31.1035 grams. One mace is 3.75 grams. The LBMA Gold Price is the price of refined gold of not less than .995 fineness. The underlying object of this contract is gold of .9999 fineness.
Article 17     The 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 final settlement price and the strike price.The trader with open positions may also, pursuant to the Taiwan Futures Exchange Operational Key Points of Clearing and Settlement for Futures Commission Merchants and Clearing Members, apply for delivering or receiving the physical gold that is registered to and regulated by Taipei Exchange.
    An in-the-money position referred to in the preceding paragraph means a call option position when the final settlement price is higher than the strike price, or a put option position when the final settlement price is lower than the strike price. Writers with in-the-money positions shall pay the difference described in the preceding paragraph, while buyers are entitled to receive the difference.
Article 18     Buyers who intend to exercise the Contract shall make a declaration on the expiration date. An in-the-money position, however, shall be deemed automatically exercised if the difference between the final settlement price and the strike price 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 19     All exercised options are assigned to the holders of short positions by the TAIFEX through an automatic random procedure.
Article 20     The total open positions in the Contract held on either the long or short side of the market by a trader at any time may not exceed the limits announced by the TAIFEX.
    The "total open positions on either the long or short side of the market" under the preceding paragraph means the total positions of call options bought and put options sold or the total positions of call options sold and put options bought.
    Every three months, or as occasioned by market conditions, the TAIFEX will announce the applicable position limits referred to in paragraph 1 according to the levels given below, based on the higher of the daily average trading volume or open interest in the Contract for that period, with the benchmark set at 5 percent thereof for individuals and 10 percent thereof for institutional investors. However, the lowest position limit shall be 2,000 contracts for natural persons, and 6,000 contracts for institutional investors:
  1. When the benchmark is 2,000 or more contracts, the position limit shall be the benchmark rounded down to the nearest integral multiple of 500 contracts.
  2. When the benchmark is 5,000 or more contracts, the position limit shall be the benchmark rounded down to the nearest integral multiple of 1,000 contracts.
  3. When the benchmark is 10,000 or more contracts, the position limit shall be the benchmark rounded down to the nearest integral multiple of 2,000 contracts.
  4. When the benchmark is 20,000 or more contracts, the position limit shall be the benchmark rounded down to the nearest integral multiple of 5,000 contracts.
    The aggregate total of a futures proprietary merchant's open positions in the Contract shall be limited to three times the institutional investors limit as given in paragraph 3. The TAIFEX, however, may adjust this limit for market makers of the Contract as it deems necessary in view of market conditions.
    When the TAIFEX examines the applicable position limit levels, if the daily average trading volume or open interest for a given period, as compared to that at the time of the previous adjustment, does not increase or decrease by more than 2.5 percent, no adjustment shall be made even if the level for adjustment has been reached.
    Any raising of the position limit will take effect from the TAIFEX announcement date; any lowering of the position limit will take effect from the expiration of the second nearby month contract already listed as of the announcement date. The TAFIEX, however, 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 limits may be held until the expiration date with respect to that position, provided that no new position may be added until the lowered limits have been complied with.
    The combined aggregate of open positions in the Contract held in omnibus accounts are not subject to the limits in paragraph 3, with the exception of undisclosed omnibus accounts, which accounts are subject to the limits for institutional investors.
    In addition to conforming to the provisions of this Article, the limits on open positions in the Contract held by traders shall also conform to the Taiwan Futures Exchange Corporation Rules Governing Surveillance of Market Positions.
Article 21     Futures commission merchants shall limit the size of orders they accept for the Contract to no more than 200 contracts per order.
    The TAIFEX may adjust the limit on the maximum number of contracts traded per order as set out in the preceding paragraph in view of market trading conditions.
Article 22     Where any circumstance exists requiring suspension of trading or delisting of the Contract as stipulated in Article 31 of the Operating Rules of the Taiwan Futures Exchange Corporation, the TAIFEX shall make a public announcement to the effect 30 days prior to implementation.
    All open positions shall be liquidated by the announced implementation date of suspension of trading or de-listing. Any positions still open on the implementation date shall be settled at the settlement price for the implementation date.
Article 23     These Trading Rules and any amendments hereto shall be implemented following ratification by the competent authority.