| Article 3 |
A customer conducting bond RP/RS transactions with a securities dealer for the first time shall enter into a Master Contract for Bond RP/RS Transactions therewith, annexing a photocopy of the national ID card or business license. The customer is not required to open an account.
The Master Contract for Bond RP/RS Transactions under the preceding paragraph shall be subject to separate determination by the GTSM. |
| Article 6 |
The ownership of the underlyings of a bond RP/RS transaction shall belong to the buyer before the repurchase date. Where a buyer acquires book-entry central government bonds in a bond RP/RS transaction, and where the agreed period is less than one month, the buyer may, as stipulated in the Addendum to the Master Contract for Bond RP/RS Transactions, further sell such bonds outright to others.
As regards bonds traded under the preceding paragraph, a bond passbook issued by a custodian institution designated by the securities firm or a certificate of RP/RS transactions of book-entry central government bonds issued by a book-entry central government bond clearing bank may be used in lieu of delivery, or delivery may be made by transferring such bonds into buyer's account through book-entry transfer, or a bond passbook issued pursuant to the requirements of and reviewed by the Taiwan Depository & Clearing Corporation (hereinafter, "TDCC") may be used in lieu of delivery.If delivery is made by transfer registration through a book-entry central government bond clearing bank, the dollar amount in the government bond account designated by the buyer shall be recorded additionally.
When a stipulation is made under paragraph 1 allowing further sale of book-entry central government bonds outright to others, the interest rate on the RP/RS transaction shall be divided, based on the respective nature of each transaction, into the interest rate on cash financing and the fee rate for loaning of bonds, wherein the dollar amount at maturity shall be calculated as the initial dollar amount plus the interest on cash financing and minus the fee for loaning of bonds.
The Addendum to the Master Contract for Bond RP/RS Transactions under paragraph 1 shall be subject to separate determination by the GTSM. |
| Article 7 |
Where bonds under an RP/RS transaction are to be delivered through book-entry transfer, upon settlement of the payment by the buyer, the securities dealer shall notify the TDCC to transfer the bonds from the seller's account to the buyer's account, or a bond passbook issued pursuant to the requirements of and reviewed by the TDCC may be used in lieu of physical delivery.
As to an RP/RS transaction between two securities dealers, the notice under the preceding paragraph shall be made by the seller securities dealer. Where the seller securities dealer notifies the TDCC of the buyer's custodial book-entry account number so that the buyer's corresponding securities firm or custodian institution may enquire inquire about, print out and/or check the content of the bond passbook through a computer connected to the TDCC, the TDCC's review of the bond passbook under the preceding paragraph is not required. Where an RP/RS transaction of book-entry central government bonds is settled by transfer registration, the securities dealer shall, either on its own behalf or as per instruction by the customer, request a book-entry central government bond clearing bank to transfer the bonds in question from the seller's government bond account to that of the buyer. |
| Article 7-1 |
A securities dealer using a bond passbook in lieu of physical delivery under the preceding article shall observe the following provisions:
1. The bond passbook shall be signed or sealed by the rights owner and then delivered to and retained by the customer.
2. The securities dealer shall not withdraw the physical bonds before expiration of the RP/RS transaction, except as applied by or agreed in writing by the customer and where the TDCC's requirements are satisfied.
3. The passbook may be cancelled at expiration of the RP/RS transaction, except where the repurchase payment has not been made. When giving the bond passbook to the customer, the securities dealer shall make known the provisions of this paragraph.
4. To carry out early termination of the contract, the bond passbook retained by the customer shall be taken back. If the passbook is not taken back in due time, a certificate of payment to the customer (except where a new transaction is undertaken with the customer under the original terms and conditions and where a separate passbook is issued, during which period no funds are returned) and a facsimile copy of undertaking signed by the customer to indicate acknowledgement thereof shall be obtained before such early termination may be made; nevertheless, the passbook and the original undertaking shall be delivered to the TDCC within five business days after the early termination day. |
| Article 11 |
Where the regulatory capital adequacy ratio of a securities firm falls under Article 65 of the Regulations Governing Securities Firms, the aforementioned limit on the outstanding balances of RP and RS transactions may be lowered to 3.5 times its net worth; where the regulatory capital adequacy ratio of the securities firm falls under Article 66 of the Regulations Governing Securities Firms, the GTSM may, considering the actual situation, further lower the aforementioned multiplier of outstanding balances of RP and RS transactions. However, if its statements filed on a monthly basis show that the reason for such adjustment has been extinguished, the multiplier may be adjusted according to the extent of the extinguishment.
If, according to the Rules Governing Early Warning of Overall Operational Risk of Securities Firms, the bond business ratio of a securities dealer has reached the specified early warning threshold and an early warning message appears, for which a GTSM audit finds any matter requiring improvement, but the securities dealer fails to make improvement or provide explanation within a specified time limit, the GTSM may lower the transaction multiplier as applied to the securities dealer under paragraph 1.
The agreed repurchase or resale period for a bond RP or RS transaction may not exceed one year.
With the exception of a financial institution concurrently engaging in securities business and being subject separately to relevant requirements prescribed by the competent authority with jurisdiction over the relevant business segment, the ceiling on the cumulative balance of a securities dealer's outright sales to others, under Article 6, of bonds that it acquires through RP/RS transactions may be set at the securities dealer's net worth or the total of its proprietary positions in bonds, whichever is higher.
When conducting RP/RS transactions of bonds with a customer, a securities dealer shall make sure that the transfer of payments on the transactions are made only with the name of the customer and shall on the relevant date of resale transfer the dollar amount at maturity of an RP/RS transaction of bonds to, and only to, the customer. |
| Article 13 |
A securities dealer may add additional or supplementary provisions to the Master Contract and/or Addendum for Bond RP/RS Transactions it enters into with a customer under Article 3, paragraph 2 and Article 6, paragraph 4, provided that the provisions thus added may not lead to a result less favorable to the investor. |
| Article 14 |
These Rules, and any amendments hereto, shall take effect upon ratification by the competent authority after passage by the board of directors of the GTSM. |
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