Registration and Book-entry Delivery of Bonds Issued in Dematerialized Form

TDCC offers the following registration and book-entry delivery of bonds issued in Dematerialized form

Introduction

A.Registration and Book-entry Delivery of Bonds Issued in Dematerialized Form

a.Operation Principles

1.The issuer shall sign a participant agreement, submit a seal card (in triplicate), and open an account with TDCC to become a participant, for registering and executing the book-entry delivery of bonds.

2.When applying for the book-entry operation of dematerialized bonds, the issuer shall carry out related transaction to apply for the registration regarding the issuance and payment of securities, and the registration of securities issuing in dematerialized form before the delivery date.After reviewing the application before the delivery date, TDCC will then register the total issuance quantity, and issue a Certificate of Registration of Dematerialized Issuance to the issuer.

3.The issuer shall submit an application and transaction to TDCC, with a digital medium containing a beneficial owners list for the book-entry, before the delivery date. It should process the relevant transactions and notify TDCC on delivery date to transfer the bonds into investors’ accounts.

4.The issuer may entrust TDCC to collect payments for offering and issuance.

b.Operating Procedure

1.Registration

(1) When applying for the book-entry operations for dematerialized bonds, the issuer shall apply to TDCC with an online transaction before the delivery date.

(2) Once the application is reviewed and confirmed, TDCC will issue a Certificate of Registration of Dematerialized Issuance to the issuer.

(3) If the bond is specified as having a floating interest rate in the regulations governing the issuance of securities, the issuer shall apply to TDCC for amendment within three business days from when the rate has been changed.

2.Book-entry Delivery

(1) Before the delivery date, the issuer shall carry out related transactions and send to TDCC a digital medium containing a book-entry delivery beneficial owners list.

(2) Before the delivery date, the issuer who needs to change the content of the digital medium shall carry out related transactions and submit the revised content to TDCC.

(3) On the day of book-entry delivery, the issuer notifies TDCC of transfer-ring the bonds into investors’ securities or bonds accounts through the operation of “notification of book-entry delivery.”

(4) On the next business day of delivery, TDCC creates a list of transferred bonds and sends it to the participant and the issuer for review. The participant and the issuer shall notify TDCC if there is any discrepancy.

3.The issuer may entrust TDCC to collect payments for offering and issuance by taking the following steps:

(1) The issuer notifies TDCC of information regarding to the book-entry delivery.

(2) TDCC notifies subscribers of checking the content of issuance.

(3) If the subscriber is a trader with an account in the Central Bank of China (Taiwan), TDCC will notify the Central Bank of fund transfer through the Interbank Funds Transfer System. If the subscriber is a trader without an account in the Central Bank (such as securities firms), it has to open an account with a clearing agent that handles the transfer through the agent’s Central Bank account. After the payment is debited from such account, TDCC will notify the Central Bank of fund transfer through the Interbank Funds Transfer System. If the subscriber is an investor, TDCC will notify the Central Bank of fund transfer through the Interbank Funds Transfer System after the clearing bank debits the payment.

(4) After the confirmation of the fund transfer completed by the Central Bank, TDCC will implement book-entry to the investor’s passbook.

(5) The issuer notifies TDCC to transfer the payments for issuance into its account.

B.Over-the-Counter market

a.Payment and clearing in the Electronic Bond Trading System

1.For participants having bonds payable, TDCC transfers the bonds payable from the participant’s depository account to TPEx’s settlement account upon the participant’s notice.

2.For participants having bonds receivable, TDCC transfers the bonds receivable from TPEx’s settlement account to the participant’s depository account upon TPEx’s notice.

3.Participants may inquire about the bond payment through TDCC’s online network and make up the difference if necessary.

b.Negotiated trades of bonds

1.Outright Trade

For negotiating the bond trades between investors and participants or between participants traded over-the-counter, or between the buyers and sellers handle the payment by themselves, the settlement and book-entry transfer are carried out according to the following procedure:

(1) For negotiated bond trades between participants or between investors and participants traded over-the–counter, the seller’s participant notifies TDCC of the transfer data via computer linkage. TDCC checks the available balance in seller’s account and then transfers the bonds from seller’s account into buyer’s account.

(2) For the negotiated repo trades between investors and participants or between participants taken place over-the-counter, the seller participant applies to TDCC for issuance of bond passbook via computer linkage. TDCC checks the seller’s account balance and make adjustment accordingly. Following, seller’s participant prints out the passbook and deliver to the buyer. The passbook without buyer’s depository account could be printed without TDCC’s verification.

2. Repo Trade

(1) Delivery via book-entry transfer

I.The seller participant notifies TDCC of transfer data via computer linkage.

II. TDCC checks the available balance in seller’s account and then transfers the bonds from seller’s account (participant’s own ac-count or its customer’s account) into buyer’s account (participant’s proprietary account or its customer’s account).

III. When the date of repo trade expires, the buyer participant notifies TDCC via computer linkage to transfer the bonds into seller’s ac-count (participant’s proprietary account or its customer’s account).

(2) Delivery via issuance of bond passbook

For the negotiated repo trades between investors and participants or between participants taken place over-the-counter, the payment of transaction will be handled by themselves, which the delivery via issuance of bond passbook is under the following procedure:

I. The seller participant applies to TDCC for issuance of passbook via computer linkage.

II. TDCC checks the available balance in seller’s account, and then make adjustment accordingly (increase the amount recorded under participant’s passbook account and deduct the same from its available balance).

III. When the date of repo trade expires, seller participant notifies TDCC to cancel the bond passbook after it has paid the buyback proceeds

VI. If the repo trade is terminated before the expiration date, the seller participant shall submit an affidavit statement and the original bond passbook to TDCC for cancellation of passbook. If the original bond passbook is not available, the seller participant must have the investor sign the affidavit statement and present proof of proceeds payment.

C.Entrusts TDCC to conduct DVP settlement

  1. When TDCC collects the payment on behalf of traders of negotiated bond trades (OP/OS, RS/RP, premature termination and RS/RP exercise) between investors and dealers taken place over-the-counter, the DVP settlement is done as the same as the short-term Bills’ DVP operation.

  2. When TDCC collects the payment on behalf of traders of negotiated bond trades (OP/OS, RS/RP, premature termination and RS/RP exercise) between bond dealers taken place over-the-counter, the DVP settlement is done as the same as the short-term Bills’ DVP operation.

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