Negotiable Trades effected Over-the-Counter

For Negotiable Trades effected Over-the-Counter, TDCC offers the following services:

Introduction

A、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:

a. 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.

b. 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.

B. Repo Trade

a.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).

b.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

a. 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.

b. 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.

D. Book-entry Operation for Securities Acquired by Direct Assignment, Inheritance or Gift

Investors, who withhold the fixed income securities and would like to apply for Securities Acquired by Direct Assignment, Inheritance or Gift , can submit supporting documents and tax information (tax payment or tax exemption) to their broker (TDCC participant) for application. After TDCC receives the above information from the participant, TDCC sends the information to issuer or its transfer agent for examination and title transfer. The issuer or its transfer agent then notifies TDCC to transfer the securities to the depository account of the assignee, heir or donee.

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