Clearing and settlement operation

(1) Transactions between bill dealers and investors

1.Investors must open a book-entry account with a clearing bank and use a NTD demand deposit account opened with the clearing bank for payment settlement. 2.Once an investor completes a negotiated trade of short-term bills with a bill dealer, the bill dealer will inform TDCC of the settlement information. 3.The investor shall confirm the settlement with the clearing bank in person or via other services provided by the clearing bank (e.g. voice or online banking). 4.After the settlement is confirmed, TDCC will inform the CBC or FISC to proceed with payment settlement. 5.TDCC will transfer the bills after the CBC or FISC has completed the payment operation.

(2) Transactions between bill dealers

1.After verifying the settlement notice from buying and selling bill dealers, TDCC will inform the Department of Banking of the CBC or FISC to proceed with payment settlement. 2.TDCC will transfer the bills after the CBC or FISC has completed the payment operation.

(3)Batch net settlement (BNS)

Settlement procedures for trades in the primary and secondary markets, including a bills dealer's trades with an investor, firm commitment underwriting, or initial purchases of short-term bills, and which employ batch net settlement (BNS) shall be as follows: 1.When the TDCC receives a BNS settlement notification from a bills dealer, it will transfer the seller's short-term bills into its pending settlement position and immediately notify the trading counterparty to undertake confirmation. After confirmation has been made, the TDCC will immediately notify the Central Bank or the FISC to carry out payment and receipt of funds.After payment and receipt of funds is completed, the completed notifications will be issued. 2.Settlement procedures for trades between bills dealers employing BNS are as follows: After the TDCC receiving settlement notifications from the buying and selling bills dealers and compared them and found no discrepancy,the TDCC will transfer the seller's short-term bills into its pending settlement position, and after calculation of the net amount of funds for the batch settlement, and except in the case of internal receipt and payment of funds by the same bank or a net amount of zero funds due, it will immediately notify the Central Bank or the FISC to carry out payment and receipt of funds. Once payment and receipt of funds is completed, transfer of bills will be completed.