Bills/Bonds Services

1.Short-Term Bills Service

2.Taiwan Bills Index Rate (TAIBIR)

3.NTD-Denominated Bonds

Introduction

1.Short-Term Bills Service

TDCC provides various services for the Negotiable Certificates of Deposit (NCD), Commercial Paper I (CPI), Commercial Paper II (CPII), Banker's Acceptance (BA), Beneficial Securities and Asset-Backed Commercial Paper (ABCP), Municipal Notes and other short-term bills approved by the competent authorities. TDCC's services include physical securities depository, registration and book-entry delivery for dematerialized securities, clearing and settlement for both payments and securities, book-entry service for pledged bills, presentation notice and redemption for maturity bills.

Bills dealers and investors executes trading, settlement and pledge operations via TDCC's transmission interface.Settlement service for bill dealers and investors' transactions is as follows:

(1)Investors must open a book-entry account with a clearing bank and use a NTD or other currencies 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.Taiwan Bills Index Rate (TAIBIR)

Domestic interest rate derivatives of Taiwan, such as IRS, Notes Issuance Facilities (NIF), Fixed Rate Commercial Paper (FRCP), loans, bank debentures, corporate bonds and other financial products are mostly related to floating rate in general. The floating rate is linked to the known as standard short-term bills interest rate index.

TAIBIR is acknowledged by The International Swaps and Derivatives Association (ISDA) in December 2010 and has been written in the ISDA 2006 Definitions.

Ⅰ.Construction and Operation of TAIBIR lists as follows:

The contributing panels of TAIBIR consists 20 members of BFA. Addressing the panel’s contributors in particular.

(1)Bill Finance Corporation is the most qualified contributors.

(2)Banks or securities firms engage significant.

(3) Transaction volumes of over certain % in short-term bills market.

(4)Well-capital Local Commercial banks.

(5)Any foreign bank that has conducted short-term bills transactions in the most recent year.

A.Index Rate Events Panel contributors shall input rates as follows: (1)Terms are categorized in period of days: 10, 20, 30, 60, 90, 120, 150, 180, 365 days.

B.Primary and Secondary Index Rate a. Primary market: Bid Rate. b. Secondary market: Bid/Offer of short term bills.

C.The System TDCC provides the on-going transmitting system in order to make the current development most cost efficient.

D.Input Rate Schedule Panel contributors shall input rates by 9am to12 noon.

E.Index Compilation Fixing rates are calculated at 11am every business day, per fixing rate daily in both index rates listed below: (1)TAIBIR 01 (Primary market fixing rate). (2)TAIBIR 02 (Secondary market fixing rate).

F.Calculation Fixing rate is calculated in the result of easy average after elimination on the one-fifth of the highest and lowest inputs.

Ⅱ. On-Line Monitoring

Daily real-time on-line surveillance mechanism will be conducted by TDCC, and the fixing rate and the relative information will be delivered to FSC, the Central Bank and BFA for reference. The rates input process will be actively monitored everyday. Where discrepancies are identified, BFA identify the discrepancies and the alert with warning or replace the institution if it is unable to offer a reasonable explanation for its rates. The relative information will be reported to FSC and the Central Bank.

Reference (1)Announcements on TDCC website(www.tdcc.com.tw). (2)Contact information: 886-2-2719-5805

3.NTD-Denominated Bonds Services Overview

Ⅰ.Negotiable Trades effected Over-the-Counter

For Negotiable Trades effected Over-the-Counter, TDCC offers Outright Trade and repo trades services.

Ⅱ.Interest and Redemption Payment services

a. When the issuer deals with the payment of interest and redemption, TDCC will create a list of holders on behalf of the issuer by taking the following steps:

(1) TDCC compiles a list of bond holders on Day T-1 of the day of interest and redemption payment.

(2) On the payment day, TDCC notifies the paying agents of the list via e-mail. For the de-livery of the bonds principal payments, TDCC will debit the balance in the holder’s depository account and send the statement of change in balance to the issuers for verification. For the delivery of the bonds of interest and redemption payments to the paying agents in the last term of such payments, TDCC also notifies the issuers of the statement of change in balance for verification.

(3) The paying agents calculate the principal/interest payment according to the list of bond holders provided by TDCC.

(4) The paying agents shall transfer the principal/interest payment, deducting the tax and transfer charges, into the holders’ payment accounts on the day of interest and redemption.

b.For issuers entrusting TDCC as their paying agent to deal with principal/interest redemption, the operation procedures are stated as following:

(1) The issuers remit payments for principal/interest redemption into the virtual accounts of the management banks. (2) TDCC notifies the banks of the holders’ information on Day T-1 of the day of interest and redemption payment.

(3) When the remitted payment is adequate, the bank will notify TDCC, which will send a message of fund transfer to the Central Bank of China (Taiwan) Interbank Funds Transfer System. Once the transfer is completed, TDCC will notify dealers and clearing banks to process the principal/interest redemption and book-entry transfer. At the same time the management banks transfer principal / interest to the holders according to the aforesaid list.

(4) When the remitted payment is inadequate, TDCC shall debit holders’ depository accounts according to the amount of payment without principal and notify the dealers and the clearing banks of the issue.

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