Taiwan Depository & Clearing Corporation

The TPEx emerging stock market officially adopted the new T+2 DVP settlement system upon resumption of trading on February 15, 2016 after the Chinese New Year, in order to provide convenient services that are in line with the global settlement standards, and to improve the market efficiency, ultimately attracting more active investors. Under the new system, settlement will take place at 10:00 A.M. of the second business day after trade date (i.e. T+2) on a delivery versus payment (DVP) basis for both emerging stock investors and brokerages.

In the past, investors who bought (or sold) emerging shares were required to deliver the payment (or equity) to a brokerage before T+1 12:00 P.M. Brokerages with payable emerging shares had to lodge the equities to the TDCC before T+1 4:00 P.M., while the due monetary payment had to be delivered to the TDCC before T+2 10:00 A.M.

The TWSE and TPEx general stock markets both switched to the T+2 DVP settlement system in February 2009. Given different settlement deadlines, FINI investors were sometimes confused with the settlement instructions when trading emerging stocks. To enhance the safety of the settlement operations, the TDCC had engaged in discussions about the emerging stock market also adopting the T+2 DVP settlement system.

The open fund beneficiary certificates and spot gold, which were listed on the TPEx market in October 2014 and January 2015, respectively and have been settled as emerging shares, will also switch to the T+2 DVP system. With the TPEx emerging stock market aligning with the TWSE and TPEx general stock markets in terms of the settlement system, FINI investors, brokerages and the central securities depository will have more time to communicate the transfer operations with each other, reducing the risks of errors owing to different time requirements. In addition, investors will be allowed more flexibility in fund utilization as they will have one extra day to prepare the due payment for buying emerging stocks, like they do for TWSE and TPEx general stock investments. This will likely enhance their willingness to participate in securities trading. Meanwhile, brokerages and the central depository will also enjoy more convenience in settlement management, transaction checking and transfer operations.