Taipei Exchange

• Over The Counter: Proprietary trade
• Electronic Bond Trading System(EBTS): Proprietary trade
• International Bond Trading System: Proprietary trade
• Automated Trade Matching System: Proprietary trade, brokerage trade

A customer who buys or sells bonds at a securities firm through over the counter or through the TPEx’s EBTS only needs to provide a photocopy of the identification card or registration certificate without opening an account.

A customer conducting bond RP/RS transactions with a securities dealer for the first time shall enter into a Master Contract for Bond RP/RS Transactions and has to prepare his/her seal as well as identity documents for the application process. If the customer is a natural person, consent for providing the customer’s name and national identity number to the relevant custodian institution is required.

If a negotiated trade involves a convertible corporate bond, exchangeable corporate bond or bond with warrant, the central securities depository account and fund transfer account opened by the customer are not restricted to the securities firm of that trade and its designated financial institution.

In principle, unless it is otherwise provided, bonds on TPEx may be traded over the counter (outright trade and repo trade), and may be traded through the following systems depending on the type of bond:

• Electronic Bond Trading System (outright trade and repo trade): Central government bonds, local government bonds, corporate bonds, and financial debentures.
• International bond trading system (outright trade and repo trade): Foreign currency denominated international bonds.
• Automated trade matching system (outright trades): Convertible corporate bonds, exchangeable corporate bonds, and corporate bonds with warrants.

• Over The Counter:
  • 9:00am-3:00pm on business days
• Electronic Bond Trading System:
  On business days
  • Outright trade: 9:00am-1:30pm
  • Designated bond repo trade: 9:00am-1:30pm, 2:00-3:00pm
  • General collateral repo trade: 9:00am-9:30am
  • Comparison system: 1:30pm-4:00pm
• International bond trading system:
  On business days
  • Outright trade: 9:00am-1:30pm
  • Repo trade: 9:00am-1:30pm, 2:00pm-3:00pm
• Automated trade matching system
  • 9:00am-1:30pm on business days

Bond trades are cum-coupon that the buyer pays the seller an agreed purchase price plus accrued interest. Accrued interest shall be calculated from (and inclusive of) the date on which the interest accrues to (and exclusive of) the date of clearing and settlement based on the actual number of days. The interest of a repo trade is calculated based on the actual number of days on the basis of a 365-day year. For foreign currency denominated international bonds, please see its prospectus or TPEx announcement.

In the event the settlement of a bond trade is delayed due to a natural disaster or other force majeure events, interest for the period of delay shall be calculated.

• Over-the-Counter (OTC)
  • Quotation: Yield or price per $100.
  • Tick Size: 0.0001% (yield) or $0.0001 (price).
  • Minimum Trading Units:
    • NTD Bonds: NT$10,000 par value.
    • Foreign currency denominated international bonds for retail and professional investors:
      • $1,000: USD, EUR, SGD, AUD, NZD, GBP, CHF, CAD.
      • $10,000: RMB, ZAR, HKD.
      • $100,000: JPY.
      • The denomination in other currencies will be set separately by TPEx.
    • Foreign currency denominated international bonds for professional investors only:
      • $100,000: USD, EUR, SGD, AUD, NZD, GBP, CHF, CAD.
      • $1,000,000: RMB, ZAR, HKD.
      • $10,000,000: JPY.
      • The denomination in other currencies will be set separately by TPEx.
• Electronic Bond Trading System (EBTS):
  • Quotation: Yield or price per $100.
  • Tick Size: 0.0001% (yield) or $0.0001 (price).
  • Minimum Trading Units:
    • Computerized Negotiation: NT$50 million par value.
    • Comparison System: NT$100,000 par value.
• International Bond Trading System
  • Outright Trades:
    • Quote: Price per $100.
    • Tick Size: $0.01.
    • Minimum Trading Units:
      • $100,000: USD, EUR, SGD, AUD, NZD, GBP, CHF, CAD.
      • $1,000,000: RMB, ZAR, HKD.
      • $10,000,000: JPY.
      • The denomination in other currencies will be set separately by TPEx.
  • Repo Trades:
    • Quote: Interest rate.
    • Tick Size: 0.0001%.
    • Minimum Trading Units:
      • $100,000: USD, EUR, SGD, AUD, NZD, GBP, CHF, CAD.
      • $1,000,000: RMB, ZAR, HKD.
      • $10,000,000: JPY.
      • The denomination in other currencies will be set separately by TPEx.
• Automated Trade Matching System
  • Quotation: Price per $100.
  • Tick size (Price-Based):
    • Under $150: $0.05
    • $150 – $999: $1.00
    • $1,000 and above: $5.00
  • Minimum Trading Units: $100,000 par value.

• Capital gain tax: Exempted
• Business tax: Exempted.
• Interest income: Subject to income tax.
  1. Individuals: Starting on January 1, 2007, interest earned by individuals from government bonds, corporate bonds or financial debentures will be subject to tax withholding (10%) in accordance with Article 88 of the Income Tax Act. Starting on January 1, 2010, interest earned by individuals from bond repo trades (net amount of sale price at maturity in excess of the original purchase price) shall be subject to tax withholding (10%) in accordance with Article 88 of the Income Tax Act.
     The income mentioned above will not be included in the gross consolidated income, nor eligible for the rules on special deduction for savings and investment (that the tax withheld cannot be credited as deduction for savings and investment). That is, the income is taxed separately.
  2. Corporate entity: On an accrual basis, income received by a profit-seeking enterprise from interests on government bonds, corporate bonds, and financial debentures shall be calculated in accordance with the holding period, the face value and interest rate of bonds. The tax on interest income calculated in accordance with the prescribed withholding rates may be deducted from the amount of income tax payable for the annual income tax return of the profit-seeking enterprise. The gains or losses derived from the bond transaction that is purchased between two interest payment days and sold before the next interest payment day shall be the net amount of the sale price minus the purchase price and interest income. Holding of bonds issued by a foreign financial institution in Taiwan is not subject to any tax.
     From January 1, 2010, interest derived from repo (RP/RS) trade (the net amount of the sale price at maturity in excess of the original purchase price) shall be subject to 10% tax withholding in accordance with Article 88 of the Income Tax Act, and added to the amount of income of the profit-seeking enterprise. The tax withheld may be deducted from the amount of income tax payable for the annual income tax return of the profit-seeking enterprise.
• Securities transactions tax:
  • Government bonds, NTD-denominated foreign bonds (exempted bonds): Exempted.
  • Corporate bonds, financial debentures, convertible corporate bonds and international bonds: Exempted.

• Proprietary trade: No fees.
• Brokerage trade: The same as fees for TPEx-listed stocks.

• The clearing and settlement of TPEx trading shall be affected on a cash payment and actual delivery basis. (Rules Governing Securities Trading on TPEx §34)
• Trades conducted by price negotiation at the business place of a securities firm may be settled in a manner as agreed by the parties to the transaction. Trades executed through the Electronic Bond Trading System or the International Bond Trading System shall be settled in accordance with the rules of TPEx.
• For RP/RS trades conducted by price negotiation, a bond passbook issued by a custodian institution or a certificate of RP/RS transaction issued by a book-entry central government bond clearing bank may be used in lieu of delivery. However, the qualification of the custodian institution, and the format or content of custody contract, bond passport or certificate of transaction shall comply with the TPEx requirements.

• Price negotiation at securities firms: A securities firm shall complete payment settlement with the customer within two business days after the trade date (T+2). The payment and settlement of international bonds shall be completed within three business days after the trade date, or within seven business days after trade date with special approval from TPEx.
• Electronic Bond Trading System: Settlement date is two business days after the trade date. But general collateral repo trades must be settled on the trade date.
• International bond trading system: Settlement date is three business days after the trade date.
• Automated trade matching system: The same as TPEx-listed stocks.

• Price negotiation at securities firms: The party not in breach should seek recourse from the party in breach on its own.
• Electronic Bond Trading System: Default will be overseen in accordance with the Taipei Exchange Rules Governing the Electronic Bond Trading System.
• International bond trading system: Default will be managed in accordance with the Taipei Exchange Rules Governing Management of Foreign Currency Denominated International Bonds.
• Automated trade matching system: Default will be overseen the same as TPEx-listed stocks.