Taipei Exchange

Bonds can be bought or sold outright (outright trade) or with a repurchase agreement (repo trade). Outright trade is a long-term investment, while repo trade is a form of short-term credit extension between the buyer and the seller that has the effect of financing.

1. In an outright trade, the ownership of bond changes hand permanently once the settlement formalities are completed, and the accrued interest goes to the buyer from the transaction date on (If transaction and settlement occur on the same day). Most bonds pay interest once or twice a year. Thus if the transaction date falls between two interest payment dates, the buyer must also pay the seller interest that has accrued from the last interest payment date to the transaction date as part of the total purchase price.
2. In a repo trade, the parties agree on a price, transaction period and interest rate, under which the seller “temporarily” sells the bond to the buyer and will repurchase the bond from the buyer after an agreed date. The buyer earns interest on the purchase which is calculated based on the agreed interest rate and the duration of transaction period.

1. 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 the TPEx.
2. 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.

1. 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 the TPEx.
2. 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.
3. International bond trading system: Settlement date is three business days after the trade date.
4. Automated trade matching system: The same as TPEx-listed stocks.