Taipei Exchange

Trading of TPEx main board stocks has improved in quality and quantity over the years, and call (put) warrants are introduced to provide investors with a greater variety of means to enhance performance or hedge their positions. 

Please refer to Article 2 of Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.

Primary market: During the sales period prior to a warrant’s listing, an investor may register for subscription to a warrant issuer.
Secondary market: After a warrant is listed, the investor may use the existing account to trade; nevertheless, in order to ensure the investor’s comprehensive understanding of risks thereof, the investor shall fill out the risk disclosure statement while engaging in the first trade.

Please refer to Article 3 of Regulations Governing the Issuance of Call (Put) Warrants by Issuers.

A domestic securities firm applying for a qualification recognition as a call (put) warrant issuer shall comply with Article 3, paragraph 1 and Article 5, paragraph 2 of the Regulations Governing the Issuance of Call (Put) Warrants by Issuers (“The Regulations”). A foreign securities firm applying for a qualification recognition as a call (put) warrant issuer shall comply with Article 3, and Article 5, paragraphs 3 and 4 of The Regulations.

Call (put) warrants for TPEx listing approval shall comply with Article 11 of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.

Currently, the underlying for call (put) warrants on the Mainboard shall comply with Article 10 of the Taipei Exchange Rules Governing the Review of Call (Put) Warrants for Trading on the TPEx.

“Over-the-counter derivatives” means trading contracts and structured instruments, whose value, in conformity with regulations or common practice on domestic or foreign over-the-counter (OTC) markets, is derived from an interest rate, exchange rate, equity, index, commodity, credit event, or other interest, or from a combination thereof.

Basic OTC derivatives include forwards, swap, options or combinations of two or more contracts above, or structured products linked to a fixed-income instrument.

A structured product is an investment tool that combines a fixed-income instrument or gold with a leverage contract to link investment return to the performance of the underlying asset.

Structured products can be classified into principal- protected and non-principal protected.

1. Principal protected notes
   A fixed-income instrument with a derivative that links investment return to the performance of the underlying asset and allows investors to seek stable return under limited risks by sacrificing partial principal or interest on the fixed-income instrument. Principal protected notes usually have long-term maturities and are suitable for more conservative and prudent investors in long-term asset allocation.
2. Non-principal protected notes
   A fixed-income instrument combined with the sale of a financial derivative to obtain a return higher than that of regular bonds with income from the sale of the derivative. However the investor may lose principal on the investment or is required to convert the note into equities or other assets. Non-principal protected notes are suitable for investors with sufficient understanding of the product and able to tolerate loss of principal or the outcome of converting the note into the underlying asset.

“Leverage contract” is a financial derivative contract entered by and between a leverage transaction merchant and a customer regarding the trading of derivatives of commodities, currencies, securities, interest rates, indexes, or any other interests conducted at the business place of the leverage transaction merchant pursuant to the regulations or practices set forth by domestic or foreign futures markets, in which one party undertakes to pay a specific percentage of an amount or to obtain a specific credit line granted by the other party, and the parties will offset their obligations and rights by settling the difference in price or delivering the underlying interest within a specified future time period pursuant to the terms under the contract. Simply put, a leverage contract involves the trading of over-the-counter financial derivatives operated by a leverage transaction merchant (a futures commission merchant who operates concurrently as a leverage transaction merchant).

FX margin means the customer pays a specific percentage of an amount as security deposit or obtains a specific credit line granted by the leverage transaction merchant and the parties engage in foreign exchange transactions within the limit of security deposit paid and credit line granted pursuant to the terms under the contract.