Article 2
Before trading emerging stocks, a securities broker or securities dealer (including a recommending securities firm) shall perform account opening operations according to the following procedures:
1. Sign a clearing and settlement agreement with TDCC, for the purposes of performing the clearing and settlement of cash and securities.
2. Sign an account opening agreement with TDCC, open a book-entry depository account (“depository account”), and become a participant, for the purposes of performing securities settlement. If it has already opened an account, use the existing account.
3. A recommending securities firm shall open a segregated market maker account (A/C No.: XXXT-6666667) under its depository account, for the purposes of conducting book-entry transfer operations of emerging stocks.
4. Sign an account opening agreement with a bank and open a cash settlement account, for the purposes of performing cash settlement. If it has already opened a cash settlement account, it may use the existing account.

Article 4
A securities broker or securities dealer may perform an “Emerging Stock Information Query” transaction (transaction code: 575) to query information on an emerging stock and its recommending securities firm.

Article 5
For an emerging stock deposited by a securities broker or securities dealer, the net settlement method may be used for sale of the stock after it has been delivered to TDCC.
For an emerging stock that is deposited by a securities broker or securities dealer, the use of the real-time gross settlement method for sale of the stock, pledging, and other book-entry operations of the stock, may begin from the second business day after the emerging stock has been delivered to TDCC. However, this restriction does not apply in any of the following circumstances:
1. The amount of the deposited stock is less than NT$10 million, and the issuing company has authenticated the stock, and the broker or dealer submits an “Application for Release of Control on Emerging Stock”.
2. The amount of the deposited stock is NT$10 million or greater, and the broker or dealer submits an “Application for Release of Control on Emerging Stock”, and it is delivered to TDCC before 11 a.m., and TDCC has forwarded it to the issuer and the operations for striking the names of the previous owners have been completed.
3. The issuer has not completed authentication or striking of the names of the previous owners, but, after obtaining TDCC’s permission, the broker or dealer deposits a bond against defective title, and submits an “Application for Release of Control on Emerging Stock”.
Except as provided in the preceding two paragraphs, the deposit and withdrawal of emerging stock shall be conducted in accordance with the current provisions governing such operations.
The amount of the deposited stock under paragraph 2 shall be calculated by multiplying the average trade price of the preceding business day as disclosed by the TPEx on the day the stock is delivered times the number of shares of the stock deposited.

Article 6
If a securities firm applies to TDCC to make book entries for stock that the securities firm has delivered to TDCC but of which the authentication or striking of the names of the previous owners has not been completed, the securities firm, until the issuer has stricken the names of the previous owners, shall deposit a bond against defective title with TDCC, the amount of which shall be calculated, for the number of shares for which the application is made, on a daily basis, based on the stock’s price on the date of commencement of TPEx-trading or on the average trade price of the preceding business day, as disclosed by the TPEx.

Article 10
After a negotiated trade is executed by a securities firm, the TPEx shall give real-time notification to TDCC of the itemized trade information and the settlement method.
Upon receiving the trade information transmitted by the TPEx, and after comparing the itemized trade information of the buyer and the seller and confirming the accuracy of the balance sold, TDCC will earmark the stocks being sold. If the recommending securities firm has a shortfall in the amount of the earmarked stocks at the trade cut-off time under the rules of the TPEx, TDCC will notify that securities firm and the TPEx to handle the matter.
The recommending securities firm and the securities broker/dealer shall perform a “Trade and Clearing and Settlement Details Query” transaction (transaction code: 576) to query the itemized trade information and the status of comparison.
In the trade information for any single trade, if the trade amount is less than NT$1, clearing and settlement will not be conducted. For a trade amount greater than NT$1, any fractional remainder of less than NT$1 shall be rounded down to the nearest NT$1.

Article 11
If, before clearing and settlement have been completed, because of an error in a trade price quote, click-and-trade trade, or brokerage trade, a securities firm needs to perform an account change operation such as trade cancellation, out-trade handling, or account number correction, it shall report to the TPEx before 3:30 p.m. on the trade date, and TDCC, upon receiving the account change information transmitted by the TPEx, will adjust the trade information.
If, before clearing and settlement have been completed, because of operational requirements, a securities firm needs to change the settlement method from real-time gross settlement to net settlement or from net settlement to real-time gross settlement, the buy-side and sell-side securities firms, before 3:30 p.m. on the trade date, shall perform a “Change Settlement Method Notification” transaction (transaction code: 584) to notify TDCC.
When a recommending securities firm conducting trading by the net settlement method wishes not to net buy and sell trades, it shall, before 3:30 p.m. on the trade date, perform an “Emerging Stock Recommending Securities Firm Non-Netting Information File Creation” transaction (transaction code: C24) to notify TDCC. If the recommending securities firm gives notification late or does not give notification, it will be deemed to be netting buy and sell trades.
The recommending securities firm and the securities broker/dealer shall perform a “Trade and Clearing and Settlement Details Query” transaction (transaction code: 576) to query the adjusted trade and earmarking details.
When a recommending securities firm conducts the netting of buy and sell trades in net settlement, and when a securities firm offsets buy and sell trades for the purposes of handling an out-trade, it shall perform an “Emerging Stock Netting Information Query” transaction (transaction code: C25) to query the information on the netting of the buy and sell trades through its market maker account or out-trade account.

Article 11-1
When a brokerage trade is executed by a securities firm through an omnibus trading account, the securities firm, before 6 p.m. on the first business day after the trade date, shall report the allocated trade details to the TPEx, and TDCC, upon receiving the allocation information transmitted by the TPEx, will adjust the trade information.
The securities firm shall perform a “Securities Firm Emerging Stock Account Adjustment Report Query” transaction (transaction code: C91) to query the details of the account adjustment, and furthermore perform an “Emerging Stock Omnibus Trading Account Information Query” (transaction code: C90) and double-check the allocation details.

Article 12
A securities broker shall perform account reconciliation and daily settlement in accordance with the following procedures:
1. The securities broker on the trade date shall perform a “Trade and Clearing and Settlement Details Query” transaction (transaction code: 576) and print a “Trade and Clearing and Settlement Information Query Report” to reconcile the information with the recommending securities firm.
2. The head and branch offices of the securities broker may respectively perform a “Trades - Compilation Information Query” transaction (transaction code: 182) and print a “Buy Trades and Sell Trades - Compilation Information Query Form” to reconcile accounts, and use it to prepare a compilation report of payments and receipts of cash for settlement.
3. The head office of the securities broker shall, at 4:30 p.m., perform a “Settlement Statement/Clearing and Settlement Statement Information Query” transaction (transaction code: 185) and print a “Clearing and Settlement Statement for OTC-Traded Emerging Stocks (Pending)”, and after conducting account reconciliation and verification with all of its branches, perform a “Settlement Statement Information Summary” transaction (transaction code: 186) to perform account settlement, and print a “Clearing and Settlement Statement for OTC-Traded Emerging Stocks (Cleared)” for the purposes of conducting the operations for settlement of funds and securities.
4. If, after the completion of account settlement, the securities broker needs to make any new adjustment to trade information, it shall first notify the recommending securities firm, and, before TDCC conducts account settlement, perform a “Reopen Settlement Statement Information Summary” transaction (transaction code: 189), and after making the account adjustment, once again perform a “Settlement Statement Information Summary” transaction (transaction code: 186) to complete account settlement.

Article 13
A securities dealer (including a recommending securities firm) shall perform account reconciliation and daily settlement in accordance with the following procedures:
1. The securities dealer on the trade date shall perform a “Trade and Clearing and Settlement Itemized Information Query” transaction (transaction code: 576) and print a “Trade and Clearing and Settlement Information Query Report” and perform account reconciliation.
2. After the securities dealer has completed account reconciliation, it shall, after 4:30 p.m. on the trade date or on the next business day, perform a “Settlement Statement /Clearing and Settlement Statement Information Query” transaction (transaction code: 185) and print a “Clearing and Settlement Statement for OTC-Traded Emerging Stocks (Cleared)” for the purposes of conducting the operations for settlement of funds and securities.

Article 16
TDCC will conduct stock settlement operations for recommending securities firms and securities brokers/dealers in accordance with the following procedures:
1. Before 10 a.m. on the second business day after the trade date, TDCC will conduct account debiting of sold stocks based on the clearing and settlement statement. However, in the case of recommending securities firms engaging in proprietary trading of emerging stocks through their market maker account, or securities firms executing trades for the purposes of disposing of out-trades, TDCC only needs to debit the difference by which the total quantity sold exceeds the total quantity purchased.
2. On the second business day after the trade date, once all securities firms with cash payable have completed payment, TDCC will transfer the purchased stocks. However, in the case of recommending securities firms engaging in proprietary trading of emerging stock through their market maker account, or securities firms executing trades for the purposes of disposing of out-trades, TDCC only needs to transfer the difference by which the total quantity purchased exceeds the total quantity sold.
A securities firm may perform a “Disclose Total Query” transaction (transaction code: 803) to query the status of the transfer of purchased stock.

Article 17
When a customer of a custodian sells stock, the account transfer operations may be handled by one of the following procedures:
1. On the first business day after the trade date, in accordance with the TDCC Directions for the Handling by Participants and Custodians of Trade Settlement Data Transmission Operations, the custodian may give notification for transfer for settlement of the sale, and upon receiving notification, TDCC, on the second business day after the trade date, will transfer the stocks to the depository account opened by the customer at a securities firm.
2. On the second business day after the trade date, the custodian may perform a “Transfer of Securities on Deposit” transaction (transaction code: 130), for transfer of the stock from its customer depository account to the depository account opened by the customer at a securities firm.
When a customer of a custodian buys stock, the securities firm shall, after the purchased stock has been transferred to the customer account under its depository account, conduct account transfer of the purchased stock in accordance with the TDCC Directions for the Handling by Custodians of Central Custody and Book-Entry Operations for Securities.

Article 18
A securities firm shall, on the first business day after the trade date, perform a “Depository Account Sale Shortfall Information Query” transaction (transaction code: A68) to print a “Depository Account Sale Shortfall Information Query Form.” If a shortfall exists, it shall ensure that, by 10 a.m. on the second business day after the trade date, a corresponding transfer is carried out to make up the shortfall.
A securities firm shall, on the second business day after the trade date, perform a “Depository Account Settlement Shortfall Information Query” transaction (transaction code: 168) to print a “Depository Account Settlement Shortfall Report” to query whether a shortfall exists, and shall complete settlement before 10 a.m.
If a securities firm fails to complete settlement within the time required under the preceding paragraph, or if the issuer gives notification that any securities that the securities firm sells by the method set out in Article 5, paragraph 1 are forged or altered, TDCC will not perform clearing and settlement for those securities transacted by that securities firm, and will adjust the trade information of the trades of those securities executed on the trade date by the counterpart securities firm, and prepare a new clearing and settlement statement, and notify the relevant securities firms and the TPEx.
If, after TDCC has carried out the clearing and settlement adjustment under the preceding paragraph, it occurs that the sum of the securities already held and those purchased by the recommending securities firm is insufficient to cover the amount sold, TDCC will not perform clearing and settlement for the securities sold by the recommending securities firm, and will adjust the trade information by the mutatis mutandis application of the preceding paragraph, and prepare a new clearing and settlement statement, and notify the relevant securities firms and the TPEx.
After receiving a notification from TDCC under the preceding two paragraphs, the securities firm shall perform a “Trade and Clearing and Settlement Details Query” transaction (transaction code: 576) and print a “Trade and Clearing and Settlement Information Query Report” to confirm the adjusted information, and perform a “Clearing and Settlement Information Adjustment Attachment Query” transaction (transaction code: 577) , and print a “Clearing and Settlement Information Adjustment Attachment”. If there is any shortfall payable, the securities firm shall, before 11:30 a.m. on the second business day after the trade date, remit the cash to the TDCC-designated cash account at the clearing bank.

Article 18-1
When, after TDCC has adjusted the trade information and prepared a new clearing and settlement statement in accordance with the preceding paragraph, the securities firm reports delayed clearing and settlement of the sell trade, it shall follow the following procedures:
1. Report to the TPEx the need to conduct delayed clearing and settlement of the sale of securities, and the TPEx will notify TDCC of the reported information.
2. After receiving the stocks to be sold from the customer, submit to TDCC an “Application by Participant to Conduct a Restricted Online Transaction” stamped with the original signature/seal of record.
After TDCC has reviewed and verified the information and released the securities, it will notify the securities firm to perform a “Transfer of Securities on Deposit” transaction (transaction code: 130) to transfer the sold securities from the seller’s depository account to the buyer’s depository account.

Article 19
When the buyer and seller complete cash payment/receipt on their own initiative on the trade date, the operational procedures are as follows:
1. Based on the trade information transmitted by the TPEx, and after the sell-side securities firm has performed a “real-time gross settlement transfer notification” transaction (transaction code: 583), TDCC will transfer the stocks from the seller’s depository account to the buyer’s depository account.
2. The buy-side and sell-side securities firms shall perform a “Trade and Clearing and Settlement Details Query” transaction (transaction code: 576) and print a “Trade and Clearing and Settlement Information Query Report” to query the status of the stock transfer.

Article 20
When the buyer and seller authorize TDCC to complete cash payment/receipt on their behalf on the trade date, the operational procedures are as follows:
1. The buy-side securities firm shall, before 2 p.m. on the trade date, perform an “Emerging Stock Delivery-Versus-Payment (DVP) Information Notification/Adjustment” transaction (transaction code: 491) to notify TDCC of the itemized DVP information, and remit the cash payable to the sell-side securities firm to the TDCC-designated cash account at the clearing bank.
2. In accordance with the information notification sequence set out in the preceding subparagraph, once the amount of cash remitted is greater than or equal to the amount specified in the notification, TDCC will transfer the stock from the seller’s depository account to the buyer’s depository account, and remit the cash payable to the sell-side securities firm to the cash settlement account designated by it.
3. Before TDCC has performed the stock transfer operations, the buy-side securities firm may perform an “Emerging Stock DVP Information Notification/Adjustment” transaction (transaction code: 491) to notify the TDCC to adjust the DVP information sequence.
4. The buy-side and sell-side securities firms shall perform a “Trade and Clearing and Settlement Details Query” transaction (transaction code: 576) and print a “Trade and Clearing and Settlement Information Query Report” to query the status of the stock transfer.
5. The buy-side securities firm shall perform an “Emerging Stock DVP Information Query” transaction (transaction code: 492) and print an “Emerging Stock DVP - Itemized Report” and an “Emerging Stock DVP - Cash Payable by Buyer - Itemized Report” to query the status of payment of the cash payable.
6. The sell-side securities firm shall perform an “Emerging Stock DVP Information Query” transaction (transaction code: 492) and print an “Emerging Stock DVP - Cash Receivable by Seller - Itemized Report” to query the status of transfer of the cash receivable.

Article 21
When a customer of a custodian buys stock, TDCC, on the trade date, will transfer the stock from the recommending securities firm’s depository account to the depository account opened by the customer at a securities broker, and the securities broker shall perform a “Transfer of Securities on Deposit” transaction (transaction code: 130) to transfer the purchased securities to the depository account opened by its customer at the custodian.

Article 22
When, after clearing and settlement has been completed, there is a need to make an account adjustment, the securities firm shall follow the following procedures:
1. Report to the TPEx the account change operation such as trade cancellation, out-trade handling, or account number correction to be conducted. The TPEx will report the account change information to TDCC.
2. Submit to TDCC an “Application by Participant to Conduct a Restricted Online Transaction” stamped with the original signature/seal of record.
After TDCC has reviewed and verified the information and released the securities, it will notify the securities firm to perform a “Transfer of Securities on Deposit” transaction (transaction code: 130) or a “Corrective Transfer of Securities on Deposit” transaction (transaction code: 131), and perform the account adjustment operations.

Article 23
When a securities firm’s customer defaults on clearing and settlement obligations, the securities firm shall handle the default by one of the methods set out in the subparagraphs below:
1. The securities firm completes clearing and settlement on the customer’s behalf:
A. After the securities firm reports to the TPEx in writing, the TPEx will perform an “Emerging Stock Default Report” transaction (transaction code: 621) to notify TDCC.
B. TDCC, based on the TPEx’s notification, will transfer the securities purchased by the defaulting customer from the defaulting customer’s account to the securities firm’s default processing account.
2. Cancel the trade
A. After the buy-side and sell-side securities firms report to the TPEx in writing, the TPEx will perform an “Emerging Stock Default Report” transaction (transaction code: 621) to notify TDCC.
B. TDCC, based on the TPEx’s notification, will transfer the purchased stocks into the account of the customer that sold them.

Article 24
When the recommending securities firm or securities broker/dealer fail to complete cash settlement, TDCC, on the second business day after the trade date, will not perform clearing and settlement for the trade information of the securities firm that failed to complete cash settlement, and will adjust the trade information of all trades executed by the counterpart securities firm on the trade date, and prepare a new clearing and settlement statement, and notify the relevant securities firms and the TPEx.
If, after TDCC has carried out the clearing and settlement adjustment under the preceding paragraph, it occurs that the sum of the securities already held and those purchased by the recommending securities firm is insufficient to cover the amount sold, TDCC will not perform clearing and settlement for the securities sold by the securities firm, and will adjust the trade information by the mutatis mutandis application of the preceding paragraph, and prepare a new clearing and settlement statement, and notify the relevant securities firms and the TPEx.
After receiving a notification from TDCC under the preceding two paragraphs, the securities firm, beginning from 10:30 a.m., shall perform a “Clearing and Settlement Information Adjustment Attachment Query” transaction (transaction code: 577) and print a “Clearing and Settlement Information Adjustment Attachment” for the purposes of performing cash settlement.

Article 25
When the securities firm performs post-adjustment operations for the settlement of securities and cash, if there is any shortfall payable according to the “Clearing and Settlement Information Adjustment Attachment”, the securities firm shall, before 11:30 a.m. on the second business day after the trade date, remit the cash to the TDCC-designated cash account at the clearing bank.
After receiving payment of any post-adjustment shortfall payable, TDCC, beginning from 11:30 a.m., will perform the operations for the payment of the cash receivables of all securities firms and of cash that is returnable to securities firms according to the “Clearing and Settlement Information Adjustment Attachment”.
Once the securities firms have completed the settlement of cash payable, and after TDCC has written off the stock traded between the securities firm for which clearing and settlement could not be performed and its counterpart securities firm, TDCC will perform the transfer of the securities purchased by all securities firms.
A securities firm may perform a “Disclose Total Query” transaction (transaction code: 803) to query the status of transfer of purchased stocks.

Article 28
On a day on which work proceeds as scheduled for the entire day for all government and educational institutions in Taipei City, and on which negotiated trading of OTC-traded emerging stock furthermore remains unsuspended for the entire day, for securities firms in cities and counties unaffected by the disaster/election/recall which are open for business as usual, the clearing and settlement of cash and securities that is due to be handled on that day shall be handled as usual.
On a day on which work proceeds as scheduled for the entire day for all government and educational institutions in Taipei City, and on which negotiated trading of OTC-traded emerging stock furthermore remains unsuspended for the entire day, with respect to securities firms that are located in cities and counties in which work is cancelled for all government and educational institutions for the entire day or the morning of the day due to disaster/election/recall, the following principles shall be followed regarding the clearing and settlement of cash and securities that is due to be handled by the securities firms in those areas on that disaster/election/recall day:
1. If the clearing and settlement of cash that is due to be handled by a securities firm in such an area will be completed on its behalf by its head office or a branch office designated thereby which is located in an area unaffected by the disaster/election/recall, that handling office, before 8:30 a.m., shall execute a “Notice of Completion of Settlement for Emerging Stock Trading on Behalf of Another” transaction (transaction code: 585) to notify TDCC. If notification cannot be given to TDCC in time, or if the head office and branch offices are unable to complete settlement on its behalf, or the head office and branch offices are all located in the affected area, the clearing and settlement that is due to be handled on that day for the securities firm’s sell-side trades shall be handled as usual. The clearing and settlement of cash and securities for its buy-side trades and the counterpart securities firms thereof that is due to be handled on that day shall be postponed accordingly, and TDCC will adjust the clearing and settlement information.
2. TDCC will prepare new clearing and settlement information, and will impose a retention lien on stocks that were purchased on the second business day before the current day by those securities firms in the disaster/election/recall area whose clearing and settlement of cash and securities due to be handled on that day is postponed.
3. A securities firm performing clearing and settlement, beginning from 9 a.m., shall perform a “Clearing and Settlement Information Adjustment Attachment Query” transaction (transaction code: 577) and print a “Clearing and Settlement Information Adjustment Attachment”, and perform the payment of cash payable before 10 a.m.
4. Once all securities firms with cash payable have completed payment, TDCC will transfer the stocks that they bought on the second business day before the current day.
5. A securities firm, after completing the clearing and settlement of cash on behalf of another, may perform a “Securities Retention Lien” transaction (transaction code: 503) to perform the operation to impose a retention lien on securities bought by a customer on the second business day before the current day, and perform a “Retention Lien Information Query” transaction (transaction code: 505) and print an “Emerging Stock Securities Retention Lien Itemized Statement”.
6. For securities firms in the affected area that conduct business as usual, operations shall be handled as usual on that day for trade information notification, comparison, adjustment, account reconciliation, daily settlement, and real-time gross settlement stock clearing and settlement operations.

Article 29
A securities firm located in an area described in paragraph 2 of the preceding article shall proceed as follows on the first business day after the disaster/election/recall day.
1. For any clearing and settlement of cash that was postponed in accordance with subparagraph 1 of paragraph 2 of the preceding article, the securities firm shall handle its settlement together with the clearing and settlement of cash and securities that is due to be handled on the current day.
2. The securities firm shall perform a “Clearing and Settlement Information Adjustment Attachment Query” transaction (transaction code: 577) and print a “Clearing and Settlement Information Adjustment Attachment” for the purposes of conducting the operations for settlement of funds and securities.
3. Once all securities firms with cash payable have completed payment, TDCC will transfer the stocks that were bought on the second business day preceding the current day and the stocks of which delivery by securities firms in the disaster/election/recall area was postponed.
4. A head or branch office that completes clearing and settlement on behalf another may, in accordance with the status of payments by the securities firm customers in that area, perform a “Retention Lien Release” transaction (transaction code: 504) to notify TDCC for performance of the operations for transfer of the stocks bought by customers on the second business day before the disaster/election/recall day, and perform a “Retention Lien Release Information Query” transaction (transaction code: 506) and print an “Emerging Stock Market Securities Retention Lien Release Itemized Statement”.

Article 31
When a securities firm defaults in trading on a central or OTC securities market, TDCC will not perform clearing and settlement for that day’s trade information of that defaulting securities firm.
The securities firm authorized to handle settlement matters on behalf of the defaulting securities firm may perform a “Trade and Clearing and Settlement Itemized Information Query” transaction (transaction code: 576) and print a “Trade and Clearing and Settlement Information Query Report” to confirm the itemized information on trades by customers of the defaulting securities firm, and the authorized securities firm may separately negotiate trade execution prices with the recommending securities firm for those trades before performing clearing and settlement.

Article 32
Any matters on which these Directions are silent shall be governed by the TDCC Operating Rules and other applicable provisions.