Laws and Regulations Database of the Central Bank of the Republic of China(Taiwan)

14. Counterparties of repo transactions include banks, bills finance companies, Agricultural Bank, Chunghwa Post, securities firms designated by the Bank as dealers for open market operations (hereafter referred to as "designated dealers"), and other financial institutions approved by the Bank.

Financial institutions, mentioned in the preceding paragraph, that are not proprietaries will entrust designated dealers to issue confirmations for repos transactions undertaken.

15. Eligible bonds (bills) for repo transactions include CDs, government issued or guaranteed bonds, bank debentures, bank accepted or guaranteed bills.

The Bank may buy eligible bonds (bills) in a repo transaction at a discount.

The tenor of a repo transaction shall not be longer than 30 days.

16. Repo transactions of bonds (bills) will be conducted in the following means:

(1) By application: The Bank shall set the repo date, eligible collaterals, tenor, yield and other relevant conditions with reference to the funding situation of the banking system and interest rate level in the financial market and announce the information through the Online Operation System or by other means.

(2) By auction: The Bank will announce the repo date, eligible collaterals, tenor, total offering amount, maximum allocation for each individual bid and other relevant information via press release before the Bank conducts the auction.

Between the announcement of repo transactions and the notification of application or auction results, the Bank reserves the right to cancel or modify the terms and conditions of repo transactions.

17. In consideration of the funding situation in the financial markets and the monetary policy issues, the Bank shall decide the amount of repo transactions that each financial institution can undertake.

The number and amount of transactions undertaken by individual financial institution are as follows:

(1) For repo of the same tenor and with the same category of eligible collaterals, a financial institution shall only undertake one transaction.

(2) The amount of each transaction shall be in multiples of NT$5 million.

18. The repo transactions auction shall be made on a multiple yield basis. The allocation of repo transaction shall depend on the yield submitted by individual financial institutions. The determination of auction allocation is based on the following rules:

(1) For bids higher than the minimum bid yield set by the Bank, rates ranked from high to low.

(2) If the remaining amount offered by the Bank is insufficient to lower bids of the same rate, the allocation will be pro rata based on the sizes of the bids submitted. NT$5 million is the smallest allocation unit.

The number, amount and yield bid by each financial institution are as follows:

(1) A maximum of five bids for each tenor of repo and with the same categories of eligible collateral.

(2) The total value of all bids submitted for each tenor of repo shall not exceed the total amount and shall be in multiples of NT$5 million.

(3) The bidding yield shall be limited three digits after the decimal point.

19. The Bank will notify each applicants or bidders the approved amount or the allocation and the allocation information of repo transactions through the Online Operation System or by other means.

20. Financial institutions shall be in accordance with the approved or allocated amount, prepare a repurchase agreement, trade confirmation, and other relevant documents to settle DVP with the Department of Banking in the following methods:

(1) The financial institution shall transfer the eligible bonds (bills) into a Bank designated account before a designated time on the trade date, and the Bank will transfer the proceeds into the account of the financial institution at the Department of Banking.

(2) The Bank will deduct the amount from the account of the financial institution opened at the Department of Banking at a designated time on the repo maturity date as agreed, and return the previously delivered bonds (bills) to the financial institution.

(3) For a financial institution which does not have an account at the Department of Banking, it may submit a document issued by another financial institution which agrees to make or collect payment on its behalf, and with the consent of the Bank, make or receive repo transactions related payments through the account of the agent opened at the Department of Banking.

21. If a financial institution has contingent liquidity needs under extraordinary economic or financial circumstances, the financial institution may apply to the Bank to undertake repo transactions, and proceed with the transaction after the Bank deliberates the situation and gives its consent.

The counterparty, tenor, manner and operation of repo transactions mentioned in the preceding paragraph are not subject to the restrictions set forth in Direction 14, Paragraph 3 of Direction 15, or Directions 16 to 18 herein.