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[Law Basis]
[Print]
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Chapter 3 Sale of Central Government Bonds
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6.Central government bonds are issued principally through auctions, and are open to
dealers only. However, the Bank may notify dealers to handle placements, when
necessary.
Individuals and juristic persons may engage dealers to submit bids under the dealers’
names. The small investor may apply to buy Central government bonds in accordance
with the offering announcement provided by the Ministry of Finance and the Directions
for Consigned and Sub-consigned Sales of Central Government Bonds by the Chunghwa
Post Co., Ltd.
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7.Either multiple or single price or yield method may be adopted for auctioning
central government bond.
Multiple price and yield bids are classified as either competitive or
noncompetitive:
（1）Competitive bids will be accepted successively, starting with those at the
price higher than the minimum price or lower than the maximum acceptable
yield set by the Ministry of Finance. Where bid prices are equal and the
remainder of the issue is insufficient to meet demand, allocations will be
made pro-rata to the bid amounts. The prices for awarded bonds are
calculated at the price or the yield they bid.
（2）Noncompetitive bid will be calculated as the weighted average price or yield
of accepted competitive bids . Where the amount of subscription exceeds the
publicly announced amount of the issue, distributions will be made pro-rata
based on the subscription amount.
The awards referred to in the preceding Paragraph will be in multiples of NT$50
million.
All single-price or yield bids will be competitive; the determination and
proration of awards shall be handled according to the previous two paragraphs
applied mutatis mutandis. The price for awarded bonds is calculated at the
lowest price or the highest yield of the accepted bids.
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8.If multiple-yield method is used for interest-bearing bonds auctions, yield is
set at increments of 0.125%, equal to or closest to, but lower than the weighted
average yield of the winning bids.
If single-yield method is used for interest-bearing bonds auctions, yield is set
at increments of 0.125%, equal to or closest to,but lower than the highest yield
of the winning bids.
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9.Dealers will be restricted to submitting one tender for each offering, on which
there may be no more than ten competitive bids, and to only one subscription
hrough a non-competitive bid. Competitive bidding and non-competitive
subscriptions may use only the tender document prescribed by the Treasury
Department, which shall be placed in a sealed envelope for submission.
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10.Tenders shall be filled out in accordance with the following provisions:
（1）Business administrative number shall be the same as that originally
submitted to the Department of the Treasury for filing.
（2）Minimum bid amount for each competitive bid shall be NT$100 million.
Minimum subscription amount for non-competitive bids shall be NT$50
million. Amounts in excess of those figures will be calculated in
increments of NT$50 million. Maximum competitive bid amount and maximum
non-competitive subscription amount shall not exceed the limit announced
by the Ministry of Finance.
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11.Any of the following circumstances will result in a tender being deemed void:
（1）A tender not submitted in the format prescribed by the Department of the
Treasury .
（2）A tender not delivered in a sealed envelope.
（3）The seal of the dealer not complying with the sample seal impression.
（4）The number of tenders exceeds the prescribed number.
（5）Other circumstances not in conformance with bidding regulations.
Under any of the following circumstances, a bid will be considered void:
（1）The bid price or yield not written in Arabic numerals or having been
altered or illegible.
（2）The bid amount or subscription amount not written in Arabic numerals or
having been altered or illegible.
（3）Minimum bid amount for a competitive bid or minimum subscription amount
for a noncompetitive bid lower than those prescribed in subparagraph 2,
Direction 10.
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12.The time and place for an auction shall be given in the offering announcement
of the Ministry of Finance.
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13.Auctions and determination of auction awards will be carried out in accordance
with the law prescribed by the Bank and the Ministry of Finance. The auction
results will be announced by the Bank.
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14.The distribution of auction awards to individual dealers in competitive or non-
competitive auctions may not exceed the limits announced by the Ministry of
Finance.
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15.Where a portion of the offering remains unsold after an auction, that portion
may be handled by placement at the non-competitive bid price or the price
publicly announced by the Ministry of Finance or by a re-auction at another time.
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16.On the business day next following the date of auction, each dealer shall
dispatch an employee to the Department of the Treasury to collect the notice of
awards, unaccepted bids, and invalid bids.
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17.Successful bidders shall settle on the prescribed date.
The settlement of book-entry government bonds shall be performed in accordance
with applicable provisions of the Directions for the Operation of Book-Entry
Central Government Securities.
For the settlement of government bonds in physical forms, dealers shall make out
a collection list and shall draw a check with the Department of Banking of the
Bank as the drawee or a promissory note payable by the Department of Banking of
the Bank (with the maturity date corresponding to the issue date of government
bonds), or transfer funds into the account of the Department of the Treasury in
the Department of Banking through the Central Bank Interbank Funds System, and
collect the bond certificates from the Bank.
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