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1.These Directions are prescribed by the Central Bank of the Republic of China
(Taiwan) (hereafter referred to as "the Bank") to implement a system of designated
dealers in open market operations for the purpose of strengthening the efficiency
of open market operations and promoting the sound development of financial
markets.
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2. Designated dealers for open market operations (hereafter referred
to as "designated dealers") of the Bank are classified into the
following two categories:
(1) General designated dealers: those are able to comply with the
Bank's adjustment of financial policies.
(2) Primary dealers in central government bonds market: those are
able to provide liquidity in government bond trading and promote
the sound development of the government bonds market.
With the permission of the Bank, a financial institution may
concurrently operate as a general designated dealer and a primary
dealer in the central government bonds market.
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3.A bank or the Chunghwa Post Co., Ltd. may apply to the Bank as a general
designated dealer if the following criteria are met:
(1)Net worth of the most recent fiscal year is at least NT$20 billion.
(2)Long-term credit rating for the most recent year meets one of the
following criteria:
i. A rating of A- or above by Standard & Poor's Corporation.
ii. A rating of A3 or above by Moody's Investors Service.
iii.A rating of A- or above by Fitch Ratings Ltd.
iv. A rating of twA- or above by Taiwan Ratings Corporation.
v. A rating of A-(twn) or above by Fitch Ratings Ltd., Taiwan Branch.
vi. A rating of A3.tw or above by Moody's Taiwan Corporation.
(3)The ratio of equity capital to risk assets of each applicant shall not be
less than 8% based on the most recent report to the competent authority.
Chunghwa Post Co., Ltd. may be exempt from subparagraphs 2 and 3 of the
preceding paragraph with the Bank's consent.
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4. In addition to participating in the Bank's open market operations as a
counterparty, a general designated dealer is entitled to the following
rights：
(1) In case of funding needs arising from compliance with the Bank's
policies, a general designated dealer could request the Bank for
financial assistance.
(2) A general designated dealer with bonds or bills dealer qualifications
could issue trade confirmations as requested by other financial
institutions and charge service fees in accordance with the
“Directions for Open Market Operations by the Central Bank of the
Republic of China (Taiwan)” (hereafter referred to as “Operation
Directions”).
(3) Other rights or privileges granted by the Bank or the Interbank Money
Center of R.O.C. Bankers Association (hereafter referred to as
"Interbank Money Center").
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5.A general designated dealer shall:
(1)Complies with the Bank's policies and adjusts market funds.
(2)Actively participates in the Bank's open market operations and in auction
bids for certificates of deposits issued by the Bank.
(3)Offers two-way price quotations in the Interbank call loan markets where such
dealer has a certain market shares by trading volume.
(4)Complies with the "By-laws to be implemented by General Designated Dealers
for Open Market Operations".
(5)Provides market information to the Bank when required.
(6)Others required by the Bank.
The "By-laws to be Implemented by General Designated Dealers for Open Market
Operations" as referred to in subparagraph 4 of the preceding paragraph shall
be drafted by the Interbank Money Center and submitted to the Bank for approvals.
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6.A bank, bills finance company, securities company and Chunghwa Post Co.,
Ltd.may apply to the Bank to become a primary dealer in the central government
bonds market if the following criteria are met:
(1)Possesses the central government bond dealer specified in Direction 3 of "
Directions for the Sale of Central Government Bonds."
(2)Net worth after closing the book for the most recent year meets the
following requirements:
i. Net worth of a bank or Chunghwa Post Co., Ltd.shall comply with
subparagraph 1, paragraph 1,
Direction 3.
ii. Net worth of a bills finance company or securities company shall be at
least NT$6 billion.
(3)Except that subparagraph 2, paragraph 1, Direction 3 shall apply to a bank,
the long-term credit rating of a bills finance company and a securities
company for the most recent year shall meet one of the following criteria:
i. A rating of BBB- or above by Standard & Poor's Corpration.
ii. A rating of Baa3 or above by Moody's Investors Service.
iii. A rating of BBB- or above by Fitch Ratings Ltd.
iv. A rating of twBBB- or above by Taiwan Ratings Corpration.
v. A rating of BBB-(twn) or above by Fitch Ratings Ltd., Taiwan Branch.
vi. A rating of Baa3.tw or above by Moody's Taiwan Corporation.
(4)The ratio of equity capital to risk assets based on the most recent report
to the competent authority during the most recent time shall meet the following
standards:
i. The ratio of a bank shall meet the standard as specified in subparagraph
3, paragraph 1, Direction 3.
ii. The ratio of a bills finance company shall be at least 8%.
iii. The ratio of a securities company shall be at least 200%.
Chunghwa Post Co., Ltd. may be exempted from (3)and (4)of the preceding paragraph
with the permission of the Bank.
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7. In addition to participating in the Bank's open market operations as a
be counterparty, a primary dealer in central government bonds market
shall be entitled to the following rights：
(1) In case of funding needs arising from compliance with the Bank's
policies, a primary dealer could request the Bank for financial
assistance.
(2) A primary dealer with bonds or bills dealer qualifications could
issue trade confirmations as requested by other financial institutions
and charge service fees in accordance with the Operation Directions.
(3) The following privileges are provided by the non-profit Gre Tai
Securities Market (hereafter referred to as "GTSM") regulations:
i. Preferential daily net trading position limits in the computer-assisted
Securities Market of R.O.C. (hereafter referred to as "Gre Tai trading
system for purchasing / selling government bonds GTSM electronic bond
trading system (EBTS)”).
ii. Preferential bond service charges.
(4) Other rights or privileges granted by the Bank or GTSM.
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8.A primary dealer in central government bonds market shall:
(1)Complies with the Bank's policies.
(2)Actively participates in the Bank's open market operations.
(3)Actively engages in auction bids for central government bonds,
when-issued trading of central government bonds, and two-way price
quotations in secondary markets for central government bonds.
(4)In either the when-issued trading in primary central government bonds
market or the outright trading in secondary bonds market shall maintain a
certain proportion of market shares by volume.
(5)Complies with relevant rules established in "By-laws to be implemented by
Primary Dealers in Central Government Bonds Market."
(6)Provide information on its position in central government bonds and relevant
trading details.
(7)Provides market information to the Bank when required.
(8)Others required by the Bank.
The "By-laws to be Implemented by Primary Dealers in Central Government Bonds
Market" in subparagraph 5 of the preceding paragraph shall be drafted by the
Gre Tai Securities Market, and submitted to the Bank for approvals.
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9.A designated dealer shall maintain business confidentiality; submit annual
financial statements to the Department of Banking of the Bank （hereafter
referred to as "the Department of Banking"） within four months after the end
of each business year; cooperate in on-site examinations conducted by the Bank
or, upon the Bank's request, dispatch business executives to the Bank for
explanation when requested.
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10.When applying for designated dealership, an applicant shall submit completed
application documents (as attached) with photocopies of relevant certification
and proof of financial status to the Department of Banking. The Bank may approve
based on the needs of financial market development.
When granting its approval in accordance with the preceding paragraph, the
Bank may, in light of the financial environment and business needs, restrict
the number of designated dealers subordinated of the same financial holding
company.
Applicants qualified for Directions 3 and 4 may apply to be a general designated
dealer and a primary dealer in the central government bonds market concurrently.
When granting its approval to application in accordance with the preceding
paragraphs, the Bank may take consideration of the needs of financial markets
development. In light of the financial environment and business needs, the Bank
may restrict the number of designated dealers subordinated under the same
financial holding company.
Application in accordance with paragraph 1 or paragraph 2 shall be submitted in
July each year except as agreed by the Bank. The Bank may re-screen a designated
dealer when necessary. Previously qualified designated dealers shall re-apply
within the period specified by the Bank. Designated dealers that fail to re-apply
in time or are not approved by the Bank's shall be disqualified.
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11.A Designated dealer that wishes to relinquish its status shall inform the
Department of Banking in writing at least two weeks before the Bank revokes
its status.
If designated dealers become subsidiaries of the same financial holding
company out of mergers, the Bank may, in accordance with paragraph 2,
Direction 10, revoke approval previously granted to designated dealers.
When a designated dealer of a financial holding company plans to transfer its
business to another affiliate under the same group, the transferee shall
submit a written consent of the financial holding Company, a declaration of
relinquishment from the designated dealer, and other relevant documents for
the Bank's permission.
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12.The Bank may rescind the status of designated dealers under any of the
following conditions; reapplication for designated dealer status may be
filed only after rectification:
(1)Net worth fails to meet the following requirement:
i. A general designated dealer: subparagraph 1, paragraph 1, Direction 3.
ii. A primary dealer in central government bonds market: subparagraph 2,
paragraph 1 of Direction 6.
(2)Long-term credit rating fails to meet the following rating criteria:
i. A general designated dealer: subparagraph 2, paragraph 1, Direction 3.
ii. A primary dealer in central government bonds market: subparagraph 3,
paragraph 1 of Direction 6.
(3)Ratio of equity capital to risk assets fails to meet the following
requirement:
i. A general designated dealer: subparagraph 3, paragraph 1, Direction 3.
ii. A primary dealer in central government bonds market: subparagraph 4,
paragraph 1 of Direction 6.
(4)A primary dealer in central government bonds market becomes disqualified.
(5)violation of laws or regulations with serious consequences.
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13.Where a designated dealer violates the provisions of Direction 9; a general
designated dealer violates the provisions of Direction 5 and a primary dealer
in central government bonds market violates the provisions of Direction 8,
the Bank may serve notice to order rectification; suspend its participation
in openmarket operations, or other privileges for a period of between three
to six months. The Bank may revoke its status in serious cases; and the dealer
in question may not re-apply for dealership within one year from the date of
such revocation.
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14.The Bank may take appropriate measures where a designated dealer violates
other laws or regulations.
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15.The Bank may award those designated dealers that demonstrate cooperation
with the Bank’s policy and full compliance with the Bank's regulations.
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