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[Law Basis]
[Print]
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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: Financial institutions with healthy business
operations that are able to comply with the Bank's management of market
liquidity.
(2)Primary central government bonds dealers: Financial institutions with
qualifications for trading central government bonds that are able to
provide liquidity in government bond trading and promote the sound
development of the government bonds market.
With the approval of the Bank, a financial institution may concurrently
operate as a general designated dealer and as a primary central government
bonds dealer.
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[Authorized Circulars]
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3.A bank or Chunghwa Post Co., Ltd. may apply to the Bank to serve as a general
designated dealer if the following criteria are met:
(1)Banks:
i.Net worth of NT$20 billion or above in the most recent fiscal year ;
ii.A long-term credit rating for the most recent year of at least A- or the
equivalent, rated by a credit rating agency approved or recognized by the
Financial Supervisory Commission (FSC) or a reputable international credit
rating agency;
iii.Ratio of equity capital to risk-weighted assets in the most recent report
to the FSC that meets the minimum capital adequacy ratio specified in
Article 5 of the Regulations Governing the Capital Adequacy and Capital
Category of Banks.
(2)Chunghwa Post Co., Ltd.: Net worth of NT$20 billion or above in the most
recent fiscal year.
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[Authorized Circulars]
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4.A general designated dealer shall
(1)Participate in the Bank's open market operations and offer two-way price
quotations and make transactions in the interbank call loan market;
(2)Comply with the " Matters Requiring Implementation by General Designated
Dealers for Open Market Operations";
(3)Provide market information to the Bank when necessary.
The "Matters Requiring Implementation by General Designated Dealers for Open
Market Operations" as referred to in Subparagraph 2 of the preceding Paragraph
shall be drafted by the Taipei Interbank Money Center, Bankers Association of
the Republic of China and submitted to the Bank for approval.
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[Related Circulars]
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5.A general designated dealer may apply to the Bank for assistance in case of
funding needs arising from compliance with the Bank's policies.
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[Related Circulars]
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6.A bank, a bills finance company, a securities company, and Chunghwa Post Co.,Ltd.
may apply to the Bank for approval to become a primary central government bonds
dealer if it holds qualifications for trading central government bonds and meets
the following criteria:
(1)Banks: Same criteria as specified in Subparagraph 1 of Direction 3.
(2)Bills finance companies and securities companies:
i.Net worth of NT$6 billion or above in the most recent fiscal year;
ii.A long-term credit rating for the most recent year of at least BBB- or
the equivalent, rated by a credit rating agency approved or recognized
by the FSC or a reputable international credit rating agency;
iii.For a bills finance company, its ratio of equity capital to risk-weighted
assets in the most recent report of capital adequacy information
submitted to the FSC shall meet the minimum requirement specified in
Article 41 of the Act Governing Bills Finance Business; for a securities
company, its regulatory capital adequacy ratio in the report shall be
200% or above.
(3)Chunghwa Post Co., Ltd.: Same criteria as specified in Subparagraph 2 of
Direction 3.
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7.A primary central government bonds dealer may participate in the Bank's open
market operations as a counterparty and shall
(1)Engage in auction bids for central government bonds, when-issued trading of
central government bonds, and two-way price quotations in central government
bonds secondary market;
(2)Comply with relevant rules established in the "Matters Requiring
Implementation by Primary Central Government Bonds Dealers";
(3)Provide the Bank with information on its central government bonds position
and relevant trading details, and with market information when necessary.
The "Matters Requiring Implementation by Primary Central Government Bonds
Dealers" in Subparagraph 2 of the preceding Paragraph shall be drafted by
Taipei Exchange and submitted to the Bank for approval.
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8.A primary central government bonds dealer may apply to the Bank for
assistance in case of funding needs arising from compliance with the Bank's
policies.
Taipei Exchange may provide related privileges for primary central government
bonds dealers.
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9.The Bank may award those designated dealers that perform well in implementing
items specified in Directions 4 and 7.
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10.A designated dealer shall submit annual financial statements that have been
audited and certified by a certified public accountant, approved by its Board
of Directors, and recognized by its supervisors to the Department of Banking
of the Bank within four months after the end of each fiscal year. Where
necessary,the Bank may assign personnel to conduct onsite inspections or
request the relevant business manager(s) to provide explanation.
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11.When a financial institution applies for designated dealership, it shall submit
an official letter with application documents, photocopies of relevant
certification and proof of financial status to the Department of Banking of the
Bank.
Applicants deemed qualified under both Directions 3 and 6 may apply to serve
concurrently as a general designated dealer and a primary central government
bonds dealer.
The Bank may re-select designated dealers when necessary. Previously
qualified designated dealers shall re-apply in accordance with the relevant
rules. Designated dealers that fail to re-apply or are not approved by the
Bank shall be disqualified.
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12.A designated dealer that wishes to cancel its status shall issue an official
letter to the Department of Banking of the Bank for the Bank's approval to
revoke its status.
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13.The Bank may suspend or rescind the status of designated dealers under any of
the following conditions on their part:
(1)Failure to meet the criteria specified in Directions 3 and 6.
(2)Violation of rules in Paragraph 1, Direction 4; Paragraph 1, Direction 7;
or Paragraph 1, Direction 10.
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