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

1. These Directions are specially prescribed by the Central Bank of the Republic of China(Taiwan) (hereafter called “the Bank”) for the sale and buyback of treasury bills. Except where otherwise provided by law, sale and buyback of treasury bills will be performed electronically or through paper tender submission; Directions for electronic bidding procedures will be regulated separately.

2. The specifics of issue and buyback of treasury bills, such as the issue code, form, method, date, amount, date of repayment, and the time and place of auctions shall be handled in the manner publicly announced by the Ministry of Finance.

3. Bidding in treasury bills auctions shall be limited to banks, Chunghwa Post Co., Ltd., bills finance companies, securities firms, and insurance enterprises only; natural persons and other juristic persons shall submit bids through bills houses under bills houses’ names.

The Bank may limit any bidders mentioned in the preceding paragraph from participating in bidding, where the bidders are placed under conservatorship or receivership by the central competent authority.

4. Treasury bills auction adopts single interest rate bidding, whether in competitive or non- competitive form. Competitive bidding may be used in combination with non-competitive bidding or may be adopted as the sole method.

(1)Competitive bids: Bid rates shall be expressed as discount rates. Bids with rates lower than the minimum acceptable rate shall be accepted successively in ascending order; Where interest rates of successful bids are equal and the remaining amount of the issue is insufficient for full allocation, a pro-rata allocation will be made based on the bid amounts. Amounts payable by successful bidders shall be calculated at an issue price resulting from conversion at the highest rate of all the successful bids.

(2)Non-competitive bids: Amounts payable will be calculated at the issue price set forth in the preceding paragraph. Where the total subscription amount of non-competitive bids exceeds the non-competitive public offering amount, a pro-rata allocation will be made based on subscription amounts.

NT$1 million shall be the incremental unit in allocations made pursuant to the preceding paragraph.

5. For each auction, each bidder shall submit only one tender (Form 1)with no more than ten bids, and shall use the tender prescribed by the Department of the Treasury of the Bank (hereafter called “Department of the Treasury”) in a sealed envelope.

6. Tenders shall be filled out in accordance with the following provisions:

(1)The government uniform invoice number of a profit-seeking enterprise shall be listed correctly.

(2)The minimum bid amount for each bid shall be NT$5 million; amounts in excess of that figure shall be in increments of NT$1 million. The maximum amount of a bid shall not exceed the amount publicly announced by the Ministry of Finance.

7. Any of the following circumstances will result in invalidation of a tender:

(1)Not using the tender prescribed by the Department of the Treasury.

(2)Not submitted in a sealed envelope.

(3)No official stamp affixed.

(4)Submitting more than one tender.

(5)Other violations of bidding regulations.

Under any of the following circumstances, a bid submitted on the tender will be void:

(1)A bid rate not written in Arabic numerals, altered, or illegible.

(2)A bid amount not written in Arabic numerals, altered, or illegible

(3)The minimum bid amount lower than the prescribed amount.

(4)Any other entries on the tender not conformed to bidding regulations.

8. Auctions and auction awards will be carried out by the Bank and the Ministry of Finance; auction awards will be announced by the Bank.

Where an auction is uncovered, the unsold balance may be sold by placement at a non-competitive bid price or at a price publicly announced by the Ministry of Finance, or be re-auctioned at another chosen date.

9. On the next business day following the auction, each bidder shall dispatch a staff member to the Department of the Treasury to collect the notice of successful, losing, and invalidated bids.

10. Successful bidders shall carry out settlement on the issue date of the treasury bills.

Settlement for book-entry treasury bills shall be performed according to the applicable provisions of the Directions for the Operation of Book-Entry Central Government Securities.

For settlement for treasury bills in the form of certificates, the dealer shall draw a check with the Bank’s Department of Banking (hereafter called “Department of Banking”) as the drawee or a promissory note with the Department of Banking as the payment agent (with the treasury bills’ issue date as maturity date), or shall transfer funds into the Department of the Treasury’s account with the Department of Banking through the CBC Interbank Funds Transfer and Settlement System, and collect the certificated treasury bills from the Bank.

11. Where a successful bidder fails to fully settle or only partially settles the treasury bills awarded by the prescribed date, the bidder shall pay a penalty that amounts to ten percent (10%) of the unsettled portion and may not participate in bidding for treasury bills for a period of three years from the issue date of the underlying issue.

12. Offering in treasury bills buybacks shall be limited to banks, Chunghwa Post Co., Ltd., bills finance companies, and insurance enterprises only; natural persons and other juristic persons shall submit offers through bills houses under bills houses’ names.）

13. Treasury bill buyback auction adopts single interest rate formats with rates expressed as yields. Successful offers will be those with yields higher than the minimum acceptable yield and the buyback yield shall be the lowest yield of all accepted offers. Where offer yields are equal and the remaining amount needed to fill the announced buyback amount is insufficient, a pro-rata allocation will be made based on the offer amounts. Amounts receivable by successful submitters shall be calculated at the buyback yields.

14. Submitters shall use the sellback tender (form 2) prescribed by the Department of the Treasury and submit offers in accordance with Direction 5.

15. The sellback tenders shall be filled out in accordance with Direction 6, except that the minimum offer amount shall be NT$1 million.

Invalidation of sellback tenders shall apply mutatis mutandis to Direction 7.

The time and place for auctions, and the handling of auctions and determination of accepted offers shall be carried out in accordance with Direction 2, first paragraph of Direction 8, and Direction 9.

16. Successful submitters shall carry out settlement on the date of buyback of treasury bills.

Settlements for buyback of book-entry treasury bills shall be performed in accordance with applicable provisions of the Directions for the Operation of Book-Entry Central Government Securities.

Where a successful submitter fails to fully settle or only partially settles the treasury bills offered by the prescribed date, the submitter shall pay a penalty that amounts to ten percent (10%) of the par amount of the unsettled portion and may not participate in buyback auctions for a period of three years from the buyback date of the underlying issue.