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) (hereinafter referred to as “the Bank”) for the management of book- entry central government securities (hereinafter referred to as“the Securities”).

Except where otherwise provided by law, management of the Securities shall be undertaken in accordance with these Directions.

2. Particulars of the issuance and buyback of the Securities, such as the issue name, type, serial number, form, method, date, amount, coupon rate, date for repayment of principal and interest (method of repayment), the time and place of auctions, the underlying exchange government held shares, the period, the price and the procedures for exchange, redemption at holders’ (issuer’s) option of the Central Government Exchangeable Bonds (hereinafter referred to as “Exchangeable Bonds”) shall be handled in the manner as publicly announced by the Ministry of Finance.

3. The Securities are in registered form, and the particulars of purchase, transfer, trust, lodgement, depository of reserves, pledge, and serving as public guarantee shall be registered in accordance with these Directions. Unless duly registered, protestation against a third party shall not be provided.

4. Terms in these Directions are defined as follows:

(1)“Book-entry central government securities(CGS)” refers to government bonds issued in registered form (hereinafter referred to as “book-entry bonds”) in accordance with Article 6 of the Act Governing Central Government Construction Bonds and Borrowing, and Treasury bills issued in registered form (hereinafter referred to as “book-entry Treasury bills”) in accordance with Article 5 of the Act Governing Treasury Bills and Short-term Borrowing.

(2) “Exchangeable bonds ” refers to book-entry bonds which may be exchanged for stocks held by the central government (“government-held stocks”), the government repays with government-held stocks or the principal to the bonds holders based on the terms of the agreement.

(3) “Strippable bonds” refers to interest-bearing government bonds made up of interest and principal payments that can be separately traded as announced by the Ministry of Finance on the date of issue.

(4) “ Separate Trading of Registered Interest and Principal of Securities (STRIPS)”refers to“coupon STRIPS”and“principal STRIPS”, that are zero coupon bonds derived from strippable bonds and traded separately with no interest payment but repaid at par value at maturity.

(5) “Clearing banks” refers to banks and Chunghwa Post Co., Ltd. appointed by the Bank to handle registrations, transfers, associated fund settlements, as well as payment of maturing principal and interest of the Securities.

(6) “Registration institutions” refers to Department of the Treasury and Department of Banking of the Bank (hereinafter referred to as “Department of the Treasury” and “Department of Banking”), and clearing banks that perform registration of the Securities.

(7) “Own account”refers to the securities account owned by the Bank or a clearing bank in its own book.

(8) “Customer account” refers to the securities account owned by a corresponding customer at the Bank or a clearing bank.

(9) “Transfer registration” refers to registration of inward or outward transfer of securities ownership, as in purchase, trading, succession, gift, or trust.

(10) "Lodgement registration" refers to inward or outward transfer registration of securities possessed when the underlying securities serve as the lodgement object deposited with the Court.

(11) "Return registration " refers to inward or outward transfer registration of securities possessed when the underlying securities serve as the lodgement object deposited with the Court are returned to the original depositor or delivered to a third party.

(12)“Restricted transfer registration” refers to restricted inward or outward transfer registration without change in ownership, as a pledge, public guarantee (where duly deposited in the Bank, the Treasury, or a bank to serve as a guarantee), or depository of reserves (where duly deposited in the Bank to serve as trust fund reserves or compensation reserves).

(13)“Intrabank transaction registration”refers to various registrations performed between two trading parties whose securities accounts are maintained at the same registration institution.

(14)“Interbank transaction registration”refers to various registrations performed between two trading parties whose securities accounts are maintained at different registration institutions.

(15) “ Par value ” refers to the registered value of the Securities. The minimum registration unit is NT$100,000 and other units used must be multiples of NT$100,000.

(16)“Transferable balance” refers to the balance of a clearing bank securities account at Department of the Treasury after subtracting the balance of interbank restricted outward transfer registrations.

(17) “Disposable balance” refers to the balance in a clearing bank’s own securities account or a its customer’s securities account after subtracting the balance of restricted outward transfer registrations, RP/RS transaction certificates issued by the clearing bank, and other intrabank deductible balances.

(18) “Transactions accompanied by payment ” refers to securities transactions accompanied by payment made for awarded securities, buybacks, delivery-versus- payment transfers, payment of principal and interest, as well as the collection of interbank transfer fees and disbursement of payment processing fees by the Bank.

5. Registrations carried out by a Registration Institution shall be as follows:

(1) Aggregate registration by Department of the Treasury of all Registration Institution securities accounts, and registration of restricted transfers on their customer accounts.

(2) Transfer registration and restricted transfer registration processed by Department of Banking for its own accounts in connection with open-market operations, deposits for reserve (bonds), and short-term accommodation.

(3) Transfer registration and restricted transfer registration processed by a clearing bank for its owned accounts and its customers’ accounts.

6. The representative office of a Registration Institution shall process with registrations for its own accounts and customer accounts; branches of the Registration Institution may perform registration operations [for the Bank] given prior reporting to the Bank for approval and recordation.

A registration institution shall issue a written notice containing information on its representative office, authorized officers, clerks, and branches to Department of the Treasury for filing reference. Any changes in the above items shall likewise be reported.

7. In order to perform various securities registrations, a natural person or a juristic person shall open a securities account and a demand deposit account at a clearing bank；A clearing bank shall open a securities account at Department of the Treasury.

When applying to open a securities account or a cash account, amend basic information of an account, or close an account, the an applicant shall fill out an Application for Opening/ Amending / Closing CGS Account Form (Form 1); When applying to open an account, a Seal Impression Card (Form 2) shall also be filled out.

For the purpose of performing trust registration of the Securities, a trustee shall open an extra securities trust account and an extra deposit trust account with the clearing bank.

8. A Registration Institution shall issue a book-entry central government securities passbook to customers for all registration in connection with the securities, and may, at the customer’s request, provide an Account Verification Statement (Form 3).

Customers may select either booklets or loose-leaf passbooks for their use (Form 4), but shall obtain approval from the Registration Institution prior to switching from one type to another. The use of the passbooks shall be dictated by the “Directions for (Loose-leaf) Passbook Use” (Appendices 1 and 2).

9. The “Central Government Securities Settlement System” (hereinafter referred to as the “CGSS”) is a computer network linking the Bank and clearing banks, with the Bank as interbank online center (hereinafter referred to as “CGSS Center”) to effect real-time interbank transfers of securities.

The Taiwan Depository & Clearing Corporation (hereinafter referred to as“TDCC”), with a linkage to the Bank, shall effect the real-time book-entry transfers of the underlying stocks according to the information transmitted by the CGSS. The TDCC, with links to its correspondent clearing banks(hereinafter referred to as “TDCC- correspondent clearing bank”), shall effect real-time book-entry transfers of STRIPS.

Any participants in the Securities System shall observe such matters and procedures for data security as set forth in the relevant provisions in the “Central Bank Computer Communications Services System.”

10. A clearing bank shall use the services of CBC Interbank Funds Transfer and Settlement System (hereinafter referred to as “ CIFS”) operated by Department of Banking, and its bank funds-Type I reserve account (hereinafter referred to as “bank reserve account”) opened at Department of Banking to effect interbank funds settlement associated with transactions processedby the CGSS.

11. The cut-off time for acceptance of interbank transfers by the CGSS Center shall be 5:00 p.m. (see table 1 for details of CGSS Operation Schedule). No late transfers will be accepted. This provision shall not apply, however, in case of system malfunction or policy support.

When requesting an extension of CGSS operating hours, a clearing bank shall notify Department of the Treasury by telephone prior to the cut-off time set forth in the preceding paragraph, and shall fax an Application for Extension of CGSS Operating Hours (Form 5) to Department of the Treasury within thirty minutes after the scheduled cut-off time.

A clearing bank that requests for extension of CGSS operating hours shall report, no later than three business days from the date of request, to Department of the Treasury in writing, stating the cause of system failure operating, status and improvement measures thereof; Department of Banking shall also be notified if the aforementioned extension of CGSS operating hours in the preceding paragraph involves the support of the CIFS.

12. A bank may apply to the Central Bank to be appointed as a clearing bank in accordance with these Directions by meeting the following requirements:

(1)Net worth of NT$15 billion or above.

(2)A ratio of equity capital to risk-based assets of 8% or above.

(3)An average return on equity for the past three years of 6% or above.

13. A bank shall apply for appointment as a clearing bank by filling out a “Application for Book-Entry Central Government Securities Clearing Bank” (Form 6) for submission to Department of the Treasury along with a copy of its financial statements and other documents required.

Applications may be approved by the Bank based on need as determined by bond market developments.

14. A clearing bank having been appointed by the Bank, shall contact the Department of Information Management of the Bank (hereinafter referred to as “Department of Information Management”) to set up online connections, and shall complete online tests within one year from the date of appointment. Otherwise, the Bank may revoke the status of a clearing bank.

Following the successful completion of various tests as set out in the preceding paragraph, which shall be undertaken jointly with the Information Systems Office and Department of the Treasury, Department of the Treasury will issue a letter informing the clearing bank of the date upon which it may commence operation.

15. A clearing bank shall establish rigorous internal controls and exercise the diligence of a good custodian with regard to performing registrations, clearing funds, releasing trading information, and issuing and revoking repurchase (resell) trade certificates. Except for the information duly provided under relevant laws, a clearing bank may not divulge any customer information.

16. Under any of the following circumstances, the Bank may issue a letter notifying a clearing bank to effect improvement:

(1) Failure to perform book-entry bond operations in accordance with these Directions.

(2) Failure to effect transfers of funds in accordance with Bond System data handling protocols.

(3) Occurrence of any other events hindering smooth operation of the Bond System.

17. Under any of the following situations, and where warranted by the circumstances, the Bank may terminate a clearing bank’s appointment, suspend its appointment for a specific period of time, or disallow new branches of the bank to carry out clearing bank junctions:

(1) Failure to effect improvement following a notification in accordance with the preceding Direction.

(2) Violation of relevant regulations or material negligence resulting in severe hindrance to the operations of the Bond System.

(3) Suspension of any department’s operations by the central competent authority, resulting in inability to perform bond operations.

(4) Appointment of a receiver or conservator by the central competent authority.

(5) An order from the central competent authority to cease operations.

18. When requesting for exit from the CGSS, a clearing bank shall give advance written notice to Department of the Treasury one month prior to the scheduled exit date.

19. Where a clearing bank’s appointment is suspended by the Bank, the clearing bank shall pay off relevant transfer fees and clear any outstanding balance in the securities account.

Where a clearing bank withdraws from the CGSS or it’s license is terminated by the Bank, in addition to effecting clearing procedures as set forth in the preceding paragraph, it shall close its securities account as well.

20. Bidding in book-entry bond auctions is restricted to central government bond dealers only (hereinafter referred to as “bond dealers”); natural persons and other juristic persons shall submit bids through bond dealers under bond dealers’ names.

Bidding in book-entry treasury bill auctions is restricted to banks, trust investment companies, insurance enterprises, bills finance companies and the Chunghwa Post Co., Ltd. only; natural persons and other juristic persons shall submit bids through bills houses under bills houses’ names.

21. Successful bidders shall carry out the following matters prior to the issuance of the Securities:

(1)Filling out and submitting the “Application for CGS Subscriptions Registration ” (Form 7) to correspondent clearing banks to effect registrations, specifying the aggregate par amount and amount payable for securities awarded on their own accounts and on customers’ accounts, prior to the following deadlines:

i. Book-entry bonds: prior to 3:30 p.m. on the next business day following the auction.

ii. Book-entry treasury bills: prior to 3:30 p.m. on the auction date.

(2) Making payments for securities awarded on their own accounts and on customers’ accounts to correspondent clearing banks prior to the prescribed time on the issue date.

22. Clearing banks shall carry out the following matters prior to the issuance of the Securities:

(1) Transmitting messages in the “Book-Entry Central Government Securities Subscription Statement” (Form 8) to the Bank, prior to the following deadlines:

i. Book-entry bonds: prior to 12:00 p.m. on the second business day following the auction.

ii. Book-entry treasury bills: prior to 5:00 p.m. on the auction date.

(2) Transmitting payment messages for securities awarded on their own accounts and on customers’ accounts, classified according to respective successful bidders, to the Bank to effect payments prior to 3:00 p.m. on the issue date. The Bank shall debit a clearing bank’s reserve account and credit the clearing bank’s securities account for the amount specified in the payment instructions accordingly. In the event that successful bidders fail to effect settlement, the clearing bank shall notify the Bank to make adjustments.

(3) Upon receiving the Bank’s confirmation of payment messages on the issue date, clearing banks shall transfer securities to the customers’ securities accounts according to the customer data listed in the “Application for CGS Subscription Registration” submitted by the successful bidders.

23. Transfer registrations between accounts at the same clearing bank shall be carried out in accordance with the following provisions:

(1) Delivery-versus-payment transfer: The transferor and transferee shall fill out an “Outward Transfer Registration (and Request for Collection) Form” (Form 9) and an “Inward Transfer Registration (and Request for Payment) Form” (Form 10) respectively for processing by the clearing bank. Following the confirmation of a match between the transferee’s and the transferor’s trading information, the clearing bank shall effect the transfers of securities and corresponding funds, and record the same in passbooks for the transferor and transferee. Confirmation of trade match may be omitted where a customer has made prior arrangements with the clearing bank.

(2) Free-of-payment transfer: The clearing bank may directly proceed with the transfer of securities in accordance with the “Outward Transfer Registration (and Request for Funds Collection) Form” filled out by the transferor except in cases of donations, successionsor trusts, which require the attachment of relevant documents. The transferee may have supplemental passbook entries recorded at the clearing bank.

The application for transfer registration mentioned in the preceding paragraph may be transmitted by secured electronic means, provided it has been so agreed between the customer and the clearing bank.

24. Intrabank Lodgment Registration shall be carried out in accordance with the following provisions:

(1) The depositor shall submit documents for lodgment request (lodgment statements, court decrees, etc.) and fill out a "Application for Treasury Custody " (Form 11) for processing by the clearing bank. After having certified the relevant documents, the clearing bank shall process Lodge-out Registration for the lodger and Lodge-in Registration for the Court. The clearing bank shall print the passbook and give it to the lodger together with a "Lodgment Certificate of Treasury Custody " (Form 11- 1), and shall print relevant slips of the " Deposit Certificate of Treasury Custody " (hereinafter referred to as a " Deposit Certificate") (Forms 12, 12-1, 12- 2, and 12-3).

(2) If several persons (including several persons with joint ownership) apply for joint lodgement, they shall submit Lodgement Registration request as prescribed in the preceding Paragraph. The lodgers may use the name of one person in the group and his/her ID Card number (or profit-seeking enterprise uniform number) as a representative. The clearing bank shall record the representative’s name and ID Card number (or profit-seeking enterprise uniform number) of the joint lodgement and the total number of lodgers in the account name columns of the relevant slips of the Deposit Certificate. The clearing bank shall print the Deposit Certificate number on the joint lodgers lists which shall be affixed to the relevant slips of the Deposit Certificate for filing.

25. Intrabank Return Registration and the conversion or sale of the lodged securities shall be carried out in the following manners:

(1) Full return or recipience:

i. The recipient shall submit the Deposit Certificate with the authorized signature of the Court to the clearing bank for return or recipience. After having certified the authorized signature, the clearing bank shall process the Return-Out Registration for the Court and the Return-In Registration for the recipient based on the Deposit Certificate, print the passbook and give it to the recipient. The Court may have its passbook entry updated at the clearing bank.

ii. If several persons (including several persons with joint ownership) jointly return or receive the lodged securities, they shall apply in accordance with theprocedures set out in subparagraph 2, Direction 24.

(2) Partial return or recipience:

i. After having certified the authorized signature of the Court, the clearing bank shall divide the Deposit Certificate into two new Deposit Certificates pursuant to the Court Letter stating the proportions of the lodged securities to be reserved and to be received, and print the relevant slips for each new certificate. Apart from the slip for clearing bank, other slips shall be handed over to the governing Court.

ii. Recipience procedures shall be processed in accordance with the full return or recipience procedures.

(3) Conversion of lodged securities:To convert lodged securities by law, the lodger shall attach the documents for lodgement request (lodgment statements, court decrees, or certificates of confirmation), and shall apply for Lodgement Registration with the newly-provided securities as security lodgement in accordance with Direction 24, and shall apply for Return Registration with the originally- lodged securities in accordance with this Direction.

(4) Sale of lodged securities:

i. After having certified the authorized signature of the Court, the clearing bank shall sell outstanding securities recorded on the Deposit Certificate in accordance with the Court’s compulsory enforcement order.

ii. The clearing bank shall transfer the securities into the security account assigned by the transferee, total the sum of money remained after sale together with the principal, interest, and yield of the matured securities, fill out(copies of)Receipt of Treasury Deposit, and transfer the sum to the custody account of court enforcement case monies for allocation.

26. Intrabank Restricted Transfer Registration shall be carried out in accordance with the following: The pledgor (guarantee provider) shall fill out an “Application for Registration Establishing Right of Pledge” (Form 13) (or “Application for Registration of Public Guarantee ” (Form 14)) and request the clearing bank for registration. The clearing bank shall perform Restricted Transfer-out Registration on behalf of the pledgor (guarantee provider) and Restricted Transfer-in Registration on behalf of the pledgee (guarantee recipient) in accordance with the applications, print out the passbook and provide it to the pledgor (guarantee provider) together with an“ Certificate for Registration of Establishing Right of Pledge ” (Form 13-1) (or “Certificate of Registration of Public Guarantee ” (Form 14-1)); the pledgee may have a supplemental passbook entry recorded at the clearing bank.

27. Intrabank Revocation of Restricted Transfer Registrations, the exercise of pledge rights, and revocation of public guarantee under court order for compulsory execution by transfer of registration shall be carried out in accordance with the following:

(1) Revocation of Restricted Transfer Registrations:

i. The pledgor (guarantee provider) shall fill out an “Application for Revocation of Right of Pledge or Registration of Public Guarantee” (Form 13), to which the seal of the pledgee (guarantee recipient) shall be affixed as proof of consent for processing by the clearing bank.

ii. According to the documents prescribed in the preceding Item, the clearing bank shall revoke the Restricted Transfer Registration between the pledgor (guarantee provider) and pledgee’s (guarantee recipient’s), print out the passbook, and provide it to the pledger (guarantee provider) together with a “Certificate of Revocation Registration of Pledge or Public Guarantee ” (Form 15-1); the pledgee may have a supplemental passbook entry recorded at the clearing bank.

(2) Exercise of pledge right:

i. The transferee shall fill out a “Notice of Exercise of Pledge Right”(Form 16) in regard to the result of the pledgee’s execution of right of pledge with the pledge-holder’s seal affixed as proof of consent for submission to the clearing bank for processing. The following documents shall be attached depending on the circumstances:

(i) Petition for court auction: Documents related to court auction shall be attached.

(ii) Self-sale by pledgee: Evidentiary documents shall be attached as listed in the proviso to Article 28 of the Law Governing the Application of the Book of Obligations of the Civil Code (certification from the court, a notary, a police unit, a commercial group, or a local autonomous institution, showing sale at market price).

(iii) Agreement with pledgor that the pledgee obtained the subject of the pledge: The contract between the pledgor and pledgee shall be attached.

(iv) Other forms of disposal: The contract between the pledgor and pledgee shall be attached. Where a third party is involved, the relevant contract shall be attached.

ii. If not being requested of deducting funds from the transferee’s deposit account to settle the transaction, the clearing bank shall, in accordance with the documents prescribed in the preceding item, carry out a simultaneous revocation of the pledgor and pledgee’s Restricted Transfer Registration and at transfer of bonds between the pledgor and transferee’s accounts, print a passbook,and provide it to the transferee together with a “ Certificate of Exercise of Pledge Right ” (Form 16-1); the pledgor and pledgee may have a supplemental passbook entry recorded at the clearing bank.

iii. In cases where a clearing bank is requested to deduct funds from a transferee’ s cash account for a transfer in payment of a transaction price, the clearing bank shall, in addition to carrying out a bond transfer as set forth in the preceding Item, carry out a transfer of funds between the transferee’s and pledgor’s accounts.

(3) Revocation of Public Guarantee Registration and simultaneous transfer of the lodged securities in accordance with a court order for compulsory execution shall be carried out in accordance with the following:

i. The transferee shall fill out a “Notice of Revocation for Public Guarantee by Transfer of Registration” (Form 17) with the guarantee recipient’s seal affixed as proof of consent for submission to the clearing bank for processing.

ii. The clearing bank shall, based on the information in the preceding item,carry out a simultaneous revocation of the guarantee provider’s and the recipient’s Restricted Transfer Registrations and a transfer of securities between the guarantee provider and transferee’s accounts, and print a passbook and provide it to the transferee together with a “Certificate of Revocation for Public Guarantee by Transfer of Registration ” (Form 17-1) record of the same for the transferee. The guarantee provider and the recipient may have a supplemental passbook entry recorded at the clearing bank.

28. Qualified central government bond traders or securities dealers may apply to strip strippable bonds (hereinafter referred to as “ bond stripping”) or to reconstitute stripped bonds (hereinafter referred to as “bond reconstitution”).

Clearing bank bond stripping or bond reconstitution shall be performed as follows:

(1)Bond stripping: The applicant shall fill out an “ Application for Stripping Form” (Form 18) and submit it to the clearing bank. The clearing bank shall strip, in accordance with the application form, the interest-bearing government bonds into coupon STRIPS and principal STRIPS and transmit the message to TDCC, which shall transfer coupon STRIPS and principal STRIPS into the applicant’s centralized depository securities account. The clearing bank shall print the passbook and issue a “ Certificate of Stripping” (Form 18-1) to the applicant.

(2)Bond reconstitution: The Applicant applying for reconstitution of principal STRIPS and coupon STRIPS into interest-bearing government bonds shall comply with the relevant regulations of TDCC, through which messages are transmitted to the TDCC correspondent clearing bank and reconstituted bonds are transferred to the securities account of the applicant. The applicant may have a supplemental passbook entry recorded at the clearing bank.

29. When issuing or revoking an RP/RS transaction certificate, a clearing bank shall proceed in accordance with the following provisions:

(1)The applicant shall fill out an “Application for Issuance of an Repurchase Agreement/Reverse Repurchase Agreement (RP/RS) Transaction Certificate” (Form 19) and submit it to the clearing bank. The clearing bank shall print the passbook and issue a certificate to the applicant.

(2) When an RP/RS transaction certificate comes due or for early annulment of contract, the applicant shall apply for revocation at the clearing bank, using the original certificate issued by the clearing bank, with the applicant’s registered seal affixed. The clearing bank shall print the passbook for the applicant.

30. When exchangeable bonds are redeemed at holders’option, the applicant shall fill out an “Application for Exchange of Central Government Exchangeable Bonds for Government-held Stocks/Redemption at Holders’ Option of Central Government Exchangeable Bonds” (Form 20) for processing by the clearing bank. The clearing bank shall print the passbook to the applicant.

31. A clearing bank, when performing registration of the Securities, stripping, reconstitution, issuance and revocation of RP/RS transaction certificates and redemption at holders’ option of exchangeable bonds, shall proceed in accordance with the following provisions:

(1) Verifying that the seal on the application form matches the registered seal of the applicant.

(2) Verifying that the information in the application form matches that originally filed with the clearing bank.

(3) Verifying that the disposable balance of the applicant’s securities account or the balance of cash account is greater than or equal to the amount of the outward transfer applied for or the RP/RS transaction certificate to be issued.

(4) Verifying whether the par value of the reconstituted or stripped coupon STRIPS is consistent with the minimum registration unit or its integral multiples; whether the par value of the principal STRIPS corresponds with that of the coupon STRIPS.

(5) Performing transfer registration:

i. Delivery -versus -payment transfer:debiting the amount from the transferor’s securities account and crediting the amount to the transferee’s securities account; at the same time, crediting the amount to the transferor’s cash account and debiting the amount to the transferee’ s cash account.

ii. Free -of -payment transfer: debiting the amount from the transferor’s securities account and crediting the amount to the transferee’s securities account.

(6) Performing lodgment registration: debiting the amount from the depositor's securities account and crediting the amount to the Court’s securities account.

(7) Performing return registration: debiting the Court’s securities account and crediting the recipient 's securities account by the same amount .

(8) Performing restricted transfer registration: crediting the amount of restricted outward transfers to the pledgor’s (guarantee provider’s) securities account and debiting the disposable balance from the pledgor’s (guarantee provider’s) securities account by the same amount, and crediting the amount of restricted inward transfers to the pledgee’s (recipient’s) securities account.

(9) Performing revocation of pledge registration (general revocation of public guarantee registration): debiting the amount of restricted outward transfer from the pledgor’s (guarantee provider’s) securities account and crediting the disposable balance to the pledgor’s securities account by the same amount, and debiting the amount of restricted inward transfers in the pledgee’s (recipient’s) securities account.

(10) Performing exercise of pledge (revocation of public guarantee registration with ownership transfer): debiting the amount of restricted outward transfer from the pledgor’s (guarantee provider’s) securities account while crediting the disposable balance to the pledgor’s securities account by the same amount, and debiting the amount of restricted inward transfer from the pledgee’s (recipient’ s) securities account and debiting the amount and the disposable balance from the pledgor’s (guarantee provider’s) securities account while adding up the amounts to the transferee’s securities account.

(11) Performing bond stripping：debiting the interest-bearing government bonds from the applicant’s securities account for the amount to be stripped and crediting STRIPS to the TDCC’s securities account by the same amount.

(12) Performing bond reconstitution：debiting STRIPS for the amount to be reconstituted from the TDCC’s securities account and crediting interest-bearing government bonds to the applicant’s securities account by the same amount.

(13) Issuing RP/RS transaction certificates: crediting the amount of RP/RS transaction certificates issued to the applicant’s securities account and debiting the disposable balance from the applicant’s securities account by the same amount.

(14) Revocation of RP/RS transaction certificates: debiting the amount of RP/RS transaction certificates from the applicant’s securities account and crediting the disposable balance to the applicant’s securities account by the same amount.

(15) Processing of application(s) for redemption at holders’ option of exchangeable bonds: crediting the amount of application for redemption at holders’ option to the applicant’s securities account and debiting the disposable balance from the applicant’s securities account by the same amount.

32. When registration institutions perform interbank transaction registration, the party that initiates the transmission of transaction message is the transferor bank, the party that receives the message is the transferee bank. Registration institutions shall be responsible for any errors in the execution of transfer orders that result in injury to the rights and interests of its customers.

The information flows for interbank transfer, exchange for government-held stocks, bond stripping or reconstitution are as follows:

(1) Delivery -versus -payment transfer:

i.The transferor bank and the transferee bank shall transmit messages to the CGSS Center. After the transaction message is matched and confirmed, it is sent to the CIFS for settlement of the transaction.

ii.The CGSS Center shall reject the message, if the disposable balance of the securities account of the transferor bank is insufficient to cover the trade, or if the securities data transmitted by the transferor bank is inconsistent with that in the CGSS Center.

iii When the CIFS executes payment settlement, a transaction for which the clearing bank does not have sufficient fund to cover shall not be rejected immediately, but shall be subject to queuing, with payment for awarded securities at level one priority, with other payments at level four.

iv.The transferor bank may initiate an instruction to cancel a transaction message still queuing for a match. Once the instruction is accepted by the CGSS Center, the cancellation shall be confirmed and the original transaction message shall be returned, unless otherwise matched.

v. Once the CIFS completes the settlement of the transaction, the CGSS Center shall effect securities transfers between the transferor bank and the transferee bank, and send the results to the transferor bank and the transferee bank respectively.

(2)Free - of - payment transfer, restricted transfer registration, lodgment registration, and return registration: The transferor bank transmits the message to the CGSS Center. Upon the receipt of such message, the CGSS Center will proceed with the transfer of securities between the transferor bank and the transfee bank according to the instruction of the transferor bank and sends the message to the transferee bank. The transferee bank should send the Bank the processing result, which will be forwarded to the transferor bank.

(3)Exchangeable bonds for government-held stocks: the CGSS Center processing the exchange of exchangeable bonds for government-held stocks through the CGSS Center shall debit the securities account of the transferor bank as instructed by the transferor bank and transmit the message to TDCC.

(4) Bond stripping: Once a bond stripping transaction performed by a clearing bank is received by the CGSS Center, the CGSS Center shall effect transfers, in accordance with the instruction of the transferor bank, debiting the interest- bearing government bonds from the transferor bank account for the amount to be stripped and crediting STRIPS to the account of the TDCC correspondent clearing bank by the same amount, and transmit the message to the TDCC correspondent clearing bank.

(5) Bond reconstitution: Once a bond reconstitution transaction performed by the TDCC correspondent clearing bank is received by the CGSS Center, the CGSS Center will effect transfers, in accordance with the instruction of the TDCC correspondent clearing bank, debiting STRIPS from the TDCC correspondent clearing bank account for the amount to be reconstituted and crediting the interest-bearing government bonds to the transferee bank account by the same amount.

The provisions in item (ii), subparagraph 1 of the preceding paragraph shall apply mutatis mutandis to the method for transmitting transaction messages involving no payment specified in subparagraphs 2 – 5 of the preceding paragraph.

33. The transferor bank and the transferee bank for interbank transaction transfer, exchanges of government-held stocks and bond stripping or reconstitution as listed in the previous direction are defined as follows:

(1) Transfer registration: The registration institution officiated with the transferor is the transferor bank (assignor bank); the registration institution officiated with the transferee is the transferee bank (assignee bank).

(2) Lodgment registration: The registration institution officiated with the depositor is the transferor bank (depositing bank); the registration institution officiated with the Court is the transferee bank (custodian bank).

(3) Return registration: The registration institution officiated with the Court is the transferor bank (custodian bank); the registration institution officiated with the recipient is the transferee bank (depositing bank).

(5) Revocation of restricted transfer registrations, exercise of pledge, and revocation of public guarantee (depository of reserves) with ownership transfer: The registration institution officiated with the pledgee or the recipient is the transferor bank (the pledgee bank or recipient bank); the registration institution officiated with the pledgor or guarantee provider or reserves depositor is the transferee bank (pledgor bank or guarantee provider bank or reserves depository bank).

(6) Exchange for government-held stocks: The clearing bank at which the applicant applies for exchange is the transferor bank. The TDCC is the transferee bank.

(7)Bond stripping: The clearing bank at which the applicant applies for bond stripping is the transferor bank, and the TDCC correspondent clearing bank is the transferee bank.

34. The transferor bank, when sending instructions such as interbank transaction transfer, exchange for government-held stocks and bond stripping or bond reconstitution, shall proceed in accordance with the following instructions：

(1) Transfer registration: Transfer messages shall be subdivided into delivery- versus-payment and free-of-payment messages, and shall include the transaction code, the transferor bank, the securities code, and the amount of securities; delivery-versus-payment transfer shall include an extra message containing the cash account number of the transferor, the cash account number of the transferee, and the amount of funds. Transfer registration arising from a trust, shall also include the relevant information related to the establishment or termination of the trust.

(2) Restricted transfer registration: In addition to the information prescribed in the preceding subparagraph, information on the type of registration and interest beneficiary shall also be included.

(3) Lodgment registration and return registration: The provisions on free-of- payment messages prescribed in subparagraph 1 hereof shall apply mutatis mutandis to information to be included in the message.

(4) Exchange of government-held stocks: The message shall include the trading code number, the transferor bank, the securities account number of the transferor, the account name of the transferor, personal ID number (profit-seeking enterprise uniform number) of the transferor, centralized depository account number of the transferor, the securities code, the amount of the securities, the exchange price, the securities code of the underlying stocks, the number of stocks exchanged, and the amount payable for odd stocks.

(5)Bond stripping or reconstitution of bonds: The messages shall include transaction code, transferor bank, securities account number of the transferor, profit seeking enterprise uniform number of the transferor, centralized depository account number of the transferor, the security code, the amount of the securities, and attached coupon series；Bond stripping shall also include other relevant information such as the interest income accrued before stripping and the amount of tax withheld.

35. Interbank transaction registration, exchange for government held stocks, bond stripping or bond reconstitution, except for the manner of registration and relevant forms to which the provisions for intrabank transactions shall apply mutatis mutandis, shall be processed in accordance with the following provisions：

(1) Interbank transfer registrations:

i.Delivery-versus-payment transfer: The transferor shall apply to the transferor bank, whereas the transferee shall apply to the transferee bank; the transferor bank and the transferee bank shall, according to the processing results of the Bank, carry out outward transfer registration and corresponding funds transfer for the transferor, as well as inward transfer registration and corresponding funds transfer for the transferee. However, in case of open market operations involving the purchase or all of securities, relevant funds transfers shall be initiated by the Bank.

ii.Free- of- payment transfer: The transferor shall apply at the transferor bank； the transferor bank shall perform outward transfer registration for the transferor, and then shall transmit relevant message to the transferee bank, which shall perform the inward transfer registration for the transferee.

(2) Interbank lodgment registration: The depositor shall apply at the depositing bank；the depositing bank shall perform the outward transfer registration for the depositor, and then shall transmit the relevant message to the custodian bank, which shall perform the inward transfer registration for the Court and print the relevant slips of Deposit Certificate. If several persons (including several persons with a joint ownership relationship) apply for joint lodgement,the depositing bank shall also fax the list of depositors to the custodian bank at the same time.

(3) Interbank return registration: The recipient shall apply at the custodian bank; the custodian bank shall perform the outward transfer registration for the Court and then shall transmit the relevant message to the depositing bank, which shall perform the inward transfer registration for the recipient. If several persons (including several persons with a joint ownership relationship) apply for joint return or collect, the custodian bank shall also fax the list of recipients to the depositing bank at the same time.

(4)Interbank restricted transfer registration: The pledgor (guarantee provider or reserves depositor) shall apply at the pledgor bank (guarantee provider bank or depositing bank)；the pledgor bank shall perform restricted outward transfer registration and then shall transmit the relevant message to the pledgee bank (the recipient bank), which shall perform restricted inward transfer registration for the pledgee (recipient).

(5) Revocation of interbank restricted transfer registration, the exercise of pledge, and revocation of public guarantee (reserves deposits) with ownership transfer:

i. Revocation of pledge registration, public guarantee registration, and reserves depository registration: The pledgor (guarantee provider or reserves depositor) shall apply at the pledgee bank (recipient bank); the pledgee bank (recipient bank) shall perform revocation of restricted inward transfer registration for the pledgee (recipient) and then shall transmit the relevant message to the pledgor bank (guarantee provider bank), which shall perform revocation of restricted outward transfer registration for the pledgor (guarantee provider or reserves depositor).

ii. Exercise of pledge: The transferee shall open a securities account at the pledgor bank, and shall apply at the pledgee bank based on the result of the pledgee’s exercise of pledge. The pledgee bank shall perform revocation of restricted inward transfer registration for the pledgee and then shall transmit the relevant message to the pledgor bank, which shall perform revocation of restricted outward transfer registration for the pledgor and the securities transfer between the pledgor and the transferee.

iii. Revocation of public guarantees (reserves deposits) with ownership transfer: The transferee shall open a securities account at the provider bank (reserves depository bank), and shall apply for revocation at the recipient bank based on the results of the Court’s mandatory execution. The recipient bank shall perform revocation of restricted inward transfer registration for the recipient and then shall transmit the relevant message to the provider bank (reserves depository bank), which shall perform revocation of restricted outward transfer registration for the guarantee provider (reserves depositor), and perform the securities transfer between the guarantee provider (reserves depositor) and the transferee’s accounts.

(6) Exchange of government-held stocks: The applicant shall fill out an “Application for Exchange of Central Government Exchangeable Bonds for Government-held Stocks/Early Sell Back of Central Government Exchangeable Bonds” (Form 20) and submit it to the clearing bank. The clearing bank shall, after confirming the par value of the securities applied for exchange and the number of government-held stocks to be received by the applicant to be correct, debit the amount from the applicant’s securities account and transmit the relevant message to TDCC. TDCC shall then transfer the stocks to the applicant’s centralized depository securities account.

(7) Bond stripping: The applicant shall apply at the transferor bank；the transferor bank shall debit the interest-bearing government bonds from the applicant’s securities account for the amount to be stripped and transmit the message to TDCC correspondent clearing bank; the TDCC correspondent clearing bank shall credit that amount of STRIPS to TDCC securities account and transmit the message to TDCC, which shall credit STRIPS to the applicant’s centralized depository securities account by the same amount.

(8)Bond reconstitution: The applicant shall apply in accordance with the relevant regulations of TDCC and shall transmit the message through TDCC to TDCC correspondent clearing bank；the TDCC correspondent clearing bank shall debit STRIPS from TDCC securities account for the amount to be reconstituted and transmit the message to the transferee bank, which shall credit that amount of interest-bearing government bonds to the applicant’s securities account.

36. Interest payments and principal redemption for the Securities shall be processed in accordance with the following provisions:

(1) Maturity of the Securities (STRIPS excluded):

i.Department of the Treasury shall calculate the amount of principal and interest payable, based on the records of the securities accounts of registration institutions, as of the close of business day prior to the date of principal and interest payment. These payments shall be transferred to the bank reserve account of the registration institutions prior to 10：00 a.m. on the date of principal and interest payment.

ii. Based on the book balances in its own securities accounts and customers’ securities accounts on the record date as described in the preceding subparagraph, registration institutions shall calculate the amount of principal and interest payable,and following the transfer of principal and interest by Department of the Treasury,transfer the net amount,after withholding taxes,to its own cash accounts and customers' cash accounts prior to 12:00 p.m. on the date of principal and interest payment.

(2) Maturity of STRIPS:

i. Department of the Treasury shall calculate the amount of principal payable based on the book balances in the securities accounts at the TDCC correspondent clearing bank as of the close of the business day before maturity date of the coupon STRIPS and the principal STRIPS, and shall transfer the principal to the bank reserve account of TDCC correspondent clearing bank prior to 10：00 a.m. on the maturity date.

ii. TDCC correspondent clearing bank will transfer, in accordance with the STRIPS holders list provided by TDCC, the net amount after withholding tax to the cash accounts of the STRIPS holder's prior to 12:00 p.m. on maturity date; if the holder is an interbank customer, the amount shall be remitted to the deposit account of the interbank customer.

(3) Exchangeable Bonds Redeemed at Holders’ (Issuer’s) Option:

i. Department of the Treasury shall calculate the amount of principal and interest payable based on the book record accumulated amount applied to be redeemed at holders’ option (the records of balances in securities accounts) at the clearing banks at the end of the announced record date. These payments shall be transferred to the bank reserve accounts of the registration institutions prior to 10：00 a.m. on the fifth business day after the date.

ii. Based on the accumulated amount applied to be redeemed at holders’ option (final balances in own accounts and customers’ accounts) on the same record date as in the preceding subparagraph, registration institutions shall calculate the amount of principal and interest payable, and following the transfer of principal and interest by Department of the Treasury, will transfer the net amount after withholding taxes to the various cash accounts for own accounts and customers’ accounts prior to 12:00 noon on the fifth business day after the record date of redemption at holders’(Issuer's) option.

When securities mature or if exchangeable bonds are redeemed at holders’(Issuer's) option, after Department of the Treasury has transferred the principal and interest in accordance with subparagraph 1, item 1, subparagraph 2, item 1, or subparagraph 3, item 1 of the preceding paragraph registered information shall be closed in whole or in part. The exchange of exchangeable bonds for government-held stocks shall be handled in the same way.

37. When security registrations are carried out for the purpose of the establishment of pledge, public guarantee or depository of reserves, interest at maturity or interest due to redemption of exchangeable bonds at issuer’s option shall be transferred to the bank reserve account of the pledgor bank (guarantee provider bank) by Department of the Treasury, and shall be transferred by the pledgor bank (guarantee provider bank) to the cash account of the pledgor (guarantee provider or reserves depositor) or the pledgee (recipient) based on the agreement between the applicant and the pledgee (recipient) at the time of application for registration. If the recipient of the interest is an interbank customer, the pledgor bank shall remit the interest to the cash account of the interbank customer.

38. When security registrations are carried out for the purpose of the establishment of pledge, public guarantee and depository of reserves, then principal at maturity or principal due to redemption of exchangeable bonds at issuer’s option, prior to the revocation of the aforementioned registrations, shall be handled in accordance with the following provisions:

(1) Pledge registration: Pledge registration: Department of the Treasury shall transfer the principal amount to the bank reserve account of the pledgor bank, which shall make payment only after notifying the interested parties first and retaining a record of the original registrations, and after the presentation by the interested party of documents demonstrating the consent of the other party or other valid documents as required by law.

(2) Public guarantee and depository of reserves registration: Department of the Treasury shall transfer the principal to the bank reserve account of the recipient bank, which shall transfer the amount to the recipient’s cash account to serve as public guarantee or depository of reserves.

39. During lodgement period, the matured principal and interest of the securities which have been processed with lodgement registration or principal and interest received due to redemption of exchangeable bonds at issuer’s option shall be handled in accordance with the following provisions:

(1) Department of the Treasury shall transfer the matured principal and interest, or principal and interest to be received due to redemption of exchangeable bonds at issuer’s option to the bank reserve account of the clearing bank (custodian bank). The clearing bank shall withhold tax and keep custody of the after-tax sum as lodgement object.

(2) The clearing bank (custodian bank) shall pay the accrued interest of the matured securities or securities received due to redemption of exchangeable bonds at issuer’s option, which are reserved as lodgement object. When processing the return registration at the request of the receiver, the clearing bank shall calculate the principal, interest, accrued interest, and tax payable of the securities originally in its custody, and shall pay the net amount after withholding tax to the recipient.

40. Bidding in book-entry bond buybacks is restricted to bond dealers only; natural persons or other juristic persons shall submit bids through bond dealers under the bond dealers’ names.

Bidding in book-entry treasury bill buybacks is restricted to bill houses only; natural persons or other juristic persons shall submit bids through bills houses under the bills houses’ names.

41. Successful bidders shall carry out the following matters prior to the sellback of the Securities:

(1) Filling out and submitting the “Application for CGS Sellback Registration ” (Form 21) to correspondent clearing banks to effect registrations, specifying the aggregate par amount and amount receivable for securities sold back on their own accounts and on customers’ accounts, prior to the following deadlines:

i. Book-entry bonds: prior to 3:30 p.m. on the next business day following the auction.

ii. Book-entry treasury bills: prior to 3:30 p.m. on the auction date.

(2) Delivering the securities sold on their own accounts and on customers’ accounts to correspondent clearing banks prior to the prescribed time on the buyback date.

42. Clearing banks shall carry out the following matters prior to selling back the Securities:

(1) Transmitting messages in the “Book-Entry Central Government Securities Sellback Statement ” (Form 22) to the Bank, prior to the following deadlines:

i. Book-entry bonds: prior to 12:00 p.m. on the second business day following the auction.

ii. Book-entry treasury bills: prior to 5:00 p.m. on the auction date.

(2) Transmitting delivery messages for securities sold back on their own accounts and on customers’ accounts, classified according to respective successful bidders, to the Bank to effect delivery prior to 3:00 p.m. on the buyback date. The Bank shall debit a clearing bank’s securities account and credit the clearing bank’s reserve account for the amount specified in the delivery instructions accordingly. In the event that successful bidders fail to effect delivery, the clearing bank shall notify the Bank to make adjustments.

(3) Upon receiving the Bank’s confirmation of delivery messages on the buyback date, crediting the net settlement amounts (after the deduction of withholding tax) to the customers’ funds accounts in accordance with the customer data listed in the “Application for CGS Sellback Registration” submitted by the successful bidders.

43. Following the disbursement of buyback settlement amount by the Department of the Treasury, the original registrations of the Securities shall be cleared in whole or in part.

44. Registration institutions shall establish formal memorandum ledgers for securities transactions; Department of the Treasury shall establish a “government book-entry securities management” assets memorandum ledger to control the number of securities issued by the Treasury, as well as a “government book- entry securities consigned management” liabilities memorandum ledger to control the amount of securities in own and customer accounts at the various registration institutions. Registration institutions shall establish a “government book-entry securities management” assets memorandum ledger for the purpose of cross-checking with the Bank's assets memorandum ledger, and shall also establish a “government book-entry securities consigned management” liabilities memorandum ledger in order to control the balances of securities in own and customers’ accounts.

Accounting ledgers listed in the preceding paragraph shall be managed according to the provisions of the “Central Public Debts Accounting System.”

Each day at the close of operations, a clearing bank shall print a “Trading of CGS” (Form 24), a “Trust of CGS”(Form 24-1), a “Balance of CGS” (Form 25), a “Daily Statement for the Exchange of Exchangeable Bonds” (Form 26), a “Daily Statement for Redemption at Holders’ (issuer’s) Option of Exchangeable Bonds” (Form 27), and a “Holding Analysis of Exchangeable Bonds” (Form 28), and a“ Daily Statement for Bond Stripping/Reconstitution” (Form 29) to be sent to the Bank for its files; the Bank will compile and print an “Aggregate Statement of Trading of CGS” (Form 30), an “Aggregate Statement ” for Trust of CGS”(Form 30- 1), an “Aggregate Statement for Balance of CGS”(Form 31), an “Aggregate Statement for Exchange of Exchangeable Bonds” (Form 32), an Aggregate Statement for the Redemption at Holder’s (Issuer’s) Option of Exchangeable Bonds” (Form 33), a “Aggregate Holding Analysis of Exchangeable Bonds ”(Form 34), and an “Aggregate Daily Statement for Bond Stripping/ Reconstitution” (Form 35).

46. .Clearing banks shall print “CGS Payment of Principal and Interest” (Form 36), “Monthly Statement for Exchangeable Bonds” (Form 37) and“ Monthly Statement for Bond Stripping/Reconstitution” (Form 38) for filing on a monthly basis.“Monthly Statement for CGS Disbursement and Collection of Principal and Interest Funds” (Form 39), “Holding Analysis of CGS” (Form 40), “Financial Institutions Holdings of CGS” (Form 40-1), and “Monthly Statement Disbursement and Collection of Exchangeable Bonds Odd Stocks Repayment Fund” (Form 41) should be printed and transmitted to the Bank for filing prior to the second business day of the following month. The Bank will compile a “Aggregate Monthly Statement for CGS Disbursement and Collection of Principal and Interest Funds” (Form 42), a“ Strippable Bonds Disbursement and Collection of Principal and Interest Funds” (Form 42-1), “Aggregate Monthly Statement for the Exchange of Exchangeable Bonds” (Form 43), a “Aggregate Monthly Statement Disbursement and Collection of Exchangeable Bonds Odd Stocks Repayment Funds” (Form 44) and “Aggregate Monthly Statement for Bond Stripping/Reconstitution” (Form 45) for Ministry of Finance records. A “Aggregate Holding Analysis of CGS” (Form 46) will be printed.

47. Clearing banks shall produce a “Semi-annual Principal and Interest Payment Settlement Statement” (Form 47) once every six months, and the Bank will produce “Comprehensive Semi-annual Principal and Interest Payment Settlement Statement” (Form 48) and submit it together with the aforementioned Statement to the Ministry of Finance for the disbursement of processing service fees.

The statements that are required of to be printed by clearing banks, as prescribed in Direction 45 to the preceding paragraph shall, if needed, be stored in electronic media, and may be printed at any time.

48. In the event of malfunction or line interruption of the CGSS mainframe system resulting in full-scale online failures, the Department of Information Management shall immediately notify the Department of the Treasury, the Department of Banking and all online participants, and take appropriate actions depending on the circumstances of the contingency:

(1) In case of system interruption：

i. Payment for awarded securities and buyback:A clearing bank shall produce electronic medium that contain information on payments for awarded securities and as well as the delivery of soldback securities,and submit the underlying electronic medium to Department of the Treasury for processing. The Bank shall produce electronic medium for the results of securities transfer against payment and funds transfer against delivery of soldback securities and give such electronic medium to the clearing bank for processing.

ii. Free- of- payment transfer, restricted transfer registration, lodgment registration, and return registration: operations shall be carried out in manual backup procedures. The transferor banks shall deliver all accepted transactions to Department of the Treasury on the [electronic] medium in whole batches； Department of the Treasury shall contact the Transferee banks to get the Bank serial numbers of the last received transactions and produce the information on the [electronic] medium for processing by the transferee banks. Transferee banks shall report the results of processing to Department of the Treasury by fax and telephone, and Department of the Treasury shall notify the relevant departments.

iii. The provisions in item (i) hereof shall apply mutatis mutandis to delivery versus payment transfer; the provisions in item (ii) hereof shall apply to exchange for government-held stocks, and bond stripping or reconstitution.

iv. The [electronic] medium produced by clearing banks according to the three preceding items shall be delivered in a sealed envelope attached with a detailed list and affixed with the authorized signature of the securities account.

(2) In case of CGSS mainframe system malfunction: CGSS operations shall be relocated to the off-site backup center of the Bank. If the off-site backup center is also inoperative, all online operations of interbank securities transaction shall be suspended and shall be reactivated after the CGSS is recovered.

When the CIFS experiences disruptions while the CGSS operates normally: Except in case of payment for awarded securities, buy back and repayment of principal and payment of interest, operations shall be backed up manually, in accordance with the Guidelines for Central Bank Electronic Interbank Funds Transfer and Settlement Procedures, all other payment-related transactions shall be executed after the CIFS is recovered.

49. In the event of malfunction or line interruption of an online participant’s mainframe system, the participant shall immediately notify the Department of the Treasury and the Department of Information Management. Manual backup procedures shall be put in place if operations are not recovered by 5:00 p.m. When the cause of failure lies with a transferor bank, the transferor bank shall produce a medium containing accepted transaction data in a batch and send it, before the recovery of the system, to the Department of the Treasury prior to 6:30 p.m. The Bank shall in turn produce a medium containing the processed transactions received from the transferee bank and provide it to the transferor bank for processing. When the cause of failure lies with the transferee bank, the Bank shall produce a medium containing accepted transaction data to the transferee bank for processing. The transferee bank shall report the processing results to the Department of the Treasury by facsimile and telephone. The Department of the Treasury shall in turn forwards the results to the relevant parties.

The medium referred to in the preceding paragraph, shall be delivered in a sealed envelope attached with a detailed list and affixed with the authorized signature of the securities account.

50. Where the Bank, due to a system breakdown, causes interbank security transactions or funds transfers to be inconsistent with the original documentation of the clearing bank, the Bank shall make the necessary correction in accordance with the relevant accounting regulations.

51. When a system participant discovers an error while reviewing its same-day transaction statement or through checking the comprehensive trading information for the given day, it shall immediately notify the relevant department of the Bank and take part in the investigation.

52. When a the transmission of an interbank transaction instruction of free-of-payment transfer, restricted transfer registration, lodgment registration, return registration, or exchange for government-held stocks does not conform with the original documents, a transferor bank shall transmit a message requesting for return [of transfer] upon obtaining approval from the transferee bank, which shall make a reversal transfer for correction accordingly.

The transferee shall offer its full cooperation in making the aforementioned correction when notified. If the balance of securities, stocks or funds of a transferee bank’s customer account is insufficient to cover a reverse correction transfer, the transferor bank shall negotiate with the customer to resolve the problem by itself.

The preceding two paragraphs do not apply to STRIPS.

53. For transactions not conforming with the original documentation as under Direction 51 and item 1, Direction 52, which are not processed by the transferor bank on the same day but corrected at a later date, and where delay adversely affects the interest of the transferee bank, it may request the transferor bank to pay compensation interest incurred from the date of the transaction until the date of correction for any securities pending transfer during that period or for a shortfall in the transfer. The transferor bank shall not be liable for any other damages.

With the exception of previous agreements between the parties to a transfer, payment interest as per the preceding paragraph, shall be calculated, per diem, at the weighted average of the overnight interbank call loan rate, for the number of days of delay.

54. Where a registration institution discovers an error connected with any type of securities registration which makes the transaction invalid, it shall immediately investigate the source of the error and re-enter the transaction data. Interbank transactions that have not been effected before the cut-off time of the CGSS operation shall be rejected by the CGSS Center.

55. The Bank may charge transfer fees for carrying out interbank securities or funds transfers (Interbank Securities Transfer fees Schedules are in Appendix 2, Interbank Fund Transfer fees Schedules are provided in relevant rules for the CIFS). The fees shall be collected from customers by clearing banks and deducted per month from the bank reserve accounts of those clearing banks by the Bank.

56. A clearing bank handling securities or funds transfers or issuance of RP/RS transaction certificates may charge transfer, issuance, or account maintenance fees.

Assessment of charges and rates for intrabank trades shall be determined by clearing banks.

57. Matters relating to the Securities, such as methods of opening and closing accounts, changing seals or reporting lost seals, use of passbooks and reporting lost passbooks, shall all be handled in accordance with relevant regulations of the Bank and clearing banks.

58. Payment and withholding of the tax in relation to the transfer of the Securities or repayment of principal and payment of interest shall be handled in accordance with relevant laws and regulations.