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

Where an authorized bank operates foreign exchange derivatives business involving the New Taiwan dollar exchange rate, the following rules shall apply:

1.Delivery foreign exchange forward business "between the New Taiwan dollar and foreign currency" (1)Actual for demand foreign exchange receipts or disbursements, but one receipt or disbursement of foreign exchange may not be used in multiple contracts. (2)Entering into contracts or processing settlements with clients, either transaction documents supporting actual for demand foreign exchange receipts or disbursements, or a written approval from the competent authorities shall be verified. (3)Maturity: determined according to actual for demand foreign exchange receipts or disbursements. (4)The price of a rollover transaction shall be based on the current market exchange rate rather than the rate of the original contracts.

2.Foreign exchange swaps business "between the New Taiwan dollar and foreign currency" (1)In swaps transactions, when entering into spot foreign exchange settlement or a forward sale (forward purchase) of foreign exchange, the authorized bank shall enter into a foreign exchange forward contract with the same amount in the opposite direction at the same time. (2)Counterparties: Domestic legal entities: no documents required. Foreign legal entities and natural persons: documents of approval issued by the competent authorities shall be verified. (3)In the settlement of swaps transactions, the Declaration Statement shall be filled out pursuant to the "Regulations Governing the Declaration for Foreign Exchange Receipts and Disbursements or Transactions" (hereinafter referred to as the Regulations for Declaration). Column 4 of the Declaration Statement "Nature of Foreign Exchange Receipts and Disbursements or Transactions" shall be filled out according to the nature of the actual transaction, and also noted as "foreign exchange swaps transaction'. In addition, the "remittance classification and code number" provided by the Department of Foreign Exchange of the Bank shall be indicated on the foreign exchange memo, and included in the daily foreign exchange transaction report along with the Declaration Statement. (4)The swap transaction amount need not be included in the foreign exchange settlement and remittance aggregate amount as specified in subparagraph 3, Paragraph 1, Article 4 of the Regulations for Declaration. (5)The prices of rollover transactions shall be based on the current market exchange rates rather than the rates of the original contracts.

3.Non-Delivery New Taiwan dollar foreign exchange forward business (NDF): (1)Counterparties are limited to domestic authorized banks and the overseas branches or head offices of authorized banks. (2)The format, content, and accounting treatment of contracts shall be segregated from those of delivery foreign exchange forward (DF) business. (3)Contracts under this item may not be rolled over or terminated before maturity. (4)Net cash settlement shall be applied uniformly upon maturity. (5)Transactions do not allow margin trade. (6)Without the approval of the Bank, contracts may not be structured to combine with other foreign exchange derivatives products, New Taiwan dollar deposits, foreign currency deposits, or other products. (7)For non-delivery New Taiwan dollar foreign exchange forward transactions of United States dollars 5 million or above, the Department of Foreign Exchange of the Bank shall be notified immediately by telephone.

4.New Taiwan dollar exchange rate option business: (1)Counterparties are limited to domestic and foreign legal entities. (2)Both net amount settlement and gross amount settlement upon maturity are allowed, but the settlement method shall be specified in the contracts. (3)The currency used for option premium and settlement if the option is exercised may be either in the denominated foreign currency or New Taiwan dollar, but shall be specified in the contract. (4)Only "plain vanilla" options may be transacted. Without the approval of the Bank, contracts may not be structured to combine with options or other foreign exchange derivatives products, New Taiwan dollar deposits, foreign currency deposits, or other products.

5.Cross currency swaps business "between the New Taiwan dollar and foreign currency": (1)Counterparties are limited to domestic and foreign legal entities. (2)For cross currency swaps involving the exchange of principal both at inception and maturity, domestic legal entities are not required to submit transaction documents. Both the principal and interest need not be included in the remittance aggregate amount as specified in Subparagraph 3, Paragraph 1, Article 4 of the Regulations for Declaration. (3)For other types of cross currency swaps, the bank shall request its customer to submit documents evidencing actual demand at the time of transaction, the transaction amount shall be included in the remittance aggregate amount as specified in Subparagraph 3, Paragraph 1, Article 4 of the Regulations for Declaration. However, if the foreign exchange receipts and disbursements or transactions are for the export or import of goods, providing services, or other uses approved by the competent authorities, they need not be included in the remittance aggregate amount. (4)In the settlement of cross currency swaps transactions, the Declaration Statement shall be filled out pursuant to the Regulations for Declaration. Column 4 of the Declaration Statement "Nature of Foreign Exchange Receipts and Disbursements or Transactions" shall be filled out according to the nature of the actual transaction, and also noted as "cross currency swaps transaction". In addition, the "remittance classification and code number" provided by the Department of Foreign Exchange of the Bank shall be shown on the foreign exchange memo, and included in the daily foreign exchange transaction report along with the Declaration Statement. (5)The exchange of principal or interest in each term in the future is deemed as a foreign exchange forward contract, and shall be reported on the daily foreign exchange forward transaction report when entering into contract.