
Ref. No:86.5.8Tai-Yang-Wai-(7)-Tze No. 0401074
From the issuance date of this letter, Authorized Banks may engage in OTC “New Taiwan Dollar Exchange Rate Options” business by reporting to the CBC enclosing the product brochure, operational rules, risk control documents and personnel qualification documents. Please take note.
1.The specifications to handle this business are as follows:
(1) Counterparties are limited to domestic and foreign legal entities.
(2) Trading related documents are not required.
(3) Both net settlement and gross settlement upon maturity are allowed, but the settlement method shall be specified in the contracts.
(4) The currency used for option premiums and settlement if the option is exercised may be either in the denominated foreign currency or in New Taiwan Dollars, but shall be specified in the contract.
(5) If the payment and receipt of option premiums and settlement proceeds when the option is exercised involve the purchase or sale of foreign exchange, the “Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transaction”and other relevant regulations shall apply.
2.The Delta positions of an Authorized Bank engaging in the said business shall be included in the financial derivatives positions and reported to the CBC (form attached) on a daily basis for the management of the foreign exchange positions.