According to Article 4 and Article 5, Paragraph 2 of the Regulations Governing the Issuance of Exchange Traded Notes by Securities Firms, an ETN issuer shall meet the following qualifying requirements:
An integrated securities firm.
Net worth not less than NT$10 billion and not less than paid-in capital.
Capital adequacy ratio not lower than 250 percent for each of the preceding 6 months.
Not having been subject to any sanction imposed by the competent authority for a specified period of time (e.g. warning, suspension of business, voiding permission for business).
Not having had trading suspended or restricted by related securities institutions for a specified period of time.
The total amount of ETN issued by the securities firm may not exceed 50 percent of its net worth.
The issuer filing for registration to issue ETN shall meet the qualifying requirements listed in Regulations Governing the Issuance of Exchange Traded Notes by Securities Firms.
Total amount to be issued not less than NT$200 million and 5 million units (minimum listing amount).
The duration is 1 to 20 years.
Not in any circumstances that the TWSE deems the listing inappropriate:
(1)The filed application documents are not submitted in full.
(2)Violation of the law or falsehood or concealment of information in the application.
(3)Circumstances allowing the competent authority to reject the application (Article 8 of the Regulations Governing the Issuance of Exchange Traded Notes by Securities Firms).
(4)The issuer has been suspended to apply by the TWSE, and restriction is still in effect.
(5)Other reasons.
Issuance plan
Prospectus
Liquidity provider: Issuing securities firms should have itself or another securities firm serve as the liquidity provider to provide liquidity during trading.
Subscription mechanism: An issuer may decide whether to issue an ETN with subscription mechanism in primary market. Investors can subscribe by applying to an issuing securities firm through a securities broker before an ETN reaches maturity.
(1)Subscription period: From listing to the last trading day preceding maturity.
(2)Subscription price: Closing indicative value on the application date.
(3)Minimum subscription amount: To be specified by the issuer in the prospectus.
(4)Reasons for rejection of subscription: The issuer may specify conditions for rejection in the prospectus.
Sellback mechanism: Investors may sell back an ETN by applying to the issuer through a securities broker before an ETN reaches maturity.
(1)Sellback period: From listing to the last trading day preceding maturity.
(2)Sellback price: Closing indicative value on the application date.
(3)Minimum sellback amount: To be specified by the issuer in the prospectus.
(4)Reasons for rejection of sellback: The issuer may specify conditions for rejection in the prospectus.
An issuer should set a mandatory redemption mechanism so that when the indicative value of ETN rises above or falls below a certain price, the issuer will proceed to make early redemption of all units held by investors. The last trading day is the first business day following the day on which the condition for mandatory redemption is met. Repayment will be based on the indicative value announced after the market closes on the last trading day.
According to Article 50-8 of the Operating Rules of the Taiwan Stock Exchange Corporation, an ETN will be delisted in any of the following circumstances:
Upon expiry of the valid term of the ETN.
The competent authority has voided or revoked effective registration.
The institution calculating the underlying index has stopped its calculation, or terminated its index licensing contract.
Total issue value is less than NT$100 million and the number of issued units is less than 5 million.
Mandatory redemption.
Delisting circumstances in accordance with its issue plan.
The issuer is in dissolution, bankruptcy, reorganization, negative net worth, or suspension of business for six months or longer.
The issuer was blacklisted by financial institution.
The issuer is unable to redeem the ETN upon maturity or those sold back by investors.
Where the TWSE deems it necessary to delist and terminate trading of an ETN for any other reason.
