Dual-Currency ETF Trading

(1)	Transaction process:
	A TWD ETF and a CNY ETF will have separate ticker codes, and matching and settlement of orders will be handled separately.
(2)	Trading hours:
	The trading hours for CNY ETFs are the same as the trading hours for currently existing TWD ETFs regardless of the trading method (e.g. ordinary trading, block trading, after-market fixed-price trading, odd-lot trading).
(3)	Tick size:
	The tick size for CNY ETFs is the same as that for currently existing TWD ETFs. If the market price per beneficial unit is less than CNY50, the tick size is CNY0.01; if the market price per beneficial unit is CNY50 or greater, the tick size is CNY0.05.
(4)	Trading unit:
	The trading unit for CNY ETFs is the same as that for TWD ETFs.
(5)	Price limits and circuit breakers:
	CNY ETFs have the same price limits as those for TWD ETFs, and also are subject to circuit breakers.
(6)	Auction reference price at market opening on first day of trading:
	The net value per beneficial unit of a given TWD ETF, after it has been converted at the applicable exchange rate to the CNY equivalent, is taken as the basis in calculating the auction reference price and the price limits at market opening on the first day of trading of CNY ETFs.

For example:
On the day before the first day of trading of a CNY ETF, if the net value per beneficial unit of the TWD ETF is NT$55, and the CNY : TWD exchange rate is 0.1900 : 1, the auction reference price at market opening on the first day of trading for the CNY ETF will be: 55 x 0.1900 = 10.45

(7)	Procedures for distribution of gains (ex dividend trading):
	For a CNY ETF, gains are still distributed in TWD. The TWD amount of an earnings distribution after it has been converted at the applicable exchange rate to the CNY equivalent, will be taken as the basis in calculating the auction reference price and the price limits at market opening on the first day of ex dividend trading of CNY ETFs.

(8)

Restrictions applying to CNY ETFs:

A. A CNY ETF may not be used in margin purchases, short sales, day trades, money borrowing or lending in connection with securities business, money borrowing or lending for unrestricted purposes, securities settlement financing, money lending secured by securities, or securities borrowing and lending transactions, nor may they be used as collateral or as the underlying securities of warrants. B. A CNY ETF may not be created or redeemed in the primary market.

(9)	Exchange rates:
	(For converting between TWD and CNY)

Content	Time of exchange rate (The term "posted exchange rate" means the exchange rate provided by Cathay United Bank at 3:30 p.m.)
Total dollar amount of quotes for brokered or proprietary trades	Conversion is done using the exchange rate posted by the TWSE on the preceding day.
Standards for the total amounts of reported daily sales of securities subject to disposition measures	Article 6 of the Taiwan Stock Exchange Corporation Directions for Announcement or Notice of Attention to Trading Information and Dispositions includes a provision that places restrictions on the "amounts of reported daily sales or purchases of a given security...." With respect to a CNY ETF, such restrictions apply to amounts as converted to TWD using the exchange rate posted by the TWSE on the preceding day.
Standards for block trade amounts	Conversion is done using the exchange rate posted by the TWSE on the preceding day.
Intraday net asset value (IOPV)	Issuer does conversion using the current exchange rate.
Reference net value at close of market	Issuer does conversion using the current day's exchange rate.
Cash collateral for settlement-coverage securities borrowing	Conversion on the day of the securities loan is done using the exchange rate posted by the TWSE on the preceding day.
Default amounts	Conversion of the amount of defaults occurring on a single reporting day is done using the exchange rate posted by the TWSE on the same day.
Out-trade amounts	Conversion on the trade date is done using the exchange rate posted by the TWSE on the preceding day.

The TWSE posts exchange rates on its Market Information System and also sends them to securities firms as a file.

The issuer of a CNY ETF must designate at least one liquidity provider that is also a liquidity provider for the TWD ETF. Before the CNY ETF is listed, only a liquidity provider is allowed to apply to have the TWD ETF positions it has subscribed or holds converted into units of the CNY ETFs, so that these can serve as liquidity units for the listing of the CNY ETFs. After the CNY ETFs have been listed, investors may apply for conversions between the TWD ETFs and the CNY ETFs.

(1)	Process for applying for conversion:
	When an investor applies with a securities broker to convert between ETF currency denominations, the securities broker will use an online system to apply with the TWSE for the conversion. The TWSE will then notify the Taiwan Depository & Clearing Corporation (TDCC) to confirm that the number of units to be converted as per the application is fewer than or equal to the available number of units in the depository account. The TDCC will then use the TWSE system to report that the conversion applied for by the securities broker has been successfully completed. If it has been successfully completed, the investor can immediately sell the units on the market.
(2)	Conversion hours:
	8:30 a.m. to 5 p.m.
(3)	Conversion ratio and quantity:
	The conversion ratio is one-to-one, i.e. a single TWD ETF unit can be converted into a single CNY ETF unit, and vice versa. The conversion quantity must be an integral multiple of the trading unit, and must not exceed the available number of units in the depository account.
(4)	Conversion of units:
	Units that are convertible: A. Units currently held: Can be converted at any time during conversion hours. B. Units purchased on day T: Cannot be converted until completion of settlement and book-entry transfer on T+2. Investors are not permitted to apply for conversion of TWD ETF positions bought on margin or borrowed.
(5)	Number of conversions:
	The number of times an investor is allowed to convert between TWD and CNY ETFs on a single day is not subject to any restrictions. Following successful conversion, the investor is not allowed to delete or alter the conversion, and is allowed only to apply to convert in the opposite direction.

(1)	Settlement accounts:
	Securities firms and investors must each open a foreign currency settlement account.
(2)	Settlement currencies:
	Settlement is made in the currency in which an ETF is listed and traded, i.e. a TWD ETF is settled in TWD, and a CNY ETF is settled in CNY.
(3)	Time of clearing and settlement:
	The times are the same as for TWD ETFs. A securities firm delivers securities to the TWSE on T+2 at 10 a.m., and delivers payment on T+2 at 11 a.m. An investor delivers both payment and securities to the securities firm on T+2 at 10 a.m.
(4)	Handling fees and processing fees:
	Handling fees and processing fees are collected in the currency in which the ETF units are traded on the market, i.e. those for a TWD ETF are collected in TWD, and those for a CNY ETF are collected in CNY.
(5)	Securities transaction tax:
	Securities transaction taxes for securities dealers' trades in CNY ETFs, and securities transaction tax for CNY ETF trades collected by securities brokers, must be converted to TWD at the actual deal rate and then paid into the national treasury. There is no need to include such amounts in a securities firm's accumulated exchange settlement amount for the current year. The securities firm must aggregate the CNY taxes payable on the security in question as of the day of settlement, round the figure to the second decimal place, then take the actual amount of CNY to be sold for TWD on the settlement date (T+2) or on the next business day thereafter (T+3), and round the NT dollar amount to the first decimal place. The amount thus obtained must be paid as a securities transaction tax. On T+2 or T+3, the securities firm must report to the TWSE the exchange rate used to calculate the actual amount to be sold for TWD in order to pay the securities transaction tax.