Directions for Issuance of Foreign-currency Denominated Negotiable Certificate of Deposit by Banks

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Title：

Directions for Issuance of Foreign-currency Denominated Negotiable Certificate of Deposit by Banks

Announced Date： July 31, 2015

Amended Date： September 20, 2016

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(Purpose of Establishment)

1.

1. The Central Bank of the Republic of China (Taiwan) (hereinafter referred to as the "Bank" ) prescribes these Directions to clearly stipulate matters to be complied with by banks when issuing foreign-currency denominated negotiable certificates of deposit (hereinafter referred to as "foreign-currency NCDs") pursuant to Article 36 of the Regulations Governing Foreign Exchange Business of Banking Enterprises.

(Par Value)

2.

2. Foreign-currency NCDs shall be issued with a par value of 100,000 USD, 100,000 Euros, 100,000 AUD, 500,000 Renminbi, 10 million JPY, or any integral multiples thereof.

(Term)

3.

3. Foreign-currency NCDs shall have a term from one week to one year.

(Rates and Rules)

4.

4. The rates of foreign-currency NCDs may be decided by the issuing bank in consideration of market conditions; however they shall not be linked to any derivative.

[Related Regulations]

(Reserves)

5.

5. When a bank issues foreign-currency NCD, it shall set aside reserves in accordance with Article 4 of the Regulations Governing the Audit and Adjustment of Deposit and Other Liability Reserves of Financial Institutions.

(Issuance and Interest Accrual)

6.

6. Foreign-currency NCDs shall be issued at par value and redeemed along with interest accrued in one lump sum payment at maturity.

(Additional Interest)

7.

7. When an issuing bank is unable to carry out redemption of foreign-currency NCD at maturity in the event of force majeure, it shall pay additional interest on the NCD.

(Issuance Conditions)

8.

8. Foreign-currency NCDs shall not be redeemed before maturity and their terms and conditions shall not be negotiable.

(Registration of Issuance, Book-entry transfer and Settlement Operation)

9.

9. Foreign-currency NCDs shall be issued in non-physical form and registered with the short-term bills central depository custody institution. Matters regarding the registration of issuance, central custody, book-entry transfer, and clearing and settlement shall be carried out in accordance with the Regulations Governing Book-Entry Operations for the Issuance, Registration, and Central Custody of Short-Term Bills.

(Trading and Settlement)

10.

10. The transactions of foreign-currency NCDs shall be settled on a delivery versus payment (DVP) basis through a foreign-currency clearing institution and a short-term bills central depository custody institution.

(Fund Management)

11.

11. When a bank issues foreign-currency NCDs, it shall retain funds raised therefrom in the denominated currency; if necessary , the issuing bank may convert the funds into NTD by SWAP or cross-currency swap (CCS).

[Related Regulations]

(Receipts and Payment)

12.

12. Settlements for foreign-currency NCD shall be made in the denominated currency of the NCD. When the payment involves an exchange against NTD, the NCD investor shall comply with the Regulations Governing the Declaration of Foreign Exchange Receipts and Disbursements or Transactions and other relevant regulations.

(Issuance Management)

13.

13. When a bank applies to the Bank for approval to issue foreign-currency NCDs in accordance with Paragraph 1, Article 6 of the Regulations Governing Foreign Exchange Business of Banking Enterprises, the bank shall submit an annual issuance plan that contains information on planned issue amount for the year and fund utilization plan, and report the issue amount and terms to the Bank for record within one week after the first issue.

A bank may issue NCDs within the issue amount approved by the Bank in accordance with the preceding paragraph on a revolving basis within one year. The unultilized portion of the quota will be invalidated at the end of the one year period.

(Filing)

14.

14. Banks shall file relevant reports and statements in a format prescribed by the Bank.

(Internal Rules)

15.

15. Banks that issue foreign-currency NCDs shall establish relevant operating rules in accordance with these Directions.