Directions for the Sale and Buyback of Treasury Bills

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Title：

Directions for the Sale and Buyback of Treasury Bills

Inactive Regulations

Amended Date： August 01, 2001

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Chapter Ⅰ General Principles

1.

1. These Directions are specially prescribed by the Central Bank of China (“the Central Bank”) for the sale and buyback of treasury bills. Except where otherwise provided by law, treasury bills will be sold by tender, which will be performed electronically or through submission of written bid forms; Directions for electronic tendering procedures will be adopted separately.

2.

2. The specifics of each treasury bills offering, such as the serial number, form, method, date, amount, date of repayment, and the time and place of auctions shall be handled in the manner publicly announced by the Ministry of Finance.

Chapter Ⅱ Sale of Treasury Bills

3.

3. Submission of bids for treasury bills shall be limited to banks, trust investment companies, insurance enterprises, bills finance companies, and the Directorate General of Postal Remittances and Savings Banks. Natural persons and other juristic persons shall engage a bills finance company to submit bids on their behalf under its own name.

4.

4. Single interest rate bidding shall be adopted for bidding on treasury bills, whether in competitive or non-competitive form. Competitive bidding may be used in combination with non-competitive bidding or may be adopted as the sole method.

(1)Competitive bids: The interest rate in a bid shall be expressed as the discount rate and shall be lower than the base rate; bids will be accepted in successive order from low to high. Where interest rates of successful bids are equal and the remainder of the issue is insufficient for full allocation, a pro-rata allocation will be made based on the bid amounts. Prices payable by successful bidders shall be calculated at an issue price resulting from conversion at the highest rate of all the successful bids.

(2)Non-competitive bids: Non-competitive bids will be calculated at the issue price set forth in the preceding paragraph. Where the volume of bills purchased exceeds the publicly announced amount of the issue, a pro-rata allocation will be made based on bid amounts.

NT$1 million shall be the incremental unit in allocations made pursuant to the preceding paragraph.

5.

5. Bidders will be restricted to submission of one bid-purchase form for each issue, on which there may be no more than ten bids. Competitive bidding and non- competitive purchases may use only the bid form prescribed by the Central Bank’s Treasury Department (“Treasury Department”) (Form 1), which shall be submitted in a sealed envelope.

6.

6. Bid forms shall be filled out in accordance with the following provisions:

(1)The government uniform invoice number of a profit-seeking enterprise shall be listed correctly.

(2)The lowest bid amount for each competitive bid shall be NT$5 million; amounts in excess of that figure shall be in incremental units of NT$1 million. The maximum amount of a bid may not exceed the amount publicly announced by the Ministry of Finance.

7.

7. Any of the following circumstances will result in invalidation of a bid form:

(1)A bid is not submitted on the bid form prescribed by the Treasury Department.

(2)A bid is not submitted in a sealed envelope.

(3)The seal of the dealer has not been placed on the bid.

(4)Bid forms submitted in excess of the prescribed number.

(5)Other circumstances not in conformance with bidding regulations.

Under any of the following circumstances, a bid on a bid form will be void:

(1)An interest rate bid is not written in Arabic numerals, has been altered, or is illegible.

(2)A bid amount is not written in Arabic numerals, has been altered, or is illegible.

(3)The lowest bid amount is lower than the prescribed amount.

(4)Any other entry on the bid form that fails to conform with bidding regulations.

8.

8. Auctions and auction awards will be carried out by the Central Bank and the Ministry of Finance; auction awards will be announced by the Central Bank.

9.

9. On the business day next following the date of auction, each bidder shall dispatch a staff member to the Treasury Department to collect the notice of successful, losing, and invalidated bids.

10.

10. Successful bidders shall carry out settlement on the issue date of the treasury bills.

Settlement for book-entry treasury bills shall be performed according to the applicable provisions of the Operational Directions for Book-Entry Central Government Bonds.

For settlements for treasury bills in the form of certificates, the dealer shall make out an invoice of the treasury bills to be collected and shall draw a check with the Central Bank’s Banking Department as the drawee or a promissory note with the Central Bank’s Banking Department as the payment agent (with the treasury bills’ issue date as maturity date), or shall transfer funds into the Treasury Department’s account in the Banking Department through the Interbank Funds Allocation and Clearing System, and collect the certificates from the Central Bank.

11.

11. Where a successful bidder fails to pay the full price due for treasury bills by the prescribed date, the bidder may not participate in bidding for treasury bills for a period of three years from the date of that issue.

Chapter Ⅲ Buyback of Treasury Bills

12.

12. Bidding for buyback of treasury bills shall be restricted to bills finance companies; natural persons or other juristic persons shall engage a bills finance company to submit bids on their behalf under the name of the bills finance company.

13.

13. Single interest rate bidding, with rates expressed as the current yield rate, shall be the method adopted for bidding on buyback of treasury bills. Successful bids will be those with rates higher than the prescribed base rate; the buyback rate shall be the highest rate among all the successful bids. Prices receivable by successful bidders shall be calculated at the buyback rate.

14.

14. Bidders shall use the prescribed Treasury Department resale bidding forms (Form 2) for bidding, which shall be undertaken in accordance with Article 5.

15.

15. The filling out of resale bid forms for treasury bills, in addition to a minimum bid amount of NT$1 million for each bid on the form, shall be in accordance with Direction 6.

Invalidation of a resale bid form for treasury bills shall apply, mutatis mutandis, to the provisions of Direction 7.

The time and place for auctions, and the handling of auctions and auction awards, shall be carried out in accordance with Direction 2, 8, and 9.

16.

16. Successful bidders shall carry out settlement on the date of buyback of treasury bills.

Settlements for book-entry treasury bills that are bought back shall be performed in accordance with applicable provisions of the Operational Directions for Book-Entry Central Government Bonds.

Where a successful bidder fails to return treasury bills by the prescribed date, the bidder may not participate in bidding for a period of three years from that treasury bills buyback date.