Taiwan Stock Exchange Forges Closer Links with International Investors

Business Wire, April 10, 2008

TAIPEI, Taiwan -- Dr. Rong-I Wu, Chairman of the Taiwan Stock Exchange Corporation ("TSEC"), met with Mr. Mark Makepeace, Chief Executive of FTSE Group, to highlight significant market reforms launched by the bourse.

In order to make Taiwan Stock Exchange a competitive trading platform for the global investment community, TSEC has launched significant market reforms in recent years. These reforms include relaxation of rules on off-exchange transactions, stock lending, free delivery settlement and short sales.

"Taiwan equity market has been the best performer in the region in the first quarter of this year. There has been significant increase in institutional interest in Taiwan stocks. Trading value of securities increased to US$274 billion in the first quarter of 2008. For the benefit of the investment community, we would like to build closer links with the international investors and let them know the marked improvement in the trading environment of Taiwan," Dr. Wu said.

Lower trading cost for SBL market

Since 2004, Taiwan Stock Exchange has lobbied for reforms to simplify Securities Borrowing and Lending (SBL) and to make the SBL market more and more liquid. The total value of SBL trading has surged from US$2.5 billion in 2004 to US $9 billion in 2007, and the number of transactions almost doubled from 1,311 orders in 2004 to 2,799 orders in 2007. In addition, TSEC has also fought to eliminate double taxation on manufactured dividends to lower the trading costs for international investors.

Faster execution on short-selling

To further improve the securities trading environment, the Securities and Futures Bureau ("SFB") has agreed to a proposal whereby securities need not be delivered to the broker before the borrower can short sell the securities as long as the lent securities can be delivered the following day. The TSEC is now working with market participants on the operational details.

Further, the original up-tick rule for short selling has been exempted for a wider range of stocks starting November 2007. Now, constituent stocks of the Taiwan Mid-Cap 100 Index and the Technology Index are also exempted, pushing the percentage of exempted stock market capitalization to 84%.

More convenience for off-exchange transactions

To facilitate trading from institutional investors, starting from 14th April 2008, there will be an additional morning trading session from 8:00am to 8:30am for block trading. Further, the TSEC will propose to prolong the trading hours for off-exchange transactions. Thus, block trade can now be processed any time from 9:00am to 5:00pm. In addition, the price fluctuation limit for block trade will be widened to 7% effective from 12th May 2008.

Further deregulation on Free Delivery mechanism

Recognizing the need for investors to transfer shares from account to account, the Free Delivery registration mechanism has been implemented in Taiwan since 2005, allowing investors to transfer securities without the cumbersome process of gaining approval from the relevant authority.

To further improve the system, the SFB has widened the range of applicable transactions. Free Delivery is now available to transfers based upon trust agreements, ETF in-kind subscriptions or redemptions, court orders or rulings, and security transfers within the same master funds.

"We are studying various ways to simplify the registration procedures and documentation for free delivery. In addition, we have also carried out a feasibility study to add omnibus trading account into block trade system to make the trading system more efficient for brokers, dealers and investors," said Ms. May Yu, the senior Vice President of the Trading Department of the Taiwan Stock Exchange.

"Taiwan Stock Exchange's role is to ensure market stability and to enhance fair trading for all investors," Dr. Wu said. "Our goal is to build an open, fair and efficient market place for all investors."

Glossary

Securities Borrowing and Lending (SBL): The SBL system launched in 2003 is developed to facilitate the borrowing and lending of Taiwanese securities. Investors in anticipation for a decline in market price of securities can borrow securities to conduct short selling.

Up-tick rule: A common rule established by regulatory authorities around the world that require every short sell transaction be entered at a price that is higher than the price of previous trade. This rule prevents short sellers from forcing downward momentum when price of securities is already experienced significant decline.

Off-exchange transactions: Buying and selling of large block of shares or 'Block trade' conducted off-the regular exchange trading system. The transaction price is usually negotiated between buyer and seller.

Free Delivery: Delivery of securities from one Master Account to underlying sub-account without payment.

About Taiwan Stock Exchange Corporation

Founded in 1961, TSEC works with the Financial Supervisory Commission (FSC) to regulate Taiwan's stock market, enhance market transparency and improve market infrastructure. It currently offers trading markets for stocks, warrants, Exchange-Traded Funds (ETFs), Taiwan Depository Receipts (TDRs) and corporate bonds.