Regulations Governing the Trading of Financial Derivatives by Bills Finance Companies Article 8

When a bills finance company engages in financial derivatives transactions on behalf of customers, the counterparties must be financial institutions that have been approved by the Competent Authority or the Central Bank of the ROC to engage in financial derivatives business, with the exception to transactions taken place on the futures exchange to which the provisions in the Futures Trading Act and applicable regulations apply.In compliance with Paragraph 3 of the Regulations Governing the Investment in Bonds and Equity Products by Bills Finance Companies, a bills finance company may not enter trading contracts on behalf of customers where the value of the contract is derived from stock price or stock index until it has been approved by the Competent Authority to invest in equity products.When a bills finance company engages in the transactions mentioned in the preceding paragraph, it may take a short position only for the purpose of hedging the risk of equity assets held, and the aggregate notional amount of the open long positions held shall be included in the investment limits provided in Article 6 of the Regulations Governing the Investment in Bonds and Equity Products by Bills Finance Companies; for contracts without a notional amount, the face value or the contract value will be used for calculation purpose.