Chapter 1: General Principles

1.These Directions are specially prescribed by the Central Bank of China (hereinafter referred to as “the Bank”) for the management of book-entry central government securities (hereinafter referred to as “the Securities”).
Except where otherwise provided by law, management of the Securities shall be undertaken in accordance with these Directions.

2. Particulars of the issuance and buyback of the Securities, such as the issue name, type, serial number, form, method, date, amount, coupon rate, date for repayment of principal and interest (method of repayment), the time and place of auctions, the underlying exchange government held shares, the period, the price and the procedures for exchange, redemption at holders’ (issuer’s) option of the Central Government Exchangeable Bonds (hereinafter referred to as “Exchangeable Bonds”) shall be handled in the manner as publicly announced by the Ministry of Finance.

3.The Securities shall be in registered book-entry form, and the particulars of their purchase, transfer, lodgement, deposit for reserves, pledge, and use as public guarantee shall be registered in accordance with these Directions; Without registration, protestation against a third party is prohibited. 

4. Terms in these Directions are defined as follows:
（1）“Book-entry central government securities” refers to bonds issued in registered form (hereinafter referred to as “book-entry bonds”) in accordance with Article 6 of the Act Governing Central Government Construction Bonds and Borrowing, and treasury bills issued in registered form(hereinafter referred to as “book-entry treasury bills”) in accordance with Article 5 of the Act Governing Treasury Bills and Short-term Borrowing.
（2） “Exchangeable Bonds” refers to book-entry securities which may be redeemed by the underlying shares held by the central government(“Government Held Shares”), the government agrees to repay with Government Held Shares or to pay the principal to the bonds holders. 
（3）“Clearing Bank” refers to banks and Chunghwa Post Co., Ltd. appointed by the Bank to handle book entry of the Securities, transfers of settlement funds, and payment of principal and interest when due.
（4）“Registration Institution” refers to the Department of the Treasury and Department of Banking of the Central Bank (hereinafter referred to as “Treasury Department” and “Banking Department”), and Clearing Banks that perform registration of the Securities.
（5）“Self-owned Accounts” refers to the in-house bond accounts of the Bank or Clearing Banks.
（6）“Customer Accounts” refers to accounts at the Bank or Clearing Banks for customers’ securities transactions.
（7）“Transfer Book Entry” refers to book entry of inward or outward transfers of ownership, as in subscription, trading, succession, or donation.
（8）"Lodgement Registration" refers to registration of securities ownership transfer when said securities are used as the guarantee object deposited with the Court.
（9）"Return Registration" refers to registration of bond ownership transfer when securities to be used as the guarantee object deposited with the Court are returned to the depositor or delivered to a third party.
（10）“Restricted Transfer Registration” refers to security registration in which ownership is not transferred, but in which restricted registration of inward or outward assignments is performed, as in establishment of right of pledge or use as public guarantee (where duly deposited in the Bank, the Treasury, or a bank to serve as a guarantee), or deposit for reserves (where duly deposited in the Bank to serve as trust fund reserves or compensation reserves).
（11）“Intrabank Trading Registrations” refers to all registrations carried out for bond accounts of trading counterparties at the same Registration Institution.
（12）“Interbank Trading Registrations” refers to all registrations carried out where bond accounts of trading counterparties are at different Registration Institutions.
（13）"Face Value" refers to the registered value, with the minimum unit of registration being NT$100,000 and the value being registered in progressive increments of NT$100,000. 
（14）“Transferable Balance” refers to amounts in Clearing Bank security accounts at the Treasury Department after deduction of restricted interbank outward transfers.
（15）“Disposable Balance” refers to the security account balance in a Clearing Bank’s Self-owned Account or Customer Account after deduction of restricted outward transfer registration, repurchase (resell) trade certificates issued by the Clearing Bank and other intra bank earmarked balances needed to be deducted.

5.Registrations carried out by a Registration Institution shall be as follows:
（1）Aggregate registration by the Treasury Department of all Registration Institution bond accounts, and registration of restricted transfers on their customer accounts.
（2）Registration by the Banking Department of its open-market operations, deposits for reserve (bonds), registration of transfers on its Self-owned Accounts for short-term financing operations, and registration of restricted transfers.
（3）Clearing Bank registrations of assignments between Self-owned Accounts and Customer Accounts and registration of restricted transfers.

6.The representative office of a Registration Institution shall process with registrations for its Self-owned Accounts and Customer Accounts; branches of the Registration Institution may perform registration operations [for the Bank] given prior reporting to the Bank for approval and recordation.

A registration institution shall report contact list containing information about representative office, responsible supervisors, clerks, and branch list to the Treasury Department for filing by letter. Any changes in the above items shall likewise be reported.

7.Natural persons and juristic persons shall open a security account and a demand deposit account at a Clearing Bank in order to carry out registrations of any kind for the Securities; a Clearing Bank shall open a security account and a security deposit account (hereinafter referred to as “Deposit Account”) with the Treasury Department.

An Account Application Form (Form 1) and a Seal Impression Card (Form 2) shall be filled out when applying to open a bond account or a Deposit Account.

8.A Registration Institution shall issue a book-entry central government securities passbook to customers for all registrations in connection with the Securities, and may, at the customer’s request, provide an Account Verification Statement (Form 3).

Customers may select from either booklet or loose-leaf passbooks for their use (Form 4), but shall obtain approval from the Registration Institution prior to switching to use of the other type. Use of the passbooks shall be according to the “Directions for (Loose-leaf) Passbook Use” (Appendices 1 and 2).

9. The “Central Government Securities Settlement System” (hereinafter referred to as “the Securities System”) established through computer connection between the Bank and Clearing Banks shall use the Bank as the center for interbank connections (hereinafter referred to as “Connection Center”) to perform real-time interbank transfers of securities or relevant funds; the Bank is also linked to the Taiwan Securities Central Depository Co., Ltd. (hereinafter referred to as “TSCD”) and based on information of the Exchangeable Bonds transmitted by the Securities System, TSCD will handle the real-time book-entry transfers of the underlying shares.
Any participants in the Securities System shall observe such matters and procedures for data security as set forth in the relevant provisions in the “Central Bank Computer Communications Services System.”

10.The cut-off time for acceptance of interbank transfers by the Central Bank’s Connection Center shall be 5:00 p.m. (see Table 1 for details of Bond System Operation Schedule). No late transfers will be accepted, provided that this restriction shall not apply when irregularities occur in Bond System operations or the need to coordinate policies requires that normal operating hours be extended.

A Clearing Bank applying for extension of the Connection Center’s operating hours shall notify the Treasury Department by telephone prior to the cut-off time set forth in the preceding paragraph, and shall fax an Application for Extension of Operating Hours (Form 5) to the Treasury Department within thirty minutes of the normal cut-off time.

11.A Clearing Bank shall use the Banking Department’s Interbank Funds Allocation and Clearing System for transfer and clearing of funds in relation to interbank trading through the Bond System.

Chapter 2: Appointment and Management of Clearing Banks

12.A bank may apply with the Central Bank to be appointed as a Clearing Bank in accordance with these Directions by meeting the following requirements:
（1）Net worth of NT$15 billion or above.
（2）A ratio of self-owned capital to risk-based assets of 8% or above.
（3）An average net profit ratio for the past three years of 6% or above.

13.A bank shall apply for appointment as a Clearing Bank by filling out a “Book-Entry Central Government Securities Clearing Bank Application” (Form 6) for submission to the Treasury Department along with a financial statement and other documents required under regulations.

Applications may be approved by the Bank based on need as determined by bond market development.

14.After receiving an appointment as a Clearing Bank, a bank shall contact the Central Bank Information Systems Office (hereinafter referred to as “Information Systems Office”) to set up online connections, and shall complete testing of online connections within one year from the date of appointment. Where testing is not completed within this deadline, the Bank may revoke a bank’s status as Clearing Bank.

Following successful completion of tests as per the preceding paragraph, which shall be undertaken jointly with the Information Systems Office and the Treasury Department, the Treasury Department will issue a letter informing the Clearing Bank of the date upon which it may commence operations.

15.A Clearing Bank shall establish rigorous internal controls and exercise the diligence of a good custodian with regard to performing registrations, clearing funds, releasing trading information, and issuing and revoking repurchase (resell) trade certificates. Except for information duly provided under relevant laws, a Clearing Bank may not divulge customer information.

16.Given any of the following circumstances, the Bank may issue a letter notifying a Clearing Bank to effect improvement:
（1）Failure to perform book-entry bond operations in accordance with these Directions.
（2）Failure to effect transfers of funds in accordance with Bond System data handling protocols.
（3）Occurrence of any other matter hindering smooth operation of the Bond System.

17.Given any of the following, and where warranted by circumstances, the Central Bank may terminate a Clearing Bank’s appointment, suspend its appointment for a specific period of time, or limit new authorizations allowing branches of the bank to carry out Clearing Bank matters:
（1）Failure to effect improvement following notification in accordance with the preceding Direction.
（2）Violation of relevant regulations or material negligence resulting in severe hindrance to Bond System operations.
（3）Suspension of any department’s operations by the central competent authority, resulting in inability to perform bond operations.
（4）Appointment of a receiver or conservator by the central competent authority.
（5）An order from the central competent authority to cease operations.

18.A Clearing Bank shall give advance notice to the Treasury Department of its intention to withdraw from the Bond System three months prior to the intended withdrawal date.

19.Where a Clearing Bank’s appointment is suspended by the Bank , the Clearing Bank shall pay relevant transfer fees and perform final settlement procedures for bond accounts and Deposit Accounts.

Where a Clearing Bank withdraws from the Bond System or its appointment is terminated by the Bank, in addition to effecting final settlements as set forth in the preceding paragraph, it shall perform account cancellation for its bond accounts and Deposit Accounts.

Chapter 3: Issuance and Subscription

20. .Participation in bidding for book-entry bonds is restricted to central government bond dealers (hereinafter referred to as “Bond Dealers”); natural persons and juristic persons shall engage a Bond Dealer to submit bids under whose name on their behalf.

Participation in bidding for book-entry treasury bills is restricted to banks, trust investment companies, insurance enterprises, bills finance companies and the Chunghwa Post Co., Ltd.; natural persons and juristic persons are required to engage a bills finance company to submit bids under whose name on their behalf.

21. Successful bidders shall attend to the following matters prior to the issuance of the Securities:
（1）Filling out an “Application Form For Registration Of Subscriptions” (Form 7), to be submitted to its Clearing Bank to effect registration, showing the combined total Face Values and prices of bonds payable for purchases on its own accounts and on customer accounts, one for each type of security and prior to the following deadlines:
i. Book-entry bonds: prior to 3:30 p.m. on the next business day following the auction.
ii.Book-entry treasury bills: prior to 3:30 p.m. on the date of the auction.
（2）Payment for bonds purchased on their own accounts and on customer accounts prior to the prescribed deadline on the date of issuance.

22.A Clearing Bank shall carry out the following matters prior to bond issuance:
（1）Submission to the Central Bank of information related to the “Book-Entry Central Government Securities Subscription Statement” (Form 8) in accordance with the type of securities and prior to the following deadlines:
i. Book-entry bonds: prior to 12:00 p.m. on the second business day following the date of auction.
ii.Book-entry treasury bills: prior to 5:00 p.m. on the date of the auction.
（2）Sending information on payment of funds for subscriptions on their own account, for customers, and for respective individual bidders, to the Bank to effect payment before 3:00 p.m. on the date of issuance. And Then the Bank will write down the amount in the Clearing Bank’s Deposit Account and write up the amount in the Clearing Bank’s bond account. Where successful bidders fail to effect timely performance of funds settlement, the Clearing Bank shall notify the Bank to make corrections.
（3）Making transfers into the customers’ security accounts on the date of issuance, following the Bank confirmation of payment information, in accordance with the customers listed in the application forms for registration of subscriptions.

Chapter 4: Intrabank Trade Registrations

23.Transfer registrations between accounts at the same Clearing Bank shall be carried out in accordance with the following provisions:
（1）When a Clearing Bank is requested to deduct funds from a transferee’s deposit account in payment of a transaction price, the transferor and transferee respectively shall fill out an “Outward Transfer Registration (and Request for Collection) Form” (Form 9) and an “Inward Transfer Registration (and Request for Payment) Form” (Form 10) for processing by the Clearing Bank. Following confirmation of a match between the transferee’s and the transferor’s trading information, the Clearing Bank shall effect the respective account transfers of bonds and settlement funds as per the applications, and record the same in passbooks for the transferor and transferee. Confirmation of trade match may be omitted where a customer has made prior arrangement with the Clearing Bank.
（2）In cases where a Clearing Bank is not requested to deduct funds from a transferee’s deposit account for a transfer in payment of a transaction price, or where no funds are transferred in connection with the transaction, the Clearing Bank may directly proceed with the transfer of bonds in accordance with the “Outward Transfer Registration (and Request for Funds Collection) Form” filled out by the transferor, except in cases of donations or successions which require attachment of relevant documents. The transferee may have supplemental passbook entries recorded at the Clearing Bank.

24.Intrabank Lodgment Registration shall be carried out in accordance with the following provisions:
（1）The depositor shall submit documents for lodgment request (lodgment statements, court decrees, etc.) and fill out a "Application for Treasury Custody " (Form 11) for processing by the Clearing Bank. After having certified the relevant documents, the Clearing Bank shall process with Lodge-out Registration for the lodger and Lodge-in Registration for the Court. The Clearing Bank shall print the passbook and give it to the lodger together with a "Lodgment Certificate of Treasury Custody " (Form 11-1), and shall print relevant slips of the " Deposit Certificate of Treasury Custody " (hereinafter referred to as a " Deposit Certificate") (Forms 12, 12-1, 12-2, and 12-3).
（2）If several persons (including several persons with a co-ownership relationship) apply joint lodgement, they shall submit Lodgement Registration request as prescribed in the preceding Paragraph. The lodger may use the name of one person among them and ID Card number (or profit-seeking enterprise uniform number) when serving as a representative. The Clearing Bank shall record the representative name and ID Card number (or profit-seeking enterprise uniform number)of the joint lodgement, and the total number of lodgers, in the account name columns of the relevant slips of the Deposit Certificate. The Clearing Bank shall print the Deposit Certificate number on the joint lodgers lists which shall be affixed to the relevant slips of the Deposit Certificate for filing.
25. The Intrabank Return Registration and the conversion or sale of the
lodged securities shall be carried out in accordance with the following 
manners: 
(1) Full return or reception:
i. The receiver shall submit the Deposit Certificate with the authorized signature of the Court to the Clearing Bank for return or reception. After having certified the authorized signature, the Clearing Bank shall process with the Return-Out Registration for the Court and the Return-In Registration for the receiver based on the Deposit Certificate, and print the passbook and give it to the receiver. The Court may have its passbook entry updated at the Clearing Bank.
ii.If several persons (including several persons with a co-ownership relationship) jointly return or receive the lodged securities, they shall apply in accordance with the manners provided by Subparagraph 2 , Direction24.
(2) Partial return or reception:
i. After having certified the authorized signature of the Court, the Clearing Bank shall divide the Deposit Certificate into two new Deposit Certificates pursuant to the indication of the Court Letter stating portions of the lodged securities to be reserved and to be received, and print the relevant slips for each new certificate. Apart from the slip for Clearing Bank, other slips shall be handed over to the governing Court.
ii. Reception procedures shall be processed in accordance with the full return or reception procedures. 
(3) Conversion of lodged securities : 
To convert lodged securities by law, the lodger shall attach the documents for lodgement request (lodgment statements, court decrees, or certificates of confirmation, etc.), and shall apply Lodgement Registration with the newly-provided securities as security lodgement in accordance with Direction 24, and shall apply Return Registration with the originally-lodged securities in accordance with this Direction. 
(4) Sale of lodged securities:
i. After having certified the authorized signature of the Court, the Clearing Bank shall sell unmatured securities recorded on the Deposit Certificate in accordance with the Court’s compulsory enforcement order. 
ii. The clearing bank shall transfer the securities into the security account assigned by the transferee, and shall total the sum of money remained after sale together with the principal, interest, and yield of the matured securities, shall fill out（copies of）Receipt of Treasury Deposit and transfer the said sum to the custody account of court enforcement case monies for allocation.

26.Intrabank Restricted Transfer Registration shall be carried out in accordance with the following:
The pledgor (guarantee provider) shall fill out an “Application for Registration Establishing Right of Pledge” (Form 13) (or "Application for Registration of Public Guarantee " (Form 14) ) and request the Clearing Bank for registration. The Clearing Bank shall perform Restricted Transfer-out Registration on behalf of the pledgor (guarantee provider) and Restricted Transfer-in Registration on behalf of the pledgee (guarantee recipient) in accordance with the applications, and print out the passbook and provide it to the pledgor (guarantee provider) together with an " Certificate for Registration of Establishing Right of Pledge " (Form 13-1) (or "Certificate of Registration of Public Guarantee " (Form 14-1) ); the pledgee may have a supplemental passbook entry recorded at the Clearing Bank.

27.Intrabank Revocation of Restricted Transfer Registrations, the exercise of pledge rights and revocation of public guarantee under court order for compulsory execution by transfer of registration shall be carried out in accordance with the following:
（1） Revocation of Restricted Transfer Registrations:
i. The pledgor (guarantee provider) shall fill out an “Application for Revocation of Right of Pledge or Registration of Public Guarantee” (Form 13), to which the seal of the pledgee (guarantee recipient) shall be affixed as proof of consent for processing by the Clearing Bank.
ii. According to the documents prescribed in the preceding Item, the Clearing Bank shall revoke the Restricted Transfer Registration between the pledgor (guarantee provider) and pledgee’s (guarantee recipient’s), and print out the passbook and provide it to the pledger (guarantee provider) together with a "Certificate of Revocation Registration of Pledge or Public Guarantee " (Form 15-1); the pledgee may have a supplemental passbook entry recorded at the Clearing Bank.
（2）Exercise of pledge right: 
i. The transferee shall fill out a “Notice of Exercise of Pledge Right ” (Form 16) in regard to the result of the pledgee’s execution of right of pledge, with the pledge-holder’s seal affixed as proof of consent, for submission to the Clearing Bank for processing. The following documents shall be attached according to the respective circumstances:
(i) Petition for court auction: Documents related to court auction shall be attached.
(ii) Self-sale by pledgee: Evidentiary documents shall be attached as listed in the proviso to Article 28 of the Law Governing the Application of the Book of Obligations of the Civil Code (certification from the court, a notary, the police unit, commercial group, or a local autonomous institution, showing sale at market price).
(iii) Agreement with pledgor that the pledgee obtained the subject of the pledge: The contract between the pledgor and pledgee shall be attached.
(iv) Other forms of disposal: The contract between the pledgor and pledgee shall be attached. Where a third party is involved, the relevant contract shall be attached.
ii. If not being requested of deducting funds from the transferee’s deposit account to settle the transaction, the Clearing Bank shall, in accordance with the documents prescribed in the preceding Item, carry out a simultaneous revocation of the pledgor and pledgee’s Restricted Transfer Registration and at transfer of bonds between the pledgor and transferee’s accounts, and shall print a passbook and provide it to the transferee together with a " Certificate of Exercise of Pledge Right " (Form 16-1); the pledgor and pledgee may have a supplemental passbook entry recorded at the Clearing Bank.
iii.In cases where a Clearing Bank is requested to deduct funds from a transferee’s deposit account for a transfer in payment of a transaction price, the Clearing Bank shall also, in addition to carrying out a bond transfer as set forth in the preceding Item , carry out a transfer of funds between the transferee’s and pledgor’s accounts.
（3）Revocation of Public Guarantee Registration and simultaneous transfer of the lodged securities in accordance with the court order for compulsory execution shall be carried out in accordance with the following: 
i. The transferee shall fill out a “Notice of Revocation for Public Guarantee by Transfer of Registration” (Form 17), with the guarantee recipient’s seal affixed as proof of consent, for submission to the Clearing Bank for processing.
ii.The Clearing Bank shall, based on the information in the preceding Item, carry out a simultaneous revocation of the guarantee provider’s and the recipient’s Restricted Transfer Registrations and a transfer of securities between the guarantee provider and transferee’s accounts, and shall print a passbook and provide it to the transferee together with a "Certificate of Revocation for Public Guarantee by Transfer of Registration " (Form 17-1)record of the same for the transferee. The guarantee provider and the recipient may have a supplemental passbook entry recorded at the Clearing Bank.

28.Issuance or redemption of repurchase (resell) trade certificates by a Clearing Bank shall be performed in accordance with the following provisions:
（1）The applicant shall fill out an “Application for Issuance of Repurchase (Resell) Trade Certificates” (Form 18) for processing by the Clearing Bank. The Clearing Bank shall record a passbook entry and produce a certificate for delivery to the applicant.
（2）When a repurchase (resell) trade certificate comes due or for early annulment of contract, the applicant shall carry out revocation with the Clearing Bank using the original certificate produced by the Bank, with the applicant’s registered seal affixed; the Clearing Bank shall record a passbook entry for the applicant.

28-1. When Exchangeable Bonds are redeemed at holders’option, the applicant shall fill out an “Application for Exchange of Central Government Exchangeable Bonds for Government Held Shares/redemption at holders’ option of Central Government Exchangeable Bonds” (Form 19) for processing by the Clearing Bank. The Clearing Bank shall record a passbook entry for delivery to the applicant.

29. A Clearing Bank shall carry out registration of the Securities, funds transfers, issuance and redemption of repurchase (resell) trade certificates and application for redemption at holders’ option of Exchangeable Bonds in accordance with the following provisions:
（1）The Clearing Bank shall verify that the seal on the application matches the registered seal of the applicant.
（2）The Clearing Bank shall verify that the information in the application matches that originally filed with the Clearing Bank.
（3）The Clearing Bank shall verify that the disposable balance of the applicant’s security account or deposit account is equal to or greater than the amount of the outward transfer applied for or the repurchase (resell) trade certificate to be issued.
（4）Processing registration of assignments: The Clearing Bank shall deduct the amount in the transferor’s account and add the amount to the transferee’s account.
（5）Processing lodgment registration: The Clearing Bank shall deduct the amount in the depositor's security account and add the amount to the court’s security account.
（6）Processing return registration: The Clearing Bank shall deduct the amount in the court’s security account and add the amount to the receiver's security account.
（7）Processing Restricted Transfer Registrations: The Clearing Bank shall add the amount of restricted outward transfers to the pledgor’s (guarantee provider’s) security account and deduct the disposable balance from the pledgor’s account by the same amount, and add the amount of restricted inward transfers to the pledgee’s (recipient’s) security account.
（8）Processing revocation of right of pledge (general revocations of public guarantee): The Clearing Bank shall deduct the amounts of restricted outward transfers in the pledgor’s (guarantee provider’s) security account and add the disposable balances to the pledgor’s account by the same amounts, and deduct the amount of restricted inward transfers in the pledgee’s (recipient’s) security account.
（9）Processing exercise of pledge right (revocations of public bonds through transfer): The Clearing Bank shall deduct the amounts of restricted outward transfers from the pledgor’s (guarantee provider’s) security account and add the disposable balance to the pledgor’s account by the same amount, and deduct the amount of restricted inward transfers from the pledgee’s (recipient’s) security account. The Clearing Bank shall also deduct the amounts and the disposable balance from the pledgor’s (guarantee provider’s) security account, while adding up the amounts to the transferee’s security account.
（10）Processing fund transfers: The Clearing Bank shall deduct the amount from the applicant's deposit account and add the amount to the recipient’s account.
（11）Issuing repurchase (resell) trade certificates: the Clearing Bank shall add the amount of repurchase (resell) trade certificates issued to the applicant’s security account and deduct the disposable balance from the applicant’s account by the same amount.
（12）Redemption of repurchase (resell) trade certificates: the Clearing Bank shall deduct the amount of repurchase (resell) trade certificates from the applicant’s security account and add the disposable balance to the applicant’s account by the same amount.
（13）Processing of application(s) for redemption at holders’ option of Exchangeable Bonds: the Clearing Bank shall add the amount of application for redemption at holders’ option to the applicant’s security account and deduct the Disposable Balance from the applicant’s security account by the same amount.

Chapter 5: Interbank Trading Registrations

30.For a Registration Institution processing interbank trading registrations, the transferor bank shall initiate the transmission of trade information and the recipient shall be the transferee bank. Securities or funds for Interbank trades processed through the Bank’s Connections Center shall be transferred between accounts at the transferor bank and the transfereer bank on the basis of the instruction from the transferor bank; the transferee bank shall transmit the results, after processing, to the Bank for transmission back to the original transferor bank. Registration Institutions shall themselves bear responsibility for any errors in the execution of transfer orders that result in injury to the rights and interests of its customers.
The Bank Connections Center will decline any trade for which there is no match in trading information or for which the Transferable Balance of the security account or the balance of the deposit account of the transferor bank is insufficient for deduction.
The Clearing Bank processing the exchange of Exchangeable Bonds for government held shares through the Bank’s Connections Center shall debit the securities account of the transferor bank at the instructions of the transferor bank and transmit the message to TSCD. The method for transmitting message of the preceding two paragraphs shall apply, mutatis mutandis.

31. The transferor bank and the transferee bank in interbank trades and exchanges of government held shares as listed in the previous direction are as follows:
（1）Transfer registration: The Registration Institution with which the transferor does business is the transferor bank; the Registration Institution with which the transferee does business is the transferee bank.
（2）Lodgment registration: The Registration Institution with which the depositor does business is the transferor bank (depositing bank); the Registration Institution with which the Court does business is the transferee bank (custodian bank).
（3）Return registration: The Registration Institution with which the Court does business is the transferor bank (custodian bank) ; the Registration Institution with which the receiver does business is the transferee bank (depositing bank).
（4）Restricted transfer registrations: The Registration Institution with which the pledgor, guarantee provider, or reserve depositor does business is the transferor bank (pledgor bank, guarantee provider bank or depositor bank); the Registration Institution with which the pledgee or recipient does business is the transferee bank (pledgee bank or recipient bank).
（5）Revocation of restricted transfer registrations, the exercise of pledge right, and revocation of public guarantees (reserve deposits) through transfer: The Registration Institution with which the pledgee or the recipient does business is the transferor bank (the pledgee bank or recipient bank); the Registration Institution with which the pledgor or guarantee provider or reserve depositor does business is the transferee bank (the pledgor bank or guarantee provider bank or depositing bank).

（6）Funds transfers: The Clearing Bank with which the applicant applies for outward transfer is the transferor bank; the Clearing Bank receiving the inward transfer is the transferee bank.

（7）Exchange for government held shares: The Clearing Bank to which the applicant applies for exchange shall be the transferor bank. The TSCD shall be the transferee.

32.The order for an interbank trade or an exchange for government held shares issued by the transferor bank shall respectively be processed in accordance with the following:
（1）Transfer registration or a funds transfer: The message shall include the trading code number, the transferor bank, the security account number of the transferor, the account name of the transferor, personal ID number of the transferor (or for a profit-seeking enterprise, the government uniform invoice number), the recipient bank, the security account number of the recipient, the account name of the recipient, the personal ID number of the recipient (or for a profit-seeking enterprise, the government uniform invoice number), the securities code, and the number of securities or the deposit account number and the amount of funds therein. 
（2）Restricted transfer registration: In addition to the information prescribed in the preceding subparagraph, information on the type of registration and interest beneficiary shall also be included.
（3）Exchange of government held shares: The message shall include the trading code number, the transferor bank, the security account number of the transferor, the account name of the transferor, personal ID number of the transferor (or for a profit-seeking enterprise, the government uniform invoice number), the account number of the transferorwith TSCD, the securities code, the amount of the securities, the exchange price, the securities code of the underlying shares, the number of exchange shares and the amount payable for odd shares.

33.Interbank trade registrations, funds transfers or exchange for government held shares shall be performed in accordance with the following regulations, except with respect to the manner of registration and the forms used, where the provisions for intrabank trade registrations shall apply mutatis mutandis:
（1）Interbank transfer registrations: To be carried out by the transferor at the transferor bank; after the transferor bank performs the outward transfer registration for the transferor, it shall transmit the related message to the transferee bank, which shall perform the inward transfer registration for the transferee.
（2）Interbank lodgment registration: To be carried out by the depositor at the depositing bank; after having processed the lodger's Transfer-out Registration, the depositing bank shall transmit relevant message to the custodian bank which shall process the Court's Transfer-in Registration and print out relevant leaves of the Custodian Certificate. If several persons (including several persons with a co-ownership relationship) make a joint depository, the depositing bank shall fax the lodger list to the custodian bank at the same time.
（3）Interbank return registration: To be carried out by the receiver at the custodian bank; after having processed the court's Transfer-out Registration, the custodian bank shall transmit relevant message to the depositing bank which shall process the receiver's Transfer-in Registration. If several persons (including several persons with a co-ownership relationship) jointly return or collect the object, the custodian bank shall fax the receiver list to the depositing bank at the same time.
（4）Interbank restricted transfer registration: To be carried out by the pledgor (guarantee provider or reserve depositor) at the pledgor bank (guarantee provider bank or depositing bank); after having processed the the pledgor's Restricted Transfer-out Registration, the pledgor bank shall transmit relevant message to the pledgee bank (the recipient bank) which shall process the pledgee's (recipient) Restricted Transfer-in Registration.
（5）Interbank revocation of restricted transfer registration, the exercise of pledge right, and revocation of public guarantee (reserve deposits) through transfer:
i. Revocation of established pledge right, public guarantee, and reserve deposit registration: To be carried out by the pledgor (guarantee provider or reserve depositor) at the pledgee bank (recipient bank); after having processed the pledgor's Revocation of Restricted Transfer-in Registration, the pledgee (recipient) bank shall transmit the related message to the pledgor (guarantee provider) bank which shall process the pledgor's (guarantee provider or reserve depositor) Revocation of Restricted Transfer-out Registration.
ii. Exercise of pledge right: The transferee shall open a security account at the pledgor bank, and effect the transaction at the pledgee bank based on the result of the pledgee’s exercise of pledge right. After having processed the pledgee's Revocation of Restricted Transfer-in Registration,the pledgee bank shall transmit the related message to the pledgor bank which shall process the pledgor's Revocation of Restricted Transfer-out Registration and the security transfer between the pledgor and the transferee.
iii. Revocation of public guarantees (reserve deposits) through transfer: The transferee shall open a bond account at the provider (reserve deposit) bank, and carry out revocation at the recipient bank based on the results of the court’s compulsory execution. After having processed the receiver's Revocation of Restricted Transfer-in Registration, the recipient bank shall transmit the related message to the provider (reserve deposit) bank which shall process the guarantee provider's (reserve depositor) Revocation of Restricted Transfer-out Registration, and perform the security transfer between the guarantee provider (reserve depositor) and the transferee’s accounts.
（6）Interbank funds transfers: The applicant shall carry out the transfer at the transferor bank by filling out a “Funds Transfer Application Form” (Form 20). The transferor bank shall deduct the amount from the applicant’s deposit account and transmit the relevant message to the transferee bank, which shall add the amount to the recipient’s deposit account.
（7）Exchange of government held shares: The applicant shall fill out an “Application for Exchange of Central Government Exchangeable Bonds for Government Held Shares/Early Sell Back of Central Government Exchangeable Bonds” (Form 19) and submit to the Clearing Bank. The Clearing Bank shall, after confirming the Face Value of the securities applied for exchange and the number of Government Held Shares to be received by the applicant to be correct and without error, deduct the amount from the applicant’s security account and transmit the relevant message to TSCD and TSCD shall then transfer the shares to the applicant’s centralized depository securities account. 

Chapter 6: Interest and principal repayment

34.Interest payments and principal repayment for the Securities shall be carried out in accordance with the following provisions:
（1） Maturity of the Securities
i. The Treasury Department will calculate the amount of principal and interest to be paid in the given period based on the records of the balances at the registration institutions as of the close of business day prior to the repayment date of interest and principal. These payments will be made to the Registration Institutions prior to 10：00 a.m. on the repayment date.
ii. Based on the final accounting of balances in Proprietary and Customer Accounts on the same date of record as in the preceding subparagraph, Registration Institutions shall calculate the amount of principal and interest to be paid for the given period, and following payments of principal and interest amount by the Treasury Department, will reallocate net amount after deduction of taxes to the various deposit accounts for Self-owned and Customer Accounts prior to 12:00 on the principal and interest repayment date.

（2）Redemption at Holders’（Issuer’s） Option of the Exchangeable Bonds
i The Treasury Department will calculate the amount of principal and interest to be paid in a given period based on the accumulated Face Value applied to be redeemed at holders’ option (the records of the balances) at the Clearing Banks as of the close of the announced record date. These payments will be made to the Registration Institutions prior to 10：00 a.m. on the fifth business day after the record date.
ii Based on the accumulated Face Value applied to be redeemed at holders’ option (final accounting of balances in Proprietary and Customer Accounts) on the same date of record as in the preceding subparagraph, Registration Institutions shall calculate the amount of principal and interest to be paid for a given period, and following payments of principal and interest by the Treasury Department, will pay the net amount after deduction of taxes to the various deposit accounts for Self-owned and Customer Accounts prior to 12:00 noon on the fifth business day after the record date of redemption at holders’(issuer’s) option.
When securities mature or are redeemed at holders’（issuer’s） option of Exchangeable Bonds, all registrations following the allocation of principal and interest by the Treasury Department will be settled in whole or in part in accordance with subparagraph 1, item 1, or subparagraph 2, item 1, of the preceding paragraph. The exchange of Exchangeable Bonds for government held shares shall handled in the same way.

35. When security registration are carried out in connection with establishment of pledge right, public guarantee or reserve deposits, interest at maturity or interest received due to redemption at issuer’s option of Exchangeable Bonds will be allocated to the pledgor (guarantee provider) bank by the Treasury Department, and the pledgor (guarantee provider) bank will make a reallocation to the deposit account of the pledgor (guarantee provider or reserve depositor) or the pledgee (recipient) based on the agreement between the applicant and the pledgee (recipient) at the time of application for registration. If the recipient of the interest is an interbank customer, the pledgor bank shall remit the interest to the deposit account of the interbank customer.

36.When security registrations are carried out in connection with establishment of pledge right, public guarantee and reserve deposits, then principal at maturity or principal to be received due to redemption at issuer’s option of Exchangeable Bonds, prior to performance of the aforementioned revocations, will be handled respectively in accordance with the following provisions:
（1）Registration of pledge right: The Treasury Department will allocate the principal amount to the pledgor bank, which shall make payment only after first notifying the interested party and retaining a record of the original registrations, and after presentation by the interested party of documents demonstrating the consent of the other party or other valid documents as required by law.
（2）Public guarantee or reserve deposit registration: The Treasury Department will allocate the principal amount to the recipient bank, which will reallocate the amount to the recipient’s deposit account to serve as public guarantee or reserve deposit.

37. During lodgement period, the matured principal and interest of the securities which have been processed with Lodgement Registration or principal and interest received due to redemption at issuer’s option of Exchangeable Bonds shall be handled in accordance with the following provisions:
(1) The Treasury Department shall pay the matured principal and interest or principal and interest to be received due to the redemption at issuer’s option of Exchangeable Bonds to the Clearing Bank( custodian bank). The sum shall be reserved as lodgement in the custody of the Clearing Bank.
(2) The Clearing Bank (custodian bank) shall pay the yield of the matured principal and interest of securities which are reserved as lodgement or principal and interest received due to redemption at issuer’s option of Exchangeable Bonds. When processing the Return Registration at the request of the receiver, the Clearing Bank shall calculate the principal, interest, yield, and tax payable of the securities originally in its custody, and shall pay the net amount to the receiver after deducting withholding tax.

Chapter 7: Buyback

38.Bidding on buyback of book-entry Treasury bills is limited to bills companies; natural persons or other juristic persons wishing to submit bids shall engage a bills company to do so under its name on their behalf.

39. .Prior to sell back book-entry treasury bills, successful bidders shall fill out an “Application for Selling Back Registrations” (Form 21) showing the total amount of the Face Values of the Treasury bills entrusted for resale through them and resold on their own accounts and prices receivable, and prior to 3:30 p.m. on the date of auction, transmit the same to their respective Clearing Banks for registration.

40.Prior to sell back book-entry treasury bills, the Clearing Bank shall carry out the following:
（1）Transmission of information on the “Statement of Book-Entry Treasury Bills for Selling Back ” (Form 22) to the Bank prior to 5:00 p.m. on the auction date . 
（2）Transmission of message on return and selling back of treasury bills on own accounts and on behalf of others, according to each respective successful bidder, to the Bank prior to 3:00 p.m. on the date of buyback for processing of return of bills. The Bank will write down the amounts in the Clearing Bank’s bond account accordingly and write up the amounts in its own deposit account. Where a successful bidder is unable to perform its settlement obligations, it shall notify the Bank to make corrections accordingly.
（3）On the date of buyback and following the Bank confirmation of the bills return information, the Clearing Bank shall transfer net amounts after deduction of taxes into the respective customer accounts of successful bidders as listed on the “Application for selling back Registration.”

41.Final settlement of original registrations shall be performed for buyback of book-entry Treasury bills after payment of principal and interest amounts by the Treasury Department.

Chapter 8: Account Affairs and Reporting of Data

42.Registration Institutions shall establish formal memorandum ledgers for security transactions; the Treasury Department shall establish a “government book-entry bond management” assets memorandum ledger to control numbers of securities issued by the Treasury, as well as a “government book-entry securities consigned management” liabilities memorandum ledger to control the numbers of securities in Self-owned and Customer Accounts at the various Registration Institutions. Registration Institutions shall establish a “government book-entry bond management” assets memorandum ledger for the purpose of cross-checking with the Bank’s assets memorandum ledger, and shall also establish a “consigned management government book-entry securities” liabilities memorandum ledger in order to control the numbers of securities in Self-owned and Customer Accounts.
Accounting ledgers listed in the preceding paragraph shall be managed according to the provisions of the “Central Public Debts Accounting System.”

43.A Registration Institution may, at any time, make inquiries regarding its own transactions for the current day through the Security System; at daily closing of accounts it shall check daily transaction information against the original certificates, and based on the settlement notification issued through the Bank Connections Center, check the comprehensive data on bond registrations and funds movements in order to maintain the accuracy of its records. Files with itemized trading information shall be kept on file and printed out monthly in Memorandum Books (Form 23). 
Each day at close of operations, a Clearing Bank shall print out a Table of Trading Statistics (Form 24), a balance statement (Form 25), a daily statement for the exchange of Exchangeable Bonds (Form 26), a daily statement for redemption at holders’(issuer’s) option of Exchangeable Bonds (Form 27), and a distribution analysis for holders of Exchangeable Bonds (Form 28) to be sent to the Bank for its files; the Bank will compile and print an aggregate trading balance statement” (Form 29) and an aggregate balance statement (Form 30), an aggregate statement for the exchange of Exchangeable Bonds (Form 31), an aggregate statement for the redemption at holders’(issuer’s) option of Exchangeable Bonds (Form 32) and a comprehensive distribution analysis for holders of Exchangeable Bonds (Form 33).

44.Clearing Banks shall print “Repayment of Principal and Interest Statement” (Form 34) for filing on a monthly basis, and shall also print out “Monthly Statement of Principal and Interest Payment Fund Balance After Receipts and Payments” (Form 35), “Bond Holders Distribution Analysis” (Form 36), “Book-Entry Securities Held by Financial Institutions” (Format 36-1), “Monthly Statement for the Exchange of Exchangeable Bonds” (Form 37), and “Monthly Statement of Exchangeable Bonds Odd Shares Repayment Fund Balance After Receipts and Payments” (Form 38) to be transmitted to the Bank for filing prior to the second business day of the following month. The Bank will then compile a “Combined Monthly Statement of Principal and Interest Payment Fund Balances after Receipts and Payments” (Form 39), a “Combined Monthly Statement for the Exchange of Exchangeable Bonds” (Form 40), and a “Combined Monthly Statement of Exchangeable Bonds Odd Shares Repayment Fund Balance After Receipts and Payments” (Form 41) for Ministry of Finance records, and will also print a “Comprehensive Bond Holders Distribution Analysis” (Form 42).

45.Clearing Banks shall print out a “Semi-annual Principal and Interest Payment Settlement Statement” (Form 43) semi-annually; the Bank shall print out a “Comprehensive Semi-annual Principal and Interest Payment Settlement Statement” (Form 44) for submission to the Ministry of Finance for its allocation of processing fees.

Chapter 9: Management of System Failure and Correction of Account Errors

46. In the event of any malfunction or interruption of the Bank’s mainframe system resulting in complete inability to carry out online operations, the Information Management Office shall immediately notify Treasury Department, Banking Department and all system participants. When service cannot be restored, system functions shall be shifted to the Bank's offsite backup center. If the offsite backup center is inoperative, operations shall be carried out in manual backup procedures. The transferor banks shall deliver all accepted transactions to the Treasury Department on the [electronic] media in whole batches；the Treasury Department shall contact with the Transferee banks to get the Bank serial numbers of the last received transactions and produce the information on the [electronic] media for processing by the transferee banks. Transferee banks shall report the results of processing to the Treasury Department by fax and telephone, and the Treasury Department shall notify the relevant departments.
The [electronic] media referred to in the preceding paragraph, shall be delivered in a sealed envelope attached with a detail list and affixed with the authorized signature of the security account. 

47. In the event of any malfunction or interruption of the system participants’ mainframe system, the Clearing Bank shall immediately notify the Treasury Department and Information Management Office. Where service has not been restored by 5:00 p.m. on the same day, transactions shall be carried out in manual backup procedures. When the cause of the failure occurred at the transferor bank, the transferor bank shall, prior to restoration of service, deliver all already-processed transactions to the Treasury Department for processing in the form of an [electronic] medium prior to 6:30 p.m., and the Bank shall provide all already-processed transactions received from the transferee bank to the transferor bank for processing by means of [a suitable] medium. When the cause of the breakdown occurred at the transferee bank, the Bank shall provide all already-processed transactions to the transferee bank by means of [a suitable] medium; the transferee bank shall report the results of processing to the Treasury Department by fax and telephone, and the Treasury Department shall forward the information to the relevant departments.
The [electronic] media referred to in the preceding paragraph, shall be delivered in a sealed envelope attached with a detail list and affixed with the authorized signature of the security account.

48.Where the Bank, due to a system breakdown, causes interbank security transactions or funds transfers that do not conform to the original documentation of the Clearing Bank, the Bank shall make correction in accordance with the relevant accounting regulations.

49.When a system participant discovers an error through an inquiry about its same-day transaction statement or through checking the comprehensive trading information for the given day, it shall immediately notify the relevant department of the Bank and carry out joint follow-up.

50.When a transferor bank transmits an instruction of interbank transfer or exchange for government held shares not conforming with the original documentation, it shall transmit a message for return [of transfer] upon obtaining approval from the transferee bank and based on which the transferee bank shall make a reverse correction transfer.
The transferee shall offer its full cooperation in making the aforementioned correction upon receipt of notification. If the balance of securities, shares or funds of a transferee bank’s customer account is insufficient to make a reverse correction transfer, the transferor bank shall negotiate with the customer to resolve the problem by itself.

51.For transactions not conforming with the original documentation as under Directions 48 to 50, item 1 which are not processed by the transferor bank on the same day but corrected at a later date, and where delay is disadvantageous to the transferee bank, it may request the transferor bank to pay interest from the date of the transaction until the date of correction for any securities or funds pending transfer during that period or for a shortfall in the transfer. The transferor bank shall not be liable for any other damages.
With the exception of previous agreements between the parties to a transfer, payment of interest as per the preceding paragraph shall be calculated at the overnight interbank reference call loan rate for the number of days of delay in payment.

52.Where a Registration Institution discovers an error connected with any type of bond registration which makes the transaction invalid, it shall immediately investigate the source of the error and re-enter the transaction data. Transactions that have not been effected at the time of a registration’s termination shall be cancelled, and a reverse entry made on the account.

Chapter 10: Fees

53.The Bank may collect transfer processing charges for carrying out interbank securities or funds transfers (Interbank Transfer Charge Schedules are in Appendix 2), which shall be collected from customers by Clearing Banks and deducted from the book-entry bond deposit accounts of those Clearing Banks by the Bank. Relevant fee rates shall be determined by the Bank through consultation with Clearing Banks.

54.A Clearing Bank handling bond or funds transfers or issuance of repurchase (resell) trade certificates may charge transfer, issuance, or account maintenance fees. Assessment of charges and rates for intrabank trades shall be determined by Clearing Banks.

Chapter 11: Supplementary Provisions

55.Matters relating to the Securities, such as methods of opening and canceling accounts, changing seals or reporting their loss, and use of passbooks and reporting their loss shall all be handled in accordance with relevant Clearing Bank and Bank regulations.

56.Tax obligations or withholding in relation to assignment of the Securities or repayment of principal and payment of interest shall be handled in accordance with relevant laws and regulations.

Attachment

(Remarks:These Directions are made in Chinese which shall prevail in case of any discrepancy between the English translation and the Chinese original)