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Merits and Demerits of Direct & Indirect Account Method

Merits and Demerits of Direct & Indirect Account Method. Taiwan Depository & Clearing Corporation. July 27 th , 2006. Market Overview Operation Models Comparison btw Direct & Indirect Accounts Prospects. Content. Market Overview – Account Structure. TDCC.

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Merits and Demerits of Direct & Indirect Account Method

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  1. Merits and Demerits of Direct & Indirect Account Method Taiwan Depository & Clearing Corporation July 27th, 2006

  2. Market Overview Operation Models Comparison btw Direct & Indirect Accounts Prospects Content

  3. Market Overview – Account Structure TDCC Ministry of Finance Central Bank Pension Fund TSEC GTSM TAIFEX SecuritiesFirms Custodian Banks • Issuers • Trusts • Securities Finance Co. Participants Account Participants Account Settlement Account Customers Account Settlement Account Participants Account Customers Account Participants Account Customers Account • TDCC: Taiwan Depository & Clearing Corp. • TSEC: Taiwan Securities Exchange Co. • GTSM: GreTai Securities Market • TAIFEX: Taiwan Futures Exchange

  4. Ministry of Finance National Stabilization Fund was established in 1999 To maintain safeness and soundness of financial market Became TDCC’s participant on March 16th, 2000 Public Service Pension Fund Established in 1943 Contributed by individual public servants and the government Became TDCC’s participant on Nov. 11th, 2004 Central Bank For business in which securities under TDCC custody are collateral of the public construction contracts Became TDCC’s participant on Dec. 30th, 2005 Market Overview – Direct Account

  5. TDCC Investors Securities Firms Operational Process - Indirect Account 7 Trading Report 6. Account Balance Inquiry • Pressing Order 5.Settlement Notice 4. Confirmation 2. Pressing order 3.Confirmation TSEC

  6. Book-entry Process - Indirect Account TDCC Participant: Broker S TSEC 參加人 B券商 Participant: Broker B Participant’s Settlement Account: • +1000 shares • -1000 shares Customer’s Account: • -1000 shares Participant’s/ Customer Account: • +1000 shares Participant’s Settlement Account: • +1000 shares • -1000 shares Securities will be transferred to TDCC participants’ settlement account on T+1 but securities and payment will be settled on T+2.

  7. Pension Funds TDCC Securities Firms Operational Process - Direct Account 6. Securities Transfer 7. Account Reconciliation 8 Trading Report 5.Settlement Notice 1. Pressing Order 4. Confirmation 2. Pressing order 3. Confirmation TSEC

  8. Book-entry Process -Direct Account TDCC Participant: Broker B Pension Fund Participant: Broker S TSEC 參加人 B券商 Participant’s Settlement Account: • +1000 shares • -1000 shares Participant’s Settlement Account: • +1000 shares • -1000 shares Participant’s/ Customer Account: • +1000 shares Participant’s Account • -1000 shares 自有帳/ 客戶帳 +1000股 Securities will be transferred to TDCC participants’ settlement account on T+1 but securities and payment will be settled on T+2.

  9. Comparison btw Direct & Indirect Accounts Note: Direct Account herein refer to Public Service Pension Fund

  10. Comparison btw Direct & Indirect Accounts Note: Direct Account herein refer to Public Service Pension Fund

  11. Comparison btw Direct & Indirect Accounts Note: Direct Account herein refer to Public Service Pension Fund

  12. Potential Customers Major shareholders of listing companies Insurance companies Labor Insurance Fund, Labor Pension Fund and Postal saving fund Follow-up issues Individual investors’ incentives to open direct accounts. Competition with CSD’s current participants (e.g. custodian banks) Management of numerous direct accounts and corresponding operations. Prospects

  13. Thank You

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