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In order to maintain market order and protect the soundness of market development, TAIFEX may perform clearing member position surveillance based on position concentration. TAIFEX may take relevant measures when the position concentration standard is reached.

I.Calculation of Position Concentration for Clearing Members

For TAIFEX clearing members, position concentration is based on the ratio of the sum of the required margin requirement for all clearing accounts of a clearing member to the total required margin requirement for all clearing accounts of all clearing members. The calculation can appropriately reflect the position risk of a single clearing member to all clearing members.

II.Standards for Position Concentration for Clearing Members

According to Article 9.2 of the Taiwan Futures Exchange OTC Derivative Clearing Enforcement Rules, TAIFEX sets out position concentration standards as follows:

• (1)Warning standard: The position concentration of a clearing member reaches 15%, and the required margin requirement meets TAIFEX's standard.
• (2)Disposition standard: The position concentration of a clearing member reaches 20%, and the required margin requirement meets TAIFEX's standard.

Regarding the above-mentioned margin requirement, TAIFEX will specify in a separate announcement after evaluating the volume of cleared transactions, the business development of clearing members and overall market conditions.

III.Position Surveillance and Measures

After TAIFEX completes the end-of-day clearing process, it will check whether the position concentration reaches the warning and disposition standards, and take relevant measures set in Article 9.2. TAIFEX may notify clearing members to monitor position concentration when the position concentration standard is reached; where the disposition standard is reached, in addition to notifying clearing members to monitor position concentration, TAIFEX may collect additional margin or take other necessary measures to maintain market integrity or protect the sound development of the OTC derivatives market.