The financial safeguard system of TAIFEX relies on the integrity of the system built up by the clearing members, in which TAIFEX and the registered clearing members carry the clearing responsibility to ensure the soundness and success of the market. In order to make the system work, the following financial resources are employed as backup supports to cover future liabilities.

1. Clearing Margin:

Every clearing member should post adequate clearing margin for the open positions of its proprietary and client accounts.

2.Compensation Reserve Fund:

TAIFEX will initially set aside NT$500 million to the designated financial institutions and shall post 20% of the total clearing income every quarter thereafter. This requirement shall not apply when the compensation reserve fund balance equals 1.5 times the authorized capital amount or allocated operating capital amount.

3. Clearing and Settlement Fund:

Currently, the amount clearing members are required to post is set as follows:

*or the designated operating capital of securities firms conducting concurrent futures business

4.Common Bond:

If a default remains unsatisfactory after the above funds are exhausted, the TAIFEX will invoke the common bond rule, which the residual balance of the unsatisfied default amount will be proportionally allocated among the non-defaulting clearing members by cleared volume and the average daily open positions out of all clearing members and is subject to the cap amount. In case the cap amount is insufficient, TAIFEX shall fulfill the remaining clearing and settlement obligation.