1

OUTLOOK • TDCC Chairman Voices Taiwan’s Perspective on

Corporate Governance to Leading Pension Experts

SPECIAL REPORT • TDCC was at the OECD Asian Roundtable on

Corporate Governance

• TDCC Successfully Establishes “Investor Services” Task

Force at ACG Annual General Meeting

BUSINESS HIGHLIGHTS • TDCC ePassbook 2.0 Launched

• Digitalization of Commercial Paper Issuance Documents

Goes Live; Market Efficiency Rapidly Improves

FINANCIAL TECHNOLOGY • Company Transparency Platform is Officially Online

STATISTICS

STOCK MUSEUM • Panoramic View and AR Experience Now Available on

Website of Taiwan Securities and Futures Virtual Museum

GALLERY

2018 WIN

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TDCC Chairman Voices Taiwan’s Perspective on Corporate Governance to

Leading Pension ExpertsTo recognize Taiwan’s significant achievement of 100% electronic-voting capability for

shareholder meetings, J.P. Morgan invited TDCC Chairman & CEO, Mr. Sherman Lin, to serve

as a panelist at its 9th Annual Multinational Pensions Forum in Paris, France on October 11th

of this year. Mr. Lin was the first speaker from Taiwan since the establishment of the forum.

Mr. Lin shared Taiwan’s experience in corporate governance with leading global institutional

investors on a panel titled “What Does Success Look Like in Achieving Good Governance?”

Mr. Lin shared Taiwan’s experience on the important factors of good governance, and

how TDCC utilizes Fintech to enhance governance. He spoke about Taiwan’s progress in

corporate governance over the past 10 years, highlighting 100% voting by poll, and the high

adoption rate of a candidate nomination system.

J.P. Morgan’s 9th Annual Multinational Pensions Forum addressed the numerous challenges

faced by pension funds through case studies that demonstrated global best practices in

delivering defined benefit and defined contribution provisions. The forum was attended by 60

pension management entities across 11 countries from Europe, North America and Asia. The

participants included public and corporate pension managers responsible for approximately

USD 1 Trillion in assets under management. The forum covered regulatory developments, the

impact of technology, and the role of sustainable investments related to the pension segment.

Mr. Lin discussed how in recent years Environmental Social Governance (ESG) and

Corporate Social Responsibility (CSR) have become important decision-making factors

of investment for long-term global institutional investors such as pension funds and asset

managers. Issuers in Taiwan need to be aware of the growing importance of ESG and

CSR. To fulfill Taiwan’s new corporate governance roadmap and support Taiwan issuers,

TDCC plans to cooperate with global proxy voting research institutions to launch an Investor

Relation Platform. This platform will provide issuers and investors with corporate governance

and ESG ratings. Issuers will be able

to review their own ESG and corporate

governance performance, and institutional

investors can easily access companies’

information via the platform. TDCC aims

to improve the quality of communication

between issuers and investors as well as

expand the visibility of Taiwan’s market in

the global investment community.

2

TDCC was at the OECD Asian Roundtable on Corporate Governance

The 2018 OECD Asian Roundtable on Corporate Governance took place on 7-8 November in

Kuala Lumpur, Malaysia. Both Taiwan Stock Exchange Corporation (TWSE) and Taiwan Depository

and Clearing Corporation (TDCC), headed by the Securities and Futures Bureau, Financial

Supervisory Commission R.O.C. (Taiwan), participated. TDCC Chairman & CEO, Mr. Sherman Lin,

was amongst the invited panelists in the panel discussion ‘The use of flexibility and proportionality

in corporate governance frameworks’.

The OECD panel emphasized the versatilities

in ‘The use of flexibility and proportionality

in corporate governance frameworks’; one

size doesn’t f i t al l , the regulations must

be programmed according to the unique

characteristics of individual markets and the

objects, with flexibility and proportionality, in

order to obtain a harmonic balance in improving

market transparency, perpetuating market

integrity and contemplating cost efficiency.

Participants of the panel discussion shared the uniqueness in local corporate governances in Japan,

Hong Kong, Singapore and Taiwan, and the use of flexibility and proportionality. TDCC Chairman &

CEO, Mr. Sherman Lin, shared the outstanding success of TDCC under the ‘Corporate Governance

Blueprint’ from the Financial Supervisory Commission. Mr. Lin also elaborated on the regulations on

independent directors, E-voting and the data of shareholders’ meetings in an alternative language,

namely English. Furthermore, Mr. Lin addressed on how the progressive measures were effectively

implemented in correspondence to various capitals of companies, different classifications and diverse

foreign shareholding ratios as well as how the innovative technologies were instrumented in the

constructions of adequate servicing platforms. Therefore, the overall compliance cost can be reduced

while the market transparency and integrity can be elevated.

During the panel discussion, the Corporate Governance Committee of OECD also pointed out

that the global market is facing a trend of ‘Increase in Institutional Ownership’; there is a growing

force affecting corporate governance of the issuing corporates coming for the institutional

shareholders. Because of this, in addition to assisting in promoting institutional investors’ regulation

compliances, TDCC is activating a dual-language ‘Integrated Investor Relations Platform’ in 2019,

in coordination with the advanced ‘Corporate Governance Blueprint’, with the aim of bettering the

quality information transfers between the issuing corporates and shareholders, hence the improved

convenience information searches for the investors. Thus, the communications between the

issuing corporates and investors can be strengthened; meanwhile, the global visibility of the Taiwan

markets can be further enhanced.

Special Report

3

TDCC Successfully Establishes “Investor Services” Task Force at ACG Annual General Meeting

After elected as the executive committee member of Asia-Pacific CSD Group (ACG) in 2016,

TDCC actively conducted the exchange and cooperation among global CSDs. On November

26, Chairman and CEO, Mr. Sherman Lin led delegation to attend the 22nd ACG Annual

General Meeting in Sri Lanka, proposing to set up “Investor Services” task force. With the

support of the attendees, the task force was successfully established.

Investor Services have been global CSDs’ development direct ion during business

transformation. How to conduct cross-industrial cooperation through innovative technology,

offer diversified channels to investors for their own account management and information

access, and provide investors with more convenient services are all major tasks for global CSD

business development.

In the past years, TDCC has been offering quality and innovative investor services to the

market such as e-voting, TDCC ePassbook and Fundrich. Through the establishment of the

task force, TDCC hopes to share with ACG members the company’s business development

in B2B as well as B2B2C and experiences in the use of financial technology. In addition,

TDCC will take into consideration members’ opinions and ideas as references for future

business planning and employ the task force as an exchange platform of members’ business

development experience.

According to Mr. Lin, TDCC has been developing diversified businesses; through the formation

of the task force, TDCC expects to promote more communication on CSDs’ operation of

investor services, information exchange, and international cooperation. Through the sharing of

experience and pursuit of mutual benefits, collaborative development among Asia-Pacific CSDs

can be facilitated.

Special Report

4

TDCC ePassbook 2.0 Launched

Business Highlights

For over a year, there have been over 400,000 accounts

successfully activated through TDCC ePassbook since it went

live, and its 2.0 version has already launched on November 12th.

The press conference was held on November 19th, 2018. The

competent authorities, brokerage representatives and media

reporters were invited to experience new functions with lively

ambiance.

The new version delivers four major functions; first, graphical

display of integrated assets, which integrates investor’s assets

in each passbook and shows the integrated assets in diagram.

Second, cloud trading statements take away investors’ worry of losing transaction details after

they got new smart phones. Third, customized push notifications target at events that investors

have the rights to participate in. Last, “e-STOCKSEARCH” provides thorough market material

information, including shareholder meetings, ex-right and ex-dividend. All these functions

provide investors with more productive ways of asset and equity management.

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Business Highlights

Digitalization of Commercial Paper Issuance Documents Goes Live;

Market Efficiency Rapidly ImprovesWith the trend of financial technology, inclusive of open intelligent platform, big data marketing, and

AI, TDCC has been constantly conducting digital transformation, realizing platform vision through

innovative thinking and launching a variety of digitalized services in bills market.

Since TDCC successfully launched dematerialized issuance of commercial paper in September

2017, there have been over three thousand issuers opening issuance registration accounts with

TDCC. After launching the service, the improvement of operation efficiency and the elimination of

risk of loss and damage are highly appreciated by the market participants. The issuance volume

has been increasing since launch of the service; over NT$ 14.4 trillion commercial papers were

issued until the end of October in 2018. To further develop the idea of platform economy and

extend efficacy of existing platform, TDCC has been actively planning the construction of B2B2B

platform, providing bills primary market with value-added services for digitalization of issuance

documents so that issuers, guarantors, and bills finance companies can transmit issuance

documents electronically through TDCC’s platform. The service removes the inconveniences of

physical document delivery among multiple parties, significantly improves efficiency, and reduces

bills finance companies’ cost of manual delivery.

The digitalization of commercial paper issuance documents, which went live on October 29th 2018,

connects many-to-many information flows among issuers, guarantors, and bills finance companies.

Through the vision of platform economy, the forty-year plus bills market operation mode has been

transformed into a digital model which guarantees a safer, more convenient, and more efficient

financing environment , which has always been and will always be TDCC‘s commitment for

Taiwan’s bills market.

1. Bills finance company delivers

transaction statement

2. Issuer agrees with transaction statement

3. Issuer confirms registration

command and underwriting agreement4. Guarantor

confirms guarantee command

6. TDCC completes issuance

registration

5. Bills finance company transmits

registration command

One click to complete commercial paper issuance documents delivery

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Financial Technology

Company Transparency Platform is Officially Online

In order to strengthen anti-money

laundering and increase corporate

transparency, the Ministry of Economic

Affairs revised the Article 22-1 of

Company Act, and assigned TDCC

on August 31, 2018, to request the

build-out of a Company Transparency

Platform (CTP) for the implementation

of the new law. The platform portal is

now available at https://ctp.tdcc.com.tw.

As 690,000 companies will be required

to file information about their directors, supervisors, managerial officers, and major shareholders

when the new law comes into effect, TDCC believes it is important that the CTP can perform ID

verification and data processing online for first-time users in a timely manner. As such, the CTP

features:

1. Multiple log-in options:

CTP users are required to go through ID verification before making a filing. This process can be

done by simply inserting a conventional corporate certificate, certificate issued by a securities or

futures brokerage, or natural person certificate into a card reader. For users who do not have a

card reader, they only need to provide their health insurance IC card numbers to verify.

2. Made-easy filing:

CTP is linked to the databases of both the Ministry of Economic Affairs and the Ministry of

Finance, so it already has the general and taxation information of all registered companies. CTP

users only need to confirm existing information and fill in the blanks after logging in. There is no

need to start from scratch.

3. Twenty-four seven services:

Using the responsive webpage design (RWD), CTP is open 24 hours a day. It means users can

complete the filing anytime, anywhere via a PC or mobile device.

CTP has been launched on November 1, 2018, and has since run smoothly. Companies are

required to complete their first filing before January 31, 2019. As of November 27, 2018, a total of

121,594 companies have made their filings online. TDCC has organized several presentations and

put the “How to Use” information on the CTP portal website to make sure companies know about

the new law and filing procedure.

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Statistics

1,135

1,174

1,167

39.89

41.30

36.80

36.91

1,998 2,0422,132

34

35

36

37

38

39

40

41

42

0

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

TWSE TPEx Emerging Stocks

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

CP2/CP1/BA NCD

Equities in Custody(Shares)

Equities in Custody(Market Capitalization)

Book-Entry Operations(Shares)

Short-TermBills in Custody

Billion Shares

Trillion NT$

Million Shares

Billion NT$

1,100

1,110

1,120

1,130

1,140

1,150

1,160

1,170

1,180

2017.10 11 12 2018.1 2 3 4 5 6 7 8 9 10 11 12

2017.10 11 12 2018.1 2 3 4 5 6 7 8 9 10 11 12

2017.10 11 12 2018.1 2 3 4 5 6 7 8 9 10 11 12

2017.10 11 12 2018.1 2 3 4 5 6 7 8 9 10 11 12

101,406

83,842

151,561

87,133

32,00118,046

40,523

19,725

430 329 486 286

8

Statistics

2,038

1,576

2,399

1,856

1,345 1,276

1,739 1,645

54 49 51

29 34 34

948,247

1,157,502

3,500

5,284

1,736 1,710

599 706 707 601

Outright Purchases / Sells Repo

Secondary MarketClearing & Settlement of

Short-Term Bills

Offshore Fund Operations

Offshore Fund Subscriptions

Registration ofDematerialized

Securities

Billion NT$

Accounts

Master Agents Distributors Investor Accounts

Systematic Investment PlanOne-time Investment

Million NT$

■

■

■

■

■

■

21,28578%

2,1048%

8713% 2,030

7%

209 1%

911 3%

No. of Issuance

0

500

1,000

1,500

2,000

2,500

3,000

0

200,000

100,000

400,000

300,000

600,000

500,000

700,000

900,000

800,000

1,200,000

1,100,000

1,000,000

0

10

20

30

40

50

60

70

80

0

1,000

2,000

3,000

4,000

5,000

6,000

Warrants

Stocks

Bene�ciary Certi�cates

Corporate Bonds/Bank Debentures

Convertible Bonds

Others

2017.10 11 12 2018.1 2 3 4 5 6 7 8 9 10 11 12

2017.10 11 12 2018.1 2 3 4 5 6 7 8 9 10 11 12

2017.10 11 12 2018.1 2 3 4 5 6 7 8 9 10 11 12

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Panoramic View and AR Experience Now Available on Website of

Taiwan Securities and Futures Virtual MuseumTDCC incorporated augmented reality (AR) technologies and 360。 panoramic photography to

present the exhibits in the Taiwan Stock Museum. Visitors can now see precious items, such as

the very first stock certificates in the world and Taiwan, and the stock with the highest face value,

via the official website of the Taiwan Securities and Futures Virtual Museum for brand new digital

experience.

Interactive AR films and cameras are available in all the exhibition halls of the Taiwan Stock

Museum for both online and offline visitors to take photos and share with friends at home and

abroad in an instantaneous fashion.

The use of technology at the Taiwan Stock Museum allows visitors to access the museum via PC

and a mobile device, such as handset and tablet, without the constraint of time and space. By

visiting the “360。 Online Stock Museum” at the Taiwan Securities and Futures Virtual Museum,

people who cannot make it to the physical museum will also get to see the exhibits on display

and experience the latest financial technology.

Here is the link to the Taiwan Securities and Futures Virtual Museum: https://www.tsfvm.com.tw/

web/index.aspx

Stock Museum

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Gallery

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T h e 2 9 t h a n n i v e r s a r y celebration fair of TDCC’s establishment, Chairman & CEO Mr. Sherman Lin (4th from left), and President Mr. Ching-Li Meng (4th from right), donated a charity fund to 6 non-profit social welfare organizations on behalf of the company on November 17, 2018.

TDCC Chairman & CEO Mr. Sherman Lin (middle) and President Mr. Ching-Li Meng (4th from right) welcomed the business visit from KSD Chairman & CEO Mr. Lee Byungrhae (4th from left), and exchanged view on the implementation and promot ion o f ACG "Investor Services" Task Force on December 13, 2018.

TDCC Chairman & CEO Mr. Sherman Lin (4th from right) met with the head of Asia for Citibank Direct Custody and Clearing Mr. Aashish Mishra (4th from left), and shared experience on recent business development of both sides on November 14, 2018.