Under Article 50, Paragraph 1 of the Futures and Exchange Law and Article 47, Paragraph 1 of the Regulations Governing the Administration of Futures Commission Merchants, a futures clearing house shall collect clearing margins from its futures clearing members, and such clearing margins may be paid in cash or marketable securities approved by the competent authority. The Financial Supervisory Commission (hereinafter, the "FSC") issued the Jin-Guan-Zheng-1030025389 Circular of July 21, 2014 (hereinafter, the "Circular") to offer instructions about the collection methods and standards for clearing margins as well as the discount ratio of marketable securities used to offset clearing margins.

This Circular points out that with regard to collection of a clearing margin, a trading margin or a royalty, when an approved clearing house collects from its futures clearing members, when a futures clearing member collects from a futures commission merchants, or when a futures commission merchants collects from a futures trader,the marketable securities under Article 6 of the Securities and Exchange Law which are announced as an offset object by a futures clearing house pursuant to its rules concerning the methods and standards for collecting futures margins may be used to offset such margin or royalty. However, the maximum amount that may be offset by marketable securities provided by futures clearing members is subject to an upper limit. The Circular indicates that the marketable securities so provided for offsetting purposes shall not exceed 50% of the total payable clearing margins.