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Relevant Laws

Title:Regulations Governing Securities Finance Enterprises (2018.02.12)
Article 19     If, during the effective duration of a margin purchase or short sale relationship, trading on the securities market is suspended either across the board or for a particular security due to a natural disaster or other extraordinary event and no time has been set for resumption of trading, the securities finance enterprise shall notify the short seller or margin purchaser to close out the margin purchase or short sale by the following means within the agreed period:
  1. For securities acquired through margin purchase, redemption of the securities by cash payment and withdrawing the securities.
  2. For securities sold short, redemption by delivery of spot securities in return for the monetary proceeds from the short sale and the margin. However, if the seller is unable to cover the short sale with spot securities, the securities finance enterprise may apply to the stock exchange or the OTC exchange to purchase the securities through public reverse auction. The cost of the reverse auction shall be borne by the short seller.
Article 54     If, during the duration of a securities borrowing and lending agreement, trading on the securities market is suspended across the board or for a particular security due to a natural disaster or other extraordinary event and no time has been set for resumption of trading, the securities finance enterprise shall notify the customer within the prescribed period of time and settle the securities borrowing and lending transaction according to the following methods:
  1. By redelivery of spot securities.
  2. By an application to the securities exchange or over-the-counter securities market by the securities finance enterprise for purchase of the subject securities by reverse auction, with any expense arising from the reverse auction to be borne by the customer.
  3. By an agreement between the two parties for repayment in cash.