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Article 31
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An SBL participant placing an order with a securities firm to lend, borrow, or return securities shall fill out an order ticket marked "LEND", "BORROW", or "RETURN", and upon successful execution of the borrowing or lending transaction, the securities firm shall, based upon the transaction information on record with the TWSE, prepare and issue a securities loan report marked "LEND", "BORROW", or "RETURN" and any other supporting documents, in the form and content as separately announced by the TWSE.
The provisions of Article 75 of the TWSE Operating Rules shall apply mutatis mutandis with respect to the preceding paragraph.
The TWSE shall, by means of file transfer, notify the borrower's securities firm regarding the original margin and maintenance margin requirements.
For any ex-rights or ex-dividend notification or any relevant calculation statement, the TWSE shall deliver a copy to each relevant SBL participant through its securities firm.
The TWSE shall, on a monthly basis or after returning the securities, settle the accounts and prepare statements of the lending fee, lending income, return of collateral, and net receipt or payment of money, and deliver a copy thereof to each relevant SBL participant through its securities firm.
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Article 47
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The securities lending fee for a fixed-price or competitive bid transaction shall be calculated, on a daily marked-to-market and on a transaction-by-transaction basis, as the sum of the products obtained by multiplying the outstanding balance of subject securities on loan on a given day by the closing price of the subject securities on that day and further by the lending rate fixed upon execution of the loan transaction. The total securities lending fees shall be collected/paid through the securities firm upon return of securities in satisfaction of the loan by the borrower.
The borrowing period shall begin on the date the subject securities are borrowed and end on the day preceding the date they are returned. If on the return date an act of God or accident occurs prompting the TWSE or TPEx to announce closure of the securities market, the next business day shall be treated as the return date. The preceding paragraph shall apply mutatis mutandis when calculating securities lending fees for holidays.
The time for settlement and collection of the securities lending fee of a fixed-price or competitive bid transaction is as follows:
- Monthly settlement and collection: On the first business day of each month, the TWSE will calculate the lending-related fees incurred, based on the quantity of the underlying securities that remained unsettled by the borrower in the previous month. The securities firm shall complete collection on the next business day following the TWSE’s notification.
- Collection upon return of securities: When the borrower completes the return of the borrowed securities or makes an early partial return, the TWSE will calculate the lending-related fees incurred in relation to the particular loan. The securities firm shall complete collection on the next business day following the TWSE’s notification.
When the borrower in a negotiated transaction completes the return of the borrowed securities or makes an early partial return, the TWSE will calculate the loan service fees incurred in relation to the particular loan and aggregate and include such fees in the service fees calculated on the first business day of the following month based on the quantity of underlying securities that remained unsettled in the previous month. The securities firm shall complete collection on the next business day following the TWSE’s notification.
The calculation and payment of the securities lending fee on a negotiated transaction shall be negotiated and agreed upon between the borrower and the lender themselves, notwithstanding the provisions of Article 31, paragraph 5.
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Article 49-1
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If any of the following circumstances applies to an SBL participant, and the case is not yet closed, the TWSE shall halt the SBL participant's participation in securities borrowing and lending transactions:
- Any breach specified in Article 76, paragraph 3, subparagraph 1 or 3 of the TWSE Operating Rules or Article 47, paragraph 2, subparagraph 1 or 3 of the GTSM Rules Governing Securities Trading on the GTSM.
- Any default or violation specified in Article 81 of the Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities, Article 28 of the Operating Rules for Securities Business Money Lending by Securities Firms, Article 26 of the Operating Rules for Securities Firms Handling Non-Restricted Purpose Loans or Article 33 of the Operating Rules for Securities Lending by Securities Firms.
- Any default or violation specified in an individual securities finance enterprise's operating rules for handling margin purchases and short sales, operating rules for securities settlement financing, or operating rules for securities lending.
If participation in any securities loan transaction by a borrower in a fixed-price or competitive bid transaction is halted by the TWSE pursuant to the preceding paragraph, thereby rendering it impossible for the borrower to return securities in satisfaction of a securities loan, the borrower may request the TWSE to apply mutatis mutandis the provisions of Article 39, paragraph 1 with respect to the disposal of loan collateral and the buying in of subject securities for return to the lender.
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Article 51
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The borrowing securities firm shall, by 11 am on the second business day after the trade date, deposit collateral with the TWSE against the borrowing of securities ("securities borrowing collateral"), in an amount of 120 percent of the closing price of the securities on the first day after the trade date, multiplied by the quantity it requests to borrow. If no closing price is available for the preceding business day, the closing price shall be determined by the principles given in Article 58-3, paragraph 4, subparagraphs 2 and 3 of the TWSE Operating Rules.
The provisions of the preceding paragraph in relation to deposit of securities borrowing collateral shall apply mutatis mutandis to a seller securities firm in the case where the TWSE borrows securities for its account or otherwise issues a securities delivery voucher as a temporary substitute for securities to satisfy settlement requirements.
If the borrowing securities firm fails to deposit securities borrowing collateral or otherwise to provide non-cash collateral against the borrowing of securities by 11 am on the borrowing date, the TWSE may temporarily retain any amounts payable for the current clearing period and/or an equivalent portion of securities.
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Article 55
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If, on a day on which a borrowing securities firm reborrows securities for a securities loan not yet returned, the remaining balance of the securities borrowing collateral deposited is lower than 107 percent of the outstanding balance of the securities borrowing multiplied by the closing price of the securities on the preceding business day, then the securities firm shall, by 11 am on the reborrowing date, make additional deposit to bring the level to 114 percent of the outstanding balance of the securities borrowing multiplied by the closing price of the securities on the preceding business day. If there is no closing price available for the preceding business day, the closing price shall be determined by the principles given in Article 58-3, paragraph 4, subparagraphs 2 and 3 of the TWSE Operating Rules.
Where the borrowing securities firm fails to deposit the securities borrowing collateral required under the preceding paragraph, or is unable to return the borrowed securities for a cause attributable to itself, the TWSE will buy in the securities in the market and return them to the lender. The prices needed and all expenses incurred shall first be paid out of the remaining balance of the securities borrowing collateral, and in the event of any shortfall, then be recovered from the borrowing securities firm; any amount remaining thereafter will be refunded to the borrowing securities firm.
The provisions of paragraphs 1 and 2 shall apply mutatis mutandis in the case where the TWSE borrows securities for the account of a seller securities firm or otherwise issues a securities delivery voucher as a temporary substitute for securities to satisfy the settlement requirement.
If the securities firm defaults on its settlement obligations, the TWSE will forthwith suspend the securities firm's participation in securities borrowing and lending transactions.
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