• Font Size:
  • S
  • M
  • L

Amended Article

Title:

Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities  CH

Amended Date: 2024.12.31 
Categories: Securities Exchange Market > Margin Transaction
Article 8     TWSE-listed ordinary shares will be announced by the TWSE as eligible for margin purchases and short sales if satisfying the criteria below:
  1. The shares have been listed for at least six months.
  2. The net asset value per share at least reaches the par value of NT$10 per share, as specified in the latest financial report as at the date of review. Where the shares have no par value or the net asset value per share is not NT$10, the financial reports published and filed in the last fiscal year show no accumulated losses.
  3. None of the following applies:
    1. Excessively intense share price volatility.
    2. Excessively concentrated equity ownership.
    3. Excessively irregular trade volume.
    With the exception of TPEx-listed managed stocks and stocks registered on the Emerging Stock Board, all TPEx listed common stock shares satisfying the criteria below will be announced by the TPEx as eligible for margin purchase and short sale.
  1. The shares have been listed on the TPEx for at least six months.
  2. The net asset value per share at least reaches the par value of NT$10 per share, as specified in the latest financial report as at the date of review. Where the shares are of a primary TWSE-listed company with no par value or the net asset value per share is not NT$10, the financial reports published and filed in the last fiscal year show no accumulated losses.
  3. The company has been incorporated and registered for at least three years. If the issuer is a transferee company of a demerger from a TWSE or TPEx listed company, the time of incorporation may be calculated from the time of establishment of the demerged division as shown in the financial data of the demerged parent company. If the issuer is an investment holding company or financial holding company, the time of incorporation may be calculated from the time of incorporation of its operating entity.
  4. The company whose shares have par value of NT$10 per share has a paid-up capital of NT$300 million or more, or a net worth of NT$600 million or more if it is a company whose shares have no par value or a par value other than NT$10 per share.
  5. Profitability of the company:
    1. whose shares have par value of NT$10 per share having had no accumulated losses, and had net operating income and profit before tax totaling 3% or more of paid-up capital on a standalone or consolidated basis, in the latest financial year, provided the above provision on net operating income and profit before tax may be waived if the paid-in capital reaches NT$600 million or more.
    2. whose shares have no par value or a par value other than NT$10 per share, had net operating income and profit before tax totaling 3% or more of shareholders' equity on a standalone or consolidated basis.
  6. None of the circumstances described in subparagraph 3 of the preceding paragraph applies.
    For purposes of these Rules, the term "net worth" means equity attributable to owners of the parent as stated in the balance sheet.
    The financial data mentioned in paragraph 2 are as specified in the latest published financial reports as having been audited and certified, or reviewed, by the CPA.
Info
Article 10     Beneficial certificates not traded in foreign currency that have been listed on the TWSE or TPEx for at least six months will be announced by the TWSE or TPEx as eligible for margin purchase and short sale if the beneficial ownership of the beneficial certificates are not excessively concentrated or if the circumstance in Article 8, paragraph 1, subparagraph 3, item 1 or 3 is not applicable. Notwithstanding, beneficial certificates of securities investment trust exchange-traded funds ("ETF Beneficial Certificates") or active exchange-traded securities investment trust fund ("active securities investment trust ETF Beneficial Certificates") and beneficial certificates of futures trust exchange-traded funds will be announced by the TWSE or TPEx as eligible for margin purchase and short sale from the day their trading commences on the TWSE or TPEx. Offshore ETF Beneficial Certificates will be announced by the TWSE as eligible for margin purchase and short sale from the day their trading commences on the TWSE.
Info
Article 13     As samples for review purposes of TWSE listed securities to which excessively intense share price volatility or excessively irregular trade volume as mentioned in Article 8, paragraph 1, subparagraph 3, item 1 or 3 occurs, listed common shares, Taiwan depository receipts, and beneficial certificates other than those whose trading method has altered are taken for comparison. As samples for review purposes of TPEx listed securities, TPEx listed common stock shares other than TPEx listed managed stocks and stocks registered on the Emerging Stock Board, and ETF Beneficial Certificates, active securities investment trust ETF Beneficial Certificates and beneficial certificates of futures trust exchange-traded funds are taken for comparison.
Info
Article 18     The beneficial ownership of beneficial certificates is deemed excessively concentrated as in Article 10 under any of the following circumstances:
  1. The number of beneficiaries holding not more than 100,000 beneficial units is less than 1,000.
  2. The number, as entered in the beneficiary register, of units of beneficial rights held by beneficiaries whose beneficial rights holding exceeds 5% of the total amount of the fund exceeds 80% of the total amount of the fund.
  3. Other circumstances where the beneficial ownership may be deemed excessively concentrated.
    The preceding paragraph does not apply to ETF beneficial certificates, active securities investment trust ETF beneficial certificates, offshore ETF beneficial certificates, and futures ETF beneficial certificates.
Info
Article 22     The TWSE or TPEx will suspend the margin purchases and short sales of TWSE or TPEx listed securities that are otherwise eligible for margin purchases and short sales, from the business day after the date of public announcement, if any of the circumstances in Article 4, paragraph 1, subparagraphs 1 to 7, and subparagraph 11, and Article 5, paragraph 1, subparagraphs 1 to 3, and subparagraph 7 applies, unless the trading method has altered or trading has been halted with respect to TWSE or TPEx listed shares and Taiwan depository receipts as in subparagraph 1 below, or trading of beneficial certificates has been halted, or the Surveillance Operations Oversight Committee of the TWSE or TPEx resolves on such suspension as in subparagraph 8 below:
  1. Where the trading method of TWSE or TPEx listed shares or Taiwan depository receipts alters, their trading is halted, or such shares or receipts are delisted from the TWSE or TPEx, or trading of beneficial certificates is halted or such certificates are delisted from the TWSE or TPEx, margin purchases and short sales of such securities will be suspended as of the effective date of the event upon the public announcement by the TWSE and TPEx of the alteration of the trading method of TWSE or TPEx listed shares or Taiwan depository receipts or halt of their trading or the halt of trading of beneficial certificates, with the suspension publicly announced concurrently; and upon the public announcement by the TWSE and TPEx of the TWSE and TPEx delisting of shares, Taiwan depository receipts and beneficial certificates, margin purchases and short sales of such securities will be suspended, with the suspension publicly announced concurrently. Notwithstanding, this does not apply where the trading is halted either under any of the circumstances in the proviso of Article 78 applies or due to a difference in rights and obligations between the securities stocks and new securities after share exchange.
  2. The TWSE or TPEx will immediately announce publicly the suspension of margin purchases and short sales of the beneficial certificates concerned, should a SITE fail to make a report and publish the financial reports of any of its securities investment trust funds on schedule as required or the circumstance in Article 96, paragraph 1 of the Securities Investment Trust and Consulting Act apply to the SITE managing the securities investment trust fund.
  3. The TWSE or TPEx will immediately announce publicly the suspension of margin purchases and short sales of the beneficial certificates concerned, should a futures trust enterprise fail to make a report and publish the financial reports of any of its futures trust funds on schedule as required or the circumstance in Article 38, paragraph 1 of the Regulations Governing Futures Trust Enterprises apply to the futures trust enterprise managing the exchange-traded futures trust fund.
  4. The TWSE or TPEx will publicly announce the suspension of margin purchases and short sales of TWSE or TPEx listed shares with a par value of NT$10 per share if, on the fifth business day after the deadline to publish and file the annual financial reports and financial reports for the first, second and third quarters of each fiscal year, a review of the latest financial reports that are published and filed as required reveals that the net asset value per share is below par value. For shares with no face value or a par value per share other than NT$10, the suspension will also apply if the financial reports indicate accumulated losses.
  5. The TWSE or TPEx will publicly announce the suspension of margin purchases and short sales of Taiwan depository receipts where the foreign securities they represent suffer accumulated losses if, on the last business day of the third month after the deadline to make a public notice and to make a filing with the competent authority, TWSE or securities market as required by the laws and regulations of the country of the foreign issuer and the country of listing, the latest annual consolidated financial reports audited and certified by the CPA or biannual consolidated financial reports reviewed by the CPA indicate accumulated losses.
  6. The TWSE will publicly announce, on the following business day, the suspension of margin purchases and short sales of the Taiwan depository receipts where the number of listed units is less than 60 million after redemption.
  7. The TWSE will publicly announce, on the following business day, the suspension of margin purchases and short sales of the shares or Taiwan depository receipts where the cumulative reported amount of defaulting single-day trades of TWSE listed securities is at least NT$200 million, or the cumulative reported amount of defaulting single-day trades of TPEx listed shares is at least NT$50 million, and if the balance of margin purchases or short sales of the day in question is at least 15% of the number of such TWSE or TPEx shares or units.
  8. The TWSE or TPEx will immediately announce publicly the suspension of margin purchases and short sales of the securities concerned if the Surveillance Operations Oversight Committee of the TWSE or TPEx so resolves or such margin purchases and short sales are otherwise inappropriate in the circumstances.
  9. Margin purchases and short sales of futures ETF beneficial certificates to which the circumstance in Article 23, paragraph 1 of the TWSE Rules Governing Trading of Beneficial Certificates or Article 16, paragraph 1 of the TPEx Rules Governing Trading of Exchange-Traded Fund Beneficial Certificates occurs shall be halted from the next business day following the public announcement of the TWSE or TPEx.
Info
Article 23     The margin purchases and short sales of TWSE or TPEx listed securities which have been suspended pursuant to the preceding article will resume under the following circumstances from the business day following the date of public announcement, except where the trading method has altered or trading has halted under subparagraph 1 of the preceding article, in which event the margin purchases and short sales will resume from the date the trading method or trading resumes, or where the Surveillance Operations Oversight Committee of the TWSE or TPEx has resolved to suspend the margin purchases and short sales, in which event the margin purchases and short sales will resume from the time the disposition period ends:
  1. The TWSE or TPEx will immediately announce publicly the resumption of margin purchases and short sales upon the elimination of the cause for suspension under subparagraph 1, 2, 3 or 8 of the preceding article.
  2. If the circumstance in subparagraph 4 of the preceding article occurs, the TWSE or TPEx will immediately announce publicly the resumption of margin purchases and short sales if, on the fifth business day after the deadline to publish and file the annual financial reports and financial reports for the first, second and third quarters of each fiscal year, a review of the latest financial reports that are published and filed as required reveals that the par value per share is NT$10 and the net asset value per share has restored to par value or above or, in the event of a company with no face value or in the event of a par value per share other than NT$10, the financial reports indicate no accumulated losses.
  3. If the circumstance in subparagraph 5 of the preceding article occurs, the TWSE will immediately announce publicly the resumption of margin purchases and short sales of the Taiwan depository receipts if, on the last business day of the third month after the deadline to make a public notice and to make a filing with the competent authority, TWSE or securities market as required by the laws and regulations of the country of the foreign issuer and the country of listing, a review by the TWSE of the latest annual consolidated financial reports audited and certified by the CPA or biannual consolidated financial reports reviewed by the CPA indicates no accumulated losses.
  4. If the circumstance in subparagraph 6 of the preceding article occurs, the TWSE will announce publicly on the following business day the resumption of margin purchases and short sales of the Taiwan depository receipts after the number of listed units restores to 60 million or above.
  5. If the circumstance in subparagraph 7 of the preceding article occurs, the TWSE or TPEx will announce publicly on the following business day the resumption of margin purchases and short sales when for six consecutive business days there has been no cumulative reported amount of defaulting single-day trades that is at least NT$10 million, and the balance of margin purchases or short sales of the last of the above six business days is under 15% of the number of such TWSE or TPEx shares or units.
  6. If the circumstance in Article 23, paragraph 2 of the TWSE Rules Governing Trading of Beneficial Certificates or Article 16, paragraph 2 of the TPEx Rules Governing Trading of Exchange-Traded Fund Beneficial Certificates occurs.
Info
Article 24     Where TWSE or TPEx securities are subject to suspension of margin purchases and short sales according to Article 22, subparagraph 4, the issuer may apply for resumption, with the latest financial reports that have been published and filed as required submitted. The TWSE or TPEx will make an announcement on the MIS and review the application on the fifth business day thereafter, and announce publicly the resumption of margin purchases and short sales from the following business day if the par value per share is NT$10 and the net asset value per share reaches the par value or above or, where the company has no face value or the par value per share is not NT$10, there are no accumulated losses shown on the financial reports.
Info
Article 26     The TWSE or TPEx will review each day the prices and trade volumes of TWSE or TPEx securities eligible for margin purchase and short sale, and will reduce the margin purchase leverage ratio by 10% and raise the short sale margin by 10% on the following business day in the event of excessively intense share price volatility or excessively irregular trade volume for five consecutive business days or six out of the last ten business days, or in the event of excessively concentrated equity or beneficial ownership as disclosed by information relating to the equity of a TWSE or TPEx listed company or foreign issuer holding an ordinary shareholders' meeting or to the beneficial rights of a securities investment trust enterprise holding a fund beneficiaries meeting. Whether the above occurs contemporaneously or successively, the margin purchase leverage ratio will be reduced by 10% and the short sale margin raised by 10% only, upon such occurrence.
    The preceding paragraph does not apply to ETF beneficial certificates, active securities investment trust ETF beneficial certificates, offshore ETF beneficial certificates, and futures ETF beneficial certificates.
Info
Article 48     For executed margin purchases and short sales, a securities firm shall calculate the balance of long and short positions in a customer's margin account after close of market each day. The customer shall settle with cash or spot securities any portion that is beyond the long position limit or short position limit.
    After a customer places an order for a short sale, if a rise in the price causes the customer's short balance to exceed the short position limit, the securities firm may lend the security to the customer for short selling within the extent of the daily price limit on the given day, provided that if short sales of ETF beneficial certificates with foreign component securities, active securities investment trust ETF beneficial certificates, offshore ETF beneficial certificates, or futures ETF beneficial certificates are not subject to a price limit, the securities firm may accommodate short sale of the securities within the extent of the highest trade price on the given day.
    When the market price per trading unit of a security sold short exceeds the short position limit, a customer may sell one trading unit short if the customer's margin account is clear of any short balance.
Article 53     A securities firm shall calculate, on a daily mark-to-market basis, the collateral maintenance ratio for each margin account as a whole and for each margin purchase and short sale in each margin account by the following formula:
collateral maintenance ratio = {market value of collateral securities for margin purchase(s) + initial collateral and short margin for short sale(s) + market value of securities deposited as collateral or other merchandise} ÷ {original margin purchase amount(s) + market value of underlying securities sold short} × 100 percent
    The market value of securities and other merchandise under the preceding paragraph shall be calculated based on the paragraph below , provided that for the six business days prior to an ex-rights or ex-dividend date for a TWSE or TPEx listed security pledged as collateral for a margin purchase, with the exception of in cases of a cash capital increase, the market value of the collateral security and the market value of TWSE or TPEx listed securities pledged as collateral shall be calculated based on the respective current day's closing price, minus the value of the cash dividend, or minus the value of the stock dividend calculated based on the current day's closing price.
  1. TWSE or TPEx listed book-entry central government bonds, local government bonds, corporate bonds, financial bonds: par value.
  2. TWSE or TPEx listed securities: the closing price of Taiwan Stock Exchange or Taipei Exchange.
  3. Gold that is registered for trading over the counter: the average price at closing based on the highest buying price quote and the lowest selling price quote ("the average closing price").
  4. An open-end type securities investment trust fund beneficiary certificate and futures trust fund beneficiary certificate: the net asset value per beneficiary unit of the prior business day.
    If the security the customer purchases on margin is subject to a 20 percent or more share dividend rate in gratuitous distribution of shares, or the issuer of the securities conducts a demerger and capital reduction, and after the capital reduction, the stock resumes trading and is TWSE or TPEx listed on the same day as the stock of the assignee company of the demerger, then unless the competent authority has otherwise imposed trading restrictions on the security, the newly issued rights shares or the stock of the assignee company of the demerger shall all be pledged as collateral, with the option of income tax deferral to be waived, and shall be transferred through book-entry by the central securities depository into the securities firm's segregated account for margin purchases and short sales, notwithstanding the provisions of Article 33 of the Regulations Governing Handling of Shareholder Services by Public Companies.
    The securities firm may not use the newly issued rights shares or the stock of the assignee company of the demerger under the preceding paragraph as a source of securities for lending in its conduct of securities trading short sale operations or as collateral for refinancing.
    The provisions of paragraph 2 shall not apply to newly issued rights shares or the stock of the assignee company of the demerger used as collateral. After the security is traded ex-rights, the market value of the newly issued rights shares shall be calculated as 70 percent of the closing price if they are TWSE or TPEx listed securities for margin purchase and short sale, or 50 percent of the closing price if they are not qualified according to Article 2 or 3 of the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale, or are suspended according to Article 4 or 5 of the same Standards. After such shares have been transferred into the securities firm's segregated account for margin purchases and short sales, their market value is no longer required to be discounted.
    The number of new beneficial right units after a split of the ETF beneficial certificates, active securities investment trust ETF beneficial certificates and beneficial certificates of futures trust exchange-traded funds acquired by a securities firm through margin purchases shall be deposited into the securities firm's segregated account for margin purchases and short sales as margin balance. The number of new beneficial right units after a split of the ETF beneficial certificates and beneficial certificates of futures trust exchange-traded funds deposited as additional collateral by a securities firm in accordance with Article 57 shall be deposited into the securities firm's segregated account for margin purchases and short sales as securities to be deposited as additional collateral.
    The market value of collateral securities for margin purchases and the original collateral and short margin for short sales, the market value of securities deposited as collateral or other merchandise referred to in paragraph 1 means the balance of the money, market value of securities and other merchandise in a customer margin account after deducting the short sale fee, competitive auction lending fee, negotiated lending fee, and fee for purchase of securities by tender offer [to meet a securities shortfall in short selling]; if there is any residual obligation after a settlement trade has been made or after the securities firm has disposed of the collateral, the residual obligation shall also be deducted.
Info