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Article 43
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A securities finance enterprise engaging in securities borrowing and lending business shall collect collateral from customers at the collateral ratio required by the competent authority, or require the customer to provide a bank guarantee.
The collateral referred to the preceding paragraph shall be limited to the following types:
- Cash.
- Book-entry central government bonds.
- Securities eligible for margin purchase and short sale transactions.
A securities finance enterprise shall mark to market daily the ratio of the value of collateral deposited by each customer to the dollar amount of the securities loaned to that customer. When that ratio is below the prescribed percentage, it shall immediately issue a margin call requiring the customer to replenish the shortfall within a prescribed period of time.
The method of calculation of the value of the collateral, the substitution of collateral, the collateralization rate, and the time limit for replenishment of collateral shall be formulated by the securities finance enterprise and submitted to the competent authority for approval.
A securities finance enterprise that borrows securities from a customer or securities firm or other securities finance enterprise shall allocate on a monthly basis a performance bond that accounts for a certain percentage of the total monetary amount of the borrowed securities.
The performance bond under the preceding paragraph shall be deposited with the TWSE. The regulations governing the deposit, custody, payment, and return of the performance bond shall be jointly drafted by the TWSE and TPEx, and submitted to the competent authority for final approval.
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