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Article 9
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For the price difference and all other fees arising from and in connection with the TWSE’s handling of any default of settlement obligations by a securities firm, the TWSE shall first make deductions from the portion of the Fund deposited by the defaulting securities firm and the interest thereupon. When that is insufficient, compensation on behalf of the securities firm shall be made from the following in the following order of priority:
- The special settlement fund allocated by the TWSE pursuant to Article 3, paragraph 3.
- The Clearing and Settlement Fund deposited by non-defaulting securities firms pursuant to Article 3, paragraph 1, and the special settlement fund allocated by the TWSE pursuant to Article 3, paragraph 2, shared pro-rata to the amounts of their allocations.
- Additional contributions to the Clearing and Settlement Fund by the non-defaulting securities firms pursuant to paragraph 3.
- The amount of any shortfall still remaining after the coverage under the preceding three subparagraphs will be covered from the TWSE compensation reserve fund.
After the utilization of amounts to be shared from the allocations under subparagraph 1 and 2 of the preceding paragraph, each securities firm and the TWSE shall replenish the allocations utilized, on the scale set by the Committee meeting.
The additional contributions to the Clearing and Settlement Fund under paragraph 1, subparagraph 3 shall be handled by the TWSE according to the following:
- If any securities firm or firms default during the cooling-off period, the additional contributions shall be capped at 100 percent of the required contributions to the Clearing and Settlement Fund from each non-defaulting securities firm in the most recent period.
- The required contributions to the Clearing and Settlement Fund in the preceding subparagraph means the Clearing and Settlement Fund that securities firms make deposits to as required by the Competent Authority under Article 3, paragraph 1.
The cooling-off period in these Rules means a period of 20 business days from the date when a securities firm’s default occurs.
Recoveries may be claimed from the defaulting securities firm of any amounts covered under paragraph 1, subparagraphs 1 to 4.
Any funds recovered from the defaulting securities firm shall be reimbursed pro-rata to the securities firms and the TWSE for any compensation that they made on behalf of the defaulting securities firm for the price difference and fees under paragraph 1.
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