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These Operation Directions are adopted under Article 6 of the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale, Article 10, paragraph 2 of the Regulations Governing Borrowing or Lending Money in Connection with Securities Business by Securities Firms, the 3 December 2013 Order No. Financial-Supervisory-Securities-Trading-1020049612, the 7 January 2015 Order No. Financial-Supervisory-Securities-Investment-1030052647, and Article 32, paragraph 2 of the Operating Rules for Securities Firms Handling Non-Restricted Purpose Loan, as prescribed or authorized by the competent authority.
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If the daily balance of a security with respect to margin purchases, to money borrowing or lending in connection with securities business and non-restricted purpose loan business as conducted by securities firms, and to settlement financing transactions performed by securities finance companies (each such securities firm and securities finance company hereinafter referred to as a "credit grantor") reaches 80 percent of the ratio (hereinafter referred to as the "designated limit") triggering suspension of margin purchases set forth in Article 6 of the aforesaid Standards, the Taipei Exchange ("TPEx") will proceed to conduct allocation on the next business day; when the daily balance of a security with respect to short sales and sales of borrowed securities reaches 80 percent of the ratio (hereinafter referred to as the "designated limit") set forth in the aforesaid orders, the TPEx will proceed to conduct allocation on the next business day. The calculation methods for the above allocations are as follows:
- Margin purchases, money borrowing or lending in connection with securities business and non-restricted purpose loans, and settlement financing:
- Allocation limit for margin purchases:
The combined total of
the daily balance of the number of lots of each such security for margin
purchases from each securities firm and securities finance company
conducting margin purchases
──────────────────────── × (designated limit-daily balance)
The combined total of
the daily balance of the number of lots of each such security for margin
purchases from each securities firm and securities finance company
conducting margin purchases, and
the daily balance of the number of lots of each such security used as
collateral for money borrowing or lending in connection with securities
business from each securities firm conducting money borrowing or lending in
connection with securities business, and
the daily balance of the number of lots of each such security used as
collateral for non-restricted purpose loans from each securities firm
conducting non-restricted purpose loans, and
the daily balance of the number of lots of each such security used as
collateral for settlement financing from each securities finance company - Number of lots for margin purchases allocable to each credit grantor:
- Where the allocation limit for margin purchases is sufficient to allocate 1 lot to each credit grantor (excluding securities firms commencing to conduct business of margin purchases and short sales on the next business day), each credit grantor will firstly be allocated with 1 lot and then, from the remaining number of lots:
The daily balance of the number of lots of each such security for margin
purchases from each securities firm and securities finance company
conducting margin purchases
─────────────────────── × (allocation limit for margin
purchases-the number of credit grantors)
The combined total of
the daily balance of the number of lots of each such security for margin
purchases from each securities firm and securities finance company
conducting margin purchases - Where the allocation limit for margin purchases is insufficient to allocate 1 lot to each credit grantor (excluding securities firms commencing to conduct business of margin purchases and short sales on the next business day):
The daily balance of the number of lots of each such security for margin
purchases from each securities firm and securities finance company
conducting margin purchases
──────────────────── × (allocation limit for margin purchases)
The combined total of
the daily balance of the number of lots of each such security for margin
purchases from each securities firm and securities finance company
conducting margin purchases
- Total allocation limit for money borrowing or lending in connection with securities business and non-restricted purpose loans:
The combined total of
the daily balance of the number of lots of each such security used as
collateral for money borrowing or lending in connection with securities
business from each securities firm conducting money borrowing or
lending in connection with securities business, and
the daily balance of the number of lots of each such security used as
collateral for non-restricted purpose loans from each securities firm
conducting non-restricted purpose loans
────────────────────── × (designated limit-daily balance)
The combined total of
the daily balance of the number of lots of each such security for margin
purchases from each securities firm and securities finance company
conducting margin purchases, and
the daily balance of the number of lots of each such security used as
collateral for money borrowing or lending in connection with securities
business from each securities firm conducting money borrowing or
lending in connection with securities business, and
the daily balance of the number of lots of each such security used as
collateral for non-restricted purpose loans from each securities firm
conducting non-restricted purpose loans, and
the daily balance of the number of lots of each such security used as
collateral for settlement financing from each securities finance company
- The total number of lots of each such security used as collateral for money borrowing or lending in connection with securities business and non-restricted purpose loans allocable to each credit grantor:
The daily balance of the number of lots of each such security used as
collateral for money borrowing or lending in connection with securities
business from each securities firm conducting money borrowing or
lending in connection with securities business, and
the daily balance of the number of lots of each such security used as
collateral for non-restricted purpose loans from each securities firm
conducting non-restricted purpose loans
────────────────────────────── × (total allocation limit for
money borrowing or lending in connection with securities business and
non-restricted purpose loans)
The combined total of
the daily balance of the number of lots of each such security used as
collateral for money borrowing or lending in connection with securities
business from each securities firm conducting money borrowing or
lending in connection with securities business, and
the daily balance of the number of lots of each such security used as
collateral for non-restricted purpose loans from each securities firm
conducting non-restricted purpose loans - Allocation limit for settlement financing:
The combined total of
the daily balance of the number of lots of each such security used as
collateral for settlement financing from each securities finance company
───────────────────────── × (designated limit-daily balance)
The combined total of
the daily balance of the number of lots of each such security for margin
purchases from each securities firm and securities finance company
conducting margin purchases, and
the daily balance of the number of lots of each such security used as
collateral for money borrowing or lending in connection with securities
business from each securities firm conducting money borrowing or
lending in connection with securities business, and
the daily balance of the number of lots of each such security used as
collateral for non-restricted purpose loans from each securities firm
conducting non-restricted purpose loans, and
the daily balance of the number of lots of each such security used as
collateral for settlement financing from each securities finance company - The number of lots of each such security used as collateral for settlement financing allocable to each credit grantor:
The daily balance of the number of lots of each such security used as
collateral for settlement financing from each securities finance company
─────────────────── × (allocation limit for settlement financing)
The combined total of
the daily balance of the number of lots of each such security used as
collateral for settlement financing from each securities finance company
- Short sales and sales of borrowed securities:
- Allocation limit for sales of borrowed securities
The daily balance of sales of borrowed securities
──────────────────────────── × (designated limit-daily balance)
The combined total of
the daily balances of short sales and sales of borrowed securities
However, if the allocation limit is less than 1.5% of the listed shares of the security, 1.5% will be used for the purpose of calculation.
- Allocation limit for short sales
The daily balance of short sales
──────────────────────────── × (designated limit-daily balance)
The combined total of
the daily balances of short sales and sales of borrowed securities - The number of lots for short sales allocable to each credit grantor:
- Where the allocation limit for short sales is sufficient to allocate 1 lot to each credit grantor ( excluding securities firms commencing to conduct business of margin purchases and short sales on the next business day), each credit grantor will firstly be allocated 1 lot and then, from the remaining number of lots:
The daily balance of the number of lots of each such security for short
sales from each securities firm and securities finance company
conducting short sales
──────────────────────────── × (allocation limit for short
sales-the number of credit grantors)
The combined total of
the daily balance of the number of lots of each such security for short
sales from each securities firm and securities finance company
conducting short sales - Where the allocation limit for short sales is insufficient to allocate 1 lot to each credit grantor (excluding securities firms commencing to conduct business of margin purchases and short sales on the next business day):
The daily balance of the number of lots of each such security for short
sales from each securities firm and securities finance company
conducting short sales
────────────────────────── × (allocation limit for short sales)
The combined total of
the daily balance of the number of lots of each such security for short
sales from each securities firm and securities finance company
conducting short sales
- On the first day when a securities firm commences to conduct margin purchase and short sale business, the limit to be allocated to it shall be deducted from the limit allocated to the securities finance company and calculated as follows:
The daily allocation limit for the securities finance company
──────────────────────────────────────────────
The number of agent securities firms on the day before the
first day the securities firm commences to conduct margin purchase and short sale business - When calculating allocation for margin purchases, short sales and sales of borrowed securities as indicated above, if a designated limit included in a calculation formula or a result yielded by a calculation contains a fraction of less than 1 trading unit, the fraction will be excluded from calculation and allocation.
- When, as described in Point 4, a securities firm conducting securities trading margin purchases and short sales or a securities finance company exceeds an allocation limit and a deduction is made accordingly, such deducted portions will be calculated and reallocated to other securities finance companies and securities firms.
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When conducting securities trading margin purchases and short sales, a securities firm may accept trade orders only within the allocated limit. If it handles a trade in excess of the allocated limit and on the trade date the customer fails to fill out a consent form for settlement with cash or spot securities, as the case may be, the exceeding part shall be reported as an out-trade.
Under the circumstances set forth in the preceding paragraph, the securities firm shall handle the event in accordance with the Directions for Securities Firms Handling Changes to Trading Category and the Directions for Reporting and Handling of Out-Trades and Account Number Corrections by Securities Brokers. Apart from that, the TPEx may notify the securities firm to make supplementation or correction within a time limit, and may, if it is of a serious nature, report the event to the competent authority.
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If a securities firm conducting securities trading margin purchases and short sales or a securities finance company exceeds an allocation limit set forth in Point 2, the TPEx will deduct the exceeding number of lots from the allocation limit of the security on the second business day following the day of exceeding the limit. If the limit is insufficient to fully make the deduction, the TPEx will make the deduction from the allocation limits of other securities, starting with securities with lesser allocation limits. If the allocation limits of all securities on that day are insufficient for the deduction, the TPEx will continue the deduction on the next business day and report the matter to the competent authority for handling.
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These Operation Directions, and any amendments hereto, shall be publicly announced and implemented after approval and recordation by the competent authority.
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