These Terms are prescribed under Article 11 of the Regulations Governing Margin and Stock Loans by Securities Firms.
A customer applying to establish a margin account and entering into a margin agreement shall meet the following thresholds, except in case of renewing an existing agreement at its expiration:
- The customer is an ROC national of at least 20 years of age and with disposing capacity, or a juristic person organized and registered under the laws of the ROC.
- Three months have elapsed since the customer established a brokerage account.
- At least ten trade orders have been executed for the customer's account during the most recent year, with an aggregate amount of at least 50 percent of the applied maximum loan value; the same also applies where a period of less than 1 year has elapsed since the customer established a brokerage account.
- The customer's income and assets for the most recent year aggregate at least 30 percent of the applied maximum loan value, save that the applied maximum loan value does not exceed NT$500,000.
In the case of a customer applying to establish margin accounts under either of the following circumstances, the calculation of the applied maximum loan value under subparagraph 3 or 4 of the preceding paragraph shall include the maximum loan values approved for previously established margin accounts.
- The application includes a total of five or more margin accounts.
- The application includes a total of two or more margin accounts, and the sum of the applied maximum loan values plus the maximum loan values approved for previously established margin accounts amounts to NT$300 million or more.
In the case of a customer applying to establish margin accounts, the applied maximum loan value calculated under paragraph 1, subparagraph 4 shall include the customer's authorized credit lines in other credit extension business at the same securities firm.
A customer adjusting the maximum loan value during the term of the agreement or renewing the agreement at its expiration shall meet the requirements set out in paragraph 1, subparagraph 4, paragraph 2, and paragraph 3. A securities firm may handle such matter by correspondence or electronic means that is sufficient to identify the customer as the applicant itself or its indication of intent.
A call (put) warrants issuer, a securities firm or bank engaging in structured notes business and the trading of equity derivatives, or an enterprise exclusively or concurrently engaging in futures proprietary trading that is also a market maker for equity options or single-stock futures, may apply to establish a margin account without being subject to the requirements set out in paragraph 1 and paragraph 2.
For a privately placed securities investment trust fund managed by a securities investment trust enterprise, the fund custodian institution may apply to establish a margin account without being subject to the requirements set out in paragraph 1, subparagraphs 1, 2, and 3, and for which neither the outstanding balance of margin purchase positions nor the outstanding balance of short sale positions, combined with the outstanding balance of sales of borrowed securities, may exceed 50 percent of the fund size.
In the case of a discretionary investment account managed by a securities investment trust enterprise (SITE) or a securities investment consulting enterprise (SICE), or of discretionary investment business conducted by a securities broker concurrently operating an SICE, or of discretionary futures trading business operated by a managed futures enterprise, the custodian institution for discretionary investment assets may open a margin account on behalf of its customer, and the provisions of paragraph 1, subparagraph 1, with the exclusion of paragraph 1, subparagraphs 2 and 3, shall apply to the customer of the discretionary investment account. For the margin account, neither the outstanding balance of margin purchase positions nor the outstanding balance of short sale positions, combined with the outstanding balance of sales of borrowed securities, may exceed 50 percent of the net asset value of the discretionary investment account, except in the case of discretionary futures trading business operated by a managed futures enterprise, for which neither the outstanding balance of margin purchase positions nor the outstanding balance of short sale positions, combined with the outstanding balance of sales of borrowed securities, may exceed 20 percent of the net asset value of the discretionary investment account.
A securities firm may raise the percentage under paragraph 1, subparagraph 3 or 4 as it deems necessary after assessment.
The assets under paragraph 1, subparagraph 4 of the preceding Article shall be limited to those owned by the customer himself or herself, or his or her spouse, parent or adult child, and the following documentation shall be submitted:
- Photocopy of certificate of real property ownership, registration records, or tax return. The securities firm shall also perform a check of whether there are other encumbrances on the real property, and calculate the value.
- Documentation of deposits with a financial institution (e.g. certificate of deposit balance, passbook, certificate of deposit). The basis of calculation shall be the average balance within the past month.
- Proof of holdings in securities.
- Documentation of deposit balance in the gold account issued by a financial institution (e.g. gold passbook, or the certificate of balance for the gold passbook or gold account).
- Documentary proof of trust property for a money trust, securities trust or real estate trust issued by a trust enterprise (e.g., a reconciliation statement, list of trust assets, or certificate of trust property). Both the trustor and the beneficiary of the trust are restricted to the person who is the customer, and the trust property may consist only of real property, deposits at financial institutions, securities, or the balance of a gold account at a financial institution.
- Amount of collaterals of the customer's margin accounts with the same securities firm that is in excess of 130% of the account collateral maintenance ratio, excluding margin and short positions where settlement is not completed.
When the customer is not the owner of assets shown on the provided proof of assets, the owner of the assets shall be a joint and several guarantor.
Where a customer of a securities firm extending margin and stock loans has entered into a margin agreement with a securities finance enterprise via the securities firm, and where such agreement is not yet terminated, if such customer enters into a separate margin agreement with the securities firm within 6 months starting from the date on which it commences the margin and stock loaning business, the restrictions imposed by Article 2 in relation to account opening thresholds do not apply.
The same shall apply to a customer of a securities firm that is extinguished as a result of a merger/consolidation or transfer of the whole of its business or property where the customer enters into a new margin agreement with the surviving securities firm within 6 months starting from the next day of the record date for the merger/consolidation or of the last business day of the transferring securities firm.
These Terms, and any amendments hereto, shall be formulated by the Taiwan Stock Exchange Corporation together with the GreTai Securities Market and shall take force per public announcement after ratification by the competent authority.