Section II Re-Financing for Securities Firms and Other Securities Finance Enterprises |
| Article 21 | Securities finance enterprises handling re-financing for securities firms and other securities finance enterprises shall be limited to the monetary amounts or amounts of securities needed for the securities margin purchase and short sale business or securities borrowing and lending business handled by the securities firm or the other securities finance enterprise.
The term "re-financing" means that securities finance enterprises provide margin loans or stock loans to securities firms or other securities finance enterprises.
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| Article 22 | A securities finance enterprise that provides re-financing to a securities firm shall sign a re-financing contract with the securities firm and open a refinancing account.
The content of the contract referred to in the proceeding paragraph shall be prescribed by the securities finance enterprise and reported to the competent authority for approval.
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| Article 23 | A securities finance enterprise providing re-financing to a securities firm for margin purchases shall not provide a margin ratio higher than the margin ratio that the securities firm provides to its customer, and shall collect as collateral all securities purchased with the margin purchase financing.
A securities finance enterprise providing re-financing to a securities firm for short sales shall collect a short sale margin whose ratio shall not be lower than the short sale margin ratio that the securities firm provides to its customer, and shall take the proceeds of the short sales as collateral.
A securities finance enterprise providing re-financing to a securities firm for securities lending shall collect securities lending collateral for the securities it loans to the securities firm at a collateralization rate that may not be lower than the collateralization rate that the securities firm provides in securities lending to customers.
The short sale margin that shall be collected by securities finance enterprises under paragraph 2 may be paid in securities; the types of securities and standards for such payment shall be prescribed by the securities finance enterprise and reported to the competent authority for its approval.
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| Article 24 | When a securities finance enterprise provides re-financing to a securities firm, the money or securities that must be delivered or collected for securities trading shall be handled through the stock exchange, OTC exchange, or its designated clearing and settlement institution.
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| Article 25 | A securities finance enterprise providing re-financing to a securities firm shall notify the securities firm to replenish the collateral or margin within the time limit or repay the shortfall if a decline in the price of the collateral for a margin purchase causes the ratio of the margin purchase amount to the collateral's market value to exceed the initial lending ratio; or if an increase in the price of securities sold short causes the short sale margin percentage to fall short of the initially collected percentage; or if an increase in the price of loaned securities or a decline in the price of collateral provided for the securities loan causes the ratio of the market value of the collateral to the market value of the loaned securities to fall short of the initial lending ratio.
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| Article 26 | A securities finance enterprise providing re-financing to a securities firm shall utilize the money it receives in accordance with the mutatis mutandis application of Article 15, paragraphs 2 and 4.
A securities finance enterprise providing re-financing to a securities firm may utilize the securities it receives, while such utilization shall be limited to the following:
- For provision of refinancing to a securities firm.
- As a source of securities needed in margin purchase and short sales transactions to cover shortfalls in securities in short sales or shortfalls of securities for redelivery in securities borrowing and lending transactions.
- As collateral for borrowing of securities through the TWSE securities borrowing and lending system.
A securities finance enterprise utilizing securities according to the preceding paragraph shall deliver the same category of securities when the re-financing is repaid.
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| Article 27 | A securities finance enterprise handling a securities firm's application for re-financing of securities shall obtain the securities for provision of refinancing by the means prescribed in Article 56, paragraph 1, subparagraphs 4 and 5 if it does not have a sufficient source of securities.
The fees for the securities financing in the preceding paragraph shall be paid by the securities firm.
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| Article 28 | A securities finance enterprise shall establish operating rules for its re-financing business in connection with providing refinancing to securities firms and report the rules to the competent authority for its approval.
The operating rules referred to in the preceding paragraph shall expressly state the following items:
- The procedure for opening a refinancing account.
- Procedures for refinancing applications and repayment of securities, and the method of repayment.
- Refinancing amounts and the calculation and replenishment of margin and collateral.
- The collection, replenishment, and disposal of refinancing collateral.
- The utilization and method of custody of the securities obtained through refinancing.
- The exercise of rights in stocks and withholding tax on dividends from stocks purchased through refinancing.
- The items recorded in the refinancing account book.
- Termination and resumption of refinancing business.
- The procedures for borrowing securities and for reverse auction.
- Other items to be included under the competent authority regulations.
Securities finance enterprises providing re-financing to securities firms shall follow the operating rules of Paragraph 1.
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| Article 29 | The regulations of Article 16, and Article 19 shall apply mutatis mutandis to re-financing provided by securities finance enterprises to securities firms or other securities finance enterprises.
The regulations of this Section shall apply mutatis mutandis to re-financing by securities finance enterprises to other securities finance enterprises.
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