Chapter VIII Clearing And Settlement |
| 101 | The trading of securities transacted on the Exchange shall be cleared and centrally settled by the Clearing Division.
The TWSE shall appoint the central securities depository to handle the receipt and delivery of securities in connection with the central settlement of securities trading referred to in the preceding paragraph.
The clearing and settlement of securities transacted by the branch offices of a securities firm shall be consolidated by the head office and handled in accordance with the preceding two paragraphs.
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| 102 | A securities firm shall complete the clearing and settlement matters in accordance with the Operation Rules and relevant regulations.
The associated persons of a securities firm in charge of the clearing and settlement shall carry the registration pass provided by the TWSE while handling centralized clearing and settlement at the Clearing Division of the TWSE or at the central securities depository.
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| 103 | The trading of securities on the Exchange that is transacted on the same business day shall be deemed as one clearing period.
The portion of the transacted securities referred to in the immediately preceding paragraph that are to be centrally deposited and settled through book-entry shall be handled in accordance with the relevant provisions of the operation rules of the central securities depository.
The portion of the securities referred to in the first paragraph of this Article that are transacted through margin purchases or short sales shall be handled by securities firms in accordance with the relevant provisions of the Operation Rules for Securities Firms Dealing with Margin Purchases and Short Sales of Securities and the Operation Rules for Securities Finance Enterprises Dealing with Margin Loans and Short Stocks.
The clearing data in respect of margin purchases or short sales referred to in the immediately preceding paragraph that shall be compared with that of the securities finance enterprises shall be transmitted along with other clearing data to the computer system of the central securities depository after ascertaining that there is no error at comparison, and consolidated report shall be prepared and transmitted to the computer system of the TWSE. The deadline for completion of the transmission shall not be later than 9:00 p.m.
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| 104 | The TWSE shall handle centralized settlement of trading conducted on the Exchange in accordance with the principle of delivery versus payment.
A securities firm shall bear the obligation to the TWSE to perform the settlement of trades that the securities firm conducts on the Exchange. The TWSE shall bear the obligation of counter-prestation settlement for trades employing multilateral net settlement.
When handling trades employing multilateral net settlement, the TWSE shall carry out settlement with securities firms and securities finance enterprises after offsetting the amounts of securities and funds receivable and payable/deliverable.
A securities firm or a securities finance enterprise shall perform in advance its obligation to deliver securities deliverable or funds payable. The TWSE may, until that obligation has been performed, retain the funds and securities receivable by the securities firm or securities finance enterprise.
Securities firms and securities finance enterprises shall complete settlement procedures with the TWSE for the prices and securities payable and receivable for securities trades within the following time limits:
- Securities deliverable to the TWSE shall be delivered by 10 a.m. of the second business day following the trade date.
- Prices payable to the TWSE shall be paid by 11 a.m. of the second business day following the trade date.
- Securities receivable from the TWSE shall be received after 11 a.m. of the second business day following the trade date.
- Prices receivable from the TWSE shall be received after 11 a.m. of the second business day following the trade date.
After completing the operations for the transfer of securities deliverable by the securities firms and securities finance enterprises, the central securities depository shall promptly notify the TWSE of the results.
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| 105 | (deleted)
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| 106 | (deleted)
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| 107 | (deleted)
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| 108 | (deleted)
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| 109 | If the balance of the securities on deposit in the custodial book-entry account of the securities firm representing the seller is insufficient for the performance of settlement obligations, the securities firm representing the seller may apply to borrow securities for settlement pursuant to the TWSE Securities Borrowing and Lending Rules, and shall by 11 a.m. pay the cash collateral required for securities borrowing. the securities firm representing the seller does not apply to borrow securities by 10 a.m. of the second business day following the trade date, and has not completed securities settlement, the TWSE shall by 11 a.m. borrow securities on its behalf.
If the amount of securities borrowed is insufficient, the TWSE will fill out and forward a "Securities Delivery Voucher" to the central securities depository for the portion falling short for safekeeping on behalf of the securities firm representing the purchaser. The borrowing securities firm shall, by 10 a.m. of the following business day, deliver the securities in exchange for the return of the aforesaid "Securities Delivery Voucher" and the refund of the cash collateral required for securities borrowing.
If the borrowing securities firm fails to deliver the cash collateral required for securities borrowing or to provide offsetting collateral by 11 a.m. of the borrowing date, the TWSE may tentatively retain a portion of the proceeds and/or securities equivalent in value to the settlement price payable for that settlement period.
Lending auctions, negotiated lending, and reverse auction carried out to cover shortfalls experienced by securities finance enterprises in securities required for short sales shall be conducted in compliance with the TWSE Securities Lending and Borrowing Rules.
The Securities Lending and Borrowing Rules will be separately adopted by the TWSE and submitted to the Competent Authority for approval and shall take effect after they are publicly announced.
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| 110 | (deleted)
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| 111 | If a securities firm or a securities finance enterprise fails to carry out settlement within the time frame specified in Article 104, paragraph 5, subparagraph 1 or 2, the TWSE shall impose a delay fine pursuant to Article 137. A securities firm that fails to pay cash collateral required for securities borrowing shall be deemed to have not completed the delivery obligation of the securities deliverable.
If a securities firm or a securities finance enterprise fails to pay a price payable or to pay cash collateral required for securities borrowing (including any collateral shortfall the borrower is required to cover for renewal of securities borrowing) by the end of banking hours, it is a breach of settlement obligations.
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| 112 | A securities broker may not refuse to perform its obligations for settlement on grounds of the following matters:
- Default by the principal.
- Delayed settlement by the principal.
- Failure by the authorized discretionary trader for a discretionary investment account to perform on time obligations arising from a trade exceeding the scope of the discretionary trader's authorization.
- A shortfall in refinancing for a margin purchase or short sale.
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| 113 | Securities firms and securities finance enterprises may not default on their settlement obligations.
Where any securities firm violates the preceding paragraph, in addition to the TWSE designating another securities firm to effect delivery on its behalf in accordance with Article 153 of the Securities and Exchange Act, the TWSE shall also retain the sum and securities receivable; provided that in respect of the sum and securities that have been actually paid and delivered, the defaulting securities firm may engage the designated securities firm to collect the retained sum and securities equivalent thereto before making computation of the offsetting in accordance with paragraph 3 hereof.
The designated securities firm shall compute and offset the sum and securities that have not been paid and delivered at the respective due date by the defaulting securities firm against the retained sum and securities. The balance thereof shall, after being verified with the TWSE to be correct and beginning from the following business date, be cleared off through purchases or sales on the Exchange on behalf of the defaulting securities firm. In case it is unable to clear off through purchases or sales, the TWSE may notify the designated securities firm to clear it through auction, price negotiation, reverse auction, or other trading methods; provided, however, that, in case auction or reverse auction approach is adopted, it may be exempted from the restrictions on volume applied for, pricing, period of public announcement, and transacted volume as specified in relevant regulations.
The base price for handling the clearing off in auction, price negotiation, reverse auction or other trading methods referred to in the preceding paragraph shall be determined by the TWSE based on the closing price for the most recent business day plus or minus 10 percent.
The defaulting securities firm shall not raise any objection in respect of the base price determined pursuant to the preceding paragraph.
The difference on pricing and all expenses incurred from handling the clearing off pursuant to paragraph 3 hereof shall be borne by the defaulting securities firm.
In the event that securities finance enterprises violate their obligations for settlement, the TWSE shall report to the Competent Authority for actions on a case by case basis.
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| 113-1 | Where default by any principal causes a securities firm to default on its obligations for settlement and the securities firm has reported such to the TWSE, the TWSE may notify other securities firms to temporarily suspend delivery to the defaulting principal of securities receivable by it for settlement, and that the securities owned by the defaulting principal and placed in custody with the central securities depository shall not be withdrawn or delivered. After the money and securities of the defaulting securities firm or the defaulting principal have been balanced, the TWSE shall notify other securities firms to proceed with settlement, and remove the said restriction on securities withdrawal or delivery.
The preceding paragraph shall apply to any principal whose connection with the defaulting principal has been verified by the TWSE on evidence from defaulting securities firm(s) and consultation with the securities firm(s) to which the TWSE has intended to notify the suspension of settlement.
Upon receiving court order of attachment execution to suspend settlement for the defaulting principal, a securities firm shall immediately notify the TWSE.
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| 114 | In the event that there is any sum payable by a defaulting securities firm, the TWSE shall forthwith offset said sum against its clearing and settlement funds and other interests. the case of any deficit after offsetting, the TWSE shall seek indemnification from the defaulting securities firm.
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| 115 | (deleted)
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| 116 | In the event of war, natural disasters or the occurrence of other events of force majeure that causes the TWSE or the central securities depository to be unable, or with obvious difficulties, to process the clearing and central settlement, the TWSE may first decide to suspend clearing and the central settlement and then formulate the method for handling such event, which shall be submitted to the Competent Authority for its approval and to take effect after its approval.
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| 117 | (deleted)
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