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Title:

Operating Rules for Securities Business Money Lending by Securities Firms  CH

Amended Date: 2021.04.01 (Articles 19 amended,English version coming soon)
Current English version amended on 2020.12.31 
Categories: Securities Exchange Market > Borrowing of Money
   Chapter V Handling of Violations
Article 27    When any of the circumstances listed below applies to a customer, at market opening on the business day on which disposal is required, the securities firm shall, through the Money Lending Default Handling Account opened with another securities broker, dispose of the respective collateral and additional collateral securities or other commodities on the TWSE centralized exchange market or through the TPEx Securities market trading system, with the exception of central book-entry bonds, municipal bonds, common corporate bonds and financial bonds, which may be subject to price negotiation and trading with the bond dealers at the place of business. If an order to dispose of the collateral is not executed, it shall continue to be quoted on the next business day, and the related processing fees and tax shall be borne by the customer, unless the parties agree otherwise.
  1. Repayment has not been made at the expiration of the financing period.
  2. The money lent has not been repaid pursuant to Article 19.
  3. A collateral shortfall has not been covered pursuant to Article 23.
  4. Replacement of additional collateral securities or other commodities has not been made pursuant to Article 26.
    Where a securities firm disposes of securities pursuant to the preceding paragraph and such disposal is insufficient to offset the debt, it shall notify the customer to cover the shortfall on the next business day. If the customer fails to do so, the securities firm may dispose of the collateral and additional collateral securities or other commodities or foreign currencies provided by that customer up to the amount required to repay the debt. If any surplus remains, it shall be returned to the customer; if any shortfall remains, the customer shall be notified to repay it within a prescribed time period.
    Where any of the following circumstances applies to a customer during the financing period, the securities firm shall notify the customer to settle the obligation the next business day, and shall terminate the loan contract that it has entered into with the customer. In case the customer fails to settle the obligation, the securities firm shall close out the lending transactions the next business day through mutatis mutandis application of the provisions of paragraph 1:
  1. Failure to perform settlement obligations on time as specified in Article 91 of the Operating Rules of the TWSE, Articles 87 and 89 of the GTSM Rules Governing Securities Trading on the GTSM, or Article 58 of the Operating Rules of the Taiwan Futures Exchange Corporation.
  2. Any default or violation specified in Article 81 of the Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities, Article 33 of the Operating Rules for Securities Lending by Securities Firms, or Article 26 of the Rules Governing the Lending of Book-Entry Central Government Bonds by Securities Firms.
    During the financing period, if a customer’s participation in securities lending transactions is halted or terminated by the TWSE pursuant to Article 42, 45, or 49 of the TWSE Securities Borrowing and Lending Rules, or if any of the following circumstances applies to the customer at another securities firm, futures commission merchant, or securities finance enterprise, the securities firm shall halt the provision of any new securities business money lending to the customer:
  1. Any default specified in Article 76, paragraph 3, subparagraph 1 or 3 of the Operating Rules of the TWSE or Article 47, paragraph 2, subparagraph 1 or 3 of the GTSM Rules Governing Securities Trading on the GTSM.
  2. Any default or in violation specified in Article 81 of the Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities, Article 33 of the Operating Rules for Securities Lending by Securities Firms, Article 26 of the Rules Governing the Lending of Book-Entry Central Government Bonds by Securities Firms, or Article 28 of these Operating Rules.
  3. Any default specified in a securities finance enterprise's operating rules for handling margin purchases and short sales, securities settlement financing rules, or rules of operation for securities lending, or violation of a type comparable to that referred to in the preceding subparagraph.
    Before a case of a default or violation under the preceding paragraph is closed, the customer may have the collateral and additional collateral securities or other commodities it provided sold by the securities firm through the Money Lending Default Handling Account opened with another securities broker to repay the money lent.
    Where the registration of an overseas Chinese or a foreign national has been cancelled by the TWSE or the TAIFEX, the securities firm, after receiving notice of such cancellation, may not accept such customer's request for new loan transactions, and shall notify such customer to close out any loan transactions, and terminate the loan contract after the closeout.
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Article 28    Where a shortfall still exists after the securities firm disposes of collateral pursuant to paragraph 2 of the preceding article, the securities firm shall notify the customer to make repayment within a time limit. Customer's failure to make repayment constitutes a violation, and the securities firm shall terminate the contract with the customer for securities business money lending and file a report with the TWSE or TPEx. The TWSE or TPEx shall promptly forward notice to all securities finance enterprises and securities firms.
    When any of the circumstances in Article 27, paragraph 1 applies to a customer, in addition to taking the measures set out in that paragraph, the securities firm may collect a default penalty equal to 10 percent of the stipulated financing interest rate from the day repayment is overdue until the date of repayment.
     If a customer's contract for securities business money lending is terminated by the securities firm because of a violation specified in paragraph 1, the securities firm may not enter into any new financing contract with that customer until after the obligation has been satisfied in full.
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