Chapter Content


Operating Rules for Securities Firms Handling Non-Restricted Purpose Loan 

Amended Date: 2021.04.01 
Categories: Securities Exchange Market > Borrowing of Money
   Chapter V Covering of Shortfalls for Collateral
Article 23    A client shall warrant that the change of collateral or supplementary collateral it provides are free and clear of all liens, claims, and encumbrances of any nature whatsoever. If there is any defect in rights or legal dispute regarding the securities, within 3 business days of the notice from the securities firm, the client shall replace such securities or commodities with securities or other commodities eligible for use as additional collateral or pay their equivalent value in cash. The same applies when the supplementary collateral belongs to a third party.
    Where the client is not the owner of supplementary collateral, it shall be responsible for obtaining the household registration information, verification of source, and consent letter of the owner of such collateral.
Article 24    The interest of the collaterals and supplementary collaterals belongs to the collateral owner, and the issuer or its institute agent shall directly distribute to the owner's designated book-entry account or centralized custody account. In case of creation of pledge under Article 6, paragraph 3, the securities firm and the owner of such collateral shall have a separate agreement on this matter.
    Where a client posts central book-entry bonds as collateral and supplementary collateral securities, the securities firm may collect any interest payment on behalf of the client through the central government securities settlement bank and shall, before the next business day of the interest payment date, transfer the interest to the client after deducting the tax withheld on the client's behalf, according to the agreement between the parties.