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Operation Directions for the Control of Margin Purchase and Short Sale Limits Relative to the Net Worth of Securities Firms(2007.03.05) |
| Date： |
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These Directions are adopted according to Articles 14 and 15 of the Regulations Governing the Conduct of Securities Trading Margin Purchase and Short Sale Operations by Securities Firms and per 2 May 2001 Letter No. (90) Taiwan-Finance-Securities-IV-117164.
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2
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The total amount of margin purchases or short sales of securities conducted by a securities firm may not exceed 250% of its worth.
Where a securities firm maintains a regulatory capital adequacy ratio of 250% or above for three consecutive months, the total amount of margin purchases or short sales of securities which it conducts from and to customers may not exceed 400% of its net worth.
Where, after the preceding paragraph is complied with, a securities firm maintains a regulatory capital adequacy ratio lower than 250% for two consecutive months and the total amount of its margin purchases from or short sales to customers exceeds 250% of its net worth, it shall cease to conduct margin purchases from or short sales to customers. When such total amount falls below 250% of its net worth or its regulatory capital adequacy ratio remains 250% or above for three consecutive months, the preceding two paragraphs will apply.
When a securities firm conducts margin purchases and short sales of securities, the sum of the total amount of its margin purchases from customers plus the total financing amount of money lent in connection with securities business may not exceed 400% of its net worth; the sum of the total amount of short sales to customers plus the total dollar amount of securities lent in connection with securities business may not exceed 400% of its net worth.
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When a securities firm conducts margin purchases and short sales of securities, the total amount of its margin purchases of each security may not exceed 10% of its net worth.
When a securities firm conducts margin purchases and short sales of securities and securities lending and borrowing, the sum of the total amount of its short sales and the total dollar amount lent with respect to each security may not exceed 5% of its net worth.
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The net worth of a financial institution operating as a securities firm concurrently is calculated based on the exclusively appropriated working capital, provided it may not exceed the maximum net worth of the securities firm in the same period and the limit prescribed by the competent authority as specified in the preceding two articles.
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Where the net worth of a securities firm exceeds the limit prescribed by these Directions for more than thrice within a period of six months, the TWSE will immediately request it to cure and take action as follows against the responsible person of the department committing the violation; where the number of times of violation reaches four, the firm concerned will be requested to give a warning to the responsible person of the department concerned.
Where the number of times of violation reaches five, the responsible person of the department concerned will be suspended from performing business for a month.
In the event of an excessive number of times of violation or the violation is material, the TWSE may impose heavier punishment on the president, responsible person of the violating department, and the handling personnel.
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These Directions shall take effect after having been submitted to and approved by the competent authority. Subsequent amendments thereto shall be effected in the same manner.
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