| Title： |
Standards Governing Eligibility of Securities for Margin Purchase and Short Sale(2014.04.25) |
| Date： |
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Article 3
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Where beneficial certificates have been exchange-listed (or OTC-listed) for a full 6 months, the securities exchange or OTC market shall publicly announce the certificates as eligible for margin purchase and short sale, and report same to the competent authority on a monthly basis; provided, beneficial certificates of exchange-traded securities investment trust funds issued by a securities investment trust enterprise (SITE) (hereinafter referred to as "exchange-traded fund beneficial certificates"), beneficial certificates of futures exchange-traded fundsexchange-traded futures trust funds issued by a futures trust enterprise, and the beneficial certificates, shares, or investment units of offshore exchange-traded funds offered and sold in Taiwan pursuant to the Regulations Governing Offshore Funds by an offshore fund manager or its designated institution (hereinafter referred to as "offshore exchange-traded fund beneficial certificates") may be exempted from the 6-month exchange (or OTC) listing requirement.
With the exception of exchange-traded fund beneficial certificates, futures exchange-tradedexchange-traded futures trust fund beneficial certificates, and offshore exchange-traded fund beneficial certificates, the provisions in paragraphs 4 and 5 of the preceding article shall apply mutatis mutandis to beneficial certificates.
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Article 5
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If any of the following conditions obtain with respect to beneficial certificates eligible for margin purchase and short sale, a securities exchange or OTC market may publicly announce suspension of margin purchase and short sale transactions in such certificates, or adjust the margin purchase leverage limit or short sale margin requirement within the scope prescribed by the competent authority, and report same to the competent authority for recordation:
- Delisting has taken place.
- Financial reports have not been punctually filed and publicly announced in accordance with requirements.
- A situation set out in Article 96, paragraph 1 of the Securities Investment Trust and Consulting Act exists with respect to the securities investment trust enterprise managing the securities investment trust fund, or a situation set out in Article 38, paragraph 1 of the Regulations Governing Futures Trust Enterprises exists with respect to the futures trust enterprise managing the futures exchange-tradedexchange-traded futures trust fund.
- The price is too volatile.
- Beneficial ownership is overly concentrated.
- Trading volume is excessively abnormal.
- There is another situation that makes it unadvisable to continue margin purchase and short sale transactions.
Where margin purchase and short sale transactions are suspended or the margin purchase leverage limit or short sale margin requirement is adjusted in accordance with the provisions of the preceding paragraph, if the reason for suspension or adjustment no longer exists, the stock exchange or OTC market shall publicly announce reinstatement and report same to the competent authority for recordation.
The specific standards and procedures required in the preceding two paragraphs shall be prescribed separately by securities exchanges and OTC markets and reported to the competent authority for approval. The provisions of subparagraphs 4 to 6 of paragraph 1 do not apply to exchange-traded fund beneficial certificates, and exchange-traded futures trust fund beneficial certificates. The provisions of subparagraphs 3 to 6 of paragraph 1 do not apply to offshore exchange-traded fund beneficial certificates.
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Article 6
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When the aggregate figure for either long margin positions or open interest in a given stock that is eligible for margin purchase and short sale transactions reaches a certain percentage limit of total exchange-listed or OTC-listed shares as set forth by the competent authority, margin purchases and short sales shall be suspended. Margin purchases and short sales shall be reinstated when the ratio falls back below the percentage as set forth by the competent authority.
In order to implement the provisions set out in the preceding paragraph, securities exchanges and OTC markets may conduct allocation and report same to the competent authority for recordation. When a securities finance enterprise or a securities firm handling margin purchases and short sales of securities conducts a margin purchase or short sale, the volume of the transaction may not exceed the volume of securities allocated by the securities exchange or OTC market for margin purchase and short sale.
The provisions of the preceding two paragraphs apply mutatis mutandis to beneficial certificates; provided, the calculation of the number of beneficial units shall be done on the basis of the total number of issued beneficial units as of the preceding business day for exchange-traded fund beneficial certificates and futures exchange-tradedexchange-traded futures trust fund beneficial certificates, and on the basis of the total number of beneficial units offered and sold in Taiwan as of the preceding business day for offshore exchange-traded fund beneficial certificates.
The provisions of paragraphs 1 and 2 apply mutatis mutandis to Taiwan depositary receipts; provided, the calculation of the number of beneficial units of exchange-traded fund beneficial certificates shall be done on the basis of the total number of units as of the preceding business day after redemption.
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