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Taiwan Stock Exchange Corporation Securities Lending and Borrowing Regulations(2004.11.19) |
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Article 9
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The business hours for services rendered by this Corporation for securities borrowing under a strategic transaction shall be from 9:00 am to 2:30 pm of the market trading hours of the then current day; the business hours for redelivery of securities and withdrawal and substitution of collateral are from 9:00 am to 3:00 pm.
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Article 18
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The term of securities borrowing under a strategic transaction shall not exceed 6 months from the date of conclusion of the borrowing transaction.
A securities borrower may redeliver the borrowed securities at any time during the agreed term.
If the lender does not request early redelivery of the securities, the borrower may, from 10 to 5 business days before expiration of the lending period, submit an application to the lender via this Corporation for extension of the loan. If the lender does not give consent within three business days from the date it receives the notice, it shall be deemed to have refused.
In an application for extension of a loan under the preceding paragraph, no term or condition of the loan may be amended except the loan period. The extension period may not exceed six months, and only one extension may be given.
A lender of fixed-price transaction or a competitive-auction transaction may file an application for redelivery of the securities with this Corporation only upon expiry of 10 business days after the securities lending, and this Corporation will so inform the borrower.
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Article 19
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A borrower of fixed-price transaction or competitive-auction transaction shall redeliver the securities by way of the following:
1. Redelivery of the securities on the due date: this Corporation will notify the borrower via the securities firm to redeliver the securities three business days prior to the date scheduled for redelivery of securities.
2. Redelivery of the securities prior to the due date: a borrower may redeliver the securities in full or in part at any time during the business hours between the business date immediately following the date of securities borrowing and the date due for redelivery of the securities.
3. Request for early redelivery of the securities: upon the request of a lender, this Corporation will give notice for early redelivery of the securities in advance, and the borrower shall redeliver the securities that it holds or borrows within 10 business days after receipt of such notice.
After a borrower is informed by a securities firm through the securities borrowing system of this Corporation, this Corporation will notify the Securities Central Depository Enterprise to transfer through book-entry the borrowed securities from the securities central depository account of the borrower to that of the lender, and this Corporation will inform the borrower and the lender via the securities firm.
Only after the borrowed securities and all rights derived from the borrowed securities during the term of borrowing have been redelivered or paid to the lender is the borrower's obligation for redelivery of the securities concluded.
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Article 25
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In case of any changes to the company name, agent, name and I.D. number of the responsible person, the uniform number or withholding tax number, withholding tax rate, bank account number, address or mailing address, or email address of the company as specified in the application for securities lending and borrowing account, such changes shall be entered by the securities firm into the securities borrowing system of this Corporation and a written notice shall be given to this Corporation.
In the event that an applicant fails to give such notice and this Corporation processes the lending and borrowing transaction by using the original information, such applicant shall be solely responsible for any legal problem arising therefrom and shall not raise any objection.
Where a notice of this Corporation is delivered by way of postal mail and such notice fails to be delivered due to the failure of the borrower or the lender to inform of the changed address or mailing address in accordance with the provisions of the preceding paragraph, or due to any event attributable to the borrower or the lender, such notice shall take effect as of the date on which it is delivered to a post office for the first time.
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Article 27
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When a lender or a borrower is to entrust a securities firm to lend or to borrow securities, it shall fill out a letter of entrustment marked with the wording "securities lending," "securities borrowing," or "securities redelivery." After the lending and borrowing transaction is concluded, the securities firm shall fill out a securities lending and borrowing report according to the transaction data of this Corporation, marked with the wording "securities lending," "securities borrowing," or "securities redelivery," the format of which is as shown in Appendix 4 hereto.
Paragraph 1 of Article 75 of Operation Rules of this Corporation shall apply mutatis mutandis to the circumstances set forth in the preceding paragraph.
The securities lending and borrowing report shall contain the particulars with respect to the names and account numbers of the borrower and the lender, date of transaction, reference number of the letter of entrustment, type of transaction, title of securities, volume, unit price, charge rate, and category and quantity of collaterals.
This Corporation will inform by way of transmission of files to the securities firm of the concerned borrower of the stipulated collateral ratio, collateral maintenance ratio and minimum collateral ratio.
This Corporation will inform the borrower and the lender via the securities firm of the notice of ex right or ex dividend and the statements pertaining to its calculation.
After a lending and borrowing transaction is settled, this Corporation will produce statements in connection with securities borrowing expenses, securities lending income, return of collaterals, and the net amount to receive and to pay, which shall be informed to the borrower and the lender by the securities firm.
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Article 29
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When applying for securities borrowing, a securities borrower of fixed-price transaction or competitive-auction transaction shall provide collaterals, and such collateral shall be limited to the following:
1. Cash;
2. Listed or OTC-traded securities as approved by this Corporation;
3. Bank guarantee;
4. Central book-entry bonds.
The collaterals referred to in the preceding paragraph shall be provided in the following manner:
1. Cash: to be transferred directly by the borrower to the bank account for security sum as designated by this Corporation;
2. Listed or OTC-traded securities: after the borrower files an application through a securities firm, this Corporation will notify the Securities Central Depository Enterprise to pen in such securities;
3. Bank guarantee: after the borrower has completed the guarantee procedures with a bank, it shall file an application through a securities firm and forward the original of such guarantee to this Corporation.
4. Central book-entry bonds: the borrower shall create a pledge on the bonds and register it in favor of this Corporation.
After a securities lending and borrowing transaction is concluded, this Corporation will notify the Securities Central Depository Enterprise to transfer the securities provided by the borrower as collaterals to this Corporation as a security.
The terms and conditions on which securities may be used as collaterals, and the discount ratio computed by reference to the opening price of the market of the day shall be determined and publicly announced by this Corporation.
The value of central book-entry bonds provided as collateral shall be calculated at a discount ratio equal to 90 percent of their par value.
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Article 31
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Where an application for securities borrowing of fixed-price transaction or competitive-auction transaction is not concluded, this Corporation will return the collaterals provided by the borrower in the following manner:
1. In the case of cash, this Corporation will on the following business day remit the cash directly into the bank account designated by the borrower;
2. In the case of listed or OTC-traded securities, this Corporation will directly notify the Securities Central Depository Enterprise to release the pen-in.
3. In the case of bank guarantee, this Corporation will return the original guarantee to the borrower on the following business day.
4. In the case of central book-entry bonds, the registration of the creation of the pledge shall be canceled on the same day.
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Article 32
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An application may be made for the withdrawal of any portion of the collateral provided by a borrower in a fixed-price transaction or competitive-auction transaction that exceeds the collateral requirement.
A borrower applying for withdrawal of collateral shall do so via the securities firm through the securities borrowing system of this Corporation. After this Corporation receives the application, the matter shall be handled in accordance with the provisions of Article 31 applied mutatis mutandis.
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Article 33
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A borrower in a fixed-price transaction or competititve auction transaction who is applying to substitute collateral shall do so via the securities firm through the securities borrowing system of this Corporation. The borrower shall first provide the additional collateral before then applying for withdrawal of the original collateral of an equivalent value or less (in the case of securities provided as collateral, the value shall be calculated at the discount ratio of the market opening reference price of the then current day).
Where securities or a bank guarantee provided by a borrower as collateral are audited and found no longer to be qualified collateral, this Corporation will forthwith notify the borrower to make a substitution by the following business day.
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Article 35
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With respect to the dividend, bonus or other benefits which are not received by a lender of fixed-price transaction or competitive-auction transaction due to the lending of the securities, the borrower shall return, via a securities firm through the securities borrowing system of this Corporation, the same to the lender in the following manner:
1. Rights and interests on cash:
(1) This Corporation will notify, via the securities firm, the borrower 5 business days prior to the payoff date;
(2) The borrower shall deposit, via the securities firm, the cash into the bank account designated by this Corporation on the payoff date, and key in via the securities firm the securities borrowing system of this Corporation for confirmation, this Corporation will transfer via the securities firm to the lender on the same day or on the following business day.
2. Rights and interests on securities:
(1) This Corporation will notify, via the securities firm, the lender after the ex dividend date, and the lender shall either redeliver the securities or return cash in equivalent value within 3 business days as of the date of notice of this Corporation, and key in via the securities firm the securities borrowing system of this Corporation, this Corporation will notify the borrower via the securities firm. In addition, where this Corporation notifies, via the securities firm, the borrower 5 business days prior to the payoff date, and if the lender fails to make selection within the time limit, this Corporation will redeliver the securities.
(2) In case of redelivery of securities by the borrower, a notice shall be given within 3 business days after the payoff date via the securities firm through the securities borrowing system of this Corporation to the Securities Central Depository Enterprise which will transfer to the lender through book-entry from the securities central depository account of the borrower. In case of return of cash in equivalent value, the amount shall be calculated on the ex dividend reference price and shall be returned on the payoff date in the manner for return of "rights and interests on cash".
(3) In case of redelivery of securities, the securities may be redelivered prior to the payoff date since the rights and interests on securities are those securities which are already been traded on the market.
3. Rights to subscribe for securities to be newly issued
(1) This Corporation will notify the lender via the securities firm 5 business days prior to the deadline for subscription of securities to be newly issued. 3 business days prior to the deadline for subscription of securities to be newly issued, the lender shall express its intent of subscription via the securities firm to this Corporation and deposit the money, via the securities firm, to the bank account designated by this Corporation. After the foregoing is keyed in the securities borrowing system of this Corporation for confirmation, this Corporation will transfer the same via the securities firm to the borrower for subscription or for purchase from the market. Within 3 business days of the date of issuance of the new securities, this Corporation will notify the Securities Central Depository Enterprise via the securities firm through the securities borrowing system of this Corporation, to transfer through book-entry from the securities central depository account of the borrower to the lender.
(2) If the securities to be newly issued have already been traded on the market, the new securities may be redelivered even before they are issued.
(3) If the lender fails to express or expresses beyond the deadline its intent of subscription or, after expressing such intent, fails to pay the money for subscription within the prescribed deadline, the lender shall be deemed to have waived the rights to subscribe for the new securities.
Where the distribution date of rights and interests on cash, rights and interests on securities, or new share subcription mentioned in the preceding paragraph falls after the redelivery date, the borrower shall return all rights and interests of the lender to the lender at the time of redelivery.
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Article 44
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The securities borrowing charge of fixed-price transaction and competitive-auction transaction shall be calculated on a daily and individual transaction basis. The daily closing price of the object securities multiplied by the volume of collaterals, and further multiplied by the transaction charge rate will be the total securities borrowing charge, which shall be collected or paid by the securities firm upon redelivery of the securities. When there is no closing price, the calculation shall be made on the basis of the most recent closing price.
The term of securities borrowing referred to in the preceding paragraph shall be from the date of borrowing of the object securities to the date preceding the redelivery date of such securities; If the redelivery date does not fall on a business day, the next following business day shall be taken as the redelivery date. The preceding paragraph applies mutatis mutandis to securities borrowing charges for holidays.
Where the lender in a fixed-price transaction or competitive-auction transaction agrees to extend the loan, the securities borrowing charge shall continue to accumulate and shall be collected after the redelivery of the securities has been concluded.
Where the borrower redelivers early a portion of the securities during the lending period, the borrower shall on the next following business day pay up the borrowing charge for that redelivered portion first.
The calculation and payment for the securities borrowing charge of a negotiated borrowing transaction shall be determined by the borrower and the lender through negotiation, for which Paragraph 6 of Article 27 hereof shall not apply.
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