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Taiwan Stock Exchange Corporation Securities Lending and Borrowing Regulations(2005.10.05) |
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Article 13
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The application for securities lending or for securities borrowing, alteration and withdrawal thereof, and the book-entry of securities of a fixed-price transaction shall be conducted in accordance with the following:
1. With respect to the application for securities lending, alteration and withdrawal thereof, and book-entry of securities:
(1) When a lender is to apply for securities lending, the account number, name of the securities, required notice period for early redelivery of the securities, and volume of the securities shall be keyed in the securities lending system of this Corporation by a securities firm.
(2) Upon receipt of application, this Corporation will notify the Securities Central Depository Enterprise by way of computer linkage to pen in the securities in the securities central depository account of the lender to make it available for lending; in the event that the volume of the securities in the securities central depository account of the lender is insufficient, such application shall be null and void.
(3) An application for securities lending at a fixed charge rate shall remain valid if it is not concluded, altered, or withdrawn, whereas, if it is concluded in part, the unconcluded portion shall remain valid.
(4) With respect to the unconcluded portion, a lender may at any time curtail, through a securities firm, the volume for lending at the securities lending system of this Corporation, and this Corporation will notify the Securities Central Depository Enterprise to make alteration to the pen-in volume in the securities central depository account of the lender in accordance with the curtailment of volume for lending.
(5) With respect to the unconcluded portion, a lender may at any time withdraw, through a securities firm, its application at the securities lending system of this Corporation, and this Corporation will forthwith notify the Securities Depository Enterprise to release the pen-in securities for lending from the securities central depository account of the lender.
(6) After an application is concluded through matching, this Corporation will forthwith notify the Securities Central Depository Enterprise to transfer the securities through book-entry from the securities central depository account of the lender into that of the borrower.
2. With respect to applications for securities borrowing, alteration, and withdrawal thereof:
(1) When a borrower is to apply for securities borrowing, the account number, name and volume of the securities, redelivery date, required notice period for early redelivery of the securities, and detailed statement of the collaterals shall be keyed in the securities borrowing system of this Corporation by a securities firm.
(2) After this Corporation has confirmed that the keyed-in information regarding the collaterals is correct and meets the stipulated collateral ratio, and the pen-in of collaterals for securities is simultaneously completed, the application will come into effect.
(3) After a borrower has adequately provided the collaterals, it may at any time apply, through a securities firm, with respect to the unconcluded portion, for alteration to the volume or the redelivery date, or withdrawal of the application.
(4) Upon application by a borrower for withdrawal of the unconcluded portion, this Corporation will forthwith notify the Securities Central Depository Enterprise to release the pen-in collaterals for the securities borrowing from the securities central depository account of the borrower.
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Article 14
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The application for securities borrowing or for securities lending of a fixed-price transaction is processed by continuous matching for those with identical conditions according to the required notice period for early redelivery of the securities, and the priority of matching is determined according the following circumstances:
1. Application for securities borrowing:
(1) Where the volume of securities lending applied for does not exceed that of securities borrowing applied for, the securities lending applied for shall be entirely transacted.
(2) Where the volume of securities lending exceeds that of securities borrowing applied for, the securities lending applied for shall be matched in the priority randomly determined by computer.
2. Application for securities lending:
(1) Where the volume of securities borrowing applied for does not exceed that of securities lending applied for, the securities borrowing applied for shall be entirely transacted.
Where the volume of securities borrowing applied for exceeds that of securities lending applied for, the securities borrowing applied for shall be matched in sequence by the priority of keyed-in time.
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Article 15
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The application for securities lending or for securities borrowing, alteration and withdrawal thereof, and book-entry of a competitive-auction transaction shall be handled in accordance with the following:
1. With respect to the application for securities lending, alteration and withdrawal thereof, and book-entry of securities:
(1) When a lender is to apply for securities lending, the account number, name and volume of the securities, required notice period for early redelivery of the securities, and the lending charge rate shall be keyed-in the securities borrowing system of this Corporation by a securities firm.
(2) Upon receipt of application, this Corporation will notify the Securities Central Depository Enterprise by way of computer linkage to pen in the securities in the securities central depository account of the lender to make it available for lending; in the event that the volume of the securities in the securities central depository account of the lender is insufficient, such application shall be null and void.
(3) An application for securities lending at a lending charge rate shall remain valid if it is not concluded, altered, or withdrawn, whereas, if it is concluded in part, the unconcluded portion shall remain valid.
(4) With respect to the unconcluded portion, a lender may at any time curtail the volume for lending or alter the lending charge rate, through a securities firm, at the securities borrowing system of this Corporation, and this Corporation will notify the Securities Central Depository Enterprise to make alteration to the pen-in volume in the securities central depository account of the lender in accordance with the curtailment of volume for lending
(5) With respect to the unconcluded portion, a lender may at any time withdraw, through a securities firm, its application at the securities borrowing system of this Corporation, and this Corporation will forthwith notify the Securities Central Depository Enterprise to release the pen-in securities for lending from the securities central depository account of the lender.
(6) After an application is concluded through matching, this Corporation will forthwith notify the Securities Central Depository Enterprise to transfer the securities through book-entry from the securities central depository account of the lender into that of the borrower.
2. With respect to the application for securities borrowing, alteration and withdrawal thereof:
(1) When a borrower is to apply for securities borrowing, the account name, name and volume of the securities, borrowing charge rate, redelivery date, required notice period for early redelivery of the securities, and detailed statement of the collaterals shall be keyed in the securities borrowing system of this Corporation by a securities firm.
(2) After this Corporation has confirmed that the keyed-in information regarding the collaterals is correct and meets the stipulated collateral ratio, and the pen-in of collaterals for securities is simultaneously completed, the application will come into effect.
(3) After a borrower has adequately provided the collaterals, it may at any time apply, through a securities firm, with respect to the unconcluded portion, for alteration to the volume, the borrowing charge rate (the time of making alteration shall become the time of entrustment), or the redelivery date, or for withdrawal of the application.
Upon application by a borrower for withdrawal of the unconcluded portion, this Corporation will forthwith notify the Securities Central Depository Enterprise to release the pen-in collaterals for the securities borrowing from the securities central depository account of the borrower
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Article 16
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The application for securities borrowing or for securities lending of a competitive-auction transaction is processed by continuous matching for those with identical conditions according to the required notice period for early redelivery of the securities, and the priority of matching is determined according to the following principles:
1. In case of an application for securities borrowing, when the keyed-in borrowing charge rate is higher than or equivalent to the lowest lending charge rate, the application for borrowing will be processed on the lending charge rates set by lenders on a from-low-to-high basis, whereas, if the volume for lending at a same charge rate exceeds that needed for borrowing, the applications for borrowing will be processed on a random basis.
2. In case of an application for securities lending, when the keyed-in lending charge rate is lower than or equivalent to the highest borrowing charge rate, the application for borrowing will be processed on the borrowing charge rates set by borrowers on a from-high-to-low basis, whereas, if the volume for borrowing at a same charge rate exceeds the volume for lending, the applications for borrowing will be processed in sequence by the priority of keyed-in time.
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Article 18
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The term of securities borrowing for transaction needs or for performance 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 the 10th business day before expiration of the lending period until the date of expiration, submit an application to the lender via this Corporation for extension of the loan. If the lender does not give consent after receiving 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.
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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 10 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 from the business day immediately following the date of securities borrowing to the due date.
3. Request by the lender for early redelivery of the securities: the lender shall, at the latest, 3 business days or 10 business days before the date for early redelivery, in accordance with the lending application conditions, notify the borrower via this Corporation of its request for early redelivery; the borrower may redeliver the securities in full or in part at any time from the business day immediately following the receipt of the notice to the early redelivery date.
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 20
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A borrower of negotiated borrowing transaction shall redeliver the securities by way of the following:
1. Redelivery of securities on the due date: 10 business days prior to the scheduled redelivery date, this Corporation will notify the borrower via the securities firm to redeliver the securities.
2. Redelivery of securities prior to the due date: a borrower and a lender may agree to the redelivery of securities at any time prior to the due date, and the parties shall report to this Corporation through a securities firm with regard to the change of the date for redelivery of securities.
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 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.
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Article 22
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The collaterals for securities obtained by this Corporation on account of the securities lending and borrowing transaction shall be entrusted to the Securities Central Depository Enterprise for custody.
After a transaction of securities lending and borrowing has been concluded, the Securities Central Depository Enterprise shall mark on the borrowed securities.
Marked securities referred to in the preceding paragraph shall not be assigned, transferred, or withdrawn, except under the following circumstances:
1. Redelivery.
2. Transaction needs or performance.
3. Transfer to the securities central depository account of the borrower opened at a custodian bank.
4. Transfer between different securities lending and borrowing accounts opened by the same investor at the same business place of the same securities firm.
5. Others as approved by this Corporation.
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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 relevant vouchers including 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 and content thereof shall be separately publicly announced by this Corporation.
Article 75 of Operation Rules of this Corporation shall apply mutatis mutandis to the circumstances set forth in the preceding paragraph.
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 36
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Where a lender of fixed-price transaction or competitive-auction transaction desires to exercise its voting right, it shall make a request for early redelivery of securities prior to the final transfer date for a shareholders' meeting, and in accordance with the required notice period for early redelivery of the securities under the original lending conditions; the request will be conveyed by this Corporation to borrower via the securities broker.
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Article 39
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A borrower of fixed-price transaction or competitive-auction transaction will be deemed to be in breach of contract under any of the following events, and this Corporation will dispose of the collaterals from the following business day and will purchase or borrow the securities for redelivery from the market. If the securities are not purchased or borrowed within 3 business days after the date of such breach, the redelivery shall be made with cash of equivalent value calculated on the basis of the closing price at the market as of the 3rd business day:
1. Where the borrower fails to redeliver the securities within the prescribed deadline on the due date or upon request of the lender for early redelivery of the securities;
2. Where the borrower fails to pay the compensation of rights and interests upon the due date for such compensation;
3. Where the borrower fails to provided additional collaterals or substitute qualified collaterals within the prescribed time limit.
4. Where the borrower fails to pay the relevant expenses when due.
The handling charge of the disposition referred to in the preceding paragraph shall be borne by the borrower.
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