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Taiwan Stock Exchange Corporation Securities Lending and Borrowing Regulations(2006.03.03) |
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Article 51
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A securities firm, when applying for securities borrowing, shall deposit with this Corporation monetary collateral equivalent to 120% of the closing price of the object securities on the date on which the transaction is concluded multiplied by the volume of securities applied for, and shall act in accordance with the Directions for Collection and Delivery Operations of Securities Firms Handling Securities Borrowing for Settlement and Supplementation of Collateral.
When a securities firm fails to complete the settlement of securities and further fails to complete the reporting or application procedures in accordance with the time prescribed in Article 104 of Operation Rules, and if such securities firm is not required to otherwise provide checks pursuant to the provisions of the "Particulars to be Noted" referred to in the preceding paragraph, this Corporation may borrow securities on behalf of the securities firm, and notify such securities firm on the following date, and the securities firm shall not raise any objection to the securities borrowing charge incurred thereby.
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Article 54
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The borrowed securities shall be redelivered on a daily basis from the business day following each lending date.
A borrowing securities firm, after completing the securities borrowing, shall redeliver or make up the securities redelivery by the prescribed or committed deadline. Before the redelivery or make-up of securities is completed, it shall continue to borrow the securities on each business day so as to use the same for the redelivery pursuant to the preceding paragraph.
The securities redelivered or made-up by a borrowing securities firm by the prescribed or committed deadline shall be redelivered through the Securities Central Depository Enterprise. Upon notice of such redelivery and completion of transfer by the Securities Central Depository Enterprise, this Corporation will pay the securities lending charge, by deducting from the refundable monetary collateral, to the lender through the securities firm of the lender or through the bank approved by the competent authority to operate the custodial business and serving as a custodial institution for the lender. Thereafter, this Corporation will redeliver to the securities firm the balance of the monetary collateral after deducting the securities lending charge.
A securities firm of a lender or a bank approved by the competent authority to operate the custodial business and serving as a custodial institution for a lender shall inform the lender of the status of securities lending and redelivery of securities, and may therefore charge the lender a service fee; however, such service fee shall not exceed 10% of the securities lending charge.
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Article 55
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After a selling securities firm borrows securities to perform settlement obligations, on any subsequent day on which it has not yet redelivered the securities and is required to continue the loan, if the balance of the total monetary collateral it has paid minus any securities lending charge incurred is lower than 107% of the amount requiring collateralization as calculated by multiplying the outstanding securities borrowings by the closing price of those securities on the current day, the securities firm shall, by 10 am of the next business day following the date of continuation of the securities loan, supplement the amount to 120% of the amount requiring collateralization as of the date of continuation of the securities loan.
Where a borrowing securities firm fails to pay the monetary collateral in accordance with regulations or is unable to redeliver the borrowed securities for reasons attributable to itself, this Corporation will acquire the securities from the market and redeliver them to the lender. The prices and all expenses incurred therefrom will be paid from the monetary collateral; in case of any shortfall, this Corporation will recover it from the borrowing securities firm, whereas, in case of any remaining balance, such balance will be redelivered to the borrowing securities firm.
In the event that a securities firm is in violation of the settlement obligation, this Corporation will forthwith suspend its participation in securities lending and borrowing transactions.
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Article 55-1
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A borrowing securities firm may, by 6 pm on the next business day following the trade date, or by 10 am on the next business day following the date of continuation of the securities loan referred to in paragraph 1 of the preceding article, apply to offset monetary collateral, or a shortfall in monetary collateral that must be covered for continuation of a securities loan, by a bank guarantee or a pledged book-entry central government bond. The limit on such offset is 90 percent of the amount of the monetary collateral. (Bank performance guarantees and book-entry central government bonds are collectively termed "offsetting collateral" below.)
After a selling securities firm borrows securities to perform settlement obligations, on any subsequent day on which it has not yet redelivered the securities and is required to continue the loan, if the balance of the cash portion of the monetary collateral it has paid minus any securities lending charge incurred is lower than 6% of the amount requiring collateralization as calculated by multiplying the outstanding securities borrowings by the closing price of those securities on the current day, the securities firm shall, by 10 am of the business day next following the date of continuation of the securities loan, supplement the amount to 10% of the amount requiring collateralization as of the date of continuation of the securities loan.
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Article 55-2
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A borrowing securities firm that applies to offset monetary collateral, or a shortfall in monetary collateral that must be covered for continuation of a securities loan, by pledged book-entry central government bond(s) shall first carry out "restricted transfer" registration with the clearing bank, and then remit the bond(s) into the book-entry central government bond account designated by this Corporation by 10 am of the second business day following the trade date, or by 10 am of the business day next following the date of continuation of the securities loan.
The offset value of a book-entry central government bond is 90 percent of its face value.
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Article 55-3
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A borrowing securities firm that applies to offset monetary collateral, or a shortfall in monetary collateral that must be covered for continuation of a securities loan, by a bank guarantee(s) shall first carry out the guarantee procedures with the bank, and then deliver the original written guarantee to this Corporation by 10 am of the second business day following the trade date, or by 10 am of the business day next following the date of continuation of the securities loan.
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Article 55-4
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A borrowing securities firm may use a single or multiple book-entry central government bond(s) or bank guarantee(s) to offset a single or multiple sum(s) of monetary collateral.
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Article 55-5
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The price and all fees incurred when this Corporation acquires securities from the market for redelivery in accordance with Article 55, paragraph 2, shall be paid first out of the monetary collateral; in the event it is insufficient, this Corporation will then dispose the offsetting collateral or exercise the rights thereunder to obtain compensation or to make necessary payouts. The procedures for disposal of offsetting collateral are as follows:
1. Where a bank guarantee(s) is used as offsetting collateral, this Corporation will claim compensation directly from the guaranteeing bank.
2. To dispose of pledged book-entry central government bond(s), this Corporation shall open a Taiwan Stock Exchange Corporation Segregated Account for Handling Default with the securities firm for that purpose.
3. All related expenses incurred in the disposal of collateral shall be borne by the borrowing securities firm.
4. After funds obtained by disposal of offsetting collateral have been applied to recover the amount of the outstanding debt, any remaining funds shall be returned to the borrowing securities firm; if the proceeds from the disposal are insufficient to liquidate the debt, recovery shall be sought from the securities firm.
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