| Title： |
Taiwan Stock Exchange Corporation Securities Borrowing and Lending Rules(2007.10.17) |
| Date： |
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Article 56
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Where a securities finance enterprise's short balance with respect to a security it sells short and otherwise borrows, plus any balance of refinancing of that security it extends to others, exceeds the total number of shares of that security it owns, it borrows through the stock exchange securities lending system, and it obtains from the operation of margin purchase and short sale business and the business of providing refinancing to others, if the shortfall is still not fully covered after it has sought refinancing from other securities finance enterprises, it shall initiate competitive bidding for loans from owners of that security as from 8 am on the next business day, and if a shortfall still exists, shall arrange for negotiated transaction with any specific persons no later than 2 pm on that day.
If the shares of a security obtained following the procedures described in the preceding paragraph are still insufficient in amount, the securities finance enterprise shall through a securities firm conduct a purchase of shares by reverse auction at the TSEC by 2:30 pm on the same day.
When the issuing company of a security closes its books, except where the book closure is made for the purpose of convening a special shareholders' meeting, or for any other reason that will not affect the exercise of shareholders' rights, any borrowing of securities through competitive bidding and negotiated transaction, and purchasing of securities by reverse auction, under the preceding two paragraphs shall be suspended for that security on the second business day prior to the first day of the book closure.
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Article 58
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A securities owner wishing to participate in the competitive bidding process for a competitive bid loan shall fill out a bid order and submit it through a securities firm. If it is submitted in person, the bid order shall be filled out and signed/sealed by the securities owner; if it is submitted over the telephone, it shall be completed by the person at the securities broker handling the bid order. The bid order shall specify the name of principal, brokerage account number, title of securities, lending quantity, and lending rate; and the securities offered to participate in the competitive bidding process may only be securities it has deposited in a custody account at the central securities depository. The securities firm, when accepting the bid order request, shall put the lendable securities on hold (except for those securities that have been lent out on the previous business day), and after the acceptance shall record the time and serial number on the bid order, and enter the information on the bid order in sequence into the TSEC competitive bid loan system.
The timeframe for entering information, as described in the preceding paragraph, shall start from 9 am and end at 12:10 pm on the application date of the competitive bid loan, and all bids will be opened automatically at 12:30 pm; upon completion of the bid opening procedure, the TSEC will publish on the Market Information System the lending rate(s) and number of shares of the winning bid(s).
The order confirmation and winning bid confirmation in relation to the competitive bid loan will be printed out through the printer of the securities firm handing the bid order, and the TSEC will provide a function to query for winning bid(s) from 2 pm.
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Article 62
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A securities finance enterprise effecting a negotiated transaction to borrow a security shall execute the transaction at a rate of not more than 10 percent of the closing price of the security on the date on which the securities shortfall takes place.
A negotiated transaction shall be conducted in the following manner, unless there is a necessary reason to do otherwise:
1. A securities owner wishing to participate in the negotiated transaction may engage a securities firm to carry out the transaction on its behalf; an order ticket for the negotiated transaction shall be filled out and signed/sealed by the securities owner if it is submitted in person, or, if submitted over the telephone, be completed by the associated person at the securities broker handling the order ticket; the order ticket shall specify the name of principal, brokerage account number, title of securities, lending quantity and lending rate; and the securities offered to participate in the negotiated transaction may only be securities it has deposited in a custody account at the central securities depository.
2. Upon receipt of the order request, the securities broker shall put the lendable securities on hold (excluding those securities that have been lent out on the previous business day).
3. Upon conclusion of the negotiated transaction, the securities finance enterprise shall enter the name of the lender, brokerage account number, title of securities, lending quantity, and lending rate into the TSEC's negotiated lending transaction system by 2 pm on that day, and, together with the details of the securities on hold, fax the same to the TSEC, and the TSEC upon confirmation will give a notice to the central securities depository, instructing it to transfer the lent securities to the securities finance enterprise's dedicated account on the next business day.
4. The cash collateral shall be deposited at a level as negotiated and agreed between the securities finance enterprise and the lender.
5. The securities lent by the lender shall be returned through the central securities depository on the second business day following the date of the negotiated transaction.
6. The securities finance enterprise shall pay the securities lending fee (securities lending fee = agreed lending rate x quantity) to, and reclaim the cash collateral from the lender by 10 am on the second business day following the date of the negotiated transaction.
If there is a necessary reason to do otherwise, as referred to in the preceding paragraph, a negotiated translation shall be conducted in the following manner and under the supervision of personnel sent by the TSEC:
1. The securities owner agreeing to lend the security shall deliver endorsed certificates of the security and a securities lending list, along with a complete set of attachments, to the securities finance enterprise, or transfer the security by book-entry to the securities finance enterprise's dedicated account at the central securities depository, by 2:00 pm on the current day; the securities finance enterprise shall prepare and deliver a receipt to the lender by 12 noon on the next business day following the date of the negotiated loan.
2. The cash collateral shall be deposited at a level as negotiated and agreed between the securities finance enterprise and the lender.
3. The securities finance enterprise shall return the securities borrowed under negotiated transaction and pay the securities lending fee (securities lending fee = agreed lending rate x quantity) to, and reclaim the cash collateral from the lender by 2 pm on the second business day following the date of the negotiated loan.
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