| Title： |
Taiwan Stock Exchange Corporation Securities Borrowing and Lending Rules(2010.12.09) |
| Date： |
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Article 59
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A securities finance enterprise, by 2 pm on the competitive auction loan application date, shall deposit cash collateral with the TWSE in the amount of 120 percent of the closing price of that security on that day multiplied by the number of shares of the winning bid(s).
Upon delivery of cash collateral by the securities finance enterprise, the TWSE will give notice to the central securities depository advising it to transfer the shares of security underlying the winning lending bid(s) to the securities finance enterprise's dedicated account at the central securities depository on the next business day following the competitive auction loan application date (the next business day hereinafter referred to as "the lending date").
Certificates of deposit or pledged book-entry central government bonds, to be valued at 90 percent of the face value of the non-cash collateral, as well as bank guarantees, may be posted as collateral in lieu of the cash collateral described in the preceding paragraph.
In regard to bank guarantees referred to in the preceding paragraph, the securities finance enterprise shall, upon completion of guarantee procedures with a bank, submit the original bank letter of guarantee to the TWSE. The TWSE may refuse to accept the bank guarantee provided by the securities finance enterprise, or demand the securities finance enterprise to replace it within a specified period of time. Bank guarantees may be denominated only in New Taiwan Dollars (NTD), and shall be in units of thousands of NTD.
The lent securities shall be returned to the lender through the central securities depository on the next business day following the lending date; provided, however, that securities borrowed through competitive auction loan on the first settlement day that follows the last trading day before the Lunar New Year holiday, shall be returned on the second trading day after the Lunar New Year holiday.
By 10 am on the next business day following the lending date, the securities finance enterprise shall pay the securities lending fee (securities lending fee = lending rate x quantity) to the lender through the lender's securities firm, whereupon the TWSE will return the cash collateral to the securities finance enterprise.
The securities firm of the lender may charge the lender a service fee at a rate of not more than 10 percent of the lending fee.
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Article 60
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If a securities finance enterprise by the due date is unable to return the securities lent by a securities owner through competitive auction loan, the TWSE will use the cash collateral to buy in securities of the same type for return to the lender. The prices needed for the purchase of the securities in the market by the TWSE for returning the borrowed securities, all processing fees, and other related fees and expenses payable by the securities finance enterprise to the TWSE for the competitive auction loan shall be paid out of the cash collateral posted by the securities finance enterprise. Any amount remaining thereafter shall be refunded to the securities finance enterprise. However, if the cash collateral is insufficient to buy in securities in the full amount, the TWSE will instead deliver the cash collateral to the lender.
If a securities finance enterprise by the due date is unable to return the securities lent by a securities owner through competitive auction loan, the TWSE will use the cash collateral to buy in securities of the same type for return to the lender, with the prices needed for the buy-in of securities in the market by the TWSE for returning the borrowed securities, all processing fees, and other related fees and expenses that the securities finance enterprise shall pay the TWSE incurred for receiving a competitive auction loan, to be paid out of the cash collateral posted by the securities finance enterprise, and with any amount remaining thereafter to be refunded to the securities finance enterprise; provided, that if the cash collateral is insufficient to buy in securities in the full amount, the TWSE will instead deliver the cash collateral to the lender.
If the securities finance enterprise under the preceding paragraph has pledged book-entry central government bonds as collateral in lieu of cash collateral, it may neither refuse to accept nor raise any objection as to how or at what price the TWSE disposes of the pledge to the extent that the disposition is made in a manner complying with the letter of consent (see attachment) provided by the securities finance enterprise. In the case of a bank guarantee used as non-cash collateral, the TWSE may seek recovery directly from the guaranteeing bank.
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