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Taiwan Stock Exchange Corporation Securities Borrowing and Lending Rules(2021.04.01) |
| Date： |
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Article 26
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In a fixed-price or competitive bid transaction, the subject securities shall be returned within the following timeframe, and in the following manner, as the case may be:
- Return of securities on due date: the TWSE will, 10 business days prior to the scheduled return date, notify the borrower through the securities firm to return the subject securities.
- Return of securities before due date: the borrower may return the subject securities, in whole or in part, at any time from the next business day following the borrowing date.
- Lender's request for early return of securities: the lender may claim return of subject securities in whole or in part on any date which is one, three, or 10 business days prior to the date to be scheduled as the early return date in accordance with the terms and conditions under which the borrowing/lending application is made; the borrower shall return the subject securities as requested, in one or more batches, starting from the next business day following the receipt of the notice.
- Compulsory early return of securities:
- When upon review the subject securities are no longer found eligible or are halted from lending transactions, the TWSE may notify the borrower to return securities in satisfaction of the loan within a specified period of time.
- If the issuer of the subject securities undergoes a merger or consolidation, capital reduction, or any other event affecting the exercise of shareholder's rights by the lender, or performs a split or reverse split of ETF beneficial certificates, the borrower shall return securities in satisfaction of the loan by the sixth business day before the book closure date.
- If the subject securities are the subject of an announcement of suspension of trading, where the time for resumption of trading is not specified, or of delisting from the TWSE or GTSM, the borrower shall return securities in satisfaction of the loan within a period of time specified by the TWSE.
- If due to a natural disaster or other emergency, the trading on the securities market is suspended across the board and the time for resumption of trading is not specified, the borrower shall return securities in satisfaction of the loan within a period of time specified in a TWSE announcement.
Upon receipt of a regulatory report on securities return filed by the borrower through its securities firm via the TWSE securities lending system, the TWSE will notify the central securities depository to effect a book-entry transfer of the securities to be returned, from the CSD account of the borrower back to that of the lender, with a notice to the borrower and the lender respectively through their securities firms.
The borrower's obligation, liability, and duty arising from its borrowing of securities are not satisfied unless and until all subject securities borrowed, all entitlements incurred during the borrowing period, and all relevant fees and expenses are fully returned or paid.
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Article 34
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A borrower in a fixed-price or competitive bid transaction applying to replace collateral shall do so through its securities firm, using the TWSE securities lending system, and shall provide substitute collateral before submitting an application to withdraw the previously pledged collateral within the value of the substitute collateral (in the case of collateral securities, the value shall be discounted at the collateral valuation percentage based on the auction reference price at the opening of market or base price for first trading for the current day on the exchange market).
Upon occurrence of any of the following circumstances to the collateral provided against a securities borrowing transaction, the TWSE shall forthwith give notice to the securities firm, to be then forwarded to the borrower, advising the borrower to replace the collateral on the next business day:
- Where the collateral securities do not conform to subparagraph 2, paragraph 1, Article 33 or otherwise are subject to an event of altered trading method, capital reduction, suspension of trading, delisting from the TWSE or GTSM, or split or reverse split of ETF beneficial certificates.
- Where the bank guaranteeing the performance of obligation becomes insolvent or, by the operation of law, is put under receivership or rehabilitation or files for reorganization or bankruptcy, or is declared bankrupt or subject to court ruling for reorganization, or has any other event involving significant loss of creditworthiness.
- Any other event sufficient to result in a low value or liquidity of the collateral.
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Article 50
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If a seller securities firm does not have enough securities in its book-entry custody account available for the satisfaction of a securities settlement obligation, it shall submit a securities borrowing application by 10 am on the second business day after the trade date. the securities firm fails to submit such an application and fails to complete the securities settlement, the TWSE will borrow securities for the account of the securities firm after 11 am, with a notice to that effect to the securities firm on the same day. The securities firm shall pay, and may not raise any objection as to, the securities lending fee thus incurred.
Where the borrowing securities firm is prevented during the suspension of trading of the securities borrowed from redeeming said securities, the TWSE will, in accordance with Article 109, paragraph 2 of the TWSE Operating Rules, issue a securities delivery voucher and forward the same to the securities depository for safekeeping on behalf of the securities firm representing the purchaser.
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