| Title： |
Taiwan Stock Exchange Corporation Guidelines for Securities Brokers in Reporting Failed Trades and Default by Principals(2008.12.09) |
| Date： |
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VII. Procedures for cancellation of default:
1. When any of the following circumstances occur in a case of default, the securities broker shall be responsible for verification and shall cancel the default through a letter of report with evidentiary documents attached:
(1) Failure of the principal to make settlement payments within the stipulated time period resulting from negligence in banking operations.
(2) Negligence by the broker in mistakenly reporting a principal's default.
(3) Confirmation that the principal's default did not arise from an arbitration decision, a final judgment of the courts, or any other official document having the same effect as a final judgment.
(4) Circumstances conforming to the conditions of Article 91, paragraph 4 of the TWSE Operating Rules.
(5) When the principal, after occurrence of default, submits evidentiary documents showing that failure to complete timely settlement for the given discretionary account was due to the consignee's failure to perform responsibilities arising out of an unauthorized trade by the consignee.
(6) Other reasons sufficient to demonstrate that the default was not attributable to the principal.
2. When securities brokers report cancellation of default and fail to perform complete verification of the grounds for cancellation or to attach evidentiary documents as specified in the preceding paragraph, or when, upon examination, the attached documents and the reasons stated in the report do not appear to satisfy the formal requirements for proving that the default was not attributable to the fault of the principal, the TWSE will not accept or process such report; the securities broker reporting default shall bear full responsibility for any damage to the rights and interests of the principal or for any disputes arising from such a report.
3. If the cancellation of default reported by the securities broker contains any false or misleading statements, the TWSE may handle such event in accordance with the Article 38 of its articles of incorporation or Article 141 of the TWSE Operating Rules.
4. If a securities broker mistakenly reports a default by a principal, the TWSE may handle the matter, according to the circumstances, in accordance with Article 38 of its articles of incorporation or Article 144 of the TWSE Operating Rules.
5. When a securities broker has cancelled a case of default and the TWSE has approved the cancellation, the case shall be closed and filed for reference. If the facts of the case have already been reported to other securities brokers, the securities broker may receive and review the information on the cancellation of the principal's default at 8:30 a.m. the next morning and submit it for display on the TSCE public announcement information system for that afternoon.
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