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Taiwan Stock Exchange Corporation Guidelines for Securities Brokers in Reporting Failed Trades and Defaults by Principals(2015.04.10) |
| Date： |
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Procedures for reporting default: A principal that fails to effect settlement within the specified period is in default. Securities brokers shall report the default in accordance with the provisions below, and shall at the same time notify the principal:
- Computer transmission:
- Period for computer entry:
- When it has confirmed the occurrence of default by a principal, a securities broker shall immediately enter the default information of the principal and its agent into the TWSE computer no later than 11 a.m. on the second business day after the trade date. However, when bank operations prevent the broker from learning of any shortfall in the deposit of securities prices until after 11 a.m., the information shall be entered immediately, with a deadline of 8:00 p.m., and the bank notice shall be sent with a letter of report to the TWSE for verification.
- If the principal is an offshore overseas Chinese, foreign national, or mainland area investor, when the securities broker reports the principal's failed trade and the principal fails to perform settlement obligation on time, the input time set forth in the preceding subparagraph may not be later than 6 p.m. of the third business day after the trade date.
- When a securities broker has confirmed the occurrence of default by the principal of a block trade, the securities broker shall proceed in accordance with the provisions of items (i) and (ii).
- If the securities broker has confirmed that the default has resulted from the principal's failure to pay a price difference or fees incurred in connection with failure to complete an opposite purchase to close out a day trade after selling securities on the spot market, it shall enter the default information no later than 6 p.m. of the next business day after the forced repurchase for the return of borrowed securities.
- When a natural disaster occurs such that local mayors and county magistrates announce closure of schools and public offices, electronic reporting by securities brokers within the affected region shall be undertaken in accordance with the provisions for handling of settlements due in the TWSE Measures for Responding to Natural Disasters.
- Accidental breakdowns:
When accidental breakdowns result in interruptions in the computer transmission lines, securities brokers shall inform the TWSE Trading Department by telephone, and put information required to be input into written form, and after affixing the seals of the company and responsible person, send it via facsimile to the TWSE, which will subsequently carry out supplemental input based on the information contained in the facsimile.
- Default report letter:
In which a principal participating in bidding-to-purchase under the Taiwan Stock Exchange Corporation Regulations Governing Auction of Listed Securities by Consignment fails to perform settlement obligations on time, the securities broker shall submit to the TWSE for recordation a report by letter meeting the requirements listed below.
- Content of the report by letter:
- The name of the principal.
- The principal's account number.
- The principal's national ID number.
- The principal's address.
- The facts of the default.
- Copies of documents to be attached:
- The front and reverse sides of the principal's national ID card.
- The consignment contract (front and reverse sides).
- The letter of consignment.
- The trading report.
- The settlement receipt form.
- When a securities broker receives a brokerage order to buy or sell securities through an omnibus trading account, if the principal fails to perform its settlement obligations and default occurs, the securities broker shall report the default on the basis of the principal's brokerage account.
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Procedures for announcing default:
- When the TWSE receives a report of default from a securities broker pursuant to Point II, paragraph 1, subparagraph 1, item (i) or (ii), it will inform all securities brokers based on the particulars of the report, which shall handle related matters as follows:
- Receive and review the information on default by the principal at 8:30 a.m. the next morning and immediately proceed as provided in Article 76, paragraph 3 of the TWSE Operating Rules.
- Receive and review the information on default by the principal at 11:30 a.m. on the given morning and proceed as provided in Article 76, paragraph 3 of the TWSE Operating Rules from no later than 12 noon.
- In any event of default under the following conditions, the TWSE will immediately inform all securities brokers of the relevant default information for their control and management of risks, and the time for notification of default in subparagraph 1 of preceding paragraph wil be included.
- The total amount that all the securities brokers purchase or sale the same type of security by default reaches NTD10,000,000 or more
- The default results from the principal placing an order through the agent
- Responsibility for any damage to the rights and interests of the principal or any disputes arising in connection with a report of default under the first paragraph shall be borne by the securities broker reporting the default.
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