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Article 12
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A securities broker accepting a trading consignment under normal settlement terms shall collect the securities sold or the purchase price of the securities from the principal as the consignment is carried out or prior to 12:00 p.m. on the first business day following the date of transaction (or 11:00 a.m. on Saturdays). When the principal is an overseas Chinese or foreign national outside ROC territory, the deadline may be extended to 6:00 p.m. on the first business day after the date of transaction.
When the principal is an overseas Chinese or a foreign national outside ROC territory and during trade confirmation there is a discrepancy between holidays in the two regions, a force majeure condition such as interruption in telecommunications or a natural disaster, a failure to receive settlement instructions by the custodian institution, or an inconsistency between the settlement instructions and the trade report, with evidence allowing verification, then upon the securities broker's report of the occurrence to the Taiwan Stock Exchange, settlement of the price payable on securities sold or the net amount payable after offsetting the prices of securities bought and securities sold may be delayed until 6 p.m. on the third business day after the transaction date.
A securities broker accepting a consignment for margin trading shall collect the legally required margin for margin purchases or deposits for short sales from the principal before 12:00 p.m. on the first business day after the date of transaction (11:00 a.m. on Saturdays).
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Article 19
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A principal who does not perform settlement of securities or funds within the specified period is in breach of contract, and the consignment contract executed with the securities broker will be automatically terminated. The securities broker may collect a sum equal to 2% of the transaction amount as penalty for breach of contract. Accounting procedures for penalties so collected shall conform to the "Criteria Governing the Preparation of Financial Reports by Securities Firms," and a sum equal to the penalty shall be allocated as a loss reserve.
When the principal is an overseas Chinese or a foreign national outside ROC territory and delay of settlement results in borrowing of securities, payments made on their behalf, or other related expenses, the principal shall return those amounts to the securities firm when completing settlement.
When the principal is in breach of contract, the securities broker shall immediately cancel the principal's consignment trading account and report the breach of contract in accordance with The Taiwan Stock Exchange Corporation's "Guidelines for Securities Brokers in Reporting Breaches of Contract." The securities broker shall then settle the transaction on behalf of the principal.
A securities broker shall, on the day the principal is determined to be in breach of contract, request other securities brokers to handle the securities or funds it received through settling the transaction referred to in the preceding paragraph on the centralized trading market of the securities exchange. Surplus remaining from the proceeds from such handling, after offsetting debt and fees resulting from the principal's breach of contract, may be returned to the principal. If there is a shortfall, compensation may be deducted from financial assets already received from or payable to the principal pursuant to other consigned trades; if a shortfall remains, compensation may be sought from the principal.
Following handling of the breach in accordance with the two preceding paragraphs, the securities firm shall make a report in accordance with the "Guidelines for Securities Brokers in Reporting Breaches of Contract," and shall notify the principal.
Where the aggregate number of [shares represented by] the share certificates of securities received by a securities broker handling settlement on behalf of a principal under Paragraph 2 during the period of a single breach reaches 5 percent or more of the number of shares of the underlying securities already issued, and furthermore reaches or exceeds the average daily trading volume of the underlying securities during the 20 trading days prior to reporting of the breach, the securities broker may adopt either of the following measures to handle the breach:
1. If handling of the breach cannot be completed through reverse transactions during the three consecutive business days from the day next following the date of confirmation of the breach by the principal, the securities broker, by reaching a mutual agreement with the principal or by notice to the principal, may, depending on market conditions, in accordance with the content of the agreement or the notice, complete handling of the breach through reverse transactions within 180 days, and report the agreement or notice to this Corporation via letter for recordation.
2. The securities broker may reach an agreement with the principal setting a price(s) to serve as the basis for calculating profit/loss, and submit the written agreement reached between the parties to this Corporation via letter for recordation.
Where the consignee of a discretionary trading account fails to perform obligations arising out of an unauthorized trade in a timely manner, a securities broker may collect a sum equal to 2% of the transaction amount for breach of contract. Accounting for breach of contract penalties collected shall be done in accordance with the Criteria Governing Preparation of Financial Reports by Securities Firms, with an equal amount allocated as a breach of contract reserve fund. In writing off the proceeds of amounts received, the securities broker shall, after offsetting debt and fees resulting from the principal's breach of contract, return the surplus to the consignee; where a shortfall remains, compensation may be sought from the principal.
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