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Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities(2010.03.31) |
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Article 26
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A customer may deposit government bearer bonds or exchange-listed or OTC securities eligible for margin purchases and short sales as additional collateral to offset against its short sale margin requirements, or may deposit government bearer bonds, or exchange-listed securities that are not in the altered-trading-method category, or OTC securities eligible for margin purchases and short sales, as additional collateral to offset against any deficiency the customer is required to cover under Article 23.
Securities under the preceding paragraph may not fall into any of the following categories:
1. be less than one trading unit;
2. be any registered shares issued to and acquired by shareholders or capital contributors as a result of capital increase out of earnings, or capital increase through contribution by company employees out of their bonuses to the industry in which they are serving, or capital increase by a venture capital company out of undistributed earnings, as effected in accordance with Article 13 of the Statute (Act) for Encouragement of Investment or Article 16 or 17 of the Statute (Act) for Upgrading Industries, that have not been transferred and reported for tax purposes.
Where the securities firm accepts the deposit of securities by the customer as additional collateral to offset against the margin requirement, it shall impress its endorsement seal on the attached transfer application form, and if the securities are held but not owned by the customer, additionally submit the household registration record, proof of source, and consent letter obtained from the original owner of the securities.
If the securities deposited as collateral to offset against a margin requirement under the preceding paragraph are subject to a 20 percent or more share dividend rate in gratuitous distribution of shares, the provisions of paragraphs 3, 4, and 5 of Article 23 shall apply to the newly issued rights shares, and the consent letter under the preceding paragraph shall specify the waiver of the option of income tax deferral.
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Article 26-1
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Where a customer applies by means other than in person to use securities in its central securities depository account established and maintained with a securities firm to deposit as additional collateral to offset against a short sale margin requirement or a deficiency it is required to cover under Article 23, the provisions of Article 26 shall still apply, and it is required that the customer sign a letter of consent for carrying out the operation of depositing securities as additional collateral by means other than in person and that the securities firm keep it on record after verification.
When a customer who may submit an application by means other than in person under the preceding paragraph applies by telephone to use its securities to deposit as additional collateral to offset against a short sale margin requirement or a deficiency it is required to cover under Article 23, the securities firm shall verify the identity of the customer and synchronously record the telephone call. The telephone recording shall be kept at its place of business and preserved for at least two months, or in the event of any dispute, until the dispute has been resolved.
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Article 31-1
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Where a customer applies to settle a margin purchase with cash or a short sale with spot securities by means other than in person, the provisions of Article 31 shall still apply, except that the customer's signature or seal is not required on the settlement application form if the customer has already submitted a signed Letter of Consent That Applications to Settle with Cash or Spot Securities Do Not Require a Signature/Seal, and if the securities firm has kept it on record after verification.
When a customer who may submit an application by means other than in person under the preceding paragraph applies by telephone to use cash or spot securities to settle a margin purchase or short sale, the securities firm shall verify the identity of the customer and synchronously record the telephone call. The telephone recording shall be kept at its place of business and preserved for at least two months, or in the event of any dispute, until the dispute has been resolved.
Where a customer has submitted a signed Letter of Consent That Applications to Settle with Cash or Spot Securities Do Not Require a Signature/Seal under paragraph 1, the short sale collateral price and short sale margin returnable by the securities firm to the customer shall be deposited into the same bank deposit account used for book-entry settlement of the customer's trading orders, and the securities bought on margin and/or the securities deposited as collateral returnable by the securities firm to the customer shall be transferred into the customer's book-entry custody account. Securities deposited as collateral that are not owned by the customer shall be returned through book-entry transfer.
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