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Operating Rules for Securities Firms Handling Margin Purchases and Short Sales of Securities(2016.07.21) |
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Article 16
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All notices that a securities firm is required to give to a customer under these Rules shall be delivered by mail, by e-mail subject to electronic signature requirements, or by personal delivery against a receipt signed by the customer.
A securities firm must procure the written or electronic consent of the customer prior to giving notice by e-mail. Procedures concerning e-mails and electronic consents are governed mutatis mutandis by the requirements applicable to the delivery by a securities firm of securities trading reconciliation statements by e-mail.
Deadlines notified by a securities firm to a customer by e-mail for actions to be taken are the same as those notified by mail.
Where a notice mailed by a securities firm is not delivered in time as a result of failure by the customer to give notice of change as required under the preceding article or due to some other reason attributable to the customer, the notice shall be deemed effective from the day of the first delivery attempt by the post office.
In the case of a notice given by personal delivery against a receipt signed by the customer, the customer's signature or seal impression on the receipt shall match the specimen signature or seal appearing on the margin agreement, and shall be dated personally by the customer.
If the customer is a discretionary investment account, a securities firm shall give notice to the discretionary investment manager and the custodian institution of such account of matters required to be notified.
Records of notification by a securities firm to its customers shall be retained for a minimum of one year or, in the evnt of a dispute, until the dispute is resolved.
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Article 26
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A customer may deposit the following securities or other merchandise as additional collateral for the short sale margin and any deficiency the customer is required to cover under Article 23.
- TWSE or TPEx listed book-entry central government bonds, local government bonds, corporate bonds, financial bonds.
- TWSE or TPEx listed securities whose trading method has not altered or which are not managed stocks, excluding ETF beneficial certificates being traded in foreign currency.
- Gold that is registered for trading over the counter.
- If an open-end type securities investment trust fund beneficiary certificate and futures trust fund beneficiary certificate, it must be denominated in NT dollars and of a domestically offered and domestically invested securities investment or a domestically offered and domestically invested futures trust fund which is offered to the general public, including those purchased in the name of a securities firm as the customer.
The aforesaid securities deposited or other merchandise eligible for margin purchase and short sale as additional collateral may not:
- be less than one trading unit if being TWSE or TPEx listed securities and gold;
- be less than one trading unit, if being an open-end type securities investment trust fund beneficiary certificate and futures trust fund beneficiary certificate.
- 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 by the customer of securities or other merchandise that are not owned by the customer as in the first paragraph, as additional collateral to offset against the margin requirement, it shall additionally submit the household registration record and consent letter obtained from the owner.
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, or the issuer of the securities conducts a demerger and capital reduction, and after the capital reduction, the stock resumes trading and is TWSE or TPEx listed on the same day as the stock of the assignee company of the demerger, the provisions of paragraphs 3, 4, and 5 of Article 23 shall apply to the newly issued rights shares or to the stock of the assignee company of the demerger for which the circumstances set forth in paragraph 2, subparagraph 3 do not exist, and the consent letter under the preceding paragraph shall specify the waiver of the option of income tax deferral.
A securities firm that accepts a customer using open-end type securities investment trust fund beneficiary certificates for margin purchase and short sale as additional collateral under the name of the securities firm, shall keep a registration log for management purposes and inform relevant information to the Taiwan Depository and Clearing Corporation ("TDCC "); book-entry operations for centrally deposited securities do not apply.
A securities firm that accepts a customer using book-entry central government bonds for margin purchase and short sale as additional collateral, shall open a collateral account at the Book-Entry Central Government Securities Clearing Bank for margin sale transfer.
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