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Article 82
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After accepting a brokerage trading order for normal settlement, a securities broker, following execution of the trade, shall collect the price payable for the securities bought, or collect the securities sold, pursuant to Article 12 of the TWSE Rules Governing Brokerage Contracts of Securities Brokers.
A securities broker filing a report of delayed settlement for an offshore overseas Chinese or foreign national, or for a mainland area investor, with the TWSE shall do so in compliance with the Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals, and shall notify the principal or the custodian institution pursuant to the agreement.
In the case of brokerage orders for margin trades, the securities broker shall collect from its principal the margin for the margin purchase or the margin for the short sale, as the case may be, pursuant to Article 12 of the TWSE Rules Governing Brokerage Contracts of Securities Brokers.
Where the TWSE has taken any disciplinary measure against a specific securities in accordance with the "Regulations for Implementation of Stock Market Monitoring System" and other relevant operation rules, a securities broker shall, on the date it accepts the order, collect in advance from its principals the funds or securities, or the margin for margin purchases, or the margin for short sales.
Where a securities broker believes that there are any defect on the rights of the securities delivered by its principal for sale or there is legal dispute or other doubtful matter, it may decline to sell such securities; provided that the above shall not be applicable where its principal has provided adequate collateral as approved by the securities broker.
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Article 91
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Where the principal fails to fulfill its settlement obligations on time, the principal is in default. In such an event, the securities broker shall report the default in accordance with the TWSE Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals , and shall simultaneously notify the principal.
When the principal is an offshore overseas Chinese or foreign national, or a mainland area investor, and a report of delayed settlement has been filed in accordance with Article 82, paragraph 2, if settlement is not completed in accordance with provisions and it is not an out-trade, the principal is in default. The securities broker shall handle the matter pursuant to the provisions in the preceding paragraph.
In the event that securities delivered by the principal for settlement are found to be forged (altered) when they are forwarded to the issuing institution (or its office for handling registration and transfer of securities) for verification during or after completion of the process of book-entry and settlement, the principal is likewise in default. The securities broker shall forthwith report by letter to the TWSE, and send a copy thereof to the principal. In case the principal is not the owner of such securities, the information regarding the owner of the securities shall also be reported by letter to the TWSE.
Where the event of default of the principal referred to in the preceding paragraph falls within any of the following circumstances, the securities broker shall forthwith submit evidentiary documents and report by letter for cancellation of the event of default:
1.Where securities delivered by a principal for settlement are not owned by the principal itself and have been found to be forged (altered) after they were forwarded for verification by the securities broker or the central securities depository during the process of book-entry and settlement, and the principal has provided securities free of defect within one (1) week after the securities broker completed the default correction procedures with the TWSE.
2.Where securities delivered by a customer for settlement are not owned by the principal itself and have been found to be forged (altered) upon being forwarded for verification by the central securities depository after completion of the process of book-entry and settlement, the principal has provided securities free of defect within one (1) week after the date on which the securities broker notified the principal following its receipt of the notice from the central securities depository.
A securities broker which receives securities or consideration in accordance with paragraph 1 or paragraph 2 of this Article shall engage another securities broker to dispose of it on the Exchange no later than the first business day after the principal's default. Thereafter, the securities broker shall forthwith report to the TWSE and notify its principal in accordance with the Guidelines for Securities Brokers in Reporting Delayed Settlement and Default by Principals. However, those securities which belong to the same account and are of the same type and same volume may be offset against each other.
Where the event of default of a principal has been reported to the TWSE by the securities broker pursuant to paragraph 3 of this Article, the securities broker shall, no later than the business day immediately following the reporting date, buy back the securities in question from the Exchange. However, if the default can be cancelled after a given period pursuant to paragraph 4 of this Article, the securities broker may buy back the securities in question on the business day immediately following the expiry of the aforesaid given period.
Where the aggregate number of [shares represented by] the share certificates of securities received by a securities broker under paragraph 1 and paragraph 2 during the period of a single default reaches 5 percent or more of the number of shares of the underlying securities already issued, and furthermore reaches or exceeds the average daily volume of the underlying securities during the 20 trading days prior to reporting of the default, the securities broker may adopt either of the following measures to handle the default:
1. If handling of the default cannot be completed through reverse transactions during the three consecutive business days from the day next following the date of confirmation of the default 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 default through reverse transactions within 180 days, and report the agreement or notice to the TWSE 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 the TWSE via letter for recordation.
Based on the report of a securities broker referred to in paragraph 1, paragraph 2, or paragraph 3 of this Article, the TWSE will forthwith notify each securities broker, which shall act in accordance with paragraph 3 of Article 76 hereof.
In the event that the principal suffers losses or there is any other dispute arising out of the notification sent by the TWSE to each securities broker based on the report by a securities broker, the securities broker reporting the default shall be fully responsible therefor.
If a securities broker, for a reason not attributable to the broker, is unable in a timely manner to take measures pursuant to paragraphs 5, 6, or 7, it shall prepare a handling record and keep it on file for inspection along with related documentary evidence.
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