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Regulations Governing Borrowing or Lending Money in Connection with Securities Business by Securities Firms(2015.09.15) |
| Date： |
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Article 2
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To conduct money lending in connection with securities business, a securities firm shall obtain the approval of the competent authority.
"Money lending in connection with securities business" in the preceding paragraph means any financing business the securities firm and customer agree to engage in to meet needs for purchases of securities by the customer.
The scope of financing by securities firms conducting securities business money lending shall be jointly drafted by the Taiwan Stock Exchange Corporation ("TWSE") and the Taipei Exchange ("TPEx"), and submitted to the competent authority for final approval.
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Article 7
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Where a securities firm conducts securities business money lending and the customer's financing period is from the second business day to the fifth business day after the trade date, the securities that the customer has purchased shall be used as collateral.
The value of the collateral referred to in the preceding paragraph shall be limited to a certain percentage of the amount of money loaned by the securities firm to the customer. The percentage shall be jointly drafted by the TWSE and TPEx, and submitted to the competent authority for final approval.
Up to the second business day after the trade date, a securities firm may notify a customer of any additional requirement to provide the following as collateral:
- TWSE or TPEx listed securities.
- Beneficial certificates of securities investment trust funds or futures trust funds that are domestically offered and that invest domestically.
- Central government bonds.
- Physical gold that is registered for trading over the counter.
- Other collateral approved by the competent authority.
The securities firm and customer shall agree that prior to the expiration of the financing period, the customer may use its securities trading funds balance to repay money lending.
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Article 8
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Where a securities firm conducts securities business money lending and the financing period does not exceed 6 months, the securities or other instruments that the customer purchases or holds shall be used as collateral; the ratio between the value of such collateral and the amount of money lending by the securities firm to that customer may not fall below a certain ratio.
Prior to the expiration of the period in the preceding paragraph, a securities firm may, depending on the customer's credit standing, grant an extension of 6 months. Prior to the expiration of the one-year period, the securities firm may, depending on the customer's credit standing, again allow the customer to apply for an extension of 6 months.
When a securities firm lends money to its customer to pay for the settlement price, and the customer has yet to obtain the securities that it has purchased, the other securities or instruments that the customer holds shall be used as collateral.
Collateral referred to in paragraph 1 shall be limited to the following:
- TWSE or TPEx listed securities.
- Beneficial certificates of securities investment trust funds or futures trust funds that are domestically offered and that invest domestically.
- Central government bonds.
- Physical gold that is registered for trading over the counter.
- Other collateral approved by the competent authority.
A securities firm shall mark to market on a daily basis the ratio of collateral value to customer debt in each lending account; when that ratio is below the prescribed percentage, it shall immediately notify the customer to make up the difference by a deadline with collateral of the types prescribed in the preceding paragraph.
The ratio referred to in paragraph 1 and the preceding paragraph shall be jointly drafted by TWSE and TPEx, and submitted to the competent authority for final approval.
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Article 10
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For a securities firm that conducts securities business money lending under Article 8 herein, the total outstanding financing balance for each type of security or beneficial interest certificate eligible for use as financing collateral may not exceed 5 percent of the TWSE listed or TPEx listed shares or beneficial interest units of that type of security, and, calculated in aggregate with the outstanding balance of margin financing [for that type of security] in the margin trading market and the outstanding balance of securities settlement financing [for that type of security] by securities finance enterprises may not exceed 25 percent of the TWSE listed or TPEx listed shares or beneficial interest units of that type of security.
When the aggregate total of margin financing [for that type of security] in securities business money lending, in the margin trading market, and in securities settlement financing by securities finance enterprises as referred to in the preceding paragraph exceeds 20 percent of the TWSE listed or TPEx listed shares or number of beneficial interest units of that type of security, the remainder under the limit shall be distributed proportionally; the distribution method shall be drafted by the TWSE or TPEx. and submitted to the competent authority for final approval.
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Article 11
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When the customer of a securities firm fails to repay money upon the expiration of the financing period, or fails to meet a margin call within the prescribed time period under Article 8, paragraph 5, herein, the securities firm shall immediately dispose of its collateral, provided that this rule does not apply if otherwise stipulated between the parties.
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Article 16
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When a securities firm conducts securities business money lending, the combined total of money lending financing limits that it extends to each customer shall be regulated by the securities firm. The securities firm shall adopt its own internal procedures for credit extension operations and risk management, in order to appropriately assess customer credit limits and manage credit extension risks.
The internal procedures for credit extension operations and risk management specified in the preceding paragraph shall include credit limit control and management for related accounts. The matters for compliance shall be adopted by the TWSE in joint consultation with the TPEx, and submitted for the competent authority's approval.
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Article 17
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When a securities firm conducts securities business money lending, the total amount of money lending financing that it extends to customers, plus the total amount of the outstanding balance of financing extended to the customer for securities margin purchase and short sales business may not exceed 400 percent of the securities firm's net worth.
Where a securities firm is concurrently operated by a financial institution, the net worth provisions of the preceding paragraph shall be calculated based on its allocated operating capital; for a branch of a foreign securities firm located within the territory of the Republic of China (ROC), those provisions shall be calculated based on the capital it has specifically allocated for ROC operations.
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Article 19
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These Regulations shall be enforced from the date of issuance, with the exception of the 15 September 2015 amendments, which shall be enforced from 30 November 2015.
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