| Title： |
Operating Rules for Securities Business Money Lending by Securities Firms(2023.07.06) |
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13
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In securities business money lending conducted by a securities firm, if the customer applies for a financing period between the second to the fifth business day after the trade date and intends to post collateral in the form of securities that it is purchasing, the customer shall file an application by 11 a.m. on the second business day after the transaction date, and have the securities firm or custodian institution transfer the customer's purchased securities or other commodities into the loan collateral account opened by the securities firm at the TDCC or central government securities settlement bank; the financing period shall be from the second business day after the transaction date to the fifth business day after the transaction date.
When the customer of the preceding paragraph submits the loan application by a method other than in person, it shall submit a written statement of consent for exemption from the use of a signature or seal on the loan application. If the securities firm has verified and kept that consent statement on file, it is not necessary for the customer to sign/seal the application.
When the customer applies to borrow money from a securities firm by personal telephone call, the securities firm shall make a synchronous recording of the call, which shall be kept at its place of business and retained for at least one year. In the event of any dispute, the recording shall be retained until the dispute has been eliminated.
The value of the collateral in paragraph 1 shall be confined to 100 percent to 130 percent of the monetary amount of the financing provided to the customer by the securities firm and calculated as below:
- The value of TWSE and TPEx traded securities, except central book-entry bonds, municipal bonds, common corporate bonds, secured convertible (exchangeable) corporate bonds, and financial bonds, is the closing price of the business day immediately prior to financing.
- The value of beneficial certificates of open-end funds traded on the TPEx is the net asset value (“NAV”) of each unit of beneficial rights of the business day immediately prior to financing.
- The value of physical gold traded on the TPEx is the average of the highest bid price and lowest offer price of market makers at the closing of the business day immediately prior to financing (“Closing Average”).
- The value of central book-entry bonds is 80 per cent of the face value.
- The value of municipal bonds, common corporate bonds, secured convertible (exchangeable) corporate bonds, and financial bonds is 60 per cent of the face value.
The closing price referred to in the preceding paragraph and in Articles 18, 24, and 25 shall be determined pursuant to Article 58-3, paragraph 3 of the TWSE Operating Rules and Article 35, paragraph 3 of the GreTai Securities Market Rules Governing Securities Trading on the GTSM.
When the customer files an application pursuant to paragraph 1 herein and is notified by the securities firm to post the collateral that it holds pursuant to Article 16, paragraph 9, the application-related provisions of paragraph 1 shall apply mutatis mutandis.
When the customer makes partial repayment prior to the expiration of the financing period, the securities firm shall return to the customer on a proportional basis the securities it originally posted as collateral, provided that increments of less than one trading unit may not be returned.
When the customer has purchased securities for which halting of margin purchases and short sale transactions has been announced, due to a resolution of the Surveillance Operations Oversight Committee of the TWSE or GTSM or due to other circumstances under which those transactions are inappropriate, then during the effective period of the disposition, that security may not be accepted as the additional financing collateral referred to in paragraph 1 above and in Article 16, paragraph 1. However, this rule shall not apply to a customer that posts collateral in the form of the securities that it purchases, if the halting of margin purchases and short sale transactions for those securities has not been announced on the trade date.
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18
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In securities business money lending conducted by a securities firm, if the customer applies for a financing period not exceeding 6 months and posts collateral in the form of securities or other commodities or foreign currencies that it purchases or holds, the financing calculation standards for the collateral shall be as listed below, save in the event of fractions of one trading unit or of one unit of beneficial rights:
- The value of TWSE and TPEx traded securities except central book-entry bonds, municipal bonds, common corporate bonds, secured convertible (exchangeable) corporate bonds, and financial bonds is 60 percent, and that of securities not eligible for margin purchase and short sale is 40 percent, of the closing price on the business day immediately prior to the application for financing.
- The value of beneficial certificates of open-end funds traded on the TPEx is 60 percent of their NAV of the business day immediately prior to financing. The value of physical gold is 60 percent of the Closing Average of the business day immediately prior to the application for financing.
- The value of beneficial certificates of open-end securities investment trust funds and those of futures trust funds is 60 per cent of the NAV of the business day immediately prior to the application for financing.
- The value of central book-entry bonds is 80 percent of their face value.
- The value of municipal bonds, common corporate bonds, secured convertible (exchangeable) corporate bonds, and financial bonds is 60 per cent of their face value.
- The value of a foreign currency collateral is the spot rate – buying as at the date of application for financing of the bank with which the foreign currency collateral account is opened. No haircut is applied to the value of an additional collateral.
A securities firm may adjust the calculation standard in the preceding paragraph as a stricter standard subject to the market condition of the collateral and the customer’s credit risk.
With respect to subparagraph 1 of the first paragraph and Article 13, paragraph 4, if there is no closing price of the business day preceding the financing date, it shall be replaced by the price determined by the principles set out in Article 58-3, paragraph 4, subparagraph 2 of the TWSE Operating Rules or Article 57, paragraph 1 of the GreTai Securities Market Rules Governing Securities Trading on the GTSM.
The financing calculation standards for collateral set out in paragraph 1 may be adjusted by the TWSE in consultation with the TPEx based on the circumstances regarding that collateral.
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23
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In securities business money lending conducted by a securities firm, if a customer applies for a financing period not exceeding 6 months and posts collateral in the form of securities or other commodities or foreign currencies that it purchase or holds, the customer's overall-account and individual-transaction collateral maintenance ratio for money lent to the customer shall be calculated as follows:
Collateral maintenance ratio = (market value of the collateral + market value of additional collateral securities or other commodities or foreign currencies) divided by the financing amount, and multiplied by 100 percent.
In regard to the collateral referred to in the preceding paragraph, the market value of TWSE and TPEx listed securities is the closing price of the current day; that of central book-entry bonds, municipal bonds, common corporate bonds, secured convertible (exchangeable) corporate bonds, and financial bonds is their face value; that of physical gold is the Closing Average of the current day; that of TPEx traded beneficial certificates of open-end funds, open-end securities investment trust funds and futures trust funds is the NAV of the preceding business day; and that of foreign currency collaterals is calculated at the current spot rate – buying of the bank with which the foreign currency collateral account is opened. If there is no current day's closing price for a given TWSE or TPEx security, the market value shall be determined by the following principles:
- If the current day's highest buy order price at the close of market is higher than the current day's auction reference price at market opening for a TWSE listed security, or than the current day's benchmark price at trade opening for a TPEx listed security, use the highest buy order price.
- If the current day's lowest sell order price at the close of market is lower than the current day's auction reference price at market opening for a TWSE listed security, or than the current day's benchmark price at trade opening of trading for a TPEx listed security, use the lowest sell order price.
- When neither of the above circumstances applies, use the current day's auction reference price at market opening for a TWSE listed security, or the current day's benchmark price at trade opening for a TPEx listed security.
If the customer has applied for a financing period not exceeding 6 months and posted collateral in the form of securities or other commodities or foreign currencies that it purchases or holds, the securities firm shall mark-to-market the customer's collateral maintenance ratio each business day. If the customer's collateral maintenance ratio is lower than 130 percent due to a change in the value of the collateral or additional collateral securities or other commodities, or the customer is an offshore overseas Chinese or foreign national as in paragraph 7 with a collateral maintenance ratio lower than as agreed, the securities firm shall notify the customer to cover the collateral shortfall and bring the collateral maintenance ratio above 166 percent within 2 business days from receipt of the notice, and shall further comply with the following provisions:
- If the customer fails to cover the collateral shortfall within 2 business days from the date upon which the notice is served and the collateral maintenance ratio is still lower than 130 percent, beginning from the third business day, the securities firm shall dispose of the customer's collateral beginning from the third business day under the mutatis mutandis application of Article 27, paragraph 1.
- If the customer fails to cover the collateral shortfall within 2 business days from the date on which the notice is served and the collateral maintenance ratio has risen to 130 percent or higher, the securities firm may temporarily refrain from disposing of the collateral on the third business day. However, on any subsequent business day in which its collateral maintenance ratio is again lower than 130 percent and where the customer does not deposit additional collateral on its own initiative on the afternoon of that day, its collateral shall be disposed of beginning on the next business day under the mutatis mutandis application of Article 27, paragraph 1.
- If the collateral maintenance ratio returns to 166 percent or higher even though the customer has not covered, or has covered only a portion of, the collateral shortfall, or if the customer makes successive collateral deposits sufficient in total to cover the shortfall as stated in the notice prior before its collateral has been disposed of under the preceding subparagraphs, the record of the collateral call shall be expunged.
Any and all individual loans of funds in the financing account for which the collateral maintenance ratio is below 130 percent are shortfalls that are required to be covered pursuant to the preceding paragraph, and shall be subject to a collateral call.
If, as a result of any change in share price, there is an increase in the net value of the collateral in a customer's financing account less the customer's obligations, the securities firm is prohibited from delivering to the customer any cash or securities equivalent to the amount of the increase.
The disposal of collateral under paragraph 3, subparagraphs 1 and 2 shall be carried out in accordance with Article 27 of the Operating Rules. If such disposal is insufficient to make repayment, the customer shall be notified to make repayment within a certain time period, with interest accruing at the financing interest rate from the date on which the claim occurred until the date of repayment.
A securities firm may agree on the collateral maintenance ratio with offshore overseas Chinese and foreign nationals meeting the following qualification requirements, provided such ratio may not be lower than 110% and is subject to necessary adjustment by the TWSE in relation to financial market volatility:
- A qualified institutional investor designated by the competent authority in accordance with Article 4, paragraph 2 of the Financial Consumer Protection Act.
- A member of a foreign securities exchange designated by the competent authority in accordance with Article 5, paragraph 1 of the Regulations Governing Securities Firms Accepting Orders to Trade Foreign Securities, or a liquidity provider.
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