| Title： |
Operating Rules for Securities Lending by Securities Firms(2009.12.09) |
| Date： |
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Article 6
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A securities firm shall open a customer brokerage account, enter into a securities lending agreement with a customer, and open a securities lending account before it may begin to accept securities lending transaction-related business from that customer.
The Taiwan Securities Association shall draft a model securities lending agreement referred to in the preceding paragraph and submit it to the TWSE for recordation.
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Article 7
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When applying to open a securities lending account, a customer that is an ROC citizen shall present in person their original national ID card and sign an account opening application and securities lending agreement on the spot.
A customer organized and registered as a juristic person under ROC law shall conduct the account opening procedures of the preceding paragraph by having its authorized person submit originals of the power of attorney, national ID cards of its authorized person and representative, corporate registration (or registration amendment) card, and evidentiary documentation of corporate registration.
When applying to open an account, a customer other than those specified in paragraphs 1 and 2 shall conduct the account opening procedures by presenting the relevant proof of identity documents in accordance with the TWSE Operating Rules or the relevant provisions regarding the opening of a brokerage account prescribed by the GreTai.
Photocopies of the relevant proof of identity documents and the original power of attorney used to apply to open an account shall be retained; the following statement shall be stamped on the photocopied portion, "It has been verified that the account opening application has been made in person by the applicant or by the authorized person thereof and that the photocopies are true and faithful copies of the original."
A securities firm processing the opening of a securities lending account shall decide whether to open that account based on a detailed and faithful credit check in accordance with its internal control system. It shall record the detailed credit check method, information, and results on the account opening application, and record the account opening date. It shall transmit the account opening information that same day to the TWSE or GreTai computer database, and shall do likewise for account cancellation information. If the customer is a juristic person, it shall separately notify the customer in writing to confirm that the account is being opened with its authorization, provided that this requirement shall not apply if the customer has engaged a custodian institution to open the account on its behalf, or submits proof that settlement is to be handled on its behalf by a custodian institution.
A securities firm shall approve its customer's line of credit based on that customer's credit check results, and provide a risk disclosure statement disclosing the possible risks of securities lending transactions.
A model for the risk disclosure statement of the preceding paragraph shall be drafted by the Taiwan Securities Association.
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Article 13
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A customer that borrows or returns securities to a securities firm shall fill out an application form marked with the word "Borrow" or "Return", and after the securities lending transaction has been executed, the securities firm shall complete a lending report bearing that same word; the TWSE and the GreTai will make a joint public announcement of the matters that shall be recorded therein by the securities firm.
The provisions of the preceding paragraph shall be subject mutatis mutandis to Article 75, subparagraphs 7 to 10 and Article 80, paragraphs 4 to 6 of the TWSE Operating Rules and to Articles 62 and 62-2 of the GreTai Rules Governing Securities Trading on Over-the-Counter Markets.
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Article 27
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When a customer closes out a portion of its securities borrowing positions, if the overall account collateral ratio for positions still open in the borrowing and lending account is lower than the collateral maintenance ratio, the securities firm shall retain the collateral returnable to the customer, to the extent necessary so as not to fall below the required collateral maintenance ratio.
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