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Article 3
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"Securities lending business" conducted by a securities firm means business activities in which the securities firm lends securities to a customer under an agreement stipulating return of securities of the same type and quantity within a specified period.
The "specified period" referred to in the preceding paragraph may not exceed 6 months. However, before that period expires and with the consent of the securities firm, the customer may apply once only to extend that period, and may not change the lending terms and conditions.
The subject of "securities lending" referred to in paragraph 1 means securities eligible for margin purchase and short sale, and other securities approved by the competent authority.
Where a subject security eligible for margin purchase and short sale under the preceding paragraph is during a halt to trading announced by the TWSE or GTSM, that security shall also be halted from securities lending transactions.
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Article 19
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When handling securities lending business, a securities firm may accept the following types of assets as collateral, to be valued at the valuation percentages indicated:
1. Cash.
2. Book-entry central government bonds. Calculate at 90 percent of face value.
3. Securities eligible for margin purchases and short sales. The collateral value of securities eligible for margin purchase and short sale transactions shall be 70 percent of the most recent closing price if they are TWSE listed securities, or 60 percent of the most recent closing price if they are GTSM listed securities.
The "most recent closing price" in subparagraph 3 of the preceding paragraph shall mean, prior to the close of market on the given day, the closing price for the preceding business day, and after the close of market on the given day, shall mean the closing price on the given day. The aforesaid closing price shall be set pursuant to Article 58-3, paragraph 3 of the TWSE Operating Rules or Article 35, paragraph 3 of the GreTai Securities Market Rules Governing Securities Trading on the GTSM .
If no closing price is available for the preceding business day, the price determined by the principles under Article 58-3, paragraph 2, subparagraph 2 of the TWSE Operating Rules or Article 57, paragraph 1 of the GreTai Securities Market Rules Governing Securities Trading on the GTSM shall substitute for the closing price.
If the closing price for a given day is not available, the most recent closing price shall be determined by one of the following principles:
1. When, on the day the security is loaned, the highest bid price at market close is higher than the auction reference price at market opening or the base price for first trading, the highest bid price shall be used.
2. When, on the day the security is loaned, the lowest ask price at market close is lower than the auction reference price at market opening or the base price for first trading, the lowest ask price shall be used.
3. When neither of the above circumstances applies, the auction reference price at the opening of market or the base price for first trading shall be used.
The preceding paragraph shall apply mutatis mutandis to the current day closing price referred to in Articles 25 and 37 herein.
Securities collateral that a securities firm collects from a customer shall be limited to securities that the customer itself owns.
The collateral valuation percentages in paragraph 1 may be adjusted by the TWSE in conjunction with the GTSM based on the condition of the collateral. The lender and borrower may separately agree to a collateral valuation percentage lower than the prescribed percentage.
The collateral under paragraph 1, subparagraph 1 shall be limited to New Taiwan Dollars. Notwithstanding the foregoing, an offshore overseas Chinese or foreign national may pledge US Dollars as collateral, subject to regulations separately adopted by the TWSE.
A securities firm may reject, or lower the valuation percentage for, any security that would otherwise be eligible collateral under paragraph 1, subparagraph 3 if the securities firm so deems appropriate having regard to the market liquidity and risk status of that collateral; if any such security has been accepted and received as collateral for a lending transaction, the securities firm may notify the borrower to replace the collateral.第一項第三款所列擔保品，證券商得視擔保品之市場流動性與風險狀況拒絕接受或調降其抵繳比率；已接受為借券擔保者，得通知借券人更換擔保品。
Where a security eligible for margin purchases and short sales under paragraph 1, subparagraph 3 is during a trading halt announced by the TWSE or GTSM, that security may not be the collateral for a lending transaction; if any such security has been accepted and received as collateral for a lending transaction, the securities firm may proceed with the collateral in accordance with the preceding paragraph.
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