| Title： |
Operating Rules for Securities Lending by Securities Firms(2015.04.02) |
| Date： |
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Article 15
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When a securities firm accepts a customer's application to borrow securities, it shall collect collateral from the customer with a value calculated at an initial collateral ratio of not less than 140 percent of the auction reference price at market opening or the base price for first trading of the security on the given day, unless the customer is a professional institutional investor as defined in Article 19-7, paragraph 2 of the Regulations Governing Securities Firms and has otherwise agreed to an initial collateral ratio with the securities firm.
The "auction reference price at market opening" or the "base price for first trading" in the preceding paragraph shall be determined pursuant to Article 58-3, paragraph 2 of the TWSE Operating Rules, or Article 60-1 of the GreTai Securities Market Rules Governing Securities Trading on the GTSM.
A securities firm shall notify the TWSE or GTSM regarding the delivery information of the loan securities and the collateral securities (except for book-entry central government bonds), and forward such notice to the TDCC to immediately conduct the securities transfer procedures. The TDCC shall annotate the borrowed securities. Central government bonds shall be handled using the title transfer registration method pursuant to the Directions for the Operation of Book-Entry Central Government Bonds.
No transfer or withdrawal of securities that have been annotated is allowed unless for purposes listed under Article 24 of the Regulations Governing Securities Lending by Securities Firms.
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Article 25
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A securities firm shall calculate on a daily basis, for each customer, the collateral ratio for the customer's securities borrowing and lending account as a whole and for each securities loan made through it, based on the closing prices published by the TWSE or the GTSM, according to the following formula:
Collateral ratio = (total collateral value of the collateral － securities lending fees payable ) ÷ (market value of the loaned securities ＋ market value of stock dividend shares to be returned ＋ cash dividends to be returned) × 100%
Except in the case of a cash capital increase, for the 6 business days prior to any ex-dividend or ex-rights date for a security that is provided as collateral, its collateral value shall be calculated at the valuation percentage specified in Article 19, based on the respective current day's closing price minus the value of the dividend or minus the value of the right determined based on the current day's closing price.The current day's closing price mentioned in the preceding paragraph is governed by Article 19, paragraph 5 mutatis mutandis.
Where a customer's overall account collateral ratio is lower than the 120 percent collateral maintenance ratio, the loaning securities firm shall promptly give notice to request the customer to provide additional collateral within 2 business days from the day the notice is delivered to make up the collateral shortfall for each individual securities lending transaction that does not meet the required collateral maintenance ratio, so as to bring the individual collateral ratios thereof above the initial collateral ratio, provided where the customer is a professional institutional investor as defined in Article 19-7, paragraph 2 of the Regulations Governing Securities Firms and has otherwise agreed to a collateral maintenance ratio with the loaning securities firm, the aforementioned notice shall be given requesting that the shortfall be made up based on the agreed ratio.
The collateral maintenance ratio in the preceding paragraph and the initial collateral ratio in Article 15 may be adjusted by the TWSE in consultation with the GTSM based on market circumstances.
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