| Title： |
Operating Rules for Securities Lending by Securities Firms(2018.03.07) |
| Date： |
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Article 5
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Securities collateral obtained by a securities firm from lending securities to customers shall be deposited in the dedicated account for securities lending collateral opened by that securities firm at the TDCC. If the customer issues a written statement of consent for collateral rehypothecation, the securities collateral may be utilized for the purposes listed below and no others:
- As collateral for securities borrowed through the TWSE securities lending system.
- As collateral for refinancing of securities by securities finance enterprises.
If the securities collateral of the preceding paragraph are book-entry central government bonds, they shall be handled by transfer of registration at the clearing bank in accordance with the Directions for the Operation of Book-Entry Central Government Securities.
A securities firm that utilizes any of its collateral securities obtained in the course of lending securities to customers shall return the same quantity and type of securities, or utilize said securities as the collateral of another borrowing transaction as agreed between the parties, when the customer returns the securities it borrowed.
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Article 21
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A securities firm shall notify the customer in writing or other manner as agreed between the parties 10 days before the expiration of the loan period for any loaned securities, and shall return the collateral, or utilize said securities as the collateral of another borrowing transaction as agreed between the parties, on the same day that the customer returns the securities upon expiration or the next business day.
The return of subject securities and collateral securities by a securities firm (except book-entry central government bonds) is governed by Article 15, paragraph 3 mutatis mutandis.
Cash collateral that is returned shall be deposited in the customer's bank deposit account. Return of book-entry central government bonds shall be handled in accordance with the Directions for the Operation of Book-Entry Central Government Securities.
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Article 22
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A securities firm may notify a customer of a recall of loaned securities as agreed by the two parties, and shall return the collateral, or utilize said securities as the collateral of another borrowing transaction as agreed between the parties, on the day the customer returns the securities or the next business day.
During the loan period, a customer may apply to return early all, or a portion of, the borrowed securities, and at the time of such application stipulate with the securities firm the method and deadline for transfer of the securities and the collateral, or or utilize said securities as the collateral of another borrowing transaction as agreed between the parties. Where the return of the collateral is agreed on, the securities firm shall return the collateral, at the latest, by the second business day after it receives the securities returned by the customer.
Where public notice is given of either a suspension of trading of a subject security without prescribing the time for resumption or the termination of its TWSE or GTSM listing, or in the event of a merger, capital reduction or other circumstances prejudicing the lending party's exercise of its shareholder's rights that occur to an issuer, the borrowing party shall return the security and close out the transaction before the date of such suspension.
Where the lending party is prevented by the overall trading condition in the market or of the subject security in question as a result of the aforementioned circumstances from buying up the security at the maximum price limit, the borrowing party may apply for return with third-person securities during the suspension period of the subject security.
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Article 38
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A securities firm borrowing securities from a customer shall pay a performance bond to the TWSE in accordance with the Regulations Governing Performance Bonds of Securities Firms and Securities Finance Enterprises Engaging in Securities Lending.
The sum of the total monetary value of securities loaned by a securities firm in conducting securities lending business and the total monetary value of securities loaned by it to customers for short sales in conducting securities margin purchase and short sale business may not exceed 400 percent of its net worth.
The monetary value of the loaned securities mentioned in the preceding paragraph is based on the closing price of the date of the loan.
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