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Article 16
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The collateral financing calculation standards for a securities firm that operate non-restricted purpose loan business shall be as follows, 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 for central book-entry bonds, municipal bonds, common corporate bonds, secured convertible (exchangeable) corporate bonds, and financial bonds, is 60% of the closing price of the business day immediately prior to financing. However, for securities not eligible for margin purchase and short sale, the value shall be calculated as 40% of 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 60% of the net asset value of each unit of beneficial rights of the business day immediately prior to financing.The value of physical gold is 60% of the closing average at the closing of the business day immediately prior to financing.
- The value of beneficial certificates of open-end securities investment trust funds or futures trust funds is 60% of the net asset value of the business day immediately prior to financing. The value of physical gold is 60% of the closing average of the business day immediately prior to financing.
- The value of central book-entry bonds is 80% of the face value.
- The value of municipal bonds, common corporate bonds,secured convertible (exchangeable) corporate bonds, and financial bonds is 60% of the face value.
- The financing amount is calculated as below where claims in outstanding settlement funds receivable are lodged as security:
Financing amount = (Price payable by the securities firm to the client on the date of application) + (Price payable by the securities firm to the client on the day prior to the date of application) – (Price receivable by the securities firm on the date of application) – (Price receivable by the securities firmon the day prior to the date of application) – (Outstanding amount after the client has applied before the date of application for lodging the claims in outstanding settlement funds receivable as security). The securities firm may also calculate and grant the financing amount after deducting the financing interest from the financing amount first mentioned above.
A security firm may adopt a stricter standard of the calculation standard of preceding paragraphin accordance with the market status of the collateral market and the client credit risk.
If there is no closing price of the business day immediately prior to financing prescribed under subparagraph 1 of paragraph 1, the price shall be replaced with the price calculated according to the principles prescribed in Article 58-3, paragraph 2, subparagraph 2 of the Operating Rules of the Taiwan Stock Exchange Corporation or Article 57, paragraph 1 of the Taipei Exchange Rules Governing Securities Trading on the TPEx.
The financing calculation standard of the collateral set forth in paragraph 1 may be adjusted by TWSEin consultation withTPExbased on the conditions of the collateral.
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Article 20
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In non-restricted purpose loan business conducted by a securities firm, the client's overall-account collateral maintenance ratio shall be calculated as follows:
Collateral maintenance ratio＝（market value of the collateral＋market value of the supplementary collateral） ÷ （financing amount）×100%
In regard to the market value ofcollateral 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 is 80 percent of their face value; that of municipal bonds, common corporate bonds,secured convertible (exchangeable) corporate bonds, and financial bonds is 60% of their face value; that of physical gold is the Closing Average of the current day, and that of TPEx traded beneficial certificates of open-end funds, open-end securities investment trust funds and futures trust funds is the net asset value of the preceding business day, provided claims in outstanding settlement funds receivablethat are lodged as security as excluded from the calculation of the collateral maintenance ratio. 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, the market value shall be 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, the market value shall be the lowest sell order price.
- When neither of the above circumstances applies, the market value shall be 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.
A securities firm shall calculate a client's overall account collateral maintenance ratio each business day. If a client's overall account collateral maintenance ratiois lower than 130% due to a change in the value of the collateral or supplementary collateral, the securities firm shall notify the client to cover the collateral shortfall and bring the collateral maintenance ratio above 166% within 2 business days from receipt of the notice, and the following provisions shall be complied with, unless the parties agree otherwise:
- If the client fails to cover the collateral shortfall within 2 business days from the date on which the notice is served and the overall account collateral maintenance ratio is still lower than 130%, from the third business day, the securities firm shall dispose of the client's collateral under the mutatis mutandis application of Article 25, Paragraph 1.
- If the client fails to cover the collateral shortfall within 2 business days from the date on which the notice is served and the overall account collateral maintenance ratio has risen to 130% or higher, the securities firm may temporarily refrain from disposing of the collateral on the third business day. However, if on any subsequent business day in which its overall account collateral maintenance ratio again falls below than 130% and the client does not deposit additional collateral on its own initiative in the afternoon of that day, its collateral shall be disposed of from the next business day under the mutatis mutandis application of Article 25, paragraph 1.
- If the collateral maintenance ratio rises to 166% or higher even though the client has not covered, or has covered only a portion of, the collateral shortfall, or if the total collateral deposits made by the client is sufficient to cover the shortfall notified to cover in the notice before its collateral has been disposed of according to the preceding subparagraphs, the record of the collateral call shall be expunged.
The covering of shortfallunder the preceding paragraph isfor the situation where the overall account collateral maintenance ratio of the financing account is below 130%.
If, as a result of any change in share price, there is an increase in the net value of the collateral in a client's financing account less the client's obligations, the securities firm is prohibited from delivering to the client any cash or securities equivalent to the amount of the increase. However, this does not apply when the client applies to change the credit limit, and the securities firm reapproves its credit limit.
The disposal of collateral under subparagraph1 and 2, Paragraph 3 shall be carried out in accordance with Article 25 of theseOperating Rules. If the proceed from such disposal is insufficient to make repayment, the client 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.
The supplementary collateral under these Operating Rules means the securities or other commodities provided by the client or any third party when the overall account collateral maintenance ratio is lower than the required ratio and such collateral is supplemented to make up the shortfall upon the notification made by the securities firm.
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