|
3
|
|
With regard to the margin trading of the suspended firm, the relevant units shall, in addition to the matters listed above, handle margin trades in accordance with the procedures listed below:
(1) Matters to be undertaken by the TSE:
(i) If the suspended firm operates its own margin trading business, the TSE shall designate another firm that operates a margin trading business as the authorized firm.
(ii) When convening the meeting between the suspended firm and the authorized firm for coordination of matters entrusted to the authorized firm, information regarding margin trades shall be transferred to the authorized firm for the purposes of coordination, and the TSE shall additionally retain a copy of said information.
(iii) When the suspended firm operates its own margin trading business:
For margin trade and short sale orders with transaction dates up to and including the third business day before the date of suspension, where settlement was completed but the investor has not yet received funds or shares from the margin sales or short purchases, the TSE will process matters relating to applications to the Securities Investors Protection Fund; or where the investor has applied for but not received settlement in cash or spot securities, the TSE shall request the investor to seek compensation from the suspended firm.
(iv) When the suspended firm and the authorized firm are agents for the same securities finance company:
The TSE shall assist clients of the suspended firm in transferring margin accounts to the authorized firm by means of amending the designation of their brokerage securities firm.
(v) When the suspended firm and the authorized firm act as agents for different securities finance enterprises:
The TSE shall advise the securities finance enterprises for which the suspended firm and the authorized firm are agents to execute an agency contract.
Where an agency contract has not been executed between the securities finance enterprises, the TSE shall assist the suspended firm to request investors with existing margin accounts to transfer those accounts to other securities firms acting as agent for the given securities finance company. Transfers shall be made with all due speed, based on the investor's preference and by means of amending their designations of brokerage securities firms.
For accounts not so transferred, margin trading accounts may also be opened at the securities finance enterprise for which the authorized firm is an agent. With regard to the balance in the margin account at the securities finance enterprise for which the suspended firm acted as agent, the authorized firm may only engage in margin sales, short purchases, cash settlement and settlement in spot securities.
(vi) When the suspended firm is a margin trading agent for a securities finance enterprise and the authorized firm operates its own margin trading business:
The TSE shall assist the suspended firm in advising investors with already-opened margin accounts that they may open new margin trading accounts at the authorized firm; however, with regard to outstanding balances in margin trading at the securities finance enterprise for which the suspended firm was agent, the authorized firm may only engage in margin sales and short purchases or settlement in cash or spot securities.
(2) Matters to be undertaken by the suspended firm:
(i) The suspended firm shall, with all due speed, compile and verify the accuracy of data on margin trades transacted up to the date of suspension. The data shall be transferred to the authorized firm and a copy sent to the TSE.
(ii) When the suspended firm operates its own margin trading business:
The suspended firm shall deliver to the authorized firm a list of investors making margin purchases or short sales on the two days prior to the suspension, along with the daily business report, contracts, seal impression cards, and other relevant materials, to allow the authorized firm to provide margin loan or stock loan services. Thereafter, the authorized firm may also handle margin sales and short purchases or settlement in cash or spot securities connected with the given trades of those investors.
(iii) When the suspended firm and the authorized firm are agents for the same securities finance company:
The margin trading accounts of clients of the suspended firm may be transferred to the authorized firm by means of an amendment indicating the brokerage securities firm. Investors may carry out settlement transactions at the authorized firm for trades made during the two business days prior to the suspension, and may continue trading after opening an account for brokerage trading.
(iv) When the suspended firm and the authorized firm are agents for different securities finance enterprises, or the authorized firm operates its own margin trading business:
(a) Where the authorized firm has an agency contract with the securities finance enterprise for which the suspended firm acted as agent, the method of handling shall be the same as in the preceding paragraph.
(b) Where the authorized firm has not executed an agency contract with the securities finance enterprise for which the suspended firm acted as agent, or the authorized firm operates its own margin trading business:
(b)(1) The suspended firm shall assist its clients, based on their preference, in transferring their account to another securities firm that does have an agency contract with the securities financing enterprise. Prior to the transfer of accounts, and after the opening of new accounts at the authorized firm, only margin sales and short purchases, or settlement in cash or spot securities, may be transacted at the authorized firm with respect to outstanding balances on margin trades transacted prior to the suspension.
(b)(2) The suspended firm shall assist those of its investors who open new margin trading accounts at the authorized firm.
(3) Matters to be undertaken by the authorized firm:
(i) When the suspended firm operates its own margin trading business, the authorized firm (which shall be one that operates its own margin trading business) shall handle related matters as follows:
(a) The authorized firm shall keep good custody of all information relating to investors' margin trading transferred to it by the suspended firm, and shall assist clients of the suspended firm who transacted margin purchases or short sales on the two business days preceding the suspension with the procedures for opening new brokerage trading accounts.
(b) The authorized firm shall carry out margin and stock loans on behalf of clients of the suspended firm who transacted margin purchases or short sales on the two business days preceding the suspension. The authorized firm shall also perform the subsequent margin sales and short purchases or settlement in cash or spot securities in connection with the given trades by those investors.
(ii) When the suspended firm and the authorized firm are agents for the same securities finance company:
The authorized firm shall process the transfer of the margin trading accounts of the suspended firm's clients, and shall assist those clients with the procedures for opening new brokerage trading accounts. The authorized firm may immediately accept margin trading orders from those clients on the date account-opening procedures are completed.
(iii) When the suspended firm and the authorized firm are agents for different securities finance enterprises, or the authorized firm operates its own securities margin trading business:
(a)The authorized firm shall handle, with all due haste, the opening of margin trading accounts for the clients of the suspended firm.
(b) Where a margin trading account of a client at the suspended firm is not transferred to another securities firm acting as agent for the same securities finance enterprise, and following the opening of a new brokerage trading account by said client, the authorized firm may only accept the outstanding balance of the suspended firm at the securities finance enterprise on the day of suspension as a margin sale, short purchase, or settlement in cash or spot securities.
(iv) Handling of settlement in cash and spot securities:
(a) When the suspended firm operates its own margin trading business, and winding up and settling has not yet been carried out for outstanding balances for margin or stock loans, the authorized firm may not accept application by the related clients for settlement in cash or spot securities, and shall request those clients to seek compensation from the suspended firm through proper legal procedures.
(b) When the suspended firm is an agent for a securities finance enterprise in margin trading, the authorized firm shall, following its handling of clients' settlement in cash and spot securities, transfer the prices of securities to the bank accounts of clients subsequent to transfer by the securities finance enterprise of securities into the custody accounts of those investors or of the prices of securities into the bank account of the authorized firm.
|