Taiwan Stock Exchange - Rules & Regulations Directory

Amendments

Title:
Taiwan Stock Exchange Corporation Securities Borrowing and Lending Rules(2018.08.22)

Article 45
    Upon occurrence of any of the circumstances under subparagraph 1 of Article 39, paragraph 1 to the borrower in a negotiated transaction, the lender shall, either by itself or through its lending agent authorized to keep custody of collateral on its behalf, place an order with a securities firm to buy in subject securities in the exchange market for return of the securities loan, and submit a regulatory filing, together with relevant transaction details, to the TWSE reporting the close-out of the negotiated transaction.
    If a circumstance arises under the preceding paragraph, and if due to the trading status of the market generally or the subject securities specifically it is not possible to buy the necessary amount of subject securities, even at a limit-up price, within 2 consecutive business days after the date of the circumstance requiring the buy-in action, or if due to a restraint from the ratio of foreign capital allowable for investment in the subject securities it is not possible to buy in the subject securities, the shortfall may be repaid in cash or otherwise offset and settled by collateral, as per the pre-determined criteria set out in the loan agreement or as otherwise agreed between the lender and the borrower.
    In the case where the lending agent places an order with a securities firm to, using the brokerage trading account established in the name of the lending agent itself, buy in the subject securities in the exchange market for return of the securities loan, upon confirmation of accuracy regarding the loan transaction record and the transaction execution information, the TWSE will, based on the buy-in amount stated in the submitted regulatory filing, notify the central securities depository to effect a book-entry transfer of subject securities in that amount from the CSD account of the lending agent to that of the lender, and thereby make a note indicating the close-out of the negotiated transaction.
    In the event that the borrower in a negotiated transaction is in the circumstances in Article 39, paragraph 1, subparagraphs 1 or 4, or thelender is in the circumstances in subparagraph 4 of the same paragraph, or an SBL participant is in breach ofa negotiated transaction agreementfor securities borrowing and lending,the other participant shall forthwith instruct their authorized securities firm to submit a regulatory filing to the TWSE reporting the handling of the event, the TWSE may halt or terminate the participation in securities borrowing and lending transactionsby the party in one of the above circumstances.

Article 45-1
    When an SBLparticipant is in one of the circumstances specified in the subparagraphs of Article 43, paragraph 1, and its negotiated transaction agreement contains a net settlement clause, the other participant may, based on the agreement of the clause, settle all outstanding claims and debts under the negotiated transaction, credit one against the other and pay the difference. Upon completion of settlement, it shall authorize a securities firm to submit a regulatory filing to the TWSE reporting that borrowing and lendingtransactions have been fully settled and satisfiedby submitting the related transaction information and supporting documents to the TWSE.The TWSE will then give notice to the central securities depositoryto remove the note for security borrowing for underlying securities and take other related actions.
    When reporting borrowing and lending transactionshave been fully settled and satisfiedin accordance with the preceding paragraph, the authorizedsecurities firm shall submit the following supporting documents:
  1. Where the circumstances under Article 43, paragraph 1, subparagraphs 1 to 6 exist, documents issued by Taiwan or foreign court or competent authority sufficient to prove the existence of these circumstances are required. For documents issued by a foreign court or competent authority, the documents shall be legalized by Taiwan's embassy or consulate or anequivalent agency.
  2. Where the circumstances under Article 43, paragraph 1, subparagraph 7 exist, specific supporting documents are required. All these documents, other than those issued by the court or competent authority, shall be notarized or certified. Foreign documents shall be legalized by Taiwan's embassy or consulate or an equivalent agency.
  3. Evidence of payment of all taxes payable in the Republic of China.
    The TWSE will dismiss any and all requests from an authorized securities firm that fails to perform a thorough review on and investigate into the circumstances under the subparagraphs of Article 43, paragraph 1 and fails to submit supporting documents described in the preceding paragraph. In the event an SBL participant has disputes arising therefrom or its rights and interests are damages as a result, the parties shall be responsible for the issue without concern to the TWSE.
    Where an authorized securities firm submit a regulatory filing to the TWSE reporting that transactions have been fully settled and satisfiedin accordance with the first paragraph, the TWSE may halt or terminate the participation of a party in one of the circumstances described in the subparagraphs of Article 34, paragraph 1 in securities borrowing and lending transactions.
    Where a party to negotiated transaction is in one of the circumstances described in the subparagraphs of Article 43, paragraph 1,and itsnegotiated transaction agreement does not contains a net settlement clause, the provisions of Article 45 shall apply mutatis mutandis.

Data Source:Taiwan Stock Exchange - Rules & Regulations Directory
twse-regulation.twse.com.tw