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Article 17
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A securities firm conducting margin purchase and short sale business shall mark to market on a daily basis the ratio of the value of collateral in each margin account to the customer's debt. If the ratio is lower than the required ratio, the securities firm shall immediately notify the customer to make up the difference within a prescribed time limit.
The ratio and time limit for payment of the maintenance margin referred to in the preceding paragraph shall be prescribed by the stock exchange and OTC exchange and reported to the competent authority for approval.
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Article 18
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In the event that a customer of a securities firm fails to pay the maintenance margin in accordance with the provisions of paragraph 1 of the preceding Article or fails to settle the transaction within the agreed time limit, the securities firm shall dispose of the collateral. However, this rule does not apply if otherwise stipulated between the parties.
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Article 21
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When conducting securities margin purchase and short sale business, a securities firm may not use the proceeds derived from short sales and the margin deposited for short sales in the customer's account for any purpose other than those listed below:
- As a source of funds for conducting margin purchase business.
- As collateral for refinancing of securities by securities finance enterprises.
- As a source of securities to lend in conducting securities lending business.
- As collateral for borrowing securities through the Stock Exchange securities lending system.
- Bank deposit.
- Purchase of short-term bills.
A securities firm shall pay interest to customers for the amounts referred to in the preceding paragraph. The interest rate shall be prescribed by the securities firms and reported to the competent authority for recordation.
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Article 22
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In conducting margin purchase and short sale business, a securities firm shall not use securities for any purpose other than those listed below and shall deposit the securities in the central depository:
- As a source of securities for conducting short sale business.
- As collateral for refinancing of funds or securities by securities finance enterprises.
- As a source of securities to lend in conducting securities lending and borrowing business.
- As collateral for borrowing securities through the TWSE securities lending system.
- To lend to a securities firm or securities finance enterprise conducting securities borrowing and lending business as a source of securities for conducting securities borrowing and lending business or securities margin purchase and short sale business.
- To lend through the TWSE securities borrowing and lending system.
- To participate in competitive auction lending transactions or negotiated lending transactions conducted by a securities finance enterprise.
A securities firm using securities referred to in the preceding paragraph shall be responsible for delivering securities of the same type upon settlement of margin purchases and short sales.
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