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Article 40
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If the proceeds arising from the disposal of collateral under the preceding article and the amount payable to the borrower are not sufficient to fully cover the price required for the buy-in of securities and other related fees and expenses, the TWSE may, to the extent necessary for the settlement of the remaining obligations, cause an early loan return to be made by buy-in of securities, and/or effect any disposal of collateral, on any other securities loan transaction of the borrower, and use the proceeds thus obtained to cover the aforesaid shortfall, after deduction of the price of and other fees and expenses related to each such buy-in transaction. there is any surplus, the SBL participant may submit a request through its securities firm to withdraw the surplus collateral. the SBL participant's obligations remain not fully satisfied, and if the SBL participant fails to settle the obligations within the time limit specified in a notice from the TWSE, such failure shall then constitute an event of default, in which case the TWSE may, with respect to each and any outstanding securities lending position of the SBL participant, request an early return of securities from the corresponding borrowing counterparty on such terms as set out in the original loan transaction, and notify the central securities depository to transfer the returned securities to the TWSE's account exclusively used for collateral securities against securities borrowings, and then place an order with a securities firm to sell the securities, in whole or in part, for realization of cash to settle the remaining obligations, or otherwise may seek to recover the unsettled amount(s) from any other property of the SBL participant.
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Article 45
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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 priceor with market order, 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 the lender 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.
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