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Relevant Laws

Title：Taiwan Stock Exchange Corporation Operating Rules on the Use of Domestic Securities by Overseas Chinese and Foreign Nationals as Collaterals for Offshore Investment Activities (2023.03.31)
Article 5     Participants in the use of domestic securities as collaterals for offshore investment activities by overseas Chinese and foreign nationals shall meet the following qualification requirements:
  1. Collateral providers: Those who have registered for investment in domestic securities in accordance with Article 10 of the Investment Regulations, or approved by the Competent Authority or the TWSE for investment in domestic securities, and are the foreign institutional investors under Article 3, paragraph 2 of the Investment Regulations.
  2. Collateral receivers: Those who have met the requirements in the preceding paragraph, are a provider of funds in the borrowing of funds in foreign currency in the third paragraph of the preceding article, and are approved by offshore financial Competent Authority to do business as a bank or securities firm.
  3. Collateral custodians: Only the banks or securities firms that have been approved by the Competent Authority to provide custodian services, and have acted as an agent for offshore overseas Chinese and foreign nationals in their registration of investment in domestic securities.
  4. Collateral managers: Only those who have been approved by offshore financial Competent Authority to provide banking services.
    Overseas Chinese or foreign nationals who act as providers of funds for borrowing of funds in foreign currency in the second subparagraph of the preceding paragraph should issue a statement undertaking they have met the qualifications in the preceding paragraph to be provided to the custodian appointed under Article 17 of the Investment Regulations (Investment Custodian) for verification by the collateral custodian.
Article 13     The income from a collateral custodian’s disposal of collaterals should be first used for repayment of the obligations agreed between the collateral provider and collateral receiver by transferring an amount in New Taiwan Dollar equivalent to the value of the obligations to the NTD account opened by the collateral receiver in accordance with Article 18 of the Investment Regulations by the end of the business day immediately after receipt of the income.
    The NTD amount used for repayment of the obligations in foreign currency in the preceding paragraph shall be deemed as inward remittance of the collateral receiver’s investment capital and outward remittance of the collateral provider’s investment capital or profits. The Investment Custodian of the collateral provider and collateral receiver should report the outward and inward fund transfers as of the previously day to the Department of Foreign Exchange, Central Bank of the Republic of China on a daily basis in accordance with Article 22 of the Investment Regulations.
    In the event there are remaining funds after the income received from the collateral custodian’s disposal of the collateral has been used for repayment of the obligations in foreign currency in the first paragraph, these funds should be returned to the NTD account opened by the collateral provider in accordance with Article 18 of the Investment Regulations by the end of the business day immediately after receipt of the income.
    If the income from disposal of collaterals in accordance with the first paragraph and the preceding paragraph is subject to settlement of traded securities, the amount of settlement may be kept in NTD, with the remaining funds to be converted to a foreign currency and transferred out of the Republic of China by the end of the business day immediately after receipt of the funds.