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Article 23
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A negotiated transaction shall be conducted in the following manner:
- A borrower and a lender shall negotiate and agree between themselves on the terms and conditions of a securities loan that cover, with respect to the securities to be loaned, the type, quantity, lending rate, loan period, and with respect to the collateral to be provided, the type, terms and conditions, and how entitlement compensation will be made, and shall enter into a Negotiated Securities Loan Transaction Agreement (in the form set out in Appendix 3 hereto), under which the borrower shall provide collateral to the lender.
- The borrower and the lender shall respectively instruct their authorized securities firm to submit on their behalf regulatory filings reporting the execution of the borrowing transaction and reporting the execution of the lending transaction by entering the information of the regulatory reports into the TWSE securities lending system, specifying therein such information as the name of securities, borrowing/lending quantity, lending fee rate as executed for the transaction, return date, securities book-entry transfer date, collateral margin, the borrower's securities borrowing and lending account and that of the lender, and the securities book-entry transfer date, which transfer date may be either the report filing date or the next following business day; and the borrower and the lender may submit their respective regulatory filing reporting the execution of the negotiated transaction through the same or through different securities firms.
- Where the securities book-entry transfer date of the filed regulatory report on the execution of the lending transaction is the report filing date, the TWSE will thereupon notify the central securities depository to put the subject securities on hold to make them available for lending; the lending transaction report will become invalid if the lender does not have sufficient securities on deposit in its CSD account.
- No change may be made to the loan terms and conditions stated in the filed regulatory report on the execution of the negotiated transaction once the TWSE confirms that those in the regulatory report on the execution of the borrowing transaction are consistent with those in the regulatory report on the execution of the lending transaction. If the securities book-entry transfer date is the next business day following the report filing date, the lender and the borrower may, acting jointly, apply for withdrawal of that negotiated transaction report at any time from the TWSE's confirmation until before 10 am on the securities book-entry transfer date.
- Where the securities book-entry transfer date of the regulatory reports on the execution of the negotiated transaction is the report filing date, the TWSE upon confirmation will notify the central securities depository to transfer the securities.
- Where the securities book-entry transfer date of the regulatory reports on the execution of the negotiated transaction is the next business day following the report filing date, the TWSE will give notice to the central securities depository at 10:30 am on that day advising it to transfer the securities; the negotiated transaction report will become invalid if the lender does not have sufficient subject securities on deposit in its CSD account, in which case the TWSE will not execute the transaction and will thereupon issue a notice to the lender and borrower through their securities firm(s).
- With respect to a subject security halted from borrowing and lending transactions, any report on the execution of the negotiated transaction that has already been entered into the TWSE computer system before the halt occurs but the paired trade is not yet approved shall remain valid. After the borrower and lender have negotiated and reached agreement, they may engage the securities firm to cancel or reduce the quantity of the original quote.
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