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Article NO. Content

Title:

Taiwan Stock Exchange Corporation Securities Borrowing and Lending Rules  CH

Amended Date: 2019.09.26 
Categories: Securities Exchange Market > Borrowing of Securities
Article 43     Upon occurrence of any of the following circumstances to an SBL participant in a fixed-price or competitive bid transaction, all of its outstanding borrowing and lending transactions shall be deemed to become due.
  1. The SBL participant files for pre-bankruptcy composition, or declares bankruptcy, or is declared bankrupt, under a domestic or foreign bankruptcy law.
  2. The SBL participant files for reorganization, or is subject to a court ruling for reorganization, or commences any liquidation proceedings, under a domestic or foreign company law.
  3. The SBL participant is put under receivership or debt clearance procedures by a domestic or foreign competent authority under any banking, insurance or other law.
  4. The SBL participant defaults on a transaction, or is subject to suspension of trading or cancellation of membership, in a foreign securities or futures market.
  5. The SBL participant is the subject of a blacklist announcement by a domestic or foreign clearing house.
  6. The SBL participant is subject to a declaration out of a criminal reason, resulting in seizure or freezing of any of its assets.
  7. Given the occurrence of any of the circumstances under the preceding subparagraphs to the holding company of the SBL participant or the occurrence of any other circumstance, it is objectively clear and sufficient to ascertain that the SBL participant has lost its ability to carry on general business objects and purposes or has lost its ability to pay.
    Upon occurrence of any of the circumstances under the subparagraphs of the preceding paragraph to an SBL participant, the TWSE will take action against the SBL participant's outstanding lending positions by making a request to the corresponding borrowing counterparty for an early return of securities pursuant to the terms and conditions as set out when the loan was made, and notify the central securities depository to transfer the returned securities to the TWSE's account exclusively used for collateral securities against securities borrowings. The TWSE may also, as the circumstances merit, either simultaneously or separately, take the following measures against all or part of the SBL participant's outstanding borrowing positions and, upon unwinding of all its outstanding securities borrowing and lending transactions and upon liquidation of all its relevant claims and obligations, cancel the SBL participant's securities borrowing and lending account.
  1. Notify the central securities depository to carry out securities loan return operations by transferring subject securities to such lender's CSD account as specified by the TWSE, from those remaining in the SBL participant's (as borrower) CSD account after a buy/sell order is completed and settled.
  2. Place an order with a securities firm to buy in subject securities in the market for return of securities loan and, to the extent necessary for the full satisfaction of the buy-in price, related fees and expenses and any outstanding obligations, to sell any collateral securities or any securities received from recall of lent securities, or otherwise demand payment of the guaranteed amount from the guaranteeing bank, or sell the book-entry central government bonds, as the case may be.
    Upon occurrence of any of the following circumstances to an SBL participant, the TWSE may notify the SBL participant to return all borrowed securities within a specified period of time, failing which the TWSE will take action in accordance with the preceding paragraph.
  1. The SBL participant is found to have furnished any false or untrue information in its account opening application.
  2. The SBL participant is subject to an order by a domestic or foreign competent authority for suspension of its business or revocation of its business license.
  3. The SBL participant is subject to an order of compulsory execution or of provisional attachment, provisional injunction, or other injunctive measure, resulting in the likelihood that its creditors would not be able to obtain payment.
  4. Given the occurrence of any other circumstance to the SBL participant, or the occurrence of any of the circumstances under the first six subparagraphs of paragraph 1 to its holding company, it is objectively clear and sufficient to ascertain the likelihood that the SBL participant would lose its ability to carry on general business objects and purposes or lose its ability to pay.
    Articles 39 and 40 shall apply mutatis mutandis to the processing procedures and related rights and obligations with respect to buy-in of subject securities for return of any securities loan, disposal of securities loan collateral or sale of securities received from recall of lent securities for satisfaction of any obligations.
    When the TWSE uses any cash collateral, or any proceeds obtained from the sale of any collateral securities or book-entry central government bonds, or any guaranteed amount transferred by the guaranteeing bank upon demand, to cover the price or amount payable for the buy-in or borrowing of subject securities and any other related fees and expenses, if there is any monies, collateral securities, or lent subject securities remaining after such covering, the TWSE will, depending on the circumstance of each case, return and transfer the remaining monies or securities respectively back to the account designated by the SBL participant or any entitled person, or turn the same over to the court, or otherwise submit a report to the court advising of the processing status.