A securities finance enterprise, by 2 pm on the competitive bid loan application date, shall deposit cash collateral with the TWSE in the amount of 120 percent of the closing price of that security on that day multiplied by the number of shares of the winning bid(s); provided that if no closing price is available for a given day, the provisions of Article 33-1, paragraph 4 shall apply mutatis mutandis.
Upon delivery of cash collateral by the securities finance enterprise, the TWSE will give notice to the central securities depository advising it to transfer the shares of security underlying the winning lending bid(s) to the securities finance enterprise's dedicated account at the central securities depository on the next business day following the competitive bid loan application date (the next business day hereinafter referred to as "the lending date").
Certificates of deposit or pledged book-entry central government bonds, to be valued at 90 percent of the face value of the non-cash collateral, as well as bank guarantees, may be posted as collateral in lieu of the cash collateral described in the preceding paragraph.
In regard to bank guarantees referred to in the preceding paragraph, the securities finance enterprise shall, upon completion of guarantee procedures with a bank, submit the original bank letter of guarantee to the TWSE. The TWSE may refuse to accept the bank guarantee provided by the securities finance enterprise, or demand the securities finance enterprise to replace it within a specified period of time. Bank guarantees may be denominated only in New Taiwan Dollars (NTD), and shall be in units of thousands of NTD.
The lent securities shall be returned to the lender through the central securities depository on the next business day following the lending date; provided, however, that securities borrowed through competitive bid loan on the first settlement day that follows the last trading day before the Lunar New Year holiday, shall be returned on the second trading day after the Lunar New Year holiday.
By 10 am on the next business day following the lending date, the securities finance enterprise shall pay the securities lending fee (securities lending fee = lending rate x quantity) to the lender in Article 56, paragraph 1, subparagraph 1 through the lender's securities firm or to the lender in Article 56, paragraph 1, subparagraph 2 directly, whereupon the TWSE will return the cash collateral to the securities finance enterprise.
The securities firm of the lender may charge the lender a service fee at a rate of not more than 10 percent of the lending fee.