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With regard to securities borrowing and lending by the suspended firm for trading purposes and exercise, the relevant units shall follow the procedures listed below:
- Matters to be undertaken by the TSE:
- Announce termination of the Master Contract for Securities Borrowing and Lending signed between the TSE and the suspended firm.
- Designate a securities firm that has already signed a Master Contract for Securities Borrowing and Lending with the TSE to handle follow-up operations for the suspended firm after it has suspended handling of securities borrowing and lending transactions, such follow-up operations to include redelivery of securities, compensation for equity interests, and withdrawal and substitution of collateral.
- If the suspended firm connects to the TSE via the internet, cancel its securities lending transaction log-in account number and password; if it connects via link with the host computer, dismantle its computer link system.
- If on the given day the suspended firm is unable to pay to the TSE relevant funds that its clients engaging in securities borrowing and lending for trading purposes and exercise have already paid, or to remit to clients securities lending income or cash equity-interest compensation that it already holds, the TSE shall wait until after the related payable and receivable amounts of the clients have been sorted out and itemized and then, if the TSE has margin refundable to a client on that day, the TSE shall deduct the related fees from the margin and then refund the balance to the client. The authorized firm will be responsible for remitting lending income and cash equity-interest compensation funds to the clients once the amounts have been sorted out.
- Assist the suspended firm to transfer to the authorized firm relevant information for clients who have opened securities borrowing and lending transaction accounts.
- Assist clients of the suspended firm to open securities borrowing and lending transaction accounts from the authorized firm.
- Matters to be undertaken by the suspended firm:
- From the date of suspension of business, suspend handling of securities borrowing and lending transaction business, including account opening, securities borrowing, compensation for equity interests, and securities redelivery operations.
- Transfer to the authorized firm relevant information for clients who have opened securities borrowing and lending transaction accounts up to the last day of operation.
- Assign associated persons to the authorized firm during the suspension period to assist clients to carry out follow-up operations at the authorized firm relating to securities borrowing and lending transactions and so forth.
- Matters to be undertaken by the authorized firm:
- From the date of suspension of business by the suspended firm, handle on a mandate basis the follow-up operations for clients of the suspended firm, including operations relating to securities redelivery, compensation for equity interests, and withdrawal and substitution of collateral.
- Assist clients of the suspended firm to sign letters of entrustment for securities borrowing and lending transactions and to open securities borrowing and lending accounts.
- If, after deducting relevant expenses, there is any remaining balance in the amount of any fees receivable by the suspended firm before the date of suspension of business, the balance shall be returned to the suspended firm.
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