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Securities that have been deemed eligible for margin purchase and short sale are subject to the following treatments if they exhibit any one of the conditions stated in Article 4, Paragraph 1, and Article 5, Paragraph 1 of the Eligibility Standards:
- For stocks that are suspended of all trading activities, delisted from the GTSM, or require advance full delivery for settlement, and exchange-traded funds that are delisted from the GTSM: Securities which the GTSM has ordered to suspend trading activities, delist from the GTSM, or require advance full delivery as the settlement method shall cease all margin purchases and short sales from the second business day after the announcement, or from the first business day after the announcement if such orders are issued in accordance with Article 287, Paragraph 1, Subparagraph 5 of The Company Act, or if it involves the receivership of a financial institution by the competent authority. However, this does not apply to trading suspensions or delistings that are due to stock capital reduction, merger, or change of listing to TWSE where shareholders' existing stocks are replaced with new stocks of different rights and obligations.
- For securities investment trust enterprises that do not publish financial statements for the funds they issue, or fund managing companies that match the descriptions stated in Article 96, Paragraph 1 of the Securities Investment Trust and Consulting Act: The GTSM will suspend all margin purchases and short sales on the beneficiary certificates of that equity fund from the second business day after the announcement.
- For GTSM listed stocks with net worth per share falling below the face value, or cumulative losses by those without face values or those whose face values do not equal to NT$10:
- The GTSM reviews each company's latest audited financial statements and auditor-reviewed 1st-quarter financial statements (auditor's review is not required for primary listed companies) on the 5th business day of the 5th month after the end of each fiscal year, and identifies companies with net worth per share that fall below their face values. For companies that are without face values or with face values that are not equal to NT$10, the GTSM will identify companies that show accumulated losses in both their latest annual reports and the 1st-quarter statements. The identified companies shall be suspended of all margin purchases and short sales from the second business day after the GTSM announces its findings.
- In addition, the GTSM reviews each company's latest half fiscal year audited financial statements (auditor-reviewed statements are permitted for primary listed companies) on the final business day of the 3rd month after the end of a half fiscal year, and identifies companies with net worth per share that fall below their face values. If a company's stock has no face value or a face value other than NT$10 per share, and it has accumulated losses in the most recent semi-annual report, the company in question shall be suspended from conducting any margin purchases and short sales from the second business day after announcement of such findings.
- For securities that encounter a major settlement default with margin purchase and short sale balances outstanding above a specified percentage: The GTSM listed securities that have been deemed eligible for margin purchases and short sales shall be suspended of such activities if the amount of settlement default occurring in one day exceeds NT$50 million while the margin purchase or short sale balance represents more than 15% of outstanding shares listed on the GTSM. In which case, the suspension shall begin from the second business day after the GTSM announces its findings.
- Securities with extreme price volatility: The GTSM will reduce margin purchase ratio by 10% and demand an additional 10% collateral on short sales in the following business day for securities that exhibit trade activities matching the criteria described in Article 10, Paragraph 3, Item 1, for five consecutive business days or for six of the last ten business days.
- Securities with abnormal changes in trade volume: The GTSM will reduce margin purchase ratio by 10% and demand an additional 10% collateral on short sales in the following business day for securities that exhibit trade activities matching the criteria described in Article 10, Paragraph 3, Item 2, for five consecutive business days or for six of the last ten business days.
- Securities with overly concentrated ownership: The GTSM will reduce margin purchase ratio by 10% and demand an additional 10% collateral on short sales in the following business day for securities that satisfy the criteria described in Article 10, Subparagraph 3, Item 3.
- For securities that conform to Article 6, Paragraph 2 of GreTai Securities Market Directions for Announcement or Notice of Attention to Trading Information and Dispositions: The GTSM will reduce margin purchase ratio by 10% and demand an additional 10% collateral on short sales over the period during which the treatment is imposed. The reduction in margin purchase ratio and the demand for additional collateral on short sale shall be raised to 20% if Article 8 coincides with other conditions described in this Paragraph.
- Other circumstances that make it unadvisable to continue a margin purchase or short sale: The GTSM may suspend margin purchase and short sale of any security if advised against during its supervisory meeting.
Paragraphs 3 through 8 above do not apply to exchange-traded fund (ETF) beneficiary certificates.
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