Provision of collateral in applications for securities borrowing
- When applying to borrow securities, a borrower shall have its securities borrowing account number, the name and amount of securities borrowed, the redelivery date, and the transaction fees entered into the TWSE securities lending system by its securities firm. At the same time an itemized list of collateral in the form of cash, TWSE listed and GTSM listed securities exclusive of book-entry central government bonds ("TWSE and GTSM listed securities"), book-entry central government bonds, and bank guarantees shall be entered.
- When a borrower provides cash as collateral, the borrower shall remit the cash into the TWSE-designated virtual bank account and request the securities firm to carry out collateral reporting through the TWSE securities lending system. Cash collateral remitted into a single securities borrowing account may be provided, in amounts designated by the borrower, as collateral for different securities borrowing applications.
A borrower that applies to open an account shall designate a bank account, and a corresponding virtual account will be assigned by the TWSE. All submissions of collateral in the form of cash shall be made through the given virtual account.
The currencies for cash collateral are the New Taiwan Dollar (NTD), United States Dollar (USD), Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Australian Dollar (AUD), and Hong Kong Dollar (HKD), in units no smaller than 1 Dollar, Euro, Yen, or Pound, as the case may be.
- When a borrower provides TWSE and GTSM listed securities as collateral, then after the name and amount of the TWSE and GTSM listed securities have been entered by the securities firm, the TWSE will notify the central securities depository to transfer the securities into the TWSE securities collateral account.
The TWSE and GTSM listed securities shall be provided in amounts that are integral multiples of trading units. The collateral value of the securities is obtained by multiplying the current day auction reference price at market opening on the TWSE or the current day base price for opening of trading on the GTSM by the valuation percentage.
- A borrower that provides a bank guarantee as collateral shall first complete the guarantee procedures with the bank. After applying to the TWSE through the securities firm, the borrower shall deliver the original of the guarantee document to the TWSE, which will enter the name of the bank, the amount of the guarantee, and the maturity date. Only after these procedures are completed can the bank guarantee be used in applications for securities borrowing.
When multiple bank guarantees are provided as collateral through a single securities borrowing account, the guarantees may be provided, in amounts designated by the borrower, for use in different applications for securities borrowing.
From the second business day before its maturity date, a bank guarantee document may no longer be used as collateral. When multiple bank guarantee documents have differing maturity dates, the earliest of the maturity dates will apply.
The currency of bank guarantee documents is the New Taiwan Dollar.
- A borrower that provides a book-entry central government bond as collateral shall create a registration of pledge of the bond. After a registration of restricted transfer has been made by the clearing bank, the bond shall be transferred into a book-entry government bond account with the clearing bank designated by the TWSE. .
A bond under the preceding paragraph may not be used in an application for borrowing until the TWSE has entered the government bond code, par value, and maturity, and provided the book-entry central government bond serial number to the securities firm. .
A borrower may combine multiple types of book-entry central government bonds in one collateral deposit, to which the TWSE will assign one book-entry central government bond serial number, or may divide one book-entry central government bond into multiple collateral deposits, to which the TWSE will assign multiple book-entry central government bond serial numbers. .
The maturity date of book-entry central government bonds shall cover the redelivery date. When multiple types of book-entry central government bonds are combined into one collateral deposit, if the bonds have different maturity dates, the nearest maturity date shall control. .
The collateral value of book-entry central government bonds shall be calculated as 90 percent of the par value.