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Article NO. Content


Directions for Collateral Management in Fixed-price and Competitive Auction Securities Borrowing and Lending Transactions  CH

Amended Date: 2016.12.20 
Categories: Securities Exchange Market > Borrowing of Securities
7     Disposition of collateral
  1. When any of the circumstances under the subparagraphs of Article 39, paragraph 1 or under Article 43, paragraph 2, subparagraph 2 of the Taiwan Stock Exchange Corporation Securities Borrowing and Lending Rules occur with respect to a securities borrower in a fixed-price or competitive auction transaction, the TWSE, on the date of the occurrence (D), will produce the relevant statements and electronic files and will begin disposition of the collateral on the following business day (D+1), engaging a securities firm to submit a quote to repurchase the subject securities from the TWSE or GTSM market for return of securities and satisfaction of the loan. If the TWSE is unable to repurchase the securities within two consecutive business days after the occurrence of the circumstance, it will use the closing price on the second business day (D+2) as the basis of calculation and reimburse the equivalent value in cash. The repurchase price or the cash reimbursement will be deducted from the collateral or advanced by the TWSE.
  2. Disposition of TWSE and GTSM listed securities collateral will be handled through a Taiwan Stock Exchange Corporation Securities Borrowing and Lending Transaction Account opened at a securities firm by the TWSE. Beginning from the business day designated for disposition of the securities, the TWSE may engage a securities firm to place a sell order on the TWSE or the GTSM; if no trade is executed after the sell order is placed, the sell order shall be placed again on the following business day and continue to be placed until the trade is executed.
  3. Dispositions of cash collateral will be made to obtain the repurchase price of securities or to defray related fees; the disposition of bank guarantee collateral will be by direct redemption at the issuing bank by the TWSE.
  4. Disposition of book-entry central government bond collateral will be effected by TWSE exercise of pledge rights through the clearing bank and subsequent sale of the bonds on the market.
  5. Any fees incurred by the TWSE as the result of a default shall be borne by the securities borrower.
  6. After disposition of collateral, the TWSE will return to the securities borrower any excess after clearing of related debts, and will collect from the borrower any funds necessary to clear related debts if proceeds from the disposition are insufficient.