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Article 10
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Securities associated with securities borrowing and lending business conducted by a securities firm may be used only for the following purposes:
- The purposes of use by customers:
- To sell through brokerage orders placed with the securities firm.
- To redeliver securities borrowed or to compensate for securities entitlements.
- To fulfill settlement obligations associated with call/put warrants, equity options, and other equity-type financial instruments.
- To use in the in-kind creation or redemption of exchange traded fund (ETF) or offshore ETF units.
- To cover shortfalls of securities in day trading.
- To redeliver spot securities borrowed in short sales.
- The purposes of use by the securities firm:
- To redeliver securities borrowed or to compensate for securities entitlements.
- To use as a source of securities for conducting securities margin purchase and short sale business.
- To use as a source of securities to return collateral to customers in conducting securities margin purchase and short sale business.
- To cover shortfalls of securities in short selling and day trading.
- To fulfill settlement obligations on securities trading markets.
- To lend to another securities firm or securities finance enterprise conducting securities borrowing and lending business or securities margin purchase and short sale business as a source of securities for conducting securities borrowing and lending business or securities margin purchase and short sale business.
- To lend through the securities lending system of a securities exchange.
- To participate in competitive auction lending transactions or negotiated lending transactions conducted by a securities finance enterprise.
- Such other purposes as may be approved by the competent authority.
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