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Article NO. Content


Regulations Governing Securities Borrowing and Lending by Securities Firms  CH

Amended Date: 2015.11.02 
Article 11     A securities firm conducting securities borrowing and lending business shall collect collateral from borrowers at the collateral ratio required by the competent authority or require the customer to provide a bank guarantee.
    The collateral under the preceding paragraph may only take the form of:
  1. cash;
  2. Book-entry central government bonds; and
  3. Securities eligible for margin purchases and short sales.
    A securities firm shall mark to market on a daily basis the ratio of the value of collateral deposited by a customer to the dollar amount of securities it lends to that customer; when that ratio is below a stated percentage, it shall immediately issue a margin call requiring the customer to cover the shortfall within a stated period of time.
    The calculation of value, substitution, and ratios with respect to collateral and time limits for meeting margin calls shall be prepared by the securities exchange in joint consultation with the over-the-counter securities market, and submitted to the competent authority for ratification.
     A securities firm that borrows securities from a customer shall allocate on a monthly basis a performance bond that accounts for a certain percentage of the total monetary amount of the borrowed securities.
     The performance bond under the preceding paragraph shall be deposited with the TWSE. The regulations governing the deposit, custody, payment, and return of the performance bond shall be jointly drafted by the TWSE and TPEx, and submitted to the competent authority for final approval.