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Article NO. Content

Title:

Operating Rules for Securities Lending by Securities Firms  CH

Amended Date: 2019.10.29 (Articles 8 amended,English version coming soon)
Current English version amended on 2018.12.24 
Categories: Securities Exchange Market > Borrowing of Securities
Article 32     Under any of the following circumstances, the securities firm shall, beginning from the next business day, dispose of the collateral from the lending transactions at issue, and also take any necessary measures pursuant to the provisions of the agreement, unless the parties agree otherwise:
  1. The loan period has expired, or early return is agreed between the parties or required by Article 22, paragraph 3, and the customer is unable to return the securities within the stipulated time limit.
  2. The payment date for compensation for entitlements has arrived, and the customer fails to make such compensation.
  3. The customer fails to make up a collateral shortfall or to provide eligible replacement collateral within the required time period.
  4. The customer fails to pay any applicable fee as stipulated.
    When a securities firm disposes of securities collateral or makes necessary repurchases pursuant to the preceding paragraph, it shall do so, through the Securities Lending Default Handling Account it has opened with another securities broker, on the TWSE central securities market or through the GTSM trading system. If such an order is not executed, it shall continue to be quoted from the next business day, and the relevant processing fees and tax shall be borne by the customer.
    After a securities firm disposes of that collateral, if the settlement proceeds are insufficient to offset the debt, it may, within the scope necessary to settle the obligation, liquidate outstanding securities borrowing and lending transactions of the customer and use the funds obtained thereby to offset its debt. If a positive balance remains, it shall be returned to the customer; if the funds obtained are still insufficient, the securities firm shall notify the customer to make up the shortfall within a specified period.
    A securities firm that borrows securities from customers shall discontinue operations regarding additional securities borrowing and extension of its securities lending and borrowing business if the circumstance in paragraph 1, subparagraph 1, 2 or 4 applies to it or if it fails to pay the performance bond in full pursuant to Article 38, paragraph 1.