Article 3
When a participant receives a customer’s application to perform book entries for securities lending information, the operation shall proceed according to the following procedures:
1. When lending securities, a customer must submit a “Customer Letter of Authorization for Securities Lending Application/Change/Cancellation” (affixed with the original seal/signature-of-record) to the participant to apply. The participant shall perform a “Securities Lending Application” transaction (transaction code: 370) to input the securities lending information into the TDCC computer system.
2. When applying to change the securities lending quantity or fee rate, a customer must submit a “Customer Letter of Authorization for Securities Lending Application/Change/Cancellation” (affixed with the original seal/signature-of-record) to the participant to apply. The participant shall perform a “Securities Lending Change” transaction (transaction code: 371) to input the securities lending change information into the TDCC computer system.
3. To cancel a securities lending application, a customer must submit a “Customer Letter of Authorization for Securities Lending Application/Change/Cancellation” (affixed with the original seal/signature-of-record) to the participant to apply. The participant shall perform a “Securities Lending Cancellation” transaction (transaction code: 372) to input the securities lending Cancellation information into the TDCC computer system.
4. A customer’s balance of loanable securities does not include securities bought (purchased) on the previous business day and deposited on the borrowing date, or securities sold on the previous business day before the borrowing date.
5. The lender participant may perform a “Securities Lending Application Query” transaction (transaction code: 373) to print a “Securities Lending Application Form” and check the securities lending application details of its customers as of the current day, or a “Securities Loan Details Query” transaction (transaction code: 374; query type: 2. Lending Query) to print a “Securities Lending Details Report” and view the details of its loaned (lent) securities for the last month.
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Article 4
When a circumstance arises requiring a borrowing of securities to be made by or for the account of a participant, as provided in Article 109 of the Operating Rules of the Taiwan Stock Exchange Corporation (the “TWSE Operating Rules”) or Article 86-1 of the Taipei Exchange Rules Governing Securities Trading on the TPEx (the “TPEx Trading Rules”), the securities borrowing operation shall proceed in accordance with the following procedure:
1. The participant shall complete the relevant filing or application procedure with the Taiwan Stock Exchange (TWSE) or the Taipei Exchange (TPEx) and then borrow securities.
2. If the seller securities firm fails to apply to borrow securities and also fails to complete the settlement of securities by 10 a.m. on the second business day after the trade date, TWSE or TPEx will notify TDCC to initiate a securities borrowing for the account of the securities firm.
3. On the borrowing date, TDCC will borrow securities based on TWSE’s or TPEx’s notification and transfer the loaned securities from the customer account under the lender participant’s book-entry depository account (“depository account”) to the borrower participant’s securities loan-related account, thereby completing the borrowing of securities. TDCC will also notify TWSE or TPEx of the securities loan information. If TDCC is unable to obtain securities through borrowing, TWSE or TPEx will issue a securities delivery voucher temporarily in lieu of settlement.
4. The borrower participant may perform a “Securities Loan Details Query” transaction (transaction code: 374) to print a “Securities Loan Details Report” and check the details of its supplemented/borrowed securities for the past month.
5. The borrower participant may perform a “Securities Loan Basic Information Query” transaction (transaction code: 644) to retrieve the basic information of securities lenders, so that it can withhold taxes and issue withholding statements.
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Article 5
After a participant applies to borrow securities in accordance with Article 109 of the TWSE Operating Rules or Article 86-1 of the TPEx Trading Rules, the return of securities or the renewal of loan shall proceed in accordance with the following procedure:
1. The borrower participant shall buy in securities through its segregated “error account” for handling erroneous buy and erroneous sell trades (“out-trades”), or its segregated “default processing account” for handling trade defaults, and then report to TWSE or TPEx.
2. TDCC will, based on TWSE’s or TPEx’s notification, carry out the securities return operation and transfer the returned securities from the borrower participant’s securities loan-related account to TWSE’s or TPEx’s book-entry settlement account (“settlement account”), and then transfer the securities to the customer account under the lender participant’s depository account, and also report the status to TWSE or TPEx.
When a participant fails to apply to borrow securities and also fails to complete the settlement of securities, after TWSE or TPEx initiates a securities borrowing for the account of the participant, the return of securities or the renewal of the loan shall proceed in accordance with the following procedure:
1. The borrower participant may perform a “Transfer for Voluntary Return of Borrowed Securities” transaction (transaction code: A61) to notify TDCC to return the securities.
2. TDCC will, based on the borrower participant’s notification, carry out the securities return operation and transfer the returned securities from the borrower participant’s securities loan-related account to the borrower participant’s securities borrowing account, and then transfer the securities to the customer account under the lender participant’s depository account, and also report the status to TWSE or TPEx.
When a borrower participant is unable to return securities on the first business day after the day on which settlement is completed with the borrowed securities or a securities delivery voucher is issued by TWSE or TPEx temporarily in lieu of settlement, a renewal of the loan must be carried out.
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Article 6
When a participant is unable to return securities, TWSE or TPEx will use the cash collateral for the securities loan to buy in securities as replacement.
TDCC will, based on TWSE’s or TPEx’s notification, transfer the returned securities from TWSE’s or TPEx’s securities loan-related account to its settlement account, and then transfer the securities to the customer account under the lender participant’s depository account, and also report the status to TWSE or TPEx.
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Article 8
A securities finance enterprise shall set up a segregated “securities loan book-entry account” (“securities loan account”) (A/C No.: XXX0-9999966) under its depository account, so that book-entry operations can be carried out for borrowing of securities through competitive bid loans (auction lending) or negotiated loans (negotiated lending).
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Article 9
When a securities finance enterprise borrows securities through a competitive bid loan, TWSE or TPEx shall, by 11 a.m. on the application date of the competitive bid loan, notify TDCC of the competitive bid loan information by fax.
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Article 10
When a participant carries out competitive bid or negotiated securities lending application operation for its own account or upon a customer’s application, the operation shall proceed in accordance with the following procedures:
1. The participant shall, within the timeframe prescribed by TWSE or TPEx, submit a “Securities Earmark/Release Application” and perform a “Securities Earmark Application” transaction (transaction code: 152) to input the earmark (on-hold) application information for loanable securities into the TDCC computer system.
2. There is no need to carry out earmarking for loaned (lent-out) securities that are re-offered for participation in the competitive bid loan or negotiated loan.
3. When the participant, by the end of the timeframes prescribed by TWSE or TPEx, applies to cancel the earmark of the loanable securities, it shall submit a “Securities Earmark/Release Application” and perform a “Securities Release-from-Earmark” transaction (transaction code: 153) to input the earmark cancelation application information for loanable securities into the TDCC computer system.
4. If, after the completion of the competitive bid opening procedure or the end of negotiation, there are still securities remaining un-loaned/unborrowed, the participant may apply to release them from being earmarked by submitting a “Securities Earmark/Release Application” and perform a “Securities Release-from-Earmark” transaction (transaction code: 153) to notify TDCC to release the earmarked securities. If there is no application submitted, TDCC will on its own initiative release the earmarked securities on the next business day.
5. The lender participant may perform a “Securities Earmark/Release Information Query” transaction (transaction code: B77) to print an “Earmark/Release Query Form” and check the earmark application details as of the end of the bidding time on the current day.
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Article 11
On the first business day after the date of competitive bid loan or negotiated loan, TDCC will, based on TWSE’s or TPEx’s notification, transfer the loaned securities from the proprietary or customer account under the lender participant’s depository account to the securities finance enterprise’s securities loan-related account, thereby completing the account transfer for the competitive bid loan or negotiated loan.
The lender participant may perform a “Securities Loan Details Query” transaction (transaction code: 374; query type: 4. Competitive Bid Lending Query) to print a “Competitive Bid Securities Lending Details Report,” or perform the same transaction (query type: 8. Negotiated Lending Query) to print a “Negotiated Securities Lending Details Report,” and view the details of its loaned securities for the last month.
The securities finance enterprise may perform a “Securities Loan Details Query” transaction (transaction code: 374; query type: 3. SFE Competitive Bid Loan Query) to print an “SFE Competitive Bid Securities Loan Details Report,” or perform the same transaction (query type: 7. SFE Negotiated Loan Query) to print an “SFE Negotiated Securities Loan Details Report,” and view the details of its securities loans for the last month. It may also perform a “Lender Basic Information Query” transaction (transaction code: 295; query type: 1. SFE Competitive Bid Loan) to print an “SFE Competitive Bid Loan Lender Basic Information Report,” so that it can withhold taxes and issue withholding statements.
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Article 12
On the second business day after the date of competitive bid loan or negotiated loan, TDCC will, based on TWSE’s or TPEx’s notification, transfer the borrowed securities from the margin purchase/short sale account under the customer account under the securities finance enterprise’s depository account to TWSE’s or TPEx’s settlement account, and then transfer the securities to the proprietary or customer account under the lender participant’s depository account.
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Article 13
When a securities finance enterprise is unable to return securities, TWSE or TPEx will use the cash collateral for the competitive bid loan or negotiated loan to buy in securities as replacement.
TDCC will, based on TWSE’s or TPEx’s notification, transfer the returned securities from TWSE’s or TPEx’s securities loan-related account to its settlement account, and then transfer the securities to the proprietary or customer account under the lender participant’s depository account, and also report the status to TWSE or TPEx.
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Article 13-1
If the amount of securities obtained by a securities finance enterprise through competitive bid and negotiated loans still falls short of the needed quantity, the shortfall securities shall be purchased by reverse auction. When a participant is engaged by a customer to place a sell bid at the reverse auction, the securities shall be earmarked or released in accordance with Article 10.
On the reverse auction purchase date, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities sold at the reverse auction from the customer account under the seller participant’s depository account to the securities finance enterprise’s related account.
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Article 14
When a participant carries out securities lending application operation for its own account or for the account of another person, the operation shall proceed in accordance with the following procedures:
1. When the participant applies to lend securities, TDCC will, based on TWSE’s notification, earmark the loanable securities in the proprietary or customer account under the lender participant’s depository account, and also report the status to TWSE.
2. When the participant cancels the securities lending application, TDCC will, based on TWSE’s notification, release the loanable securities earmarked in the proprietary or customer account under the lender participant’s depository account, and also report the status to TWSE.
3. The lender participant may perform a “TWSE SBL System - Securities Loan Change Detail Query” transaction (transaction code: 419; query type: 1) to print a “TWSE SBL System - Loanable Securities Earmark/Release Details Query Form” and view the earmark/release information for loanable securities for the current day.
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Article 15
When a participant carries out securities borrowing application (securities loan application) operation for its own account or for the account of another person, the operation shall proceed in accordance with the following procedures:
1. When the participant applies to borrow securities, TDCC will, based on TWSE’s notification, earmark the collateral securities in the proprietary or customer account under the borrower participant’s depository account, and also report the status to TWSE.
2. When the participant cancels the securities borrowing application, TDCC will, based on TWSE’s notification, release the collateral securities earmarked in the proprietary or customer account under the borrower participant’s depository account, and also report the status to TWSE.
3. The borrower participant may perform a “TWSE SBL System - Securities Loan Change Detail Query” transaction (transaction code: 419; query type: 2) to print a “TWSE SBL System - Collateral Securities Earmark/Release Details Query Form” and view the earmark/release information for collateral securities for the current day.
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Article 16
When a participant carries out a securities borrowing and lending (SBL) transaction, the account transfer operation shall proceed in accordance with the following procedure:
1. After the SBL transaction is completed, TDCC will, based on TWSE’s notification, carry out account transfer operation and transfer the loaned securities from the proprietary or customer account under the lender participant’s depository account to the proprietary or customer account under the borrower participant’s depository account, and also report the status to TWSE.
2. TDCC will transfer the collateral securities provided by the borrower participant from the proprietary or customer account under the borrower participant’s depository account to TWSE’s depository account, and also report the status to TWSE.
3. If the borrower participant needs to transfer the borrowed securities to its depository account under another participant, it may perform a “Borrowing Balance Transfer” transaction (transaction code: 425) to carry out the transfer.
4. The borrower participant may perform a “TWSE SBL System - Securities Loan Change Detail Query” transaction (transaction code: 419; query type: 4) to print a “TWSE SBL System - Collateral Securities Transfer Details Query Form” and view the collateral securities transfer information for the current day.
5. The lender participant or borrower participant may perform a “TWSE SBL System - Securities Loan Change Detail Query” transaction (transaction code: 419; query type: 5) to print a “TWSE SBL System - Securities Loan Transaction Transfer Details Query Form” and view the securities transfer information for executed SBL transaction for the current day.
6. The lender participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 2) to print a “Transfer Transaction Details Query Form” and check the outward transfer details of securities loaned through the TWSE SBL system for the current day or the previous business day.
7. The borrower participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 1) to print a “Transfer Transaction Details Query Form” and check the inward transfer details of securities borrowed through the TWSE SBL system for the current day or the previous business day.
8. The borrower participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 2) to print a “Transfer Transaction Details Query Form” and check the outward transfer details of securities provided as collateral through the TWSE SBL system for the current day or the previous business day.
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Article 17
When a participant carries out securities return operation for its own account or for the account of another person, the operation shall proceed in accordance with the following procedure:
1. When the participant returns securities, TDCC will, based on TWSE’s notification, carry out an account transfer for the return of securities and transfer the borrowed securities from the proprietary or customer account under the borrower participant’s depository account to the proprietary or customer account under the lender participant’s depository account, and also report the status to TWSE.
2. TDCC will transfer the collateral securities provided by the borrower participant from TWSE’s depository account to the proprietary or customer account under the borrower participant’s depository account, and also report the status to TWSE.
3. The lender participant or borrower participant may perform a “TWSE SBL System - Securities Loan Change Detail Query” transaction (transaction code: 419; query type: 3) to print a “TWSE SBL System - Returned Securities Transfer Details Query Form” and view the returned securities transfer information for the current day.
4. The borrower participant may perform a “TWSE SBL System - Securities Loan Change Detail Query” transaction (transaction code: 419; query type: 4) to print a “TWSE SBL System - Collateral Securities Transfer Details Query Form” and view the collateral securities transfer information for the current day.
5. The lender participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 1) to print a “Transfer Transaction Details Query Form” and check the inward transfer details of securities loaned through the TWSE SBL system for the current day or the previous business day.
6. The borrower participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 2) to print a “Transfer Transaction Details Query Form” and check the outward transfer details of securities borrowed through the TWSE SBL system for the current day or the previous business day.
7. The borrower participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 1) to print a “Transfer Transaction Details Query Form” and check the inward transfer details of securities provided as collateral through the TWSE SBL system for the current day or the previous business day.
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Article 18
When a participant carries out entitlements repayment operation for its own account or for the account of another person, the operation shall proceed in accordance with the following procedure:
1. When the participant repays the lender’s securities entitlements, TDCC will, based on TWSE’s notification, transfer the securities entitlements from the proprietary or customer account under the borrower participant’s depository account to the proprietary or customer account under the lender participant’s depository account, and also report the status to TWSE.
2. The lender participant or borrower participant may perform a “TWSE SBL System - Securities Loan Change Detail Query” transaction (transaction code: 419; query type: 6) to print a “TWSE SBL System - Securities Loan Entitlements Repayment Details Query Form” and view the securities entitlements repayment information for the current day.
3. The lender participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 1) to print a “Transfer Transaction Details Query Form” and check the inward transfer details of securities entitlements repaid through the TWSE SBL system for the current day or the previous business day.
4. The borrower participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 2) to print a “Transfer Transaction Details Query Form” and check the outward transfer details of securities entitlements repaid through the TWSE SBL system for the current day or the previous business day.
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Article 19
When a participant is unable to return securities, the operation shall proceed in accordance with the following procedures:
1. When the borrower is unable to return securities, after TWSE buys back or borrows equivalent securities in the market, TDCC will, based on TWSE’s notification, transfer the securities from TWSE’s depository account to the proprietary or customer account under the lender participant’s depository account.
2. When the borrower defaults, TWSE will dispose of the provided collateral securities, and then perform a “Deposited Securities Transfer” transaction (transaction code: 130) to transfer the collateral securities from TWSE’s securities depository account to its default processing account under a securities firm.
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Article 21
When a participant receives a customer’s application to lend and transfer securities to a borrower, the operation shall proceed in either of the following manners:
1. Where the customer applies to transfer all loaned securities to the borrower’s hedge account
A. The customer shall present the securities passbook and the lending agreement (loan contract) and submit an “SBL Earmark/Account Transfer Application” in duplicate (affixed with the original seal/signature-of-record) to the participant to apply.
B. After reviewing and verifying the accuracy of the aforesaid application document(s), the participant shall perform an “SBL Earmark/Account Transfer Application” transaction (transaction code: 226) to notify TDCC of the lending and account transfer information. After the transaction is successfully completed, the participant shall return one duplicate copy of the application form to the customer, while retaining the other copy for its own record keeping purposes.
C. After receiving the aforesaid account transfer notification, TDCC will immediately transfer the securities from the customer’s depository account to the borrower’s hedge account. TDCC will also make the entries in the participant account and notify the participant to make the necessary entries in its proprietary and customer accounts.
2. Where the securities loaned by the customer are first earmarked and, at later times, transferred to the borrower’s hedge account in separate lots upon application by the borrower as required for hedging purposes
A. The customer shall present the securities passbook and the lending agreement and submit an “SBL Earmark/Account Transfer Application” in duplicate (affixed with the original seal/signature-of-record) to the participant to apply. After reviewing and verifying the accuracy of the aforesaid application document(s), the participant shall perform an “SBL Earmark/Account Transfer Application” transaction (transaction code: 226) to notify TDCC of the earmark information for loaned securities. After the transaction is successfully completed, the participant shall return one duplicate copy of the application form to the customer, while retaining the other copy for its own record keeping purposes. After receiving the aforesaid notification, TDCC will immediately earmark the securities loaned by the lender.
B. When applying to borrow the aforesaid securities loaned by the customer, the borrower shall submit an “SBL Earmark/Account Transfer Application” in duplicate (affixed with the original seal/signature-of-record) to the participant to apply. After reviewing and verifying the accuracy of the aforesaid application document(s), the participant shall perform an “SBL Earmark/Account Transfer Application” transaction (transaction code: 226) to notify TDCC of the borrowing and account transfer information. After the transaction is successfully completed, the participant shall return one duplicate copy of the application form to the borrower, while retaining the other copy for its own record keeping purposes. After receiving the aforesaid account transfer notification, TDCC will transfer the securities from the lender customer’s depository account to the borrower’s hedge account. TDCC will also make the entries in the participant account and notify the participant to make the necessary entries in its proprietary and customer accounts.
3. The participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167) to print a “Transfer Transaction Details Query Form” and check the inward transfer and deposit information for loaned securities for the current day.
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Article 22
When applying to return and transfer securities to a lender, a borrower shall submit an “SBL Earmark/Account Transfer Application” in duplicate (affixed with the original seal/signature-of-record) to the participant to apply.
After reviewing and verifying the accuracy of the aforesaid application document(s), the participant shall perform an “SBL Earmark/Account Transfer Application” transaction (transaction code: 226) to notify TDCC of the return and account transfer information. After the transaction is successfully completed, the participant shall return one duplicate copy of the application form to the borrower, while retaining the other copy for its own record keeping purposes.
After receiving the aforesaid account transfer notification, TDCC will immediately transfer the securities from the borrower’s hedge account to the lender customer’s depository account. TDCC will also make the entries in the participant account and notify the participant to make the necessary entries in its proprietary and customer accounts.
The participant may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167) to print a “Transfer Transaction Details Query Form” and check the securities return, inward transfer, and deposit information for the current day.
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Article 23
Where the securities loaned by a customer are transferred in the manner set out in Article 21, subparagraph 2, namely the customer’s securities are first earmarked and, at later times, transferred to the borrower’s hedge account in separate lots upon application by the borrower as required for hedging purposes, when at any time the lender customer intends to release the earmarked securities, the customer shall present the issuer’s consent document for the release and submit an “SBL Earmark/Account Transfer Application” in duplicate (affixed with the original seal/signature-of-record) to the participant to apply.
After reviewing and verifying the accuracy of the aforesaid application document(s), the participant shall perform an “SBL Earmark/Account Transfer Application” transaction (transaction code: 226) to notify TDCC of the release-from-earmark information for loaned securities. After the transaction is successfully completed, the participant shall return one duplicate copy of the application form to the lender, while retaining the other copy for its own record keeping purposes.
After receiving the aforesaid notification, TDCC will immediately release the earmarked securities loaned by the lender customer.
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Article 26
When a customer applies to a securities firm for securities business money lending or money lending for unrestricted purposes and to use securities bought or held by the customer as collateral for the loan, the customer shall present the securities passbook and submit a “Money Lending/Settlement Financing Collateral Account Transfer Application” (affixed with the original seal/signature-of-record) to the securities firm to apply.
After reviewing and verifying the accuracy of the application document(s) described in the preceding paragraph, the securities firm shall perform a “Money Lending/Settlement Financing Collateral Account Transfer” transaction (transaction code: K10) or a “Money Lending/Settlement Financing Collateral Account Transfer - Electronic Transmission” transaction (transaction code: K10S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will transfer the securities from the customer’s depository account to the securities firm’s money lending collateral account.
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Article 27
When returning collateral provided by a customer, a securities firm shall submit a “Money Lending/Settlement Financing Collateral Account Transfer Application” and perform a “Money Lending/Settlement Financing Collateral Account Transfer” transaction (transaction code: K10) or a “Money Lending/Settlement Financing Collateral Account Transfer - Electronic Transmission” transaction (transaction code: K10S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will transfer the securities from the securities firm’s money lending collateral account to the customer’s depository account.
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Article 28
When disposing of or cancelling disposition of collateral provided by a customer, a securities firm shall submit a “Money Lending/Settlement Financing Collateral Disposition/Cancellation Account Transfer Application” and perform a “Money Lending/Settlement Financing Collateral Disposition/Cancellation Account Transfer” transaction (transaction code: K11) or a “Money Lending/Settlement Financing Collateral Disposition/Cancellation Account Transfer - Electronic Transmission” transaction (transaction code: K11S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will transfer the securities between the securities firm’s money lending collateral account and its money lending default processing account. If, however, the collateral is open-end beneficial certificates and is disposed of by means of redemption, then after receiving the notification described in the preceding paragraph, TDCC will immediately transfer the collateral from the securities firm’s money lending collateral account to the registration account under the securities investment trust enterprise’s (SITE) depository account.
To cancel the account transfer of open-end beneficial certificates that has been completed under the preceding paragraph, the securities firm shall apply to the SITE.
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Article 29
When a securities firm, after a customer has issued a written statement of consent for rehypothecation, uses the received collateral as collateral to borrow securities through the TWSE SBL system, the relevant operations shall proceed in accordance with the collateral account transfer procedures set out in Chapter 3 (Securities Borrowing and Lending through the TWSE Securities Borrowing and Lending System).
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Article 30
When a securities firm, after a customer has issued a written statement of consent for rehypothecation, uses the received collateral as collateral for refinancing from a securities finance enterprise, or when it returns the collateral, the securities firm shall submit a “Deposited Securities Transfer Application” and perform a “Refinancing and Deposited Securities Account Transfer” transaction (transaction code: 712) or a “Refinancing and Deposited Securities Account Transfer - Electronic Transmission” transaction (transaction code: 712S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will transfer the securities between the money lending collateral account and the securities finance enterprise’s margin purchase/short sale account.
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Article 31
When accepting a collateral-providing customer’s application to change account number, a securities firm shall perform a “Money Lending/Settlement Financing Collateral Provider Account Number Change” transaction (transaction code: K13/K13S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will change the collateral provider’s account number.
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Article 32
When a customer applies to convert any deposited collateral for use as collateral, in the form of using securities held by the customer as collateral, for securities business money lending or money lending for unrestricted purposes, the securities firm shall, based on the customer’s application, perform a “Money Lending Collateral Type Change” transaction (transaction code: K12) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will change the money lending collateral type.
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Article 33
A securities firm may perform the following transactions for account reconciliation:
1. It may perform a “Money Lending/Settlement Financing/SBL Collateral Details - Download” transaction (transaction code: RBK) to retrieve and check the collateral details.
2. It may perform a “Money Lending/Settlement Financing/SBL Collateral Details Query” transaction (transaction code: K19) to print a “Money Lending/Settlement Financing/SBL Collateral Details Query Form” and check customers’ collateral details.
3. After the end of operations each day, it shall perform a “Collateral Summary Information Query” transaction (transaction code: K20) to print a “Collateral Summary Information Query Form,” or perform a “Collateral Summary Information - Download” transaction (transaction code: K20F) to retrieve the summary information on collateral and check the relevant accounts.
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Article 35
When a customer applies to a securities firm for settlement financing or secured loan financing and to use securities held by the customer as collateral for the loan, the customer shall present the securities passbook and submit a “Money Lending/Settlement Financing Collateral Account Transfer Application” (affixed with the original seal/signature-of-record) to the securities firm to apply.
After reviewing and verifying the accuracy of the application document(s) described in the preceding paragraph, the securities firm shall perform a “Money Lending/Settlement Financing Collateral Account Transfer” transaction (transaction code: K10) or a “Money Lending/Settlement Financing Collateral Account Transfer - Electronic Transmission” transaction (transaction code: K10S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will transfer the securities from the customer’s central depository account to the securities finance enterprise’s settlement financing collateral account.
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Article 36
When returning collateral provided by a customer, a securities finance enterprise shall submit a “Money Lending/Settlement Financing Collateral Account Transfer Application” and perform a “Money Lending/Settlement Financing Collateral Account Transfer” transaction (transaction code: K10) or a “Money Lending/Settlement Financing Collateral Account Transfer - Electronic Transmission” transaction (transaction code: K10S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will transfer the securities from the securities finance enterprise’s settlement financing collateral account to the customer’s central depository account.
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Article 37
When disposing of or cancelling disposition of collateral provided by a customer, a securities finance enterprise shall submit a “Money Lending/Settlement Financing Collateral Disposition/Cancellation Account Transfer Application” and perform a “Money Lending/Settlement Financing Collateral Disposition/Cancellation Account Transfer” transaction (transaction code: K11) or a “Money Lending/Settlement Financing Collateral Disposition/Cancellation Account Transfer - Electronic Transmission” transaction (transaction code: K11S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will transfer the securities between the securities finance enterprise’s settlement financing collateral account and its default processing account. If, however, the collateral is open-end beneficial certificates and is disposed of by means of redemption, then after receiving the notification described in the preceding paragraph, TDCC will immediately transfer the collateral from the securities finance enterprise’s settlement financing collateral account to the registration account under the SITE’s depository account.
To cancel the account transfer of open-end beneficial certificates that has been completed under the preceding paragraph, the securities finance enterprise shall apply to the SITE.
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Article 38
When a securities finance enterprise, after a customer has issued a written statement of consent for rehypothecation, uses the received collateral as collateral to borrow securities through the TWSE SBL system, the relevant operations shall proceed in accordance with the collateral account transfer procedures set out in Chapter 3 (Securities Borrowing and Lending through the TWSE Securities Borrowing and Lending System).
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Article 38-1
When a customer applies to convert any deposited collateral for use as collateral for settlement financing or secured loan financing, the securities finance enterprise shall, based on the customer’s application, perform a “Money Lending Collateral Type Change” transaction (transaction code: K12) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will change the money lending collateral type.
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Article 39
When a securities finance enterprise, after a customer has issued a written statement of consent for rehypothecation, uses the received collateral as collateral for refinancing from another securities finance enterprise, or when it returns the collateral, the former securities finance enterprise shall submit a “Deposited Securities Transfer Application” and perform a “Refinancing and Deposited Securities Account Transfer” transaction (transaction code: 712) or a “Refinancing and Deposited Securities Account Transfer - Electronic Transmission” transaction (transaction code: 712S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will transfer the securities between the settlement financing collateral account and the securities finance enterprise’s margin purchase/short sale account.
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Article 40
When accepting a collateral-providing customer’s application to change account number, a securities finance enterprise shall perform a “Money Lending/Settlement Financing Collateral Provider Account Number Change” transaction (transaction code: K13/K13S) to notify TDCC.
After receiving the notification described in the preceding paragraph, TDCC will change the collateral provider’s account number.
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Article 41
A securities finance enterprise may perform the following transactions for account reconciliation:
1. It may perform a “Money Lending/Settlement Financing/SBL Collateral Details - Download” transaction (transaction code: RBK) to retrieve and check the collateral details.
2. It may perform a “Money Lending/Settlement Financing /SBL Collateral Details Query” transaction (transaction code: K19) to print a “Money Lending/Settlement Financing/SBL Collateral Details Query Form” and check customers’ collateral details.
3. After the end of operations each day, it shall perform a “Collateral Summary Information Query” transaction (transaction code: K20) to print a “Collateral Summary Information Query Form,” or perform a “Collateral Summary Information - Download” transaction (transaction code: K20F) to retrieve the summary information on collateral and check the relevant accounts.
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Article 43
When a securities firm or securities finance enterprise obtains a source of securities, the operation shall proceed according to either of the following procedures:
1. Where the securities are to be transferred from the securities firm’s or securities finance enterprise’s depository account:
A. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
B. When the securities firm or securities finance enterprise decides not to proceed with the transfer, it shall perform an “SBL Cancellation/Change” transaction (transaction code: K56) to notify TDCC.
C. Upon receiving the notification described in item (1) and confirming the absence of the notification described in item (2), TDCC will immediately transfer the securities from the proprietary or customer account under the securities firm’s or securities finance enterprise’s depository account to the SBL account under the securities firm’s or securities finance enterprise’s depository account, and also report the status to TWSE or TPEx.
2. Where the securities are to be transferred from the depository account opened at a securities firm (“the servicing securities firm”) by the securities firm, by the securities finance enterprise, or by the securities finance enterprise’s customer:
A. The servicing securities firm shall perform an “SBL Outward Transfer Application” transaction (transaction code: K54) to notify TDCC.
B. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
C. After receiving the notifications described in the preceding 2 items and verifying the accuracy of the transfer information, TDCC will immediately transfer the securities from the depository account of the securities firm, the securities finance enterprise, or the securities finance enterprise’s customer at the servicing securities firm to the SBL account under the securities firm’s or securities finance enterprise’s depository account, and also report the status to TWSE or TPEx.
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Article 44
When a securities firm or securities finance enterprise returns securities to the original source, the operation shall proceed in accordance with the following procedure:
1. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
2. When the securities firm or securities finance enterprise decides not to proceed with the transfer, it shall perform an “SBL Cancellation/Change” transaction (transaction code: K56) to notify TDCC.
3. Upon receiving the notification described in subparagraph 1 and confirming the absence of the notification described in subparagraph 2, TDCC will immediately transfer the securities from the SBL account under the securities firm’s or securities finance enterprise’s depository account to the proprietary or customer account under the securities firm’s or securities finance enterprise’s depository account or to the customer account under the depository account of the servicing securities firm of the securities firm, the securities finance enterprise, or the securities finance enterprise’s customer, and also report the status to TWSE or TPEx.
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Article 45
When a securities firm or securities finance enterprise lends securities, the operation shall proceed in accordance with the following procedure:
1. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
2. When the securities firm or securities finance enterprise decides not to proceed with the transfer, it shall perform an “SBL Cancellation/Change” transaction (transaction code: K56) to notify TDCC.
3. Upon receiving the notification described in subparagraph 1 and confirming the absence of the notification described in subparagraph 2, TDCC will immediately transfer the securities from the SBL account under the securities firm’s or securities finance enterprise’s depository account to the proprietary or customer account under the securities firm’s or securities finance enterprise’s depository account; in the case of a securities finance enterprise lending securities to a securities firm, TDCC will immediately transfer the securities from the margin purchase/short sale account under the customer account under the securities finance enterprise’s depository account to the SBL account under the securities firm’s depository account. TDCC will also report the status to TWSE or TPEx.
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Article 46
When a securities firm or securities finance enterprise returns securities or repays entitlements, the operation shall proceed according to either of the following procedures:
1. Where the securities are to be transferred from the securities firm’s or securities finance enterprise’s depository account:
A. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
B. When the securities firm or securities finance enterprise decides not to proceed with the transfer, it shall perform an “SBL Cancellation/Change” transaction (transaction code: K56) to notify TDCC.
C. Upon receiving the notification described in item (1) and confirming the absence of the notification described in item (2), TDCC will immediately transfer the securities from the proprietary or customer account under the securities firm’s or securities finance enterprise’s depository account to the SBL account under the securities firm’s or securities finance enterprise’s depository account, and also report the status to TWSE or TPEx.
2. Where the securities are to be transferred from the depository account opened at the servicing securities firm by the securities finance enterprise’s customer or from the SBL account under the securities firm’s depository account:
A. The servicing securities firm shall perform an “SBL Outward Transfer Application” transaction (transaction code: K54) to notify TDCC.
B. The securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
C. After receiving the notifications described in the preceding 2 items and verifying the accuracy of the transfer information, TDCC will immediately transfer the securities from the customer account under the securities firm’s depository account to the SBL account under the securities finance enterprise’s depository account; in the case of a securities firm returning borrowed securities to a securities finance enterprise, TDCC will immediately transfer the securities from the SBL account under the securities firm’s depository account to the margin purchase/short sale account under the customer account under the securities finance enterprise’s depository account. TDCC will also report the status to TWSE or TPEx.
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Article 47
When a securities firm’s or securities finance enterprise’s customer provides securities as collateral, the operation shall proceed according to either of the following procedures:
1. Where the securities are to be transferred from the securities firm’s depository account:
A. The securities firm shall notify TDCC of the relevant information through TWSE or TPEx.
B. When the securities firm decides not to proceed with the transfer, it shall perform an “SBL Cancellation/Change” transaction (transaction code: K56) to notify TDCC.
C. Upon receiving the notification described in item (1) and confirming the absence of the notification described in item (2), TDCC will immediately transfer the securities from the customer account under the securities firm’s depository account to the SBL collateral account under its depository account, and also report the status to TWSE or TPEx.
2. Where the securities are to be transferred from the depository account opened at a securities firm by the securities finance enterprise’s customer:
A. The servicing securities firm shall perform an “SBL Outward Transfer Application” transaction (transaction code: K54) to notify TDCC.
B. The securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
C. After receiving the notifications described in the preceding 2 items and verifying the accuracy of the transfer information, TDCC will immediately transfer the securities from the customer account under the securities firm’s depository account to the SBL collateral account under the securities finance enterprise’s depository account, and also report the status to TWSE or TPEx.
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Article 48
When a securities firm or securities finance enterprise returns a customer’s collateral securities, the operation shall proceed in accordance with the following procedure:
1. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
2. When the securities firm or securities finance enterprise decides not to proceed with the transfer, it shall perform an “SBL Cancellation/Change” transaction (transaction code: K56) to notify TDCC.
3. Upon receiving the notification described in subparagraph 1 and confirming the absence of the notification described in subparagraph 2, TDCC will immediately transfer the securities from the SBL collateral account under the securities firm’s depository account to the customer account under its depository account, or from the SBL collateral account under the securities finance enterprise’s depository account to the customer account under the depository account of the servicing securities firm of the securities finance enterprise’s customer, and also report the status to TWSE or TPEx.
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Article 49
When a securities firm or securities finance enterprise utilizes collateral securities, the operation shall proceed in accordance with the following procedure:
1. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
2. When the securities firm or securities finance enterprise decides not to proceed with the transfer, it shall perform an “SBL Cancellation/Change” transaction (transaction code: K56) to notify TDCC.
3. Upon receiving the notification described in subparagraph 1 and confirming the absence of the notification described in subparagraph 2, TDCC will transfer the securities from the securities firm’s or securities finance enterprise’s SBL collateral account to TWSE’s depository account or to the margin purchase/short sale account under the customer account under the securities finance enterprise’s depository account, and also report the status to TWSE or TPEx.
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Article 50
When a securities firm or securities finance enterprise applies for return of utilized collateral securities, the operation shall proceed according to either of the following procedures:
1. Where the securities are to be transferred from TWSE’s depository account, the securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE. After receiving the notification, TDCC will transfer the securities from TWSE’s depository account to the securities firm’s or securities finance enterprise’s SBL collateral account.
2. Where the securities are to be transferred from the securities finance enterprise’s depository account:
A. The securities finance enterprise shall perform an “SBL Outward Transfer Application” transaction (transaction code: K54) to notify TDCC.
B. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
C. After receiving the notifications described in the preceding 2 items and verifying the accuracy of the transfer information, TDCC will transfer the securities from the margin purchase/short sale account under the customer account under the securities finance enterprise’s depository account to the securities firm’s or securities finance enterprise’s SBL collateral account, and also report the status to TWSE or TPEx.
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Article 51
When a securities firm or securities finance enterprise disposes of collateral securities, the operation shall proceed in accordance with the following procedure:
1. The securities firm or securities finance enterprise shall notify TDCC of the relevant information through TWSE or TPEx.
2. When the securities firm or securities finance enterprise decides not to proceed with the transfer, it shall perform an “SBL Cancellation/Change” transaction (transaction code: K56) to notify TDCC.
3. Upon receiving the notification described in subparagraph 1 and confirming the absence of the notification described in subparagraph 2, TDCC will transfer the securities from the securities firm’s or securities finance enterprise’s SBL collateral account to the default processing account opened by the securities firm or securities finance enterprise, and also report the status to TWSE or TPEx.
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Article 52-1
When a securities firm uses borrowed securities arising from its conduct of SBL business (as an alternative source of securities) to fulfill a settlement obligation in the securities trading market, the operation shall proceed in accordance with the following procedure:
1. After reporting the erroneous sell trade, customer default, or delayed settlement (failed trade), as the case may be, in accordance with applicable TWSE or TPEx provisions, the securities firm shall transfer the borrowed securities from the SBL account to the alternative-sourced offsetting securities settlement account in accordance with Article 45.
2. After verifying that the borrowed securities have been transferred to the alternative-sourced offsetting securities settlement account, the securities firm shall perform an “Alternative-Sourced Offsetting Securities Settlement Application/Cancellation” transaction (transaction code: K21; notification type: 1. Application) and input relevant information to notify TDCC.
3. After receiving the securities firm’s notification, and after reviewing and verifying the accuracy of its application details and the balance in the alternative-sourced offsetting securities settlement account, TDCC will transfer the securities from the alternative-sourced offsetting securities settlement account to the error account or to the customer account under the securities firm’s depository account and carry out settlement for the securities firm.
4. If the securities firm has notified TDCC through the transaction described in subparagraph 2 and needs to cancel the application, it shall perform an “Alternative-Sourced Offsetting Securities Settlement Application/Cancellation” transaction (transaction code: K21; notification type: 2. Cancellation) to carry out the cancellation.
5. The securities firm may perform an “Alternative-Sourced Offsetting Securities Settlement Detail Query” transaction (transaction code: K22) and view its application or cancellation information.
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Article 53
A securities firm or securities finance enterprise may perform the following transactions for account reconciliation:
1. It may perform an “SBL Outward Transfer Application Query” transaction (transaction code: K55) to print an “SBL Outward Transfer Application Query Form” and view the securities outward transfer application information for its depository account.
2. It may perform an “SBL Cancellation/Change Query” transaction (transaction code: K57) to print an “SBL Cancellation/Change Query Form” and view the SBL cancellation/change information for its depository account.
3. It may perform an “SBL Change Detail Query” transaction (transaction code: K52) to print an “SBL Change Detail Query Form” and view the SBL change details.
4. It may perform a “Transfer Transaction Detail Query” transaction (transaction code: 167; query type: 0) to print a “Transfer Transaction Details Query Form,” or perform a “Transfer Transaction Details - Download” transaction (transaction code: 167F; query type: 0) to retrieve the transfer transaction details and check the securities inward transfer details for the SBL account or SBL collateral account for the current day or the previous business day.
5. It may perform a “Control Information Query” transaction (transaction code: 350) to print a “Customer On-Hold Information Query” form and view the information on the balance of loaned securities in its depository account.
6. It may perform a “Money Lending/Settlement Financing/SBL Collateral Details Query” transaction (transaction code: K19) to print a “Money Lending/Settlement Financing/SBL Collateral Details Query Form” and check customers’ collateral details.
7. It may perform an “SBL Change Summary Query” transaction (transaction code: K53) to print an “SBL Change Summary Query Form” and view the information on the changes in its SBL account balance for the current day.
8. After the end of operations each day, it shall perform a “Collateral Summary Information Query” transaction (transaction code: K20) to print a “Collateral Summary Information Query Form,” or perform a “Collateral Summary Information -Download” transaction (transaction code: K20F) to retrieve the summary information on collateral and check the relevant accounts.
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Article 53-1
The head office of a securities firm, or a securities finance enterprise, shall set up a segregated “day-trade deliverable securities shortfall account” (A/C No.: XXX0-8899999) under its depository account, so that book-entry operations can be carried out for SBL for covering shortfalls in securities deliverable in day trading.
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Article 53-2
When a securities firm borrows securities, the operation shall proceed according to the following procedures:
1. When a securities firm borrows securities from a customer, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the customer’s depository account to the securities firm’s day-trade deliverable securities shortfall account, and also report the status to TWSE or TPEx.
2. When a securities firm borrows securities from another securities firm, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the lender securities firm’s day-trade deliverable securities shortfall account to the borrower securities firm’s day-trade deliverable securities shortfall account, and also report the status to TWSE or TPEx.
3. When a securities firm borrows securities from a securities finance enterprise, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the securities finance enterprise’s day-trade deliverable securities shortfall account to the securities firm’s day-trade deliverable securities shortfall account, and also report the status to TWSE or TPEx.
For the purposes of subparagraph 3 of the preceding paragraph, the obtention of sources of securities for the securities finance enterprise’s day-trade deliverable securities shortfall account shall proceed in accordance with the procedures set out in Articles 9 to 11.
When a securities firm transfers its proprietary securities to its day-trade deliverable securities shortfall account to serve as a source of securities for lending, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the proprietary account under the securities firm’s depository account to its day-trade deliverable securities shortfall account, and also report the status to TWSE or TPEx.
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Article 53-3
When a securities firm lends securities to a customer that did not make an opposite buy trade to offset a given trade, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the securities firm’s day-trade deliverable securities shortfall account to the customer’s depository account, and also report the status to TWSE or TPEx.
When a securities firm transfers securities from its day-trade deliverable securities shortfall account to its proprietary depository account to fulfill a settlement obligation in the securities trading market, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the securities firm’s day-trade deliverable securities shortfall account to the proprietary account under its depository account, and also report the status to TWSE or TPEx.
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Article 53-4
When a securities firm buys back and returns securities from its day-trade deliverable securities shortfall account, the operation shall proceed according to the following procedures:
1. When a securities firm returns securities borrowed from a customer, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the securities firm’s day-trade deliverable securities shortfall account to its customer’s depository account, and also report the status to TWSE or TPEx.
2. When a securities firm returns securities borrowed from another securities firm, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the borrower securities firm’s day-trade deliverable securities shortfall account to the lender securities firm’s day-trade deliverable securities shortfall account, and also report the status to TWSE or TPEx.
3. When a securities firm returns securities borrowed from a securities finance enterprise, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the securities firm’s day-trade deliverable securities shortfall account to the securities finance enterprise’s day-trade deliverable securities shortfall account.
After the securities described in subparagraph 2 of the preceding paragraph are credited to the account, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the lender securities firm’s day-trade deliverable securities shortfall account to its customer’s depository account, and also report the status to TWSE or TPEx.
After the securities described in subparagraph 3 of paragraph 1 are credited to the account, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the securities finance enterprise’s day-trade deliverable securities shortfall account to TWSE’s or TPEx’s settlement account, and then transfer the securities to the customer account under the lender participant’s depository account.
When a securities firm transfers securities from its day-trade deliverable securities shortfall account to its proprietary depository account for return of securities to the original source, TDCC will, based on TWSE’s or TPEx’s notification, transfer the securities from the securities firm’s day-trade deliverable securities shortfall account to the proprietary account under its depository account, and also report the status to TWSE or TPEx.
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Article 54
On the business day before an issuer’s publicly announced book closure date, TWSE shall on its own prepare an owner-specific securities ownership list containing information on the collateral securities in its depository account and deliver it to TDCC.
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Article 55
For handling SBL book-entry operations, TDCC will charge fees in accordance with its fee-charging standards.
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Article 56
Any matters on which these Directions are silent shall be handled in accordance with the TDCC Operating Rules and other applicable provisions.
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