TWSE Press Release

TWSE relaxed the qualification for participating in the securities lending system

Publish Date︰2017/04/11 17:35

Aiming to increase the liquidity in securities market, the Taiwan Stock Exchange (TWSE) relaxed the limit on the qualification for participating in the securities lending system, which allows domestic corporations, funds, and offshore foreign institutional investors to be securities borrowers or lenders (“SBL participants”) without being limited to the identity of specific corporate institution. This relaxation shall enter into force on July 31, 2017.

The TWSE securities lending system and the securities lending business conducted by securities firms are the two most critical securities lending channels in Taiwan. TWSE indicates that the relaxation on the qualification for participation will increase the consistency of the two securities lending channels and allow the securities lending market in Taiwan to be in line with the world, which will be beneficial to the circulation of securities. Meanwhile, TWSE also strengthens the control providing that insiders of a public company are forbidden to participate in the securities lending, and it also relaxes the number of extensions for the securities lending period to two times in order to provide a better securities lending environment.

Recently, TWSE has made many efforts in improving the system of securities lending market, aiming to provide SBL participants a more efficient investment environment:

I.On March 30, 2015, TWSE relaxed the terms for foreign currency collateral, adding five new currencies, including the Euro, Pound, Hong Kong dollar, Japanese Yen, and Australian dollar other than the original US dollar. There are a total of six foreign currencies which may serve as the collateral of securities lending in Taiwanese market in order to increase the funding efficiency of international SBL participants.

II.On June 1, 2015, TWSE permitted securities firms to negotiate the collateral ratio with professional institutional investors, which dramatically lowers the securities lending costs for borrowers.

III.On February 1, 2016, TWSE permitted securities firms to borrow securities from customers to increase the amount of securities that are available for lending.

IV.On February 1, 2016, TWSE relaxed the qualification limit of securities that can be loaned for securities firms conducting securities lending and borrowing, so as to be consistent with the regulations of the securities lending system.

V. On February 1, 2016, TWSE cancelled the amount limit for securities firms conducting securities lending to and borrowing from customers, in which the securities firms control the risks on their own.

VI.On February 1, 2016, TWSE relaxed the number of extensions for the securities lending period to two times for securities firms conducting securities lending, which increased the business flexibility of securities firms.

VII. On January 9, 2017, TWSE extended the trading hours of securities lending from 09:00~15:00 to 09:00~15:30, which allowed securities firms to have more sufficient time to conduct the allocation and transfer of underlying securities and collaterals.

VIII.On February 6, 2017, TWSE integrated laws, regulations, letters, orders and announcements associated with securities lending.

IX.On February 23, 2017, TWSE relaxed the daily limit on the SBL short selling . The limit was that the commissioned amount shall not exceed 20% of the average turnover of previous 30 days of the stock, and it was relaxed to 30%, which effectively increase the liquidity in Taiwan’s securities market.

X. On July 31, 2017, TWSE relaxed the number of extensions for the securities lending period to two times for securities lending system, which increases the consistency of two securities lending channels.

XI.On July 31, 2017, TWSE cancelled the QFIIrestriction on the qualification for participating in the securities lending system, which increases the circulation of the securities.

 

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