TWSE Press Release

TSEC deregulates rules on negotiated transactions

Publish Date︰2005/03/30 09:06

On March 29, TSEC further deregulated rules related to arrangement of negotiated transactions that lenders early recall the lent securities and sell such securities on the same day.

To prevent lenders mentioned in the preceding paragraph from default, TSEC allows them to borrow securities, through entrusted selling securities firms, from TSEC’s settlement coverage system. And, the following terms and conditions shall be met with respect to the parties engaging in such early recall:

*The consensus is reached between the lender and the borrower when the lender in a negotiated transaction early recalls the lent securities and sells such securities on the same day. In the meantime, the borrower agrees to return such borrowed securities on the revised date of return.

*With the above requirements, the lender is allowed to borrow securities, via the entrusted selling securities firm, by TSEC’s settlement coverage system to facilitate their securities settlement.

*In addition, a one-day exemption of charge for securities borrowing derived from TSEC’s settlement coverage system shall be effected.

*Such securities firm may request the lender to reimburse relevant expenses incurred in accessing the settlement coverage system of TSEC.

With these deregulations, TSEC expects that securities lending market will benefit from additional participants and increasing trading volume.

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