TWSE Press Release

TSEC lifts restrictions on Securities Borrowing & Lending

Publish Date︰2005/05/17 15:28

TSEC announced supporting measures to lift restrictions on securities borrowing and lending(SBL) according to the order of May 13th by the Financial Supervisory Commission.

The following are the deregulations related to SBL transactions:

*The earlier requirement that an SBL transaction has to be in connection with a “strategic purpose” is now abolished. That is, holding long positions is no longer required.

*The On-shore collateral requirement imposed upon negotiated transactions where the borrower and the lender involved are both foreign investors have been relaxed.

In addition, “Total short selling volume limit” will be adopted. The supporting measures are shown as below:

*Daily maximum shares of short sold borrowed securities cannot exceed 3% of outstanding shares per lending securities;

*Maximum shares of short sold borrowed securities cannot exceed 10% of outstanding shares per lending securities;

*The total volume of short sold borrowed securities and short sold margin transactions cannot exceed 25% of outstanding shares per lending securities.

The above deregulations will become effective after the computer systems of TSEC and securities firms are amended.

TSEC will monitor the 3% daily shares available for short selling and disclose the remaining shares to securities firms via the computer trading system. Investors may inquire about on-line available shares for short selling during the trading session from the securities firms.

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