13 February 2017
Taipei
Reporter: Drew Nicol

Taiwan overhauls lending rulebook


The Taiwan Stock Exchange (TWSE) has implemented fresh amendments to its securities lending rules and overhauled its regulatory interpretations interface in a bid to improve transparency and attract more lenders to the market.

In total, the exchange reviewed 14 articles in three chapters of its rulebook, most of which favoured lenders, with the new rules effective from 6 February.

TWSE clarified that banks acting as agent lenders must adhere to the reforms.

The rules for securities firms and futures commission clients, regarding opening securities borrowing and lending accounts and internal book-entry transfers, were reformed to allow lenders in a fixed-price or competitive bid transaction to request an early redelivery of securities.

Rules regarding wire transfers by virtual account for securities borrowers providing cash collateral, paying borrowing fees and entitlement compensation on behalf of clients, and providing performance bonds for borrowing securities from clients, were also reviewed.

Further restrictions were also implemented to ensure that no additional loan is allowed within the 10 business days preceding a mandatory return date.

Finally, the calculation of collateral value, related to submission, withdrawal, and marking-to-market of foreign currency collaterals, and rules regarding borrowers applying for return of foreign currency collaterals, were refreshed.

As part of its transparency boosting initiative, TWSE collected 14 letters of interpretation regarding the practical aspects of securities lending and placed these letters under the respective chapters and articles.

The latest amendments to Taiwan’s securities lending rules come as part of long-term effort to bolster and streamline the market’s regulatory framework.

Previous amendments allowed brokers to borrow securities directly from customers and extend the rollover limit from once to twice, from 1 February 2016.

Borrowing limits placed on customers were also removed, while the range of securities eligible for securities lending was expanded.

In 2015, onshore Taiwanese banking rules were relaxed to allow them to set more flexible margin levels and also to accept more currencies than just Taiwanese dollars.

More regulation news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
SEC launches new 2018 disclosure forms
15 August 2017 | Washington DC | Reporter: Drew Nicol
New securities lending disclosure forms Forms N-1A, N-3 and N‑CSR are now in play for open-end and closed-end funds in the US, as of 1 August
DC Circuit orders review of OCC’s capital plan
10 August 2017 | Chicago | Reporter: Drew Nicol
The US Court of Appeals for the DC Circuit has called on the US SEC to reconsider its premature acceptance of OCC’s amended capital plan
Electronic repo trading on the rise, says Bruni
04 August 2017 | New York | Reporter: Jenna Lomax
“Many factors” — but particularly the new margin requirements for over-the-counter (OTC) derivatives—are driving the trend
ISLA welcomes asset segregation opinion
02 August 2017 | London | Reporter: Mark Dugdale
The International Securities Lending Association has welcomed an opinion that will clarify asset segregation and the application of depository rules to central securities depositories
FDIC tells firms to prepare for T+2
31 July 2017 | Washington DC | Reporter: Mark Dugdale
US financial services firms should take appropriate steps to ensure they are prepared for the move to T+2 settlement on 5 September
US regulators to work together on Volcker Rule
28 July 2017 | Washington DC | Reporter: Stephanie Palmer
Five US federal financial regulatory agencies are coordinating the efforts to review the regulatory treatment of certain foreign funds under Section 619 of the Dodd-Frank Act, better known as the Volcker Rule
BoE refines margin liquidity risk assessment proposals
18 July 2017 | London | Reporter: Drew Nicol
Securities financing margin liquidity risk assessments should be based on historical margin posted, with a stress uplift applied, according to the Bank of England’s Prudential Regulation Authority