13 February 2017
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
France raises spectre of European financial transactions tax
15 December 2017 | Paris | Reporter: Jenna Lomax
French President Emmanuel Macron and several ministers have dismissed concerns over the negative effect of an EU financial transactions tax on securities lending revenue
Final leverage ratio rule a boon for CCPs
11 December 2017 | Basel | Reporter: Drew Nicol
The final version of Basel III’s leverage ratio rules are providing an early Christmas present for CCPs due to re-orientation towards RWA over minimum capital requirement
Collateral pains stinging buy side
06 December 2017 | London | Reporter: Jenna Lomax
“Regulation is limiting possibilities for the securities lending market”, according to Habib Motani, an international financial markets lawyer at Clifford Chance
SFTR code of conduct not fit for purpose, says SASLA
05 December 2017 | Johannesburg | Reporter: Drew Nicol
The South African Securities Lending Association has raised serious concerns over the applicability of a proposed code of conduct for securities financing participants in the region
SLR and SCCL changes on the horizon, says BNY Mellon
01 December 2017 | New York | Reporter: Zsuzsa Szabo
Adjustments are expected on the Supplemental Leverage Ratio (SLR) and Single Counterparty Credit Limits (SCCL) in the near future, following industry concerns
EEA members’ supervisory weaknesses exposed in ESMA review
30 November 2017 | Paris | Reporter: Jenna Lomax
ESMA said those NCAs who did not identify good practices, would be consulted by ESMA on how they can make improvements in time for the MiFID II deadline
IHS Markit partners with Regis-TR on SFTR
29 November 2017 | London | Reporter: Jenna Lomax
Regis-TR, the European trade repository, has collaborated with IHS Markit to create a reporting solution for SFTR requirements