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Enforcement Letter

 
Organisation: Order of the Financial Supervisory Commission
Issue No.: Financial-Supervisory-Securities-Trading-1090361226 
Issue Date: 2020/03/18
Content:     Order of the Financial Supervisory Commission

    Issue date: 18 March 2020
    Issue no.: Financial-Supervisory-Securities-SITC-1070120331

  1. This Order is issued pursuant to Article 18, paragraph 2, Article 60, paragraph 1, subparagraph 3, and Article 138, paragraph 1, subparagraph 11 of the Securities and Exchange Act and Article 6 of the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale.
  2. When securities are borrowed and the securities are furthermore to be sold on the market under Article 38 of the Regulations Governing Securities Finance Enterprises, Article 15 of the Regulations Governing Securities Borrowing and Lending by Securities Firms, or Article 82-2 of the Operating Rules of the Taiwan Stock Exchange Corporation, the following provisions must be complied with:
    1. The sum of the balance of sales of borrowed shares or units of a security plus the balance of shares or units of the security sold short in margin trading may not exceed 25 percent of the number of the TWSE or TPEx listed shares or beneficial units of the security.
    2. The balance of sales of borrowed shares or units of a security may not exceed 10 percent of the number of the TWSE or TPEx listed shares or beneficial units of the security.
  3. The quantity of orders for the sale of borrowed shares or units of a security during the regular trading session each day may not exceed 10 percent of the average daily trading volume of the security during the preceding 30 business days. However, the sale of borrowed shares or units of a security will not be subject to this restriction when done to meet hedging needs, such as by a securities firm that is issuing put warrants, or operating structured instruments and equity derivatives trading business at its place of business, or serving as a beneficial certificate liquidity provider, or by a futures dealer that is serving as a market maker for equity options or single stock futures.
  4. The quantity calculation method and the number of borrowed shares that may be sold each day under the preceding point shall comply with the public announcements of the Taiwan Stock Exchange Corporation.
  5. If the sum of the balance of sales of borrowed shares or units of a security plus the balance of shares or units of the security sold short in margin trading exceeds 20 percent of the number of the TWSE or TPEx listed shares or beneficial units of the security, the situation shall be handled in accordance with the Taiwan Stock Exchange's and the Taipei Exchange's respective Operation Directions for the Allocation of Limits for Margin Purchases and Short Sales and for Sales of Borrowed Securities Permitted for Securities Trading.
  6. The calculation under Point 2 of the number of beneficial units of exchange-traded fund beneficial certificates shall be based on the total number of issued beneficial units as of the preceding business day.
  7. This Order is effective from 19 March 2020. Financial Supervisory Commission Order No. Financial-Supervisory-Trading-1060004431 issued on 22 February 2017 is repealed from 19 March 2020.