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Taiwan Stock Exchange - Rules & Regulations Directory
time：2017/08/03 01:39
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Taiwan Stock Exchange Corporation Specific Standards and Procedures for
Halting and Reinstating Margin Purchase and Short Sale of Securities,
Title：
and for Adjusting Margin Purchase Leverage Limits and Short Sale Margin
Requirements
Amended Date： 2014.07.04
1
These Standards and Procedures are adopted pursuant to Article 4 and Article 5 of
the Standards Governing Eligibility of Securities for Margin Purchase and Short Sale
("Margin Purchase and Short Sale Eligibility Standards").
2
With the exceptions of TWSE listed stocks or Taiwan Depositary Receipts placed
under an altered trading method or suspended from trading under subparagraph 1 below or
securities for which margin purchase and short sale transactions are halted by a
resolution of the TWSE Surveillance Operations Oversight Committee under subparagraph 7
below, when any of the conditions of Article 4, paragraph 1, subparagraphs 1 through 7
and subparagraph 11, or Article 5, paragraph 1, subparagraphs 1 through 3 and
subparagraph 7 of the Margin Purchase and Short Sale Eligibility Standards exists with
respect to TWSE listed securities eligible for margin purchase and short sale
transactions, the Taiwan Stock Exchange Corporation (TWSE) will halt margin purchase and
short sale transactions, from the first business day following the date of public
announcement, in accordance with the following principles:
1. When TWSE listed shares or Taiwan depositary receipts have been placed under an
altered trading method, their trading has been suspended, or beneficial
certificates have been delisted: When the TWSE announces an altered trading
method or a suspension of trading for a stock or a Taiwan Depositary Receipt, it
will simultaneously announce the halting of margin purchase and short sale
transactions in those securities, effective from the date on which the cause of
the halting takes effect. When the TWSE announces the delisting of a stock,
Taiwan Depositary Receipt, or beneficial certificate, it will simultaneously
announce the halting of margin purchase and short sale transactions in those
securities; this provision will not apply, however, to securities that are
delisted because the issuer undergoes a merger, consolidation, or acquisition or
a share conversion.
2. When a securities investment trust enterprise has failed to punctually file and
publish a securities trust investment fund's financial report; or the
circumstances under Article 96, paragraph 1 of the Securities Investment Trust
and Consulting Act exist with respect to the securities investment trust
enterprise that manages a securities investment trust fund; or a futures trust
enterprise has failed to punctually file and publish a futures trust fund's
financial report in accordance with regulations; or the circumstances under
Article 38, paragraph 1 of the Regulations Governing Futures Trust Enterprises
exist with respect to the futures trust enterprise that manages a futures ETF:
The TWSE will publicly announce the halting of margin purchase and short sale
transactions in the fund's beneficial certificates.
3. When net worth per share for a TWSE listed stock is below par value, or, in the
case of shares issued by a TWSE primary listed company with no par value or a par
value other than NT$10 per share, when an accumulated deficit has been posted in
the financial report: The TWSE, on the fifth business day following the final
date for public announcement and filing of the annual, first quarter, second
quarter, and third quarter financial reports of each fiscal year, will review the
company's financial report for the most recent period publicly announced and
filed in accordance with regulations. If net worth per share is below par value,
it will publicly announce the halting of margin purchase and short sale
transactions in that company's shares. For shares issued by a TWSE primary listed
company with no par value or a par value other than NT$10 per share, however, the
halting of margin purchase and short sale transactions will be announced if an
accumulated deficit is shown in the financial report.
4. When the issuer of foreign securities evidenced by Taiwan depositary receipts has
posted an accumulated deficit: If the issuer has posted an accumulated deficit in
either the CPA-audited and attested consolidated annual financial report for the
most recent period or the CPA-reviewed semi-annual consolidated financial report
for the most recent period, the TWSE shall announce the halting of margin
purchase and short sale transactions in those depositary receipts on the final
business day of the third month following the deadline for public announcement
and reporting to the competent authority, securities exchange, or securities
market as required by the laws and regulations of the foreign issuer's home
country or the jurisdiction where it is listed.
5. When the number of TWSE listed units of a Taiwan Depositary Receipt after
redemption is less than 60 million: the TWSE will immediately, on the following
business day, announce the halting of margin purchase and short sale transactions
for the given Taiwan Depositary Receipt.
6. Where there has been a major default on TWSE listed shares or Taiwan depositary
receipts, and the balance of long margin positions or short interest meets or
exceeds a prescribed ratio: When the aggregate dollar amount of transaction
failures reported in a single day is NT$200 million or more and the balance of
long margin positions or short interest on that day meets or exceeds 15 percent
of listed shares or units, the TWSE will immediately, on the following business
day, publicly announce the halting of margin purchase and short sale transactions
in those shares or Taiwan Depositary Receipts.
7. When there are other circumstances that make it unadvisable to continue margin
purchase and short sale transactions: as determined by a resolution of the TWSE
Surveillance Operations Oversight Committee, or in the event of another
circumstance that makes such transactions unadvisable, the TWSE shall publicly
announce the halting of margin purchase and short sale transactions in those
securities.
3
When margin purchase and short sale transactions in TWSE listed securities eligible
for such transactions have been halted pursuant to the provisions of the preceding
point, margin purchase and short sale transactions may be reinstated from the first
business day following public announcement for those which meet the conditions set out
below, with the exceptions of securities placed under an altered trading method or
suspended from trading under subparagraph 1 of the preceding point, for which the margin
transactions shall be reinstated from the date of resumption of the original trading
method or the date on which trading resumes after a suspension, and also with the
exception of securities for which margin purchase and short sale transactions are halted
by a resolution of the TWSE Surveillance Operations Oversight Committee, for which the
margin transactions shall be reinstated from the end of the period of the disposition:
1. When the circumstances under subparagraph 1, 2, or 7 of the preceding point
exist: When the reason for the halt is extinguished, the TWSE will publicly
announce reinstatement of margin purchase and short sale transactions in those
securities.
2. Under the circumstances of subparagraph 3 of the preceding point, when net worth
per share has returned to par value or higher, the TWSE shall publicly announce
reinstatement of margin purchase and short sale transactions in those shares.
However, for shares issued by a TWSE primary listed company at no par value or at
a par value other than NT$10 per share, announcement of reinstatement shall be
made when no accumulated deficit has been posted in the financial report: The
TWSE, on the fifth business day following the final date for public announcement
and filing of the annual, first quarter, second quarter, and third quarter
financial reports of each fiscal year, will review the company's publicly
disclosed and filed financial report for the most recent period filed in
accordance with regulations.
3. Where the conditions under subparagraph 4 of the preceding point exist: If the
issuer has not posted an accumulated deficit in either the CPA-audited and
attested consolidated annual financial report for the most recent period or the
CPA-reviewed semi-annual consolidated financial report for the most recent
period, the TWSE shall announce reinstatement of margin purchase and short sale
transactions in those depositary receipts on the final business day of the third
month following the deadline for public announcement and reporting to the
competent authority, securities exchange, or securities market as required by the
laws and regulations of the foreign issuer's home country or the jurisdiction
where it is listed.
4. Where the conditions under subparagraph 5 of the preceding point exist: When the
number of Taiwan Depositary Receipts has returned to 60 million or more TWSE
listed units, the TWSE will immediately, on the following business day, publicly
announce reinstatement of margin purchase and short sale transactions for the
given Taiwan Depositary Receipt.
5. Where the conditions under subparagraph 6 of the preceding point exist: When the
aggregate dollar amount of transaction failures reported in a single day has been
less than NT$10 million for each of the previous 6 business days and the figures
for both long margin positions and open interest on the last of those 6 business
days are below 15 percent of listed shares or units, the TWSE shall publicly
announce reinstatement of margin purchase and short sale transactions in those
securities.
"Net worth," in subparagraph 3 of the preceding point and subparagraph 2 of the
preceding paragraph, means balance sheet equity attributable to owners of the parent.
When margin purchase and short sale transactions in TWSE listed securities eligible
for such transactions have been halted pursuant to the provisions of subparagraph 3
under the preceding point, the issuer may apply for reinstatement of margin purchase and
short sale transactions by submitting the financial report for the most recent period
publicly announced and filed in accordance with regulation. The TWSE shall then make
disclosure on the Market Information System (MIS) website and conduct a review 5 days
afterward. Where it is found upon review that net worth per share has returned to par
value or higher, margin purchase and short sale transactions in those securities shall
be reinstated on the fifth business day following public announcement. However, for a
TWSE primary listed company whose shares are issued with no par value or a par value
other than NT$10 per share, announcement of reinstatement shall be made when the TWSE
finds upon review that no accumulated deficit has been posted.
Where margin purchase and short sale transactions in Taiwan depositary receipts
eligible for such transactions have been halted pursuant to the provisions of
subparagraph 4 of the preceding point, the issuer may apply for reinstatement of margin
purchase and short sale transactions by submitting the CPA-audited and attested
consolidated annual financial report for the most recent period or the CPA-reviewed
semi-annual consolidated financial report for the most recent period. The TWSE shall
then make disclosure on the Market Information System (MIS) website and conduct a review
5 days afterward. Where it is found upon review that there is no accumulated deficit,
margin purchase and short sale transactions in those securities shall be reinstated on
the fifth business day following public announcement.
4
For the purposes of this point, the following terms shall have the following
meanings:
1. Subject securities: TWSE listed securities that are eligible for margin purchase
and short sale transactions, with the TWSE deciding whether to adjust margin
purchase leverage limits and short sale margin requirements, provided that this
does not apply to beneficial certificates of an exchange traded fund (ETF), nor
to beneficial certificates of an offshore ETF, nor to beneficial certificates of
a futures ETF.
2. Sampling period: Prices and trading volume are reviewed daily. The 30 business
days preceding the review date (inclusive) constitute the sampling period, which
is taken as the acquisition period for the data used in calculations.
3. Sampled securities: TWSE listed common shares, Taiwan depositary receipts, and
beneficial certificates that have not been placed under an altered trading method
are the sampled securities, which serve as the basis for comparison with subject
securities.
4. Degree of price fluctuation: Refers to the average daily degree of price
fluctuation (absolute value) as calculated during the sampling period for the
subject securities, sampled securities, or securities of industry peers.
5. Spread ratio: Refers to the ratio between: (a) the spread between the highest and
lowest prices for the subject securities, sampled securities, or securities of
industry peers, as calculated for the sampling period; and (b) the respective
average prices thereof.
Where, for 5 consecutive business days or for any 6 business days during the most
recent 10 business days, the share price of subject securities is too volatile or the
trading volume is excessively abnormal in the manner described below, or if it is
determined on the basis of records on equity ownership or beneficial ownership prepared
in connection with either: (a) a regular shareholders meeting convened by a TWSE listed
company or foreign issuer; or (b) a general meeting of beneficial owners of a securities
investment trust fund; that equity ownership or beneficial ownership is overly
concentrated, the TWSE shall on the next business day lower the margin purchase leverage
limit by 10 percent and raise the short sale margin requirement by 10 percent. Where the
aforementioned circumstances occur simultaneously or in close succession, the margin
purchase leverage limit shall be lowered by 10 percent and the short sale margin
requirement raised by 10 percent one time only.
1. Where either both of the following descriptions in items 1 and 2, or the
following descriptions in item 3, apply to subject securities, the share price is
too volatile:
A. The degree of price fluctuation for the securities is equal to the average
value for degree of price fluctuation for the sampled securities plus two
or more standard deviations, and exceeds 150% of the average value for
degree of price fluctuation for the securities of industry peers.
B. The degree of price differential for the securities is equal to the
average value for degree of price differential for the sampled securities
plus two or more standard deviations, and exceeds 150% of the average
value for degree of price differential for the securities of industry
peers.
C. When the percentage of premium or discount calculated from the closing
price of Taiwan depositary receipts and the closing price of the shares
they represent on the exchange market of their home country meets any of
the following conditions during the sampling period:
a. When on the current day, the percentage of premium on a Taiwan
depositary receipt announced through the Market Observation Post
System (MOPS) for the previous business day is in excess of 50
percent, while the current day closing price is also the highest of
the most recent 6 business days (inclusive of the current day),
provided that if there is no closing price for the most recent 5
business days (excluding the current day), then the current day
closing price must also be higher than the opening reference price.
b. When on the current day, the percentage of discount on a Taiwan
depositary receipt announced through the MOPS for the previous
business day is in excess of 50 percent, while the current day
closing price is also the lowest of the most recent 6 business days
(inclusive of the current day), provided that if there is no closing
price for the most recent 5 business days (excluding the current
day), then the current day closing price must also be lower than the
opening reference price.
Exceptions:
D. During the period for calculating the standards for subject securities
prescribed in item 1 or 2 of this subparagraph, or when making for the
subject securities the comparison based on the closing prices for the most
recent 6 business days (inclusive of the current day) by the standards
prescribed in item 3 of this subparagraph, if price fluctuation occurs due
to non trade-related factors (such as ex-rights or ex-dividend factors),
those factors in the fluctuation shall be excluded from the calculation.
E. During the period of making the comparison between the subject securities
and securities of industry peers pursuant to item 1 or 2 of this
subparagraph, if there are no other TWSE listed securities of industry
peers, comparison may be made with GTSM listed securities of industry
peers; if there are no other GTSM listed securities of industry peers, the
requirements for comparison with securities of industry peers shall not
apply. Additionally, the requirements for comparison with securities of
industry peers also shall not apply if the subject securities do not
belong to any particular industry.
2. Where either one of the following descriptions applies to subject securities
during the sampling period, trading volume is excessively abnormal:
A. The turnover rate for the securities is 10 or more times the average
turnover rate for the sampled securities.
B. The turnover rate for the securities is less than 10 percent of the
average turnover rate for the sampled securities, and the total figure for
trading volume is less than 1,000 round lots of shares or 1,000 trading
units.
3. Where any one of the following descriptions applies to subject securities, equity
ownership or beneficial ownership is overly concentrated:
A. Shares: Shareholders owning 1,000 to 50,000 shares are fewer than 500 in
number. Taiwan depositary receipts: Holders of Taiwan depositary receipts
owning 1,000 to 50,000 units are fewer than 500 in number. Beneficial
certificates: Persons owning not more than 100,000 beneficial units are
fewer than 1,000 in number.
B. Shares: The holdings of registered shares by all directors, supervisors,
managerial officers, and shareholders with a stake of greater than 10
percent account for a combined total of at least 75 percent of the
company's listed shares when the company's paid-in capital is NT$500
million or less; or the aforementioned holdings account for at least 80
percent when the paid-in capital is greater than NT$500 million and less
than NT$5 billion; or the aforementioned holdings account for at least 85
percent when the paid-in capital is greater than NT$5 billion. Taiwan
depositary receipts: The holdings of persons owning greater than 5 percent
of the company's total issued Taiwan depositary receipt units account in
combination for greater than 80 percent of total issued units as recorded
in the roster of Taiwan depositary receipt holders. Beneficial
certificates: The beneficial units recorded in the register of beneficial
owners under the names of beneficial owners holding more than 5 percent of
the total dollar amount of a fund account in combination for greater than
80 percent of the total dollar amount of the fund. However, for shares
issued by a TWSE primary listed company with no par value or a par value
other than NT$10 per share, overconcentration is when holdings of
registered shares by all directors, supervisors, managerial officers, and
shareholders with a stake of greater than 10 percent account for a
combined total of 75 percent or more of the company's listed shares when
the company's total number of issued shares is 50 million or less; or when
the aforementioned holdings account for 80 percent or more when the total
number of issued shares is greater than 50 million and less than 500
million; or the when aforementioned holdings account for 85 percent or
more when the total number of issued shares is greater than 500 million.
C. Where records on equity ownership or beneficial ownership are not
delivered to the TWSE within 20 days after a regular shareholders meeting
or a general meeting of beneficial owners of a fund, equity ownership or
beneficial ownership shall be deemed overly concentrated.
Where there is an irregularity in the redemption of Taiwan depositary receipts, the
TWSE may on the next business day lower the margin purchase leverage limit by 20 percent
and raise the short sale margin requirement by 20 percent, and under serious
circumstances may lower the margin purchase leverage limit and raise the short sale
margin requirement multiple times in succession.
If the subject securities comply with Article 6, paragraph 3 of the TWSE Directions
for Announcement or Notice of Attention to Trading Information and Dispositions, the
TWSE may, during the period of a disposition, lower the margin purchase leverage limit
to zero and raise the short sale margin requirement to 100 percent. If any adjustment
has already been made pursuant to paragraph 2 or 3, the short sale margin requirement
will be cumulatively raised, and the margin purchase leverage limit will remain at zero.
The same shall apply in the event of any adjustment being made pursuant to paragraph 2
or 3 after an adjustment is made pursuant to this paragraph.
5
For TWSE listed securities eligible for margin purchase and short sale transactions,
where the margin purchase leverage limit has been lowered by 10 percent or the short
sale margin requirement raised by 10 percent pursuant to the provisions of the preceding
point, the TWSE shall reinstate the original margin purchase leverage limit and short
sale margin requirement for those securities on the next business day after the
reinstatement conditions set out below are met; note, however, that where the adjustment
was made because excessive volatility of share prices, excessive abnormality of trading
volume, and overconcentration of equity ownership or beneficial ownership have occurred
simultaneously or in close succession, reinstatement may not be effected until each of
the following reinstatement conditions have been met:
1. Excessively volatile share price: The reason for readjustment has been
extinguished for 6 consecutive business days.
2. Excessively abnormal trading volume: The reason for readjustment has been
extinguished for 6 consecutive business days.
3. Overconcentration of equity ownership or beneficial ownership: The TWSE listed
company, foreign issuer, or securities investment trust enterprise has furnished
records to the TWSE which, upon review, indicate that overconcentration of equity
ownership or beneficial ownership no longer exists.
Where the circumstances in paragraph 3 of the preceding point arise, once the reason
for adjustment is extinguished, the TWSE shall on the next business day reinstate the
original margin purchase leverage limit and the original short sale margin requirement
for those securities.
6
Where margin purchase and short sale transactions in TWSE listed securities eligible
for such transactions are halted or reinstated, or the margin purchase leverage limit
and short sale margin requirement are adjusted, the TWSE shall publicly announce such
information on the Market Information System website. Whenever margin purchase and short
sale transactions are halted, price volatility is excessive, trading volume is
excessively abnormal, equity ownership or beneficial ownership is overly concentrated,
or there has been a 10-percent cut in a margin purchase leverage limit accompanied by a
10-percent raise of a short sale margin requirement, the TWSE shall note this fact in
the Summary Statement of Balances for Long Margin Positions and Short Interest.
7
These Standards and Procedures, and any subsequent amendments hereto, shall be
implemented upon submission to and ratification by the competent authority.
Data Source：Taiwan Stock Exchange - Rules & Regulations Directory
twse-regulation.twse.com.tw