Hong Kong Regulations

BANKING (DISCLOSURE) RULES - SECT 41

Fair value

(1) An authorized institution shall disclose the fair value of each class of
its financial assets and financial liabilities in a way which permits such
fair value to be compared with the carrying value of each such class.

(2) An authorized institution is not required to include in the disclosure
required under subsection (1)—

   (a)  the fair value of any financial asset or financial liability where the
        carrying value of such asset or liability is a reasonable
        approximation of its fair value;

   (b)  the fair value of any equities—

        (i)    which do not have a quoted market price in an active market;
               and

        (ii)   which are measured at cost as the fair value of such equities
               cannot be measured reliably;

   (c)  the fair value of any derivative contract the value of which is
        determined by reference to the value of, or any fluctuation in the
        value of, any equities referred to in paragraph (b); or

   (d)  the fair value of any contract of insurance which contains a
        discretionary participation feature where the fair value of such
        feature cannot be measured reliably.

(3) In this section—

"discretionary participation feature" (酌情參與成分), in relation to a
contract of insurance, means a right under the terms of the contract to
receive, as a supplement to guaranteed benefits, additional benefits—

   (a)  the amount of which is likely to be a significant portion of the total
        contractual benefits;

   (b)  the amount and time for payment of which is, under the terms of the
        contract, at the discretion of the insurer which is a party to the
        contract; and

   (c)  the amount of which is based on—

        (i)    the performance of a pool of contracts or a type of contract,
               as specified in the contract;

        (ii)   realized and unrealized investment returns on a pool of assets

(as specified in the contract) held by the insurer which is a party to the
contract; or

        (iii)  the profit or loss of the insurer which is a party to the
               contract.

"discretionary participation feature" (酌情參與成分)