Hong Kong Regulations

LEVERAGED FOREIGN EXCHANGE TRADING (BOOKS, CONTRACT NOTES AND CONDUCT OF BUSINESS) RULES - SECT 3

Keeping of books, accounts and records

Caution: This is a past version. See the current version here.

PART II

KEEPING OF BOOKS, ETC. AND CONTRACT NOTES

(1) For the purposes of section 21 of the Ordinance, a licensed trader shall-

   (a)  keep such accounting, trading and other records as are sufficient to-

        (i)    explain all transactions undertaken by the licensed trader and
               the operation of its business;

        (ii)   reflect the financial position of its business; and

        (iii)  enable profit and loss accounts and balance sheets which give a
               true and fair view of its affairs to be prepared from time to
               time;

   (b)  keep those records in such manner as would enable an audit to be
        conveniently and properly carried out;

   (c)  make entries in those records in accordance with generally accepted
        accounting principles; and

   (d)  keep those records at the principal place of business of the licensed
        trader in Hong Kong and, where the prior written approval of the
        Commission has been obtained, at any other place or places, whether in
        or outside Hong Kong.

(2) The records mentioned in subsection (1) shall include-

   (a)  particulars of-

        (i)    all money received and paid by the licensed trader into
               accounts kept by it, including money paid to and disbursed from
               a segregated trust account;

        (ii)   all income received by the licensed trader from any charges,
               commissions, brokerage, remuneration, interest and other
               sources;

        (iii)  all expenses, commissions and interest paid by the licensed
               trader; and

        (iv)   all the assets and liabilities, including contingent
               liabilities, of the licensed trader; and

   (b)  particulars, including those specified in subsection (3), of all
        contracts and transactions entered into by the licensed trader with or
        on behalf of-

        (i)    its clients who have signed the client agreement as specified
               in section 5;

        (ii)   its clients who have signed the discretionary account agreement
               as specified in section 8;

        (iii)  its representatives, employees and agents;

        (iv)   its recognized counterparties; and

        (v)    the licensed trader itself; and

   (c)  copies of all contracts, client agreements, discretionary account
        agreements, order forms and all other agreements, confirmations and
        statements, registers, records, memoranda and correspondence made or
        received by the licensed trader in the course of the business for
        which it is licensed under the Ordinance.

(3) The additional particulars referred to in subsection (2)(b) are-

   (a)  the charges and credits arising from each of those contracts or
        transactions;

   (b)  the names of the parties to each of those contracts or transactions;

   (c)  the date and time of execution of each of those contracts or
        transactions; and

   (d)  details of the relevant instructions and other terms and conditions.

(4) For each trading day, the licensed trader shall maintain records which
include-

   (a)  the marked to market position for its own accounts and the accounts of
        each of its clients and recognized counterparties at the end of a
        trading day;

   (b)  for each contract executed by the licensed trader-

        (i)    the bid and offer prices quoted by the licensed trader to the
               client;

        (ii)   the price at which the contract is executed; and

        (iii)  the bid and offer prices at the time of execution of the
               contract as quoted and disseminated to the public, or to
               subscribers, by a reputable financial information services
               organization; and

   (c)  the interest rate differentials which are charged or paid by the
        licensed trader on a daily basis for being long or short, one currency
        against another.

(5) The licensed trader shall ensure that its records are sufficient to
demonstrate whether or not the Leveraged Foreign Exchange 
Trading (Financial Resources) Rules ( Cap 451 sub. leg.) have been complied
with at all times.

(6) The licensed trader shall adopt all reasonably necessary procedures for-

   (a)  guarding against falsification of its records; and

   (b)  facilitating discovery of any falsification of its records.

(7) Except as otherwise provided in the Ordinance and these Rules, a licensed
trader shall retain the records required by this section for a period of not
less than 7 years. (Enacted 1994)