LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - CHAPTER 451G LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - LONG TITLE Empowering section (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - LONG TITLE Empowering section VerDate:30/06/1997 (Cap 451 sections 17 and 73) [1 September 1994] L.N. 482 of 1994 (L.N. 443 of 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 1 (Omitted as spent) VerDate:30/06/1997 PART I PRELIMINARY (Omitted as spent) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 2 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 2 Interpretation VerDate:30/06/1997 In these Rules, unless the context otherwise requires- "aggregate gross position" (合計總持量) means the aggregate of the gross positions of a licensed leveraged foreign exchange trader in all foreign currencies other than any gross position in a currency linked to Hong Kong currency; "approved redeemable shares" (核准可贖回股份) means shares in the share capital of a corporation, which are approved by the Commission for the purposes of these Rules, and are redeemable at the option of the holder of the shares or that of the corporation; "approved subordinated loan" (核准附屬貸款) means a loan, which is approved by the Commission for the purposes of these Rules, and under which the lender's claim is subordinated to the prior payment, or provision for payment, in full of all claims of all other present and future creditors of the borrower; "authorized institution" (認可機構) has the meaning assigned to it in section 2(1) of the Banking Ordinance (Cap 155); "authorized institution incorporated in Hong Kong" (在香港成立的認可機構) has the meaning assigned to it in section 2(1) of the Banking Ordinance (Cap 155); "bank" (銀行) has the meaning assigned to it in section 2(1) of the Banking Ordinance (Cap 155); "business day" (營業日) means a day (excluding Saturday) on which banks in Hong Kong are open for business; "currency linked to Hong Kong currency" (與香港貨幣有連繫兌換率的貨幣) means any currency which has an exchange rate which is linked to Hong Kong currency from time to time; "discount amount" (折扣數額) means- (a) in the case of shares, the difference between their market value and the amount provided for in section 5(d); and (b) in the case of recognized debt securities, the difference between their market value and the amount provided for in section 5(f); "floating losses" (浮動虧損) means unrealized losses calculated by marking to market foreign currency positions; "floating profits" (浮動利潤) means unrealized profits calculated by marking to market foreign currency positions; "foreign exchange agreement" (外匯協議) means an agreement whereby 2 parties agree to exchange different currencies at a future time other than a contract traded on a recognized futures exchange or on a recognized stock exchange; "gross position" (總持倉量) means, in relation to a foreign currency, the total of- (a) the aggregate of the value of assets, other than fixed assets, beneficially owned by a licensed leveraged foreign exchange trader which are denominated in that foreign currency together with the amount of that foreign currency which it is obliged to purchase under any contract; and (b) the aggregate of the liabilities of the licensed leveraged foreign exchange trader which are denominated in that foreign currency together with the amount of that foreign currency which it is obliged to sell under any contract; "leveraged foreign exchange introducing agent" (槓桿式外匯買賣介紹代理人) means a licensed leveraged foreign exchange trader which has satisfied the Commission that- (a) it does not hold or control clients' assets; and (b) it conducts no business other than- (i) communicating offers to effect leveraged foreign exchange trading in the name of the persons from whom they are received to recognized counterparties; or (ii) effecting introductions of persons to recognized counterparties; "liquid assets" (速動資產) means such assets as are prescribed as liquid assets by section 5; "liquid capital" (速動資金) means the excess of liquid assets over ranking liabilities; "local branch" (本地分行), in relation to an authorized institution, has the meaning assigned to it in section 2(1) of the Banking Ordinance (Cap 155); "margin" (保證金) means, in relation to a licensed leveraged foreign exchange trader, the collateral deposited by its client in respect of leveraged foreign exchange trading; "marking to market" (按照市值計算差額) means the method or procedure of adjusting the valuation of open positions to reflect current market values; "OECD countries" (經濟合作及發展組織國家) means countries belonging to the Organization for Economic Co-operation and Development; "ranking liabilities" (認可負債) means such liabilities and financial adjustments as are prescribed as ranking liabilities by section 6; "recognized debt securities" (獲承認債務證券) means debenture stock, loan stock, debentures, bonds, notes, indexed bonds, convertible debt securities, bonds with warrants, non-interest bearing debt securities and other securities or instruments acknowledging, evidencing or creating indebtedness- (a) which are listed on the Unified Exchange; (b) which are issued or guaranteed by the Government of Hong Kong, or by any government of or central bank of an OECD country or Singapore; or (c) the issuer of which has a Moody's Investors Service rating of Baa or above for long term debt or Prime-3 or above for short term debt, or a Standard & Poor's Corporation rating of BBB or above for long term debt or A-3 or above for short term debt; "subsidiary" (附屬公司) has the meaning assigned to it in section 2 of the Companies Ordinance (Cap 32); "Unified Exchange" (聯合交易所) means the stock market established under section 27 of the Stock Exchanges Unification Ordinance (Cap 361). (Enacted 1994) "aggregate gross position" (合計總持量) "approved redeemable shares" (核准可贖回股份) "approved subordinated loan" (核准附屬貸款) "authorized institution" (認可機構) "authorized institution incorporated in Hong Kong" (在香港成立的認可機構) "bank" (銀行) "business day" (營業日) "currency linked to Hong Kong currency" (與香港貨幣有連繫兌換率的貨幣) "discount amount" (折扣數額) "floating losses" (浮動虧損) "floating profits" (浮動利潤) "foreign exchange agreement" (外匯協議) "gross position" (總持倉量) "leveraged foreign exchange introducing agent" (槓桿式外匯買賣介紹代理人) "liquid assets" (速動資產) "liquid capital" (速動資金) "local branch" (本地分行) "margin" (保證金) "marking to market" (按照市值計算差額) "OECD countries" (經濟合作及發展組織國家) "ranking liabilities" (認可負債) "recognized debt securities" (獲承認債務證券) "subsidiary" (附屬公司) "Unified Exchange" (聯合交易所) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 3 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 3 Generally accepted accounting principles VerDate:30/06/1997 For the purposes of these Rules, all calculations shall be made in accordance with generally accepted accounting principles unless otherwise specified. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 4 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 PART II LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 4 Requirements relating to issued and paid up share capital and liquid capital VerDate:30/06/1997 PART II FINANCIAL RESOURCES REQUIREMENTS RELATING TO LICENSED LEVERAGED FOREIGN EXCHANGE TRADERS (1) A licensed leveraged foreign exchange trader, other than a leveraged foreign exchange introducing agent, shall have and at all times maintain- (a) issued and paid up share capital of not less than $30000000; and (b) liquid capital of not less than $25000000. (2) A licensed leveraged foreign exchange trader which is a leveraged foreign exchange introducing agent shall have and at all times maintain- (a) issued and paid up share capital of not less than $5000000; and (b) liquid capital of not less than $3000000. (3) For the purposes of determining the issued and paid up share capital of a licensed leveraged foreign exchange trader under subsections (1)(a) and (2)(a), there shall be- (a) excluded from share capital any redeemable shares other than approved redeemable shares; and (b) deducted from share capital any aggregate net debit balance in the profit and loss account and reserves of the licensed leveraged foreign exchange trader. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 5 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 5 Liquid assets VerDate:30/06/1997 The following assets are liquid assets of a licensed leveraged foreign exchange trader for the purposes of this Part if they are beneficially owned by it or if they are money which is held on behalf of clients and shall be calculated in accordance with this section and section 7- (a) cash in hand; (b) money which is on account with a local branch or the principal place of business in Hong Kong of an authorized institution and which, in the case of a time deposit, will become payable within 6 months, together with interest accrued; (c) money which is on account with an authorized institution incorporated in Hong Kong or incorporated or established by or under the law or other authority of an OECD country (other than the money specified in paragraph (b)) and is freely remittable to Hong Kong and which, in the case of a time deposit, will become payable within 6 months, together with interest accrued; (d) subject to section 7(5) and (7)- (i) 80% by market value of any shares that are listed on the Unified Exchange or on any stock market specified in Part I of Schedule 1; and (ii) 70% by market value of any shares that are listed on any stock market specified in Part II of Schedule 1; (e) 60% by market value of any warrants that are listed on the Unified Exchange or on any stock market specified in Part I of Schedule 1; (f) subject to section 7(6) and (7)- (i) 90% by market value of any recognized debt securities issued or guaranteed by the Government of Hong Kong, or by any government of or central bank of an OECD country or Singapore; (ii) 80% by market value of any recognized debt securities other than those specified in subparagraph (i); (g) interest, fees, commissions and commission rebates which have accrued for a period of not more than 1 month in each case, or which are receivable and remain outstanding for not more than 2 weeks after they are first due for payment, in the ordinary course of business of leveraged foreign exchange trading; (h) the amount receivable from and cash deposited with a recognized counterparty or a recognized futures exchange or its clearing house or a clearing member of such futures exchange or such clearing house in respect of leveraged foreign exchange trading and any interest accrued on such cash deposits; and (i) floating profits in respect of foreign currency positions. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 6 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 6 Ranking liabilities VerDate:30/06/1997 (1) The following liabilities and financial adjustments of a licensed leveraged foreign exchange trader are ranking liabilities for the purposes of this Part and shall be calculated in accordance with this section and section 7- (a) liabilities to clients in respect of cash deposits received and interest payable on the deposits; (b) where the licensed leveraged foreign exchange trader has any outstanding contract relating to leveraged foreign exchange trading with a client, the excess, which is calculated on a client by client basis, of- (i) 3% of the aggregate gross principal value of all outstanding contracts relating to leveraged foreign exchange trading in all foreign currencies other than currency linked to Hong Kong currency; over (ii) (A) margin, as calculated in accordance with subsection (2), received from the client together with accrued interest payable and floating profits due to the client in respect of contracts relating to leveraged foreign exchange trading; less (B) accrued interest, fees and commissions receivable and floating losses due from the client in respect of contracts relating to leveraged foreign exchange trading; (c) floating losses in respect of foreign currency positions; (d) in the case of a licensed leveraged foreign exchange trader other than a leveraged foreign exchange introducing agent, 5% of the amount by which the sum of the net positions of all foreign currencies other than currency linked to Hong Kong currency, as calculated in accordance with subsection (3), exceeds $20000000; (e) in the case of any foreign exchange agreement to which the licensed leveraged foreign exchange trader is a party, the amount of currency to be received by the licensed leveraged foreign exchange trader under such foreign exchange agreement multiplied by the percentage specified in the following Table- TABLE Remaining term of foreign exchange agreement Percentage (i) Where the other party is an authorized institution Less than 3 days 0% 3 days or more but less than 1 year 0.2% 1 year or more 0.5% plus 0.3% for each additional full year in excess of 1 year (ii) Where the other party is not an authorized institution 5% (f) provision made for contingent liabilities; (g) 10% of the amount of any guarantee provided by the licensed leveraged foreign exchange trader; (h) any amount by which the total liabilities of any subsidiary of the licensed leveraged foreign exchange trader (other than any amounts due to such trader) exceed the assets of that subsidiary; (i) the consideration at which redeemable shares have been issued by the licensed leveraged foreign exchange trader but not redeemed, other than any approved redeemable shares; (j) in the case of a licensed leveraged foreign exchange trader which is a leveraged foreign exchange introducing agent, 5% of the amount representing the difference between- (i) the aggregate of the value of assets, other than fixed assets, beneficially owned by the leveraged foreign exchange introducing agent which are denominated in a foreign currency (other than a currency linked to Hong Kong currency) together with the amount of that foreign currency which it is obliged to purchase under any contract; and (ii) the aggregate of the liabilities of the leveraged foreign exchange introducing agent which are denominated in that foreign currency together with the amount of that foreign currency which it is obliged to sell under any contract; and (k) all other liabilities that are regarded as liabilities under generally accepted accounting principles other than any approved subordinated loan. (2) For the purpose of subsection (1)(b)(ii)(A), the following collateral provided by clients to a licensed leveraged foreign exchange trader are regarded as margin and shall be calculated in accordance with this section and section 7- (a) 100% of cash in Hong Kong currency (or currency linked to Hong Kong currency); (b) 95% of cash in such foreign currency as may be approved by the Commission in writing in each particular case; (c) 95% of any time deposits in Hong Kong currency (or currency linked to Hong Kong currency) which are placed with a local branch or the principal place of business in Hong Kong of an authorized institution and which will become payable within 6 months and which have been assigned to the licensed leveraged foreign exchange trader; (d) 60% by market value of any shares that are listed on the Unified Exchange or on any stock market specified in Part I of Schedule 1; (e) 80% by market value of any recognized debt securities issued or guaranteed by the Government of Hong Kong, or by any government of or central bank of an OECD country or Singapore; (f) 60% by market value of any recognized debt securities other than those specified in paragraph (e); (g) 90% of the maximum amount that could be drawn under current letters of credit issued by banks incorporated in Hong Kong or banks incorporated or established by or under the law or other authority of any OECD country or of Singapore in favour of the licensed leveraged foreign exchange trader. (3) For the purpose of subsection (1)(d)- (a) the net position of a particular foreign currency of a licensed leveraged foreign exchange trader is calculated as the difference between- (i) the aggregate of the value of assets, other than fixed assets, beneficially owned by the licensed leveraged foreign exchange trader which are denominated in that foreign currency together with the amount of that foreign currency which it is obliged to purchase under any contract; and (ii) the aggregate of the liabilities of the licensed leveraged foreign exchange trader which are denominated in that foreign currency together with the amount of that foreign currency which it is obliged to sell under any contract; (b) the net position of a particular foreign currency of a licensed leveraged foreign exchange trader shall not be set off against the net position of another currency of such trader. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 7 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 7 Calculation of liquid assets and ranking liabilities VerDate:30/06/1997 (1) Liquid assets and ranking liabilities in relation to all transactions entered into by a licensed leveraged foreign exchange trader shall be calculated on a trade date basis. (2) For the purposes of calculating the liquid assets of a licensed leveraged foreign exchange trader and the collateral provided by a client to such trader as margin under section 6(2), the value of any securities the trading of which is suspended for more than 2 business days shall be zero. (3) Notwithstanding anything in section 5, any assets which are given by a licensed leveraged foreign exchange trader to others as security for any liabilities or obligations of other parties shall not be included as liquid assets of the licensed leveraged foreign exchange trader. (4) Notwithstanding anything in section 5, amounts which are receivable from outside Hong Kong by a licensed leveraged foreign exchange trader and which are not freely remittable to Hong Kong shall not be included as liquid assets of the licensed leveraged foreign exchange trader. (5) Where a licensed leveraged foreign exchange trader holds 5% or more of the entire issued share capital, or of any class of the issued share capital, of a company and the shares which it holds are of any description specified in section 5(d), their value as liquid assets shall be further reduced below what is provided for in section 5(d) by 100% of the discount amount. (6) Where a licensed leveraged foreign exchange trader holds 25% or more of all recognized debt securities, or of any class of recognized debt securities, issued by an issuer, their value as liquid assets shall be further reduced below what is provided for in section 5(f) by 100% of the discount amount. (7) Where the aggregate of the market value of any shares in a company held by a licensed leveraged foreign exchange trader, which are of any description specified in section 5(d), and the market value of recognized debt securities issued by that company held by it, exceeds 25% in value of the liquid capital of the licensed leveraged foreign exchange trader- (a) the value of the shares as liquid assets shall be further reduced below what is provided for in section 5(d) by 100% of the discount amount; and (b) the value of the recognized debt securities as liquid assets shall be further reduced below what is provided for in section 5(f) by 100% of the discount amount. (8) For the purposes of calculating the liquid capital of a licensed leveraged foreign exchange trader in subsection (7), no account shall be taken of the adjustments in the liquid capital by virtue of subsection (7)(a) and (b). (9) For the purposes of subsections (5), (6) and (7), the number of shares or the amount of recognized debt securities held by a licensed leveraged foreign exchange trader shall be taken as the difference between- (a) the aggregate of- (i) the number of shares or amount of recognized debt securities held by it; (ii) the number of shares or amount of recognized debt securities which it is under an obligation to purchase or subscribe; and (iii) the number of shares or amount of recognized debt securities which it is entitled to purchase or subscribe under any option where the exercise price of the option is less than the market value of the securities; and (b) the aggregate of- (i) the number of shares or amount of recognized debt securities short sold by it; (ii) the number of shares or amount of recognized debt securities which it is under an obligation to sell; and (iii) the number of shares or amount of recognized debt securities which it is entitled to sell under any option where the exercise price of the option is more than the market value of the securities. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 8 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 8 Position limit for licensed leveraged foreign exchange trader other than a leveraged foreign exchange introducing agent VerDate:30/06/1997 The aggregate gross position for all foreign currencies of a licensed leveraged foreign exchange trader other than a leveraged foreign exchange introducing agent, excluding positions with a recognized counterparty, shall not exceed 60 times its liquid capital at all times. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 9 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 PART III LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 9 Licensed leveraged foreign exchange trader to notify Commission of changes in accounting policies VerDate:30/06/1997 PART III RETURNS AND NOTIFICATIONS TO COMMISSION (1) Subject to subsection (2), where a licensed leveraged foreign exchange trader alters any of its accounting policies and the alteration will have a material effect on its liquid capital, liquid assets or ranking liabilities, it shall notify the Commission in writing in advance of the alteration and of the reasons for the alteration. (2) This section does not apply to any alteration of accounting policies made pursuant to a requirement of the Statements of Standard Accounting Practice published by the Hong Kong Society of Accountants. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 10 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 10 Licensed leveraged foreign exchange trader to notify Commission of changes in circumstances VerDate:30/06/1997 A licensed leveraged foreign exchange trader shall immediately notify the Commission in writing whenever- (a) its issued and paid up share capital falls below the amount required to be maintained by it under section 4; (b) its liquid capital falls below 120% of the amount required to be maintained by it under section 4; (c) its liquid capital falls below the amount required to be maintained by it under section 4; (d) its liquid capital falls below 80% of the amount stated in its latest return lodged with the Commission; (e) its aggregate gross position exceeds 80% of its position limit as prescribed by section 8; (f) its aggregate gross position exceeds its position limit as prescribed by section 8; or (g) the information stated in any of its previous returns lodged with the Commission has become misleading in a material respect, and the reasons therefor. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 11 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SECT 11 Licensed leveraged foreign exchange trader to lodge monthly return with Commission VerDate:30/06/1997 A licensed leveraged foreign exchange trader shall in respect of each calendar month prepare a return containing particulars set out in the Form of Schedule 2 and cause the return to be lodged with the Commission not later than 5 business days after the end of the month. (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SCHEDULE 1 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SCHEDULE 1 STOCK MARKETS VerDate:30/06/1997 [sections 5 & 6] PART I OECD Stock Markets American Stock Exchange Amsterdam Stock Exchange Australian Stock Exchange Brussels Stock Exchange Copenhagen Stock Exchange Frankfurt Stock Exchange Helsinki Stock Exchange London Stock Exchange Luxembourg Stock Exchange Madrid Stock Exchange Milan Stock Exchange Montreal Stock Exchange Nagoya Stock Exchange New York Stock Exchange New Zealand Stock Exchange Osaka Securities Exchange Oslo Stock Exchange Paris Bourse Stockholm Stock Exchange Tokyo Stock Exchange Toronto Stock Exchange Vienna Stock Exchange Zurich Stock Exchange PART II Non-OECD Stock Markets Korea Stock Exchange Kuala Lumpur Stock Exchange Makati Stock Exchange Manila Stock Exchange Stock Exchange of Thailand Stock Exchange of Singapore (Enacted 1994) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SCHEDULE 2 (Repealed 5 of 2002 s. 406) VerDate:01/04/2003 LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES - SCHEDULE 2 FORM VerDate:30/06/1997 [section 11] FORM LEVERAGED FOREIGN EXCHANGE TRADING ORDINANCE (Cap 451) LEVERAGED FOREIGN EXCHANGE TRADING (FINANCIAL RESOURCES) RULES Monthly return for licensed leveraged foreign exchange traders (1) Name of licensed leveraged foreign exchange trader ___________________________ (2) Reporting date _______________________________________________________ (3) Status: Leveraged foreign exchange introducing agent (Tick where appropriate) Yes ( ) / No ( ) Note: In this Form, references to sections are to sections of the Leveraged Foreign Exchange Trading (Financial Resources) Rules (Cap 451 sub. leg.) made under sections 17 and 73 of the Leveraged Foreign Exchange Trading Ordinance (Cap 451). LIQUID ASSETS Amount HK $'000 (4) Cash and bank balances [Schedule A] (5) Shares, debt securities and other investments [Schedule B] (6) Interest, fees, commissions and commission rebates receivable [section 5(g)] (7) Amounts receivable from and cash deposited with recognized counterparties, recognized futures exchanges or their clearing houses or their clearing members and interest accrued [section 5(h)] (8) Floating profits [section 5(i)] (9) TOTAL LIQUID ASSETS (aggregate of amounts in items (4) to (8)) RANKING LIABILITIES (10) Liabilities to clients in respect of cash deposits received and interest payable on the deposits [section 6(1)(a)] (11) Financial adjustments relating to insufficient margin received from clients [section 6(1)(b)] (12) Floating losses [section 6(1)(c)] (13) Financial adjustments relating to net positions in foreign currencies [section 6(1)(d)] (14) Other financial adjustments and provisions relating to - foreign exchange agreements [section 6(1)(e)] - guarantees [section 6(1)(g)] - excess of total liabilities over assets in subsidiaries [section 6(1)(h)] - redeemable shares [section 6(1)(i)] - foreign currency [section 6(1)(j)] (15) Provision for contingent liabilities [section 6(1)(f)] (16) Other liabilities under generally accepted accounting principles other than approved subordinated loan [section 6(1)(k)] (17) TOTAL RANKING LIABILITIES (aggregate of amounts in items (10) to (16)) (18) LIQUID CAPITAL (amount in item (9) less amount in item (17)) (19) REQUIRED LIQUID CAPITAL [section 4(1)(b) or (2)(b)] (20) EXCESS / (DEFICIENCY) IN LIQUID CAPITAL (amount in item (18) less amount in item (19)) Schedule A Cash and bank balances Amount HK $'000 (a) Cash in hand [section 5(a)] (b) Money on accounts with local branch and the principal place of business in Hong Kong of authorized institution [section 5(b)] (c) Other money on accounts with an authorized institution incorporated in Hong Kong or incorporated or established by or under the law or other authority of an OECD (#) country and is freely remittable to Hong Kong [section 5(c)] Total amount included in liquid assets [item (4)] Schedule B Shares, debt securities and other investments Market Value (A) HK$'000 % (B) Liquid Assets (A) x (B) HK$'000 (a) Shares listed on the Unified Exchange [section 5(d)(i)] 80% (b) Shares listed on stock markets (*) in OECD (#) countries [section 5(d)(i)] 80% in non-OECD (#) countries [section 5(d)(ii)] 70% (c) Warrants listed on the Unified Exchange or stock markets (*) in OECD (# ) countries [section 5(e)] 60% (d) Recognized debt securities recognized debt securities issued or guaranteed by the Government of Hong Kong, or any government of or central bank of an OECD (#) country or Singapore [section 5(f)(i)] 90% other recognized debt securities [section 5(f)(ii)] 80% (e) All other securities and investments 0% Further deductions for concentrated positions [section 7(5) to (7)] Total market value Total amount included in liquid assets [item (5)] (#) Organization for Economic Co-operation and Development. (*) Stock markets specified in Part I or II of Schedule 1 to the Leveraged Foreign Exchange Trading (Financial Resources) Rules (Cap 451 sub. leg.). Schedule C Required Share Capital Amount HK$'000 Issued and paid up non-redeemable share capital Approved redeemable share capital Deficits in profit and loss account and other reserves [section 4(3)(b)] ( ) Share capital less deficits in reserves Required issued and paid up share capital [section 4(1)(a) or (2)(a)] Excess / (Deficiency) Schedule D Gross Position Limit Amount HK$'000 Liquid capital (item (18)) Multiple x Gross Position Limit [section 8] Aggregate gross position excluding positions with recognized counterparties ( ) Buffer / (Over-trading) amount Schedule E Foreign Currency Position (in HK$'000 equivalent) Commitments Currency Assets Liabilities Long Short Gross Position Net Position Total For the purposes of the financial return, a copy of the balance sheet of the licensed leveraged foreign exchange trader as at the reporting date has to be submitted. I certify that the foregoing information and the information in any attachments to this return is true and correct to the best of my knowledge and belief. Signature: For and on behalf of Name in block letters: (Responsible Director*) Date: * A director of a licensed leveraged foreign exchange trader who is nominated as the Responsible Director of such trader under section 8(b)(ii) of the Leveraged Foreign Exchange Trading Ordinance (Cap 451). (Enacted 1994)