Hong Kong Regulations

MANDATORY PROVIDENT FUND SCHEMES (GENERAL) REGULATION - SECT 51

Restrictions on entering into repurchase agreements

(1) The approved trustee of a registered scheme must ensure that the funds of
the scheme are not applied for the purpose of entering into a repurchase
agreement unless the agreement is entered into by the custodian of the scheme
assets.

(2) If the authority to enter into repurchase agreements in respect of a
registered scheme is to be delegated to a custodian appointed in respect of
the scheme, that authority must be included in the custodial agreement entered
into with the custodian in accordance with section 50.

(3) The trustee must ensure that, in relation to each constituent  fund of
the scheme-

   (a)  a repurchase agreement relating to assets of the fund is entered into
        only if the amount of the consideration (including the value of any
        collateral security) given for the relevant security exceeds the value
        of the security; and

   (b)  no more than 10 per cent of the assets of the fund are the subject of
        repurchase agreements at any one time; and

   (c)  no more than 50 per cent of the securities of the same issue held
        among the assets of the fund are the subject of repurchase agreements
        at any one time.

(4) The trustee must ensure that the scheme assets are not the subject of a
reverse repurchase agreement.

(5) For the purposes of this section-

   (a)  a repurchase agreement, in relation to the approved trustee of a
        registered scheme, is an agreement under which the trustee agrees to
        sell a debt security to a person and to repurchase it from that person
        at a specified date in the future for an agreed price, subject to the
        amount of consideration (including the value of any collateral
        security) provided by that person during the period of the agreement;
        and

   (b)  a reverse repurchase agreement, in relation to the approved trustee of
        a registered scheme, is an agreement under which the trustee agrees to
        buy a debt security from a person and to resell it to that person at a
        specified date in the future for an agreed price.