Hong Kong Regulations

SECURITIES AND FUTURES (INSURANCE) RULES - SECT 4

Duty of specified licensed corporations to take out and maintain insurance

(1) Where the Commission has approved a master policy of insurance under
section 5(1) in respect of a period of insurance for a regulated activity, a
specified licensed corporation licensed for that regulated activity shall take
out and maintain insurance for that regulated activity in relation to the
specified risks for not less than the specified amount during that
period of insurance under-

   (a)  that master policy of insurance approved by the Commission; or

   (b)  any other policy of insurance with one or more insurer that-

        (i)    is not a related corporation of the specified licensed 
               corporation; and

        (ii)   has a specified credit rating on the date of commencement of
               the policy of insurance.

(2) Where the Commission has approved a master policy of insurance under
section 5(2)(a) in respect of a period of insurance for the regulated activity
of dealing in securities, a specified licensed  corporation that is an
exchange participant of the Stock Exchange Company licensed for that regulated
activity shall, in addition to an insurance

(if any) that it is required to take out and maintain under other provisions
of this section, take out and maintain insurance for that regulated activity
in relation to the specified risks for not less than the specified amount
during that period of insurance under that master policy of insurance.

(3) Where the Commission has approved a master policy of insurance under
section 5(2)(b) in respect of a period of insurance for the regulated activity
of dealing in futures contracts, a specified licensed  corporation that is an
exchange participant of the Futures Exchange Company licensed for that
regulated activity shall, in addition to an insurance (if any) that it is
required to take out and maintain under other provisions of this section, take
out and maintain insurance for that regulated activity in relation to the
specified risks for not less than the specified amount during that
period of insurance under that master policy of insurance.

(4) Each master policy of insurance approved by the Commission under section 5
and the policy of insurance referred to in subsection

(1)(b) may specify a deductible amount not exceeding $3000000.

(5) For the avoidance of doubt, a specified licensed corporation shall not be
required to take out and maintain insurance in relation to a regulated
activity under subsection (1) where that specified licensed  corporation is
required to take out and maintain insurance for that regulated activity under
subsection (2) or (3).