Hong Kong Regulations

SECURITIES AND FUTURES (CLIENT SECURITIES) RULES - SECT 5

Requirement for deposit or registration of client securities and securities collateral

PART 2

TREATMENT OF CLIENT SECURITIES AND SECURITIES COLLATERAL

Division 1-General rules

(1) Subject to section 6, an intermediary or an associated entity of an
intermediary which receives any client securities of the intermediary shall
ensure that, as soon as reasonably practicable, the client securities are-

   (a)  deposited in safe custody in a segregated account which is designated
        as a trust account or client account and established and maintained in
        Hong Kong by the intermediary or associated entity for the purpose of
        holding client securities of the intermediary with-

        (i)    an authorized financial institution;

        (ii)   an approved custodian; or

        (iii)  another intermediary licensed for dealing in securities; or

   (b)  registered in the name of-

        (i)    the client on whose behalf the client securities have been
               received; or

        (ii)   the associated entity.

(2) Subject to section 6, an intermediary or an associated entity of an
intermediary which receives any securities collateral of the intermediary
shall ensure that, as soon as reasonably practicable, the securities
collateral is-

   (a)  deposited in safe custody in a segregated account which is designated
        as a trust account or client account and established and maintained in
        Hong Kong by the intermediary or associated entity for the purpose of
        holding securities collateral of the intermediary with-

        (i)    an authorized financial institution;

        (ii)   an approved custodian; or

        (iii)  another intermediary licensed for dealing in securities;

   (b)  deposited in an account in the name of the intermediary or associated
        entity (as the case may be) with-

        (i)    an authorized financial institution;

        (ii)   an approved custodian; or

        (iii)  another intermediary licensed for dealing in securities; or

   (c)  registered in the name of-

        (i)    the client on whose behalf the securities collateral has been
               received;

        (ii)   the intermediary; or

        (iii)  the associated entity.