Hong Kong Regulations

SECURITIES AND FUTURES (CLIENT SECURITIES) RULES - SECT 6

Dealings with client securities and securities collateral

(1) An intermediary or an associated entity of an intermediary may deal with
client securities or securities collateral of the intermediary that it
receives or holds in accordance with-

   (a)  an oral or written direction-

        (i)    to sell the client securities or securities collateral; or

        (ii)   to settle such a sale order;

   (b)  a written direction to withdraw the client securities or securities
        collateral from an account referred to in section 5(1)(a) or

(2)(a) or (b) or to deal with client securities or securities collateral that
have been registered in accordance with section 5(1)(b) or (2)(c); or

   (c)  a standing authority, except where this would-

        (i)    subject to subsection (2) or section 7, 8 or 9, result in a
               transfer of the client securities or securities collateral to
               an account in Hong Kong of- (A) the intermediary; (B) the
               associated entity; or (C) any corporation with which the
               intermediary is in a controlling entity relationship or in
               relation to which the associated entity is a
               linked corporation, other than an account referred to in
               section 5(1)(a) or (2)(a) or (b), or otherwise result in a
               person referred to in sub-subparagraph (A), (B) or (C) having
               the benefit or use of the client securities or securities
               collateral;

        (ii)   result in a transfer of the client securities or securities
               collateral to any officer or employee of- (A) the intermediary;
               (B) the associated entity; or (C) any corporation with which
               the intermediary is in a controlling entity relationship or in
               relation to which the associated entity is a
               linked corporation, unless that officer or employee is the
               client in question; or

        (iii)  be unconscionable.

(2) Without prejudice to subsection (1)(a), with an agreement in  writing with
the client on whose behalf client securities have been received or are held,
an intermediary licensed or registered for asset  management may withdraw any
of the client securities from an account referred to in section 5(1)(a) or
deal with client securities that have been registered in accordance with
section 5(1)(b)-

   (a)  to sell them; or

   (b)  to settle a sale order, on behalf of the client.

(3) Without prejudice to subsections (1) and (2), with an agreement 
in writing with the client on whose behalf client securities or securities
collateral have been received or are held, an intermediary may-

   (a)  dispose; or

   (b)  initiate a disposal by an associated entity of the intermediary, of
        any of the client securities or securities collateral in settlement of
        any liability owed by or on behalf of the client to-

   (c)  the intermediary;

   (d)  the associated entity; or

   (e)  a third person.

(4) In subsection (1), a direction is a direction from a client that-

   (a)  relates to specified client securities or securities collateral;

   (b)  is given to the intermediary or associated entity in question by the
        client of the intermediary on whose behalf the client securities or
        securities collateral were received or are being held;

   (c)  directs the intermediary or associated entity to deal with the client
        securities or securities collateral in a particular manner; and

   (d)  ceases to have effect after the client securities or securities
        collateral to which it relates have been dealt with by the
        intermediary or associated entity in the manner directed.