Hong Kong Regulations

SECURITIES AND FUTURES (CLIENT SECURITIES) RULES - SECT 7

Treatment of client securities and securities collateral by intermediaries licensed or registered for dealing in securities and their associated entities

Caution: This is a past version. See the current version here.

Division 2-Particular rules

(1) This section applies to-

   (a)  an intermediary licensed or registered for dealing in  securities; and

   (b)  an associated entity of such intermediary.

(2) With a standing authority, an intermediary or an associated entity to
which this section applies may-

   (a)  apply any of the client securities or securities collateral in
        question pursuant to a securities borrowing and lending agreement;

   (b)  deposit any of the securities collateral in question with an
        authorized financial institution as collateral for financial
        accommodation provided to the intermediary; or

   (c)  deposit any of the securities collateral in question with-

        (i)    a recognized clearing house; or

        (ii)   another intermediary licensed or registered for dealing in 
               securities, as collateral for the discharge and satisfaction of
               the intermediary's settlement obligations and liabilities.

(3) Where an intermediary to which this section applies-

   (a)  provides financial accommodation to a client of the intermediary in
        the course of dealing in securities; and

   (b)  also provides financial accommodation to the client in the course of
        any other regulated activity for which the intermediary is licensed or
        registered, the intermediary or an associated entity of the
        intermediary may apply or deposit any of the securities collateral in
        question in accordance with subsection (2) with a standing authority.