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

(Past version on 01/04/2003).

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)  subject to section 8A, deposit any of the securities collateral in
        question with an authorized financial institution as collateral for
        financial accommodation provided to the intermediary; or (L.N. 118 of
        2006)

   (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.