Hong Kong Regulations

SECURITIES AND FUTURES (CLIENT SECURITIES) RULES - SECT 8A

Repledging Limit

(1) This section applies to—

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

   (b)  an intermediary licensed for securities margin financing, where the
        intermediary or an associated entity of such intermediary repledges
        securities collateral of the intermediary.

(2) On each business day, the intermediary to which this section applies shall
ascertain the aggregate market value of the repledged securities collateral,
which shall be calculated by reference to the respective closing prices of the
collateral on that business day.

(3) If the aggregate market value of the repledged securities collateral
calculated pursuant to subsection (2) exceeds 140% of the intermediary’s
aggregate margin loans on the same business day (“relevant day”), the
intermediary shall by the close of business on the next business day following
the relevant day (“specified time”) withdraw, or cause to be withdrawn,
from deposit an amount of repledged securities collateral such that the
aggregate market value of the repledged securities collateral at the specified
time, which is calculated by reference to the respective closing prices on the
relevant day, does not exceed 140% of the intermediary’s aggregate margin
loans as at the close of business on the relevant day.

(4) In this section— “aggregate margin loans” (保證金貸款總額),
in relation to an intermediary, means the sum of margin loans owed to the
intermediary by its margin clients as at the close of business on the relevant
business day; “business day” (營業日) means a day other than—

   (a)  a Saturday;

   (b)  a public holiday; and

   (c)  a gale warning day or black rainstorm warning day as defined in
        section 71(2) of the Interpretation and General Clauses Ordinance (
        Cap 1); “margin client” (保證金客戶) has the meaning assigned
        to it by section 2(1) of the
        Securities and Futures (Financial Resources) Rules ( Cap 571 sub. leg.
        N); “margin loan” (保證金貸款), in relation to a margin
        client of an intermediary, means the net amount owed to the
        intermediary by the margin client arising from the provision of
        securities margin financing by the intermediary to the margin client,
        excluding any amount added to or deducted from such net amount in
        respect of dealing in securities by or for the margin client which are
        not yet due for settlement according to the settlement date;
        “repledge” (再質押), in relation to an intermediary or an
        associated entity of an intermediary, means an act by which the
        intermediary or the associated entity deposits securities collateral
        of the intermediary as collateral for financial accommodation provided
        to the intermediary; “repledged securities collateral”
        (被再質押的證券抵押品) means any securities collateral which
        is on deposit as collateral for financial accommodation provided to an
        intermediary, whether repledged by the intermediary or an associated
        entity of such intermediary; “settlement date” (交收日期)
        means the date on which payment for any dealing  in securities is
        first due as agreed between the parties to the transaction.

(5) In subsection (4), “securities margin financing”
(證券保證金融資) has the meaning assigned to it by section 2(1) of the
Securities and Futures  (Financial Resources) Rules ( Cap 571 sub. leg. N).
(L.N. 118 of 2006) “aggregate margin loans” (保證金貸款總額)
“business day” (營業日) “margin client” (保證金客戶) “margin
loan” (保證金貸款) “repledge” (再質押) “repledged securities
collateral” (被再質押的證券抵押品) “settlement date”
(交收日期) “securities margin financing” (證券保證金融資)