Hong Kong Regulations

SECURITIES AND FUTURES (FINANCIAL RESOURCES) RULES - SECT 23

Amounts receivable from counterparties in respect of dealings in securities

(1) Subject to subsection (2), a licensed corporation shall include in its
liquid assets the following amounts receivable from any securities  dealer
which arise from the sale of securities by it to the securities  dealer-

   (a)  where the securities are sold on a cash-against-delivery basis-

        (i)    any such amount receivable which has been outstanding for 2
               weeks or less after the settlement date; and

        (ii)   where any such amount receivable has been outstanding for more
               than 2 weeks but less than one month after the settlement date,
               the amount which is the lower, when calculated on a
               transaction-by-transaction basis, of- (A) such outstanding
               amount receivable less any specific provision for bad or
               doubtful debts made in respect of such outstanding amount; and
               (B) the market value of the securities to which such
               outstanding amount relates;

   (b)  where the securities are sold on a free delivery basis, such amount
        receivable calculated on a transaction-by-transaction basis, which-

        (i)    in the case where the clearing system of the exchange on which
               the securities are traded effects settlement only on a
               free delivery  basis, has been outstanding for 2 weeks or less
               after the settlement date; or

        (ii)   in any other case, is not yet due for settlement according to
               the settlement date.

(2) The aggregate of amounts that a licensed corporation includes in its
liquid assets under subsection (1) shall not exceed the aggregate of amounts
receivable from securities dealers referred to in that subsection less the
aggregate of amounts of specific and general provisions for bad or doubtful
debts made in respect of such aggregate of amounts receivable.