Hong Kong Regulations

SECURITIES AND FUTURES (FINANCIAL RESOURCES) RULES - SECT 25

Amounts receivable from licensed corporations licensed for Type 8 regulated activity

(1) Subject to subsection (2), a licensed corporation licensed for Type 1
regulated activity shall include in its liquid assets the aggregate of any
amount receivable from each licensed corporation licensed for Type 8 regulated
activity and any net amount receivable from such second-mentioned licensed
corporation referred to in section 24(2) that has not been included in its
liquid assets under that section, in the amount which, in relation to each
such second-mentioned licensed corporation, is the lower of-

   (a)  such aggregate amount less any specific provision for bad or doubtful
        debts made in respect of each such aggregate amount; and

   (b)  the sum of-

        (i)    the amount of cash deposited with it as security by such
               second-mentioned licensed corporation;

        (ii)   the market value of collateral deposited with it by such
               second-mentioned licensed corporation, less the haircut amount
               in relation to such collateral; and

        (iii)  the maximum amount that it can draw under a bank guarantee
               provided to it by such second-mentioned licensed corporation
               and issued by an authorized financial institution or an
               approved bank incorporated  outside Hong Kong.

(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 other licensed corporations 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.