Hong Kong Regulations

SECURITIES AND FUTURES (FINANCIAL RESOURCES) RULES - SECT 3

Accounting treatment

PART 2

ACCOUNTING TREATMENT

(1) For the purposes of these Rules and subject to subsection (3), a licensed
corporation shall account for all assets and liabilities-

   (a)  in accordance with generally accepted accounting principles, unless
        otherwise specified in these Rules; and

   (b)  in a way that recognizes the substance of a transaction, arrangement
        or position including accounting for a structured bond as a derivative
        product and not as a debt security.

(2) Subject to subsection (3), a licensed corporation shall not without
notifying the Commission under section 55(5), change any of its accounting
principles, other than those referred to in subsection (1)(a), in a way that
may materially affect the liquid capital or paid-up share capital that it
maintains or is required to maintain under Part 3.

(3) A licensed corporation may, with the Commission's prior written approval
under section 58(5)(d), adopt an accounting principle other than one of those
referred to in subsection (1)(a).