Hong Kong Regulations

SECURITIES AND FUTURES (FINANCIAL RESOURCES) RULES - SECT 31

Exchange-traded options contracts trading for own account

(1) Where a licensed corporation purchases for its own account any
options contract traded on a specified exchange, it shall include in its
liquid assets-

   (a)  in the case where the options contract has been grouped with any other
        position held by the licensed corporation in-

        (i)    a futures contract; or

        (ii)   any other options contract, for the purpose of calculating a
               net amount of margin required to be  deposited by it in respect
               of such positions, any amount receivable by it

(other than any such amount receivable which has already been included in its
liquid assets under section 28(1), (2) or (3) or 29) from-

        (iii)  a licensed corporation licensed for Type 1 or Type 2 regulated
               activity;

        (iv)   a futures or options clearing house; or

        (v)    a clearing participant of a futures or options clearing house,
               arising from such calculation; or

   (b)  in any other case, subject to subsections (2) and (3) and
        sections 27(4), 40(7) and (8) and 43(6), an amount which equals 60% of
        the market value of such options contract.

(2) Subject to subsection (4) and without prejudice to section  40 (7), where
a licensed corporation holds a long position in a stock  futures contract and
holds a put stock options contract, which is not subject to any margin
requirement, in respect of the same underlying listed shares, to the extent
that the number of shares underlying the futures contract is equal to the
number of shares underlying the options  contract, subsection (1)(b) does not
apply in respect of the options  contract and section 40(4) does not apply in
respect of the futures  contract and it shall include in its liquid assets the
options contract at market value.

(3) Subject to subsection (4) and without prejudice to section  40 (8), where
a licensed corporation holds a short position in a stock  futures contract and
holds a call stock options contract, which is not subject to any margin
requirement, in respect of the same underlying listed shares, to the extent
that the number of shares underlying the futures contract is equal to the
number of shares underlying the options  contract, subsection (1)(b) does not
apply in respect of the options  contract and section 40(4) does not apply in
respect of the futures  contract and it shall include in its liquid assets the
options contract at market value.

(4) Subsections (2) and (3) do not apply in respect of a stock 
futures contract or a stock options contract which has been grouped with other
positions for the purpose of calculating a net amount of margin 
required to be deposited by the licensed corporation.