Hong Kong Regulations

SECURITIES AND FUTURES (FINANCIAL RESOURCES) RULES - SECT 52

Miscellaneous

(1) A licensed corporation shall include in its ranking liabilities-

   (a)  10% of the amount of any guarantee, indemnity or other similar
        financial commitment provided by it, directly or indirectly (including
        the pledging of assets for the purpose of obtaining a bank guarantee),
        other than a guarantee, an indemnity and other financial commitment
        provided by it in respect of its own liabilities and obligations;

   (b)  the amount by which the liabilities of any subsidiary of it

(excluding any amounts due to it from the subsidiary) exceed the assets of the
subsidiary;

   (c)  the consideration it is obliged to pay for the redemption of
        redeemable shares, other than approved redeemable shares, which have
        not yet been redeemed;

   (d)  subject to subsection (2), 5% of its net position in each
        foreign currency; and

   (e)  where it is the underwriter of a note issuance and revolving 
        underwriting facility, the maximum amount that can be drawn down by
        the issuer under the facility by issuing notes less the amount that
        has been drawn down by the issuer by issuing and placing notes
        multiplied by the percentage specified in column 3 of Schedule 5
        opposite the description of the remaining term to maturity in column 2
        of the Schedule which is applicable to the facility.

(2) In calculating the net position in a foreign currency for the purposes of
subsection (1)(d), a licensed corporation may elect to exclude from the
calculation the value of any asset which is denominated in that
foreign currency and not included in its liquid assets under any provision in
Division 3.

(3) In this section, "net position" (淨持倉量), in relation to a
foreign currency, means the difference between-

   (a)  the aggregate of the value of assets, other than fixed assets,
        beneficially owned by a licensed corporation which are denominated in
        the foreign currency together with the amount of the foreign currency
        which it is obliged to purchase under any outstanding contract; and

   (b)  the aggregate of the amount of the on-balance sheet liabilities of the
        licensed corporation, other than excluded liabilities, which are
        denominated in such foreign currency together with the amount of such
        foreign currency which it is obliged to sell under any outstanding
        contract.

"net position" (淨持倉量)