Hong Kong Regulations

SECURITIES AND FUTURES (FINANCIAL RESOURCES) RULES - SECT 56

Licensed corporations to submit returns to Commission

(Past version on 30/06/2004).
(Past version on 01/04/2003).

(1) Subject to subsection (4), a licensed corporation licensed for one or more
of the following-

   (a)  Type 1 regulated activity;

   (b)  Type 2 regulated activity;

   (c)  Type 3 regulated activity;

   (d)  Type 4 regulated activity, and it is not subject to the
        specified licensing condition;

   (e)  Type 5 regulated activity, and it is not subject to the
        specified licensing condition;

   (f)  Type 6 regulated activity, and it is not subject to the
        specified licensing condition;

   (g)  Type 7 regulated activity;

   (h)  Type 8 regulated activity;

   (i)  Type 9 regulated activity, and it is not subject to the
        specified licensing condition, shall, in respect of each month at the
        end of which it remains licensed, submit to the Commission in the
        manner specified in subsections (5) and

(6)(d), (e) or (f) (as the case may be), no later than 3 weeks after the end
of the month concerned, a return, in the form specified by the Commission
under section 402 of the Ordinance, which includes-

   (j)  its liquid capital computation, as at the end of the month;

   (k)  its required liquid capital computation, as at the end of the month;

   (l)  a summary of bank loans, advances, credit facilities and other
        financial accommodation available to it, as at the end of the month;

   (m)  an analysis of its margin clients, as at the end of the month;

   (n)  an analysis of collateral received from its margin clients, as at the
        end of the month;

   (o)  an analysis of its rolling balance cash clients, as at the end of the
        month;

   (p)  an analysis of its profit and loss account;

   (q)  an analysis of its client assets, as at the end of the month; and

   (r)  where it is licensed for Type 3 regulated activity, an analysis of its
        foreign currency positions, as at the end of the month.

(2) Subject to subsection (4), a licensed corporation to which subsection (1)
applies shall, in respect of each period of 3 months at the end of which it
remains licensed, being such period in a year ending at the end of the month
of March, June, September or December, respectively, submit to the Commission
in the manner specified in subsections (5) and

(6)(d), (e) or (f) (as the case may be), no later than 3 weeks after the end
of the period concerned, a return, in the form specified by the Commission
under section 402 of the Ordinance, which includes-

   (a)  an analysis of its clientele, as at the end of the 3 month period;

   (b)  an analysis of its proprietary derivative positions, as at the end of
        the 3 month period;

   (c)  where it is licensed for Type 3 regulated activity, an analysis of its
        recognized counterparties, as at the end of the 3 month period; and

   (d)  where it is licensed for Type 9 regulated activity, an analysis of the
        assets under its management, as at the end of the 3 month period.

(3) Subject to subsection (4), a licensed corporation which is licensed solely
for one or more of the following-

   (a)  Type 4 regulated activity;

   (b)  Type 5 regulated activity;

   (c)  Type 6 regulated activity;

   (d)  Type 9 regulated activity, and subject to the
        specified licensing condition, shall, in respect of each period of 6
        months at the end of which it remains licensed, being such period in a
        year ending at the end of the month of June or December, respectively,
        submit to the Commission in the manner specified in subsections (5)
        and (6)(d), (e) or (f) (as the case may be), no later than 3 weeks
        after the end of the period concerned, a return, in the form specified
        by the Commission under section 402 of the Ordinance, which includes-

   (e)  its liquid capital computation, as at the end of the 6 month period;

   (f)  its required liquid capital computation, as at the end of the 6 month
        period;

   (g)  an analysis of its profit and loss account;

   (h)  an analysis of its clientele, as at the end of the 6 month period; and

   (i)  where it is licensed for Type 9 regulated activity, an analysis of the
        assets under its management, as at the end of the 6 month period.

(4) A licensed corporation may elect to submit the return required under-

   (a)  subsection (1), in respect of periods of not less than 28 days but not
        more than 35 days, each ending not more than 7 days before or after
        the end of a month;

   (b)  subsection (2), in respect of periods of 3 months each ending not more
        than 7 days before or after the end of March, June, September or
        December in a year;

   (c)  subsection (3), in respect of periods of 6 months each ending not more
        than 7 days before or after the end of June or December in a year,
        determined by it on a basis according to which the ending date of each
        period so determined is predictable, and where it so elects and
        submits the return concerned, it shall be deemed to have submitted the
        return concerned in respect of the period required under subsection
        (1), (2) or

(3) (as the case may be).

(5) A return referred to in this section shall be signed in the manner
prescribed in subsection (6) by a responsible officer or another officer of
the licensed corporation approved by the Commission under section 58(5)(e) for
the purposes of this section. (L.N. 117 of 2006)

(6) A licensed corporation may elect to submit a return referred to in this
section to the Commission- (L.N. 117 of 2006)

   (a)  electronically, by means of a secure online communication network
        approved by the Commission under section 58(7) for the purposes of
        this paragraph;

   (b)  in electronic form on a floppy disk, delivered by hand or by post to
        the Commission; or

   (c)  in paper form, delivered by hand or by post to the Commission, and-

   (d)  where it submits the return in accordance with paragraph (a)-

        (i)    the return shall be signed by way of attachment to the return
               of the digital signature of the licensed corporation, and the
               digital  signature shall be- (A) supported by a
               recognized certificate; (B) generated
               within the validity of that certificate; and (C) used in
               accordance with the terms of that certificate; or (14 of 2004
               s. 30)

        (ii)   if the return is not signed as provided for in subparagraph

        (i)    , it shall also submit a signed copy of the return in paper
               form, delivered by hand or by post to the Commission;

   (e)  where it submits the return in accordance with paragraph (b), the
        floppy disk shall be accompanied by a signed copy of the return in
        paper form; or

   (f)  where it submits the return in accordance with paragraph (c), the
        signed original of the return shall be submitted.

(6A) For the purposes of subsection (6)(d)(i)(A), a digital  signature is
taken to be supported by a recognized certificate if it is taken to be
supported by that certificate under section 2(2) of the
Electronic Transactions Ordinance ( Cap 553). (14 of 2004 s. 30)

(7) In this section-

"digital signature" (數碼簽署) has the meaning assigned to it by
section 2(1) of the Electronic Transactions Ordinance ( Cap 553); (14 of 2004
s. 30)

"recognized certificate" (認可證書) has the meaning assigned to it by
section  2 (1) of the Electronic Transactions Ordinance ( Cap 553); (14 of
2004 s. 30)

"rolling balance cash client" (滾存結餘現金客戶) means a client of a
licensed corporation in respect of whom the amounts receivable from, and
amounts payable to, him by the licensed corporation arising from the purchase
and sale of securities on a cash-against-delivery basis by the licensed
corporation for him may be set-off by the licensed corporation under
section 21(3);

"within the validity of that certificate" (在該證書的有效期內) has
the meaning assigned to it by section 6(2) of the
Electronic Transactions Ordinance ( Cap 553).

(14 of 2004 s. 30)

"digital signature" (數碼簽署)

"recognized certificate" (認可證書)

"rolling balance cash client" (滾存結餘現金客戶)

"within the validity of that certificate" (在該證書的有效期內)