Hong Kong Regulations

SECURITIES AND FUTURES (FINANCIAL RESOURCES) RULES - SECT 58

Approvals

(1) For the purposes of these Rules, the Commission may, whether or not on
application in writing and payment of the fee prescribed in the
Securities and Futures (Fees) Rules ( Cap 571 sub. leg. AF), approve a person
as-

   (a)  an approved bank incorporated outside Hong Kong, where the person is a
        bank which is incorporated under the law or other authority of any
        jurisdiction outside Hong Kong;

   (b)  an approved credit rating agency; or

   (c)  an approved securities borrowing and lending counterparty.

(2) Where the Commission approves a person under subsection (1), it shall as
soon as reasonably practicable-

   (a)  publish in such manner as it considers appropriate the name of the
        person approved; and

   (b)  in the case of a person approved under subsection (1)(b), specify the
        ratings issued by the person as being equivalent to a specified rating
        issued by Moody's Investors Service or Standard & Poor's Corporation.

(3) A person approved under subsection (1)(c) shall be a person whose
activities or objects include the provision of services for interposing
himself in a securities borrowing and lending agreement as the counterparty to
both the borrower and the lender, including administering any security
deposited with him in connection with the agreement and registration and
settlement of the agreement.

(4) The Commission may, on application in writing and payment of the fee
prescribed in the Securities and Futures (Fees) Rules ( Cap 571 sub. leg. AF),
approve a licensed corporation for the purposes of these Rules as an
approved introducing agent where the licensed corporation satisfies the
Commission that-

   (a)  where-

        (i)    it is licensed solely for Type 1 regulated activity, it
               conducts no business other than- (A) communicating offers to
               effect dealings in securities to an exchange participant of a
               recognized exchange company or a specified  exchange, in the
               names of the persons from whom those offers are received; and
               (B) introducing persons to an exchange participant of a
               recognized exchange company or a specified exchange, in order
               that they may- (I) effect dealings in securities; or (II) make
               offers to deal in securities;

        (ii)   it is licensed solely for Type 2 regulated activity, it
               conducts no business other than- (A) communicating offers to
               effect dealings in futures contracts or options contracts to an
               exchange participant of a recognized exchange company or a
               specified exchange, in the names of the persons from whom those
               offers are received; and (B) introducing persons to an
               exchange participant of a recognized exchange company or a
               specified exchange, in order that they may- (I) effect dealings
               in futures contracts or options contracts; or (II) make offers
               to deal in futures contracts or options contracts;

        (iii)  it is licensed solely for Type 3 regulated activity, it
               conducts no business other than- (A) communicating offers to
               effect leveraged foreign exchange trading to a recognized
               counterparty in the names of the persons from whom those offers
               are received; and (B) introducing persons to a recognized
               counterparty in order that they may- (I) effect trading in
               leveraged foreign exchange contracts; or (II) make offers to
               trade in leveraged foreign exchange contracts; or

        (iv)   it is- (A) licensed for one or more of the following- (I) Type
               1 regulated activity; (II) Type 2 regulated activity; (III)
               Type 3 regulated activity; or (B) licensed for one or more of
               the regulated activities referred to in sub-subparagraph (A)
               and one or more of the following- (I) Type 4 regulated
               activity, and it is subject to the specified 
               licensing condition; (II) Type 5 regulated activity, and it is
               subject to the specified  licensing condition; (III) Type 6
               regulated activity, and it is subject to the specified 
               licensing condition, and not licensed for any regulated
               activity other than as described in sub-subparagraphs (A) and
               (B), and in relation to any one or more of the regulated
               activities referred to in sub-subparagraph (A) for which it is
               licensed, it conducts no business other than that described in
               subparagraph (i), (ii) or (iii);

   (b)  in connection with the offers communicated or the persons so
        introduced, it will not incur any liability to any person except for
        its own negligence, wilful default or fraud; and

   (c)  it does not hold client assets.

(5) The Commission may, on application in writing by a licensed corporation
and payment of the fee prescribed in the Securities and  Futures (Fees) Rules
( Cap 571 sub. leg. AF), approve-

   (a)  as approved redeemable shares, any redeemable shares issued by the
        licensed corporation;

   (b)  as an approved subordinated loan, any subordinated loan obtained by
        the licensed corporation;

   (c)  as an approved standby subordinated loan facility, any standby 
        subordinated loan facility obtained by the licensed corporation;

   (d)  for the purposes of section 3(3), the adoption by the licensed
        corporation of an accounting principle other than one of those
        referred to in section 3(1)(a);

   (e)  for the purposes of section 56(5), an officer of the licensed
        corporation to sign a return;

   (f)  for the purposes of section 41(1)(a)(v), a foreign currency; and

   (g)  the withdrawal of an election made by the licensed corporation under
        any provision of these Rules.

(6) An approval granted under subsection (1), (4) or (5) shall be subject to
such reasonable conditions as the Commission may impose, and the Commission
may at any time revoke the approval or amend or revoke any such condition or
impose new conditions as may be reasonable in the circumstances.

(7) The Commission may, for the purposes of section 56(6)(a), approve a secure
online communication network.

(8) Where the Commission approves a communication network under subsection
(7), it shall as soon as reasonably practicable publish details of the network
in such manner as it considers appropriate.

(9) An approval granted under subsection (1), (4), (5) or (7) remains in
force-

   (a)  where a period of validity of the approval is specified in the notice
        of approval, until the expiry of the period; or

   (b)  where no such period is specified, until revoked by the Commission by
        notice in writing.