Hong Kong Regulations

SECURITIES AND FUTURES (ACCOUNTS AND AUDIT) RULES - SECT 3

Financial statements and other documents to be prepared by licensed corporations and associated entities of intermediaries

(1) For the purposes of section 156(1)(a) of the Ordinance, the financial
statements and other documents that a licensed corporation shall prepare, in
respect of each financial year, are-

   (a)  a set of accounts consisting of each of the following, prepared in
        accordance with generally accepted accounting principles-

        (i)    a profit and loss account;

        (ii)   a balance sheet; and

        (iii)  notes to the accounts;

   (b)  in so far as applicable, the following returns as referred to in
        section 56 of the Securities and Futures (Financial Resources) Rules (
        Cap 571 sub. leg. N), each made up to the last day of the financial
        year-

        (i)    a liquid capital computation;

        (ii)   a required liquid capital computation;

        (iii)  a summary of bank loans, advances, credit facilities and other
               financial accommodation available to it;

        (iv)   an analysis of its margin clients;

        (v)    an analysis of collateral received from margin clients;

        (vi)   an analysis of its rolling balance cash clients;

        (vii)  an analysis of its client assets; and

        (viii) an analysis of its proprietary derivative positions; and

   (c)  a business and risk management questionnaire.

(2) For the purposes of section 156(2)(a) of the Ordinance, the financial
statements and other documents required to be prepared by a licensed
corporation that ceases carrying on all of the regulated activities for which
it is licensed are-

   (a)  a set of accounts as referred to in subsection (1)(a); and

   (b)  a liquid capital computation as referred to in subsection

(1)(b)(i).

(3) For the purposes of section 156(1)(a) of the Ordinance, the financial
statements and other documents that an associated entity of an intermediary
shall prepare, in respect of each financial year, are-

   (a)  a set of accounts consisting of each of the following, prepared in
        accordance with generally accepted accounting principles-

        (i)    a profit and loss account;

        (ii)   a balance sheet; and

        (iii)  notes to the accounts;

   (b)  an analysis of client assets as at the end of the financial year; and

   (c)  a business and risk management questionnaire.

(4) For the purposes of section 156(2)(a) of the Ordinance, the financial
statements and other documents required to be prepared by an associated entity
of an intermediary that ceases to be such an associated entity are-

   (a)  a set of accounts as referred to in subsection (3)(a); and

   (b)  an analysis of client assets as referred to in subsection

(3)(b).