Hong Kong Regulations

DEPOSIT PROTECTION SCHEME (ASSET MAINTENANCE) RULES - SECT 3

Assets in Hong Kong

(1) For the purposes of these Rules, an asset is maintained in Hong Kong by a
Scheme member if, subject to subsections (4), (5) and (6)—

   (a)  the asset is a relevant asset;

   (b)  the asset is recorded as an asset in the accounts of the Scheme member
        for all its Hong Kong offices;

   (c)  the asset is not subject to any encumbrance, charge (other than
        floating charge) or outstanding incidental payment; and

   (d)  the asset is not a claim on, or a share of, a related company of the
        Scheme member.

(2) For the purposes of subsection (1)(d ), a company is a related company of
a Scheme member if, subject to subsection (3)—

   (a)  the company is a subsidiary, or the holding company, of the Scheme
        member; or

   (b)  the company is a subsidiary of that holding company.

(3) On the written application by a Scheme member, the Monetary Authority may
designate that a company is not a related company of the Scheme member for the
purposes of subsection (1)(d).

(4) If the asset is a relevant asset described in item 3, 4, 5 or 6 of the
Schedule and comprising claims or securities that are in bearer form and
transferable by delivery, the asset is not maintained in Hong Kong by a Scheme
member by virtue of subsection (1) unless the documents of title of the claims
or securities are also kept in Hong Kong.

(5) If the asset is a relevant asset described in item 3, 4, 5 or 9 of the
Schedule and comprising securities that are in registered form, the asset is
not maintained in Hong Kong by a Scheme member by virtue of subsection (1)
unless one of the following conditions is also satisfied—

   (a)  the securities are transferable and registrable only at a register in
        Hong Kong; or

   (b)  the securities are transferred and registered at a register in Hong
        Kong in the ordinary course of business and the certificates of the
        securities (if any) are kept in Hong Kong.

(6) If the asset is a relevant asset described in item 3, 4, 5 or 9 of the
Schedule and comprising securities held by an intermediary—

   (a)  with whom a Scheme member maintains a securities account; and

   (b)  on whose records the Scheme member's rights or interests in the
        securities are recorded, the asset is not maintained in Hong Kong by
        the Scheme member by virtue of subsection (1) unless the conditions
        set out in subsection (7) are also satisfied.

(7) The conditions for the purposes of subsection (6) are—

   (a)  the intermediary is located in Hong Kong;

   (b)  the intermediary's records of the Scheme member's rights or interests
        in the securities are kept in Hong Kong; and

   (c)  the agreement for the securities account between the intermediary and
        the Scheme member is enforceable by legal proceedings in a court in
        Hong Kong.