Banking (Exposure Limits) Rules and Revised Return of Certificate of Compliance (Form MA(BS)1F(a))

Banking Policy Department
Our Ref: B1/15C
B9/188C
9 July 2018
The Chief Executive
All Authorized Institutions
Dear Sir/Madam,
Banking (Exposure Limits) Rules and
Revised Return of Certificate of Compliance (Form MA(BS)1F(a)) Further to our letter of 18 May 2018, I am writing to inform you that the negative vetting of the Banking (Exposure Limits) Rules by the Legislative Council has already expired. As a result the Rules will come into operation from 13 July 2018. The Rules primarily replace the equity exposure limit under section 87 of the Banking Ordinance. We have previously consulted locally incorporated authorized institutions (“AIs”) regarding their readiness to comply with the revised limit. An AI which has opted for complying with the Rules starting from 1 January 2019 will receive notification on the detailed arrangements individually soon. Other AIs, i.e. ones which have opted for immediate switching should start to comply with the revised equity exposure limit in the Rules from 13 July 2018. To supplement the implementation of the Rules, we propose to revise the Return of Certificate of Compliance with Banking Ordinance (“Certificate”) and the accompanying Completion Instructions (“CIs”) as attached in Annex 1 and
Annex 2.
The revisions primarily seek to (i) replace as appropriate references to the Banking Ordinance which have been made obsolete by the implementation of the Rules and (ii) add a new reporting field on Tier 1 capital. Changes from the current return in use are highlighted for ease of reference. We believe that these minor changes should not cause reporting difficulties.

2
All AIs, whether subject to individual notification of special arrangements or not, should use the revised Certificate for statutory reporting purposes starting from the reporting period ended September 2018. We will notify you separately when the electronic files for the revised Certificate and its accompanying CIs are available for downloading from the HKMA’s supervisory communication website. In relation to an AI which will start to comply with the revised equity exposure limit under the Rules from 13 July 2018, the reporting of the September Certificate is complicated by the fact that the applicable regulations for compliance assessment will change from the current section 87 of the Ordinance before 13 July 2018 to Part 2 of the Rules after that date. Expedient reporting arrangements to address the associated reporting issues are set out in Annex 3. The AI should follow these expedient reporting arrangements to report the September Certificate. To support the expedient reporting arrangements, pursuant to section 63(2) of the Ordinance the AI is required to submit the information set out under Supplementary Reporting Requirement in Annex 3 to the HKMA. When we write to an AI which has opted for complying with the Rules starting from 1 January 2019, we will also specify the expedient reporting arrangements applicable to their case. Yours faithfully, Daryl Ho Executive Director (Banking Policy) Encl cc: The Chairperson, The Hong Kong Association of Banks The Chairman, The DTC Association FSTB (Attn: Ms Eureka Cheung)

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Annex 1
T SECRET C o . N o . MM YY CAT
(For Official Use Only) und e r t he B ankin g O rdin an c e C E R T I F I C A T E O F C O M P L I A N C E W I T H T H E B A N K I N G O R D I N A N C E O F A N A U T H O R I Z E D I N S T I T U T I O N I N C O R P O R A T E D I N H O N G K O N G Position of *Local Office(s)/Local Offices and Overseas Branches/Consolidated Return
for the quarter ended ..................................................................
(last day of the quarte r)

• D e l e t e w h e r e i n a p p l i c a b l e
  N a m e o f A u t h o r i z e d I n s t i t u t i o n D a t e o f S u b m i s s i o n The Ba n ki ng Ordina nce In fo rmation r eq u est ed in th is r etu rn is req u ir ed u n d er s ec tion 6 3 (2 ) o f th e Ban k in g Or d in an ce. Th e r etu rn sh ou ld b e su b mitted to th e M on etar y Au th orit y n ot later th an 1 4 d ays a ft er th e en d o f each q u arter en d in g on 3 1 M arch , 3 0 Ju n e, 3 0 Sep temb er an d 3 1 Dec emb er, u n less oth er wis e ad vis ed b y th e M on etar y Au th orit y. Note: This certificate is to be prepared in accordance with the completion instructions issued by the Monetary Authority. We c ertif y th at th is certifica te is, to th e b est o f ou r k n o wled g e an d b eli ef, c or r ect. C h i e f A c c o u n t a n t C h i e f E x e c u t i v e N a m e N a m e Name and telephone number of responsible person who may be contacted by the Monetary Authority in case of any query. N a m e T e l e p h o n e N u m b e r M A( B S ) 1 F ( a ) (R e v . 9 / 20 1 8 )

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  (HK$ ’000 )
  I. As at
  (a) Capital base of the institution
  (b) Tier 1 capital of the institution
  II. Compliance with the Banking Ordinance
  Please state whether or not, during the reporting period, the institution was in contravention of the provisions of the following sections of the Banking Ordinance Yes No (Please put an "X")

1. section 80
2. section 81
3. section 83
4. section 85
5. section 87A
6. section 88
7. Exposure limits prescribed in
   the following parts of the
   Rules made under section
   81A:
   (a)Part 2
8. capital requirements
   specified in a notice served by the Monetary Authority under
   Section 97F(1)
9. liquidity requirements
   prescribed in the Rules made under section 97H(1) that are applicable to the institution :
   (a) Hong Kong office position
   (b) Unconsolidated position
   (c) Consolidated position
10. section 119A
11. Rules made under section
    60A(1)
    If the answer is “yes”, please specify the relevant
    section(s) of the Rules that were contravened

If the institution is exempted by the Monetary Authority for disclosures required under the Rules, please tick this box .
III. Maximum exposures
At the close of business on any day during the reporting period :
(HK$'000)

1. Maximum financial exposure to any one person etc., within the meaning of section 81,
   other than those exempted under sections 81(4), 81(5), 81(6) and 81(7), amounted to

Name of counterparty :
2. Maximum aggregate of unsecured facilities to directors and connected parties, within
the meaning of section 83(1), other than those exempted under section 83(4A), amounted to Please note that there is no requirement to default an economic interdepend ence relationship between two individual counterpart ies of an AI which belong to the same family. AIs should always follow the considerati ons as set out in paragraph 8 of Annex 1 to
Appendix 1
of the proposals in establishin g the economic interdepend ence relationship between its counterpart ies.

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  3. Maximum aggregate of unsecured facilities to directors and connected parties, within
  the meaning of section 83(2)(a), other than those exempted under section 83(4A), amounted to
  4. Maximum unsecured facilities to any individual director and connected party, within
  the meaning of section 83(2)(b), other than those exempted under section 83(4A), amounted to
  5. Maximum aggregate equity exposures within the meaning of Rule 12 of the Rules
  made under section 81A(other than those exempted under rule 13), amounted to
  6. Maximum aggregate value of interests in land, within the meaning of section 88(1),
  excluding those occupied for conducting the institution's business as referred to in sections 88(2) and 88(3) and those exempted under section 88(5), amounted to
  IV. Assets under charge
  1. At the close of business on any day during the reporting period, maximum ratio calculated on the basis of
  the aggregate value of all charges over the total assets of the institution and the value of such assets, within the meaning of section 119A, other than those charges approved/exempted by the Monetary Authority, was (HK$'000) (a) Aggregate value of all charges (b) Value of total assets after provisions (excluding contra items) (c) Maximum ratio ((a) ÷ (b) x 100%) %
  2. During the reporting p erio d, the follo wing ch arges were created w ithin the meaning o f section 119 A:
  New ch arges created At the clo se o f business on the day wh en a ch arge was created Date Value o f charges (HK$ 000) Aggregate valu e o f all charges (including tho se included in colu mn (b)) other th an those appro ved or exempted b y th e Monetary Authority (HK$ 000) Value o f total assets after provisions (excluding contra items) (HK$ 000) Ratio o f aggregate value o f all ch arges to value o f total assets after pro visions (excluding contra items) (c) ÷ (d) x 100 % (%) (a) (b) (c) (d) (e)

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  V. Exempted/Approved Tran sactions

1. During the reportin g p erio d, the maximu m exposures in respect o f th e transactions that were exclud ed
   fro m sections 80, 81 and 8 3 as appro ved b y the Mon etary Authority under sections 80(2), 81(4), 81(5), 81(6)(b)&(i), 81(7), 83(4)(e)&(g) and 83(4 A) respectively, amounted to Relevant
   section
   Name o f cu sto mer Type o f facility
   Limit appro ved b y the
   Monetary Authority
   (HK$ 000)
   Maximu m expo sures
   (HK$ 000)
2. At the end of th e reporting period, th e valu e o f shareholdin gs or d ebt secu rities acquired under an
   underwriting contract or in satisfaction o f d ebts, etc., and the value o f interests in land acquired under mo rtgage to secure debts due to th e in stitutio n a s approved b y the Monetary Au thority under sections 81(6)(i), 81(7), 88(5) as well as rules 13(1)(b) and 13(1)(c ) of the Rules m ade under
   section 81A a s the ca se ap plicable , amounted to
   Relevant
   section/
   rule
   Name o f co mpan y/
   Lo cation of property
   Date o f acquisition
   Expiry o f approved period of holdin g
   Value
   (HK$ 000)

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3. During the reporting p eriod, the maximu m aggregate valu e o f all charges ap proved b y th e Monetar y
   Au thority under section 11 9A(2), amounted to Particulars o f ch arges Value o f charges (HK$ 000) Limit o f facility secured b y charges (HK$ 000) Maximu m amount utilized (HK$ 000)
4. (a) Durin g the reporting period, the maximu m aggregate value o f all ch arges exempted b y th e
   Monetar y Authority under section 119 A(3), amounted to Class o f exempted charges Particulars o f ch arges Value o f charges (HK$ 000) Maximu m amount utilized (HK$ 000) (b) Top 5 counterparties in favour o f wh ich exempted initial margin charges are created Charges in favour o f Particulars o f ch arges Value o f charges (HK$ 000)

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Annex 2
MA(BS)1F(a)/P.1(9/2018)
Completion Instructions
Certificate of Compliance with the Banking Ordinance of an authorized institution incorporated in Hong Kong Form MA(BS)1F(a) Introduction
Section A : General Instructions

1. This Certificate is to be submitted by all authorized institutions incorporated in
   Hong Kong essentially on a solo basis, unless otherwise specified. 1 Institutions with subsidiaries or (in the case of liquidity requirements) other associated entities may additionally be required to submit the Certificate on a consolidated basis. In the case of a solo Certificate, report the positions of the institution’s Hong Kong offices and overseas branches (if any) in one Certificate; in the case of a consolidated Certificate, report the positions of the institution and its consolidated entities in a separate Certificate.
2. Unless otherwise specified by the Monetary Authority, institutions should
   submit the Certificate not later than 14 days after the end of each quarter (that is, 31 March, 30 June, 30 September or 31 December). If the submission deadline falls on a public holiday, it will be deferred to the next working day.
3. All figures reported in this Certificate should be shown to the nearest thousand,
   in HK$ or HK$ equivalents in the case of foreign currency items. The closing middle market T/T rates prevailing at the position date should be used for conversion purposes.
4. In completing this Certificate, reference should be made to the relevant sections
   of the Banking Ordinance regarding the scope of the statutory limits and restrictions.
5. For the purposes of Part XV (i.e. sections 81, 83, 87A & 88) and Part XVIA of
   the Banking Ordinance as well as the Banking (Exposure Limits) Rules (“BELR”), the Monetary Authority may require an institution to observe the limitations and restrictions on a consolidated basis and may specify different subsidiaries for consolidation under these Parts and the BELR. This may result

1
A locally incorporated AI is required to certify its compliance with the liquidity requirements relating to the Liquidity Coverage Ratio, Liquidity Maintenance Ratio, Net Stable Funding Ratio and Core Funding Ratio where applicable to the AI on (i) a Hong Kong Office basis (as referred to in rule 10(1)(a) of the Banking (Liquidity) Rules (BLR)) and (ii) a solo basis (i.e. unconsolidated basis as referred to in rule 10(1)(b) of the BLR). Please refer to item 10 and the relevant completion instructions.

Annex 2
MA(BS)1F(a)/P.2(9/2018) in the use of different capital bases to determine compliance with these Parts and the BELR. Institutions should therefore be careful in selecting the appropriate capital bases for reporting under Part II of the Certificate.
6. For the purposes of this Certificate, the term “value of charges” means the book
value of the assets which have been charged to another party.
7. Securities transactions should be reported on the “trade date” basis. For the
purposes of determining a credit exposure , securities transactions under sale and repurchase agreements (“repos”) and reverse repos should be reported on an “economic substance” approach (i.e. they are treated as collateralised deposits and loans respectively). For repos, the reporting institution is exposed to the issuer of the securities. For reverse repos, the reporting institution is, in the first instance, exposed to the counterparty, only in the event of a failure of the counterparty would the reporting institution be exposed to the issuer of the securities acquired. The reporting treatment of unmatured spot and forward purchase of securities and of unmatured spot and forward sales of securities should be as for repos and reverse repos respectively. Where cash is not involved in these transactions (e.g. securities repos), the reporting institution is only exposed to the issuer of the securities delivered to the counterparty. Where the terms of a repo transaction transfer substantially all the risks and rewards of the ownership of the securities to the buyer, the transaction should be regarded as an outright sale and the commitment to repurchase should be treated as an off-balance sheet exposure to the issuer of the securities. Where the commitment to repurchase has no pre-determined price, the fair value (e.g. current market value) as of the reporting date should be used. On the other hand, if the reporting institution is a buyer of such a repo, it should regard the transaction as an outright purchase and treat it as an on-balance sheet exposure to the issuer of the securities.
Section B : Specific Instructions
8. Part I - Capital Base/ Tier 1 capital
Unless otherwise advised by the Monetary Authority, report the capital base and Tier 1 capital figures as at the end of the previous quarter complied on the basis for determining compliance with Part XV of the Banking Ordinance and
Part 2 of the BELR.
9. Part II - Compliance with the Banking Ordinance
9.1 Put an “X” in the appropriate column to indicate whether or not the institution
has contravened each of the sections specified in this Part during the reporting period.

Annex 2
MA(BS)1F(a)/P.3(9/2018)
9.2 Items 2, 3, 6 & 7
For the purposes of determining compliance with sections 81, 83(except 83(2)(b)) and 88 of the Banking Ordinance as well as Part 2 of the BELR, institutions should calculate on a daily basis the relevant ratios by dividing the exposures or amounts of restricted assets under each of these sections by the capital base or Tier 1 capital (whichever applicable) prevailing at the close of business on the same day. However, for the sake of convenience, institutions may use the capital base or Tier 1 capital reported in Part I of this Certificate as the basis of calculation provided that there has been no significant reduction in the capital base or Tier 1 capital during the quarter covered by the Certificate.
9.3 Item 5
For the purpose of determining compliance with section 87A of the Banking Ordinance, institutions which, during the reporting period, have acquired the share capital of a company (except those approved by the Monetary Authority under section 87A(2)(a) or exempted under section 87A(8)) should calculate the ratio by dividing the value of the share capital (i.e. cost of acquisition or the accumulated value in the case of a series of acquisitions) by the capital base prevailing at the close of business on the date of acquisition. However, for the sake of convenience, institutions may use the capital base reported in Part I of this Certificate as the basis of calculation provided that there has been no significant reduction in the capital base during the period from the end of the previous quarter to the date of acquisition.
9.4 Item 8
For the purpose of determining its compliance with the minimum capital adequacy ratio applicable to it (defined in section 3 of the Banking (Capital) Rules to be the institution’s CET1 capital ratio, Tier 1 capital ratio and Total capital ratio), the reporting institution should take into account any variation of its capital adequacy ratio made by the Monetary Authority by notice served on the institution under section 97F(1) of the Banking Ordinance. That is, the reporting institution should certify compliance against the capital adequacy ratio specified in section 97F(1) notice. Moreover, for reasons already mentioned in paragraph 5 above, institutions which have been required by the Monetary Authority to observe the capital adequacy ratio on a consolidated basis should note that the consolidated capital base to be used for computation under this section may not be the same as the one used under Part XV of the Ordinance.
9.5 Item 9
Report in this item whether the reporting institution complied with the minimum liquidity requirement(s) applicable to it during the reporting period.

Annex 2
MA(BS)1F(a)/P.4(9/2018)
 If the reporting institution is a category 1 institution, the minimum liquidity requirements are the minimum required level of Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) set out respectively in rule 4 and rule 8A of the Banking (Liquidity) Rules (BLR).  If the reporting institution is a category 2 institution, the minimum liquidity requirement is the minimum required level of the Liquidity Maintenance Ratio (LMR) set out in rule 7 of the BLR. Further to this, a category 2A institution must also comply with the minimum Core Funding Ratio (CFR) set out in rule 8D of the BLR. In the “solo” Certificate, the reporting institution should complete –  sub-item (a) – covering the institution’s Hong Kong office position as referred to under rule 10(1)(a) of the BLR); and  sub-item (b) – covering the institution’s unconsolidated position as referred to under rule 10(1)(b) of the BLR, if this position is applicable to the institution. If the reporting institution is also required to submit the Certificate on a consolidated basis, it should, in the “consolidated” Certificate, complete item 9(c), covering the institution’s consolidated position as referred to under rule 11(1) of the BLR.
9.6 Item 10
For the purpose of determining compliance with section 119A of the Banking Ordinance, only the reporting institution’s solo position (i.e. the combined position of Hong Kong office and, if any, overseas branches) should be taken into account. This is applicable to reporting under both the solo and the consolidated Certificates.
9.7 Item 11
For the purposes of indicating compliance with the rules made under section 60A(1) of the Banking Ordinance (that is, the Banking (Disclosure) Rules, or hereafter referred to BDR), the reporting institution is required to complete item 11 under a solo Certificate only. The certification of compliance should be made in relation to the reporting institution’s most recent disclosure statement issued prior to the Certificate of Compliance. For instance, if the institution’s financial year-end is end-December it should indicate in its solo Certificate for the period ending 30 September whether it has contravened the requirements of the BDR in respect of its disclosures for the interim reporting period. Any contraventions of the BDR in respect of its disclosures for the annual reporting period should be recorded in the Certificate for the period ending 30 June. Where the Certificate of Compliance relates to a quarter in

Annex 2
MA(BS)1F(a)/P.5(9/2018) which no disclosure statement has been issued, the reporting institution should give the same answer as on the previous quarter’s Certificate of Compliance. The reporting institution should complete item 11 by putting a “Y” or “N” in the appropriate column to indicate whether or not the institution has contravened any of the requirements of the BDR. If the answer to item 11 is “yes”, the institution should specify in the space provided relevant section(s) of the BDR that it contravened. If the institution is exempted by the Monetary Authority for disclosures required under the BDR, it should tick the relevant box as provided in the Certificate.
10. Part III - Maximum Exposures
10.1 Items 1 - 6
For each of the sections specified under these items, report the maximum exposure incurred during the reporting period. In this connection, the daily closing exposures should be used for comparison and reporting purposes. The amount reported should include only those transactions which are subject to the limitations / restrictions prescribed under the relevant sections or rules. Items and transactions which are exempted under sections 81(4), 81(5), 81(6), 81(7), 83(4A), 88(2), 88(3) and 88(5) of the Banking Ordinance or Rule 13 of the BELR should not be included. Where an exposure is supported by a letter of comfort, the amount to be reported in item 1 is the difference between the maximum exposure incurred in the reporting period and the limit exempted under s.81(6)(b)(ii) (“the exempt limit”), unless otherwise advised by the Monetary Authority. For the purpose of this return, the exempt limit is defined as the difference between the maximum lending limit as specified in the comfort letter and the statutory limit under section 81 (i.e. that being 25% of an AI’s capital base). An example is provided at Annex 1.
11. Part IV – Assets under Charge
11.1 Item 1
Report in sub-item 1(c) the maximum ratio, expressed as a percentage, during the reporting period between the aggregate book value of all assets charged and the book value of the total assets after provisions (excluding contra items) of the institution. The book value of the numerator and denominator of such maximum ratio should then be reported under sub-items 1(a) and 1(b) respectively. For both the solo and consolidated Certificates, report only the institution’s solo position covering the Hong Kong offices and, if any, overseas branches.

Annex 2
MA(BS)1F(a)/P.6(9/2018)
11.2 Item 2
Report in the table details of all charges created during the reporting period. These include:
 Column (a) - Date
State in chronological order all the dates on which new charges, except those approved or exempted by the Monetary Authority, were created.  Column (b) - Value of charges Report the book value of the assets which were the subject of a new charge created on the date indicated in column (a).  Column (c) - Aggregate value of all charges Report the aggregate book value of all the assets which have been charged to another party (including those reported under column (b) but exclude those approved or exempted by the Monetary Authority under sections 119A(2) and 119A(3) at the close of business on the date indicated in column (a).  Column (d) - Value of total assets Report the book value of the total assets after provisions (excluding contra items) of the institution at the close of business on the date indicated in column (a).
12. Part V - Exempted / Approved Transactions
12.1 Item 1
Report the maximum exposures during the reporting period in respect of the transactions that were excluded from sections 80, 81 and 83 as approved by the Monetary Authority under sections 80(2), 81(4), 81(5), 81(6)(b)&(i), 81(7), 83(4)(e)&(g) and 83(4A).  Relevant section:
Specify the section under which exemption / approval has been given by the Monetary Authority.  Name of customer:

Annex 2
MA(BS)1F(a)/P.7(9/2018)

• in the case of section 80(2), report the name of the company for
  which the institution has been approved by the Monetary Authority under this section to grant any advances, loans or credit facilities or give any financial guarantee or incur any other liability, against the security of the shares of the company; and
• in the case of sections 81(4), 81(5) and 83(4A), provide the name
  of the customer to whom the relevant exposures were incurred. Where an exemption is granted by the Monetary Authority under
  section 83(4A) to a number of staff residential mortgage loans,
  the institution may report them in aggregate and under the term “unsecured staff mortgage loan”.  Type of facility:
  Specify the type of facility such as term loan, overdraft, financial guarantee, letters of credit etc. that has been granted by the institution.  Limit approved by the Monetary Authority:
  Report the limit of facility approved by the Monetary Authority.  Maximum exposures:
  Report maximum exposures during the reporting period for each of the exempted / approved transactions. For the purpose of this item, the term “exposures” include all those exposures or facilities specified under
  section 80(2), 81(2) and 83(3) of the Banking Ordinance.
  12.2 Item 2
  Report the book values of shareholdings, debt securities and interests in land etc. approved by the Monetary Authority under sections 81(6)(i), 81(7) and 88(5) of the Banking Ordinance as well as rules 13(1)(b) and 13(1)(c) of the BELR which were outstanding at the end of the reporting period.  Relevant section/rule:
  Specify the section/rule under which the relevant approval was given by the Monetary Authority.  Name of company/ location of property:
• Provide the name of the company the share capital or debt
  securities of which were acquired by the institution in satisfaction of debts or under an underwriting contract, etc., or,

Annex 2
MA(BS)1F(a)/P.8(9/2018)

• Provide the address of property which was acquired pursuant to
  entry into possession by the institution under mortgage.
   Date of acquisition:
  Report the date on which the shares or debt securities of a company or a property were / was acquired by the institution.  Expiry of approved period of holding:
  Report the expiry date of the extended period of holding approved by the Monetary Authority.  Value Report the book values of the approved holding of shares, debt securities or properties which were outstanding at the end of the reporting period.
  12.3 Item 3
  Report the maximum aggregate value of all charges during the reporting period which have been approved by the Monetary Authority under section 119A(2) of the Banking Ordinance.  Particulars of charges:
  Provide a description of the assets (e.g. properties, shares, debt securities, etc.) which have been charged to another party.  Value of charges:
  Report the book value of the assets charged.
   Limit of facility secured by charges:
  Report the limit of facilities granted to the institution against the security of the charged assets.  Maximum amount utilized:
  Report the maximum amount of the facility utilized by the institution during the reporting period. For example, in the case of an overdraft facility, report the maximum amount that had been overdrawn by the institution during the reporting period.

Annex 2
MA(BS)1F(a)/P.9(9/2018)
12.4 Item 4(a)
Report the maximum aggregate value of all charges exempted by the Monetary Authority under section 119A(3) of the Banking Ordinance in respect of each of the classes of charges.  Class of exempted charges:
Select the appropriate class of exempted charges, i.e.

• Charges in favour of Euroclear Bank S.A.;
• Charges in favour of Clearstream Banking S.A.; or
• Charges created in connection with the provision of initial margin
  for over-the-counter derivative transactions (“initial margin charges”).  Particulars of charges:
  Provide a description of the assets (e.g. properties, cash, shares, debt securities, etc.) which have been charged to another party.  Value of charges:
  Report the book value of the assets charged.
   Maximum amount utilized:
  For initial margin charges, this column should be left blank. For other classes of exempted charges, report the maximum amount utilized under the exempted charges during the reporting period. Item 4(b) Report the top 5 counterparties among the exempted charges included in the maximum aggregate value of exempted initial margin charges reported under item 4(a).  Charges in favour of:
  Provide the name of the counterparty in favour of which the exempted charge has been created.  Particulars of charges:
  Provide a description of the assets (e.g. cash, shares, debt securities, etc.) which have been charged to each of the top 5 counterparties.  Value of charges:

Annex 2
MA(BS)1F(a)/P.10(9/2018)
Report the book value of the assets charged.
Hong Kong Monetary Authority
September 2018

Annex 2
MA(BS)1F(a)/P.11(9/2018)
Annex 1
Illustration of reporting a maximum exposure covered by a letter of comfort HK$’000 Maximum lending limit 100,000 25% of the reporting AI’s capital base 30,000 Amount of the exempt limit 70,000 Maximum exposure during the quarter 90,000 Less : exempt limit 70,000 Amount to be reported 20,000

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Annex 3
Return of Certificate of Compliance (MA(BS)1F(a)) Expedient reporting arrangements Applicable to an authorized institution (“AI”) which starts to comply with the revised equity exposure limit set out in the Banking (Exposure Limits) Rules (the Rules) from 13 July 2018 The AI should follow the instructions below when it reports the September 2018 Return of Certificate of Compliance:
(i) Part II item 5 (to be renumbered to item 7(a) in the revised return) on compliance with Banking Ordinance (“BO”) section 87 during the reporting period (indicate yes or no)  Notwithstanding that this item will be revised to make reference to
Part 2 of the Rules, when reporting this item for the September 2018
Return, the AI should indicate YES only if it has complied with BO
section 87 for the period 1 July to 12 July 2018 and has complied with
Part 2 of the Rules for the period 13 July to 30 September 2018.
(ii) Part III item 5 - Maximum aggregate value of shareholdings within the meaning of BO section 87 This item will be revised to make reference to maximum aggregate equity exposures under rule 12 of the Rules. For reporting the September 2018 Return, an AI should-  report its maximum aggregate equity exposures under rule 12 during 13 July to 30 September 2018 in the return. Supplementary reporting requirement When the AI submits the September 2018 Return of Certificate of Compliance, it should also separately submit a letter enclosing the information below to the AI’s usual contact at the HKMA:
A hard copy of the current version (i.e. before revision) of the Return of Certificate of Compliance with the completion of the items specified below:
(i) Part III item 5 - Maximum aggregate value of shareholdings, within

the meaning of BO s.87(1), other than those exempted from BO s.87(2), amounted to  Report the maximum aggregate shareholdings during 1 to 12 July 2018 instead. (ii) Part V item 2 – At the end of the reporting period, the value of shareholdings or debt securities acquired under an underwriting contract or in satisfaction of debts, etc, and the value of interests in land acquired under mortgage to secure debts due to the institution as approved by the Monetary Authority under sections 81(6)(i), 81(7), 87(1), 87(2)(a) and 88(5) respectively, amounted to  In relation to section 87, report the amount of the shareholdings as at 12 July 2018 instead. The above information should be signed off by an officer who has proper delegated authority for signing off banking returns.