Regulatory Alerts1991-04-12
Added · Updated
Guideline 5.4: Lending to Stockbrokers
The Hong Kong Banking Department advises authorized institutions to exercise caution when accepting client shares as security for stockbroker loans due to legal uncertainties regarding consent under the Securities Ordinance. Institutions are required to obtain actual written client authority specifying the pledged shares rather than relying solely on broker declarations to ensure the collateral is valid. If such specific consent cannot be verified, the facility must be assessed as general lending based on the broker's creditworthiness rather than being treated as well-secured.
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