associated entity ( ) has the meaning assigned to it by section 97H(4) of the Ordinance;
bank ( ) has the meaning assigned to it by section 2 of the Capital Rules;
Capital Rules ( ) means the Banking (Capital) Rules (Cap. 155 sub. leg. L);
category 1 institution ( ) means an authorized institution designated under section 4(1) as a category 1 institution;
category 2 institution ( ) means an authorized institution which is not a category 1 institution;
central bank ( ) means—
(a) the central bank of a country; or
(b) an authority of a country that performs in the country functions similar to the functions performed by the Monetary Authority under section 5A(2) of the Exchange Fund Ordinance (Cap. 66);
class ( ) includes a subclass;
code of practice ( ) means an approved code of practice, referred to in Part XVIC of the Ordinance, that is in force;
currency notes and coins ( ), in relation to an authorized institution, means legal tender notes or other notes, and coins, representing the lawful currency of a country or Hong Kong held by the institution;
consolidated group ( ), in relation to an authorized institution incorporated in Hong Kong that has one or more specified associated entities, means—
(a) the institution’s Hong Kong office;
(b) the institution’s overseas branches (if any); and (c) the institution’s specified associated entities;
convertible ( ), in relation to a currency (other than Hong Kong dollars) held by an authorized institution, means the ability of the institution to exchange funds held in that currency into Hong Kong dollars through—
(a) an active foreign exchange market; or
(b) an established exchange and clearing arrangement operated by the central bank that issues the currency (or operated by a person appointed by the central bank for that purpose);
corporate ( ) means—
(a) a company; or
(b) a partnership, or any other unincorporated body,
that is neither a public sector entity nor a financial institution;
customer ( ) includes a counterparty;
debt securities ( ) means any securities other than—
(a) equities;
(b) securities that can be converted into equities; or (c) import or export trade bills;
determine ( ) includes calculate;
EF debt security ( ) means—
(a) an Exchange Fund Bill;
(b) an Exchange Fund Note; or
(c) any other debt security issued by the Government for the account of the Exchange Fund under the Exchange Fund Ordinance (Cap. 66);
Exchange Fund Bill ( ) means any instrument described as such as issued by the Government for the account of the Exchange Fund under the Exchange Fund Ordinance (Cap. 66);
Exchange Fund Note ( ) means any instrument described as such as issued by the Government for the account of the Exchange Fund under the Exchange Fund Ordinance (Cap. 66);
fair value ( )—
(a) in relation to an asset (whether an on-balance sheet or off-balance sheet asset), means the amount for which the asset could be exchanged between knowledgeable, willing parties in an arm’s length transaction; or
(b) in relation to a liability (whether an on-balance sheet or off-balance sheet liability), means the amount for which the liability could be settled between knowledgeable, willing parties in an arm’s length transaction;
financial institution ( ) has the meaning assigned to it by section 157A(3) of the Capital Rules;
guidelines ( ) means guidelines under the Ordinance that are published in the Gazette and in force;
Hong Kong office ( ), in relation to an authorized institution, means the institution’s principal place of business in Hong Kong and its local branches (if any);
Hong Kong office basis ( ), in relation to an authorized institution’s calculation of its LCR or LMR, means the basis referred to in section 11(1)(a);
HQLA ( ), in relation to a category 1 institution, means the institution’s stock of high quality liquid assets, as determined in accordance with Part 7, that the institution is permitted to include in the calculation of its LCR;
LCR ( ) means liquidity coverage ratio;
LCR period ( ), in relation to a category 1 institution’s LCR, means the period of 30 calendar days immediately following the day on which the LCR is calculated;
level 1 assets ( ) means any assets specified in section 1, Part 1 of Schedule 2;
level 2A assets ( ) means any assets specified in section 2, Part 1 of Schedule 2;
level 2B assets ( ) means any assets specified in section 3, Part 1 of Schedule 2;
liquefiable assets ( ), in relation to a category 2 institution, means the institution’s stock of liquefiable assets, as determined in accordance with Part 8, that the institution is permitted to include in the calculation of its LMR;
liquidity coverage ratio ( ), in relation to a category 1 institution, means the ratio, expressed as a percentage, of the amount (calculated in Hong Kong dollars) of the institution’s HQLA to the amount (calculated in Hong Kong dollars) of the institution’s total net cash outflows, as calculated in accordance with Part 7;
liquidity maintenance ratio ( ), in relation to a category 2 institution, means the ratio, expressed as a percentage, of the amount (calculated in Hong Kong dollars) of the institution’s liquefiable assets to the amount (calculated in Hong Kong dollars) of the institution’s qualifying liabilities (after deductions), as calculated in accordance with Part 8;
liquidity transfer restriction ( ), in relation to an authorized institution, means any regulatory, legal, tax, accounting or other restriction or impediment that inhibits, or may potentially inhibit, the transfer of assets or the flow of funds between the institution’s Hong Kong office, and any of its associated entities and overseas branches ;
LMR ( ) means liquidity maintenance ratio;
marketable debt securities ( ) means debt securities that have an established secondary market in or outside Hong Kong in which they can be monetized readily;
monetize ( ), in relation to an asset of an authorized institution, means converting the asset into cash by—
(a) a direct sale of the asset;
(b) entering into a repo-style transaction that is collateralized by the asset; or (c) any other means;
pledged deposit ( ), in relation to an authorized institution, means a deposit placed with the institution by a customer (other than a bank) that is contractually pledged to the institution as collateral to secure a loan from the institution;
prescribed instrument ( ) has the meaning assigned to it by section 137B(1) of the Ordinance;
principal amount ( )—
(a) in relation to an on-balance sheet item of an authorized institution—
(i) if the item is measured at fair value, means the value of the item determined in accordance with section 10; or
(ii) if the item is not measured at fair value, means the book value (including accrued interest) of the item; or
(b) in relation to an off-balance sheet item of an authorized institution, means—
(i) subject to subparagraphs (ii) and (iii), the contracted amount;
(ii) in the case of an undrawn facility, the amount of the undrawn facility; or (iii) in the case of a partially drawn facility, the amount of the undrawn portion;
relevant financial activity ( ), in relation to an associated entity of an authorized institution, means—
(a) an activity which is ancillary to a principal activity of the institution, including—
(i) owning and managing the institution’s property; and
(ii) performing information technology functions for the institution;
(b) lending, including—
(i) the provision of consumer or mortgage credit;
(ii) factoring;
(iii) forfaiting; and
(iv) the provision of guarantees and other financial commitments;
(c) financial leasing;
(d) money transmission services;
(e) issuing and administering a means of payment, including—
(i) credit cards;
(ii) travellers’ cheques; and (iii) bank drafts;
(f) trading for the associated entity’s own account, or for accounts of the entity’s customers, in—
(i) money market instruments;
(ii) foreign exchange;
(iii) financial instruments which are traded on an exchange;
(iv) OTC derivative transactions; or (v) transferable securities;
(g) participating in securities issues, including the provision of services relating to the issues;
(h) the provision of—
(i) advice to undertakings on capital structure or industrial strategy, including any matter relating to capital structure or industrial strategy; or
(ii) advice and services relating to mergers and the purchase of undertakings;
(i) money broking;
(j) portfolio management and the provision of advice in relation to portfolio management; or
(k) custodial and safekeeping services;1
relevant liquidity event ( ) has the meaning assigned to it by section 15(3);
residential mortgage-backed security ( ) means a debt security—
(a) that is issued by a special purpose entity or another company; and
(b) the payments in respect of which are secured by a pool of underlying residential mortgage loans originated by banks or other financial institutions;
RMBS ( ) means one or more residential mortgage-backed securities;
securities financing transaction ( ), in relation to a category 1 institution, means –
1 “Custodial and safekeeping services” is added to the definition of “relevant financial activity” in order to reflect a similar change now being introduced in Banking (Capital) (Amendment) Rules 2014, which is under consultation.
(a) a repo-style transaction; or (b) a margin lending transaction;
sovereign ( ) means—
(a) the Government; or
(b) the central government of a country;
specified associated entity ( ), in relation to an authorized institution incorporated in Hong Kong, means an associated entity of the institution that is the subject of a notice given to the institution under section 12(1) that is in force.
(2) A reference in these Rules to a table or formula followed by a number (including an alphanumeric number) is a reference to the table or formula, as the case may be, in these Rules bearing that number.
(3) If, under a provision of these Rules, the prior consent or approval of the Monetary Authority is required by an authorized institution in respect of any matter, the institution must seek the prior consent or approval, as the case may be, by making an application in the specified form (if any) to the Monetary Authority.
(4) If, under a provision of these Rules, the Monetary Authority is required to give, or may give, notice of any matter to all authorized institutions, or to a class of such institutions, it is sufficient compliance with that provision if the Monetary Authority publishes the notice in the Gazette.
(5) If any matter specified in a provision of these Rules is qualified by the word “adequate”,
“appropriate”, “consistent”, “material”, “relevant” or “significant”, then, for the purposes of assisting in ascertaining the nature of such qualification in so far as it relates to the matter, regard must be had to any guidelines or codes of practice that are applicable to the provision.
(6) If a term used in these Rules is defined in section 2(1) of the Capital Rules but not in these Rules, that section applies to the interpretation of the term as used in these Rules as it applies to the interpretation of the term as used in the Capital Rules.
(7) A reference in a provision of these Rules to a liability or asset of an authorized institution is a reference only to an on-balance sheet liability or on-balance sheet asset, as the case may be, of the institution unless the provision expressly states otherwise.
(8) A reference in a provision of these Rules to an application that may be made by an authorized institution to the Monetary Authority means an application in a specified form (if any) to the Monetary Authority.