Overview

This course provides a structured recap of the regulatory framework and key control requirements governing Securities Margin Financing (SMF) in Hong Kong. It reviews the development of SMF regulation, internal control principles, capital and liquidity requirements under the Financial Resources Rules (FRR), and the seven key risk control areas set out in the SFC Guidelines for SMF Activities.

Through practical scenarios, compliance insights and enforcement examples, the course reinforces the importance of disciplined oversight, robust controls, timely regulatory engagement and sound SMF operations to safeguard client assets and maintain financial resilience.

Language Options: This course includes English, Traditional Chinese and Simplified Chinese language options. Learners may select their preferred language after launching the course.

Objective

On completing this course, you should be able to:

• Define internal controls and their relevance to SMF;
• Describe the development and regulatory framework of SMF under RA8;
• Identify the seven key risk control areas in the SFC Guidelines for SMF:

1. Total margin loans controls
2. Margin client credit limit controls
3. Securities collateral concentration controls
4. Margin client concentration controls
5. Haircuts for securities collateral
6. Margin calls, stopping further advances, and forced liquidation
7. Stress testing

• Recognise common non-compliance scenarios and associated self-reporting obligations;
• State the potential regulatory consequences for non-compliance under SFC regulations; and
• Recall key takeaways for maintaining compliance in margin financing operations.

Content

SECTION 1: FOUNDATIONS OF SECURITIES MARGIN FINANCING

• Development and Regulatory Framework of SMF (RA8)
• Introduction to SMF and Internal Controls

SECTION 2: CAPITAL REQUIREMENTS

• The Securities and Futures (Financial Resources) Rules (FRR)

SECTION 3: THE SEVEN KEY RISK CONTROL AREAS

• Overview of the Seven SMF Risk Control Areas
• 1. Total Margin Loans Controls
• 2. Margin Client Credit Limit Controls
• 3. Securities Collateral Concentration Controls
• 4. Margin Client Concentration Controls
• 5. Haircuts for Securities Collateral
• 6. Margin Calls, Stopping Further Advances and Purchases of Securities, and Forced Liquidation
• 7. Stress Testing

SECTION 4: COMPLIANCE AND REAL-WORLD LESSONS

• Non-Compliance Scenarios, Self-Reporting, and Enforcement Cases

CONCLUSION

• Key Takeaways & Course Conclusion

Who should attend

This eCourse is primarily targeted at licensed individuals involved in securities margin financing. It is also relevant to middle office and compliance practitioners working in SFC-licensed corporations.