Debit Balance in Securities Account – Compulsory Currency Conversion Arrangement
To ensure customers’ timely settlement of outstanding balances arising from
different stock exchange markets (Hong Kong and A-share market; the U.S. market)
and to avoid unnecessary interest charges due to delay or omission of fund transfer,
we are going to implement a compulsory currency conversion arrangement for the
two markets mentioned above with effect from 1 April 2015.
Scope of coverage:
1. Cash and margin securities accounts (excluding investment migration, stock
options as well as borrowing and short selling accounts).
2. For handling currency conversion in respect of a) the Hong Kong and Mainland’s
A-share market (HKD and RMB); and b) the U.S. market (HKD and USD), which
means no transfer of balance will be effected across different markets.
3. A debit balance equivalent to HKD1,000 or less will not be covered under this
conversion arrangement.
Criteria for currency conversion:
1. Currency conversion is confined to the same account within the same market.
2. Currency Conversion applies when a debit balance denominated in one currency
and a balance denominated in another currency co-exist within the same market.
3. The balance/debit balance representing the lowest HKD equivalent will be
converted in full into another currency to offset the debit balance/balance.
Example of currency conversion:
If a customer’s purchase of RMB-settled securities renders his/her account in respect
of the Hong Kong and A-share market having insufficient RMB balance for settlement,
there will be a RMB debit balance standing in the account on the settlement date. In
this case, we will convert the HKD balance within the same market to RMB for
settlement of the RMB debit balance, until the RMB debit balance or the HKD
balance drops to zero. Likewise, if the customer has a HKD debit balance and a RMB
balance in his/her account within the same market, we will arrange conversion of the
RMB balance to HKD for settlement of the debit balance, until the HKD debit balance
or the RMB balance falls to zero. Such a conversion arrangement also applies to
conversion between USD and HKD in the U.S. market. The compulsory currency
conversion arrangement does not apply to transfer of balance between accounts of
different markets. For details of different conversion scenarios, please refer to
Attachment 1.
Such compulsory conversion will be effected at the exchange rate prevailing at 12:00
noon on the conversion date taking into account the then debit balance of the
customer. If the conversion date coincides with a currency settlement holiday or a
Hong Kong public holiday, compulsory conversion of the said currency will be
suspended.
Customers shall deposit the required currency into the account for settlement of the
relevant debit balance to avoid suffering from foreign exchange loss as a result of
fund transfer. Any foreign exchange loss arising from currency conversion shall be
borne by the customer and the rate of foreign exchange shall be determined at our
sole and absolute discretion.
If still have queries on compulsory conversion arrangement, please feel free to
contact our Customer Service Officer at (852) 3583 3388/ (86) 755 8266 3232.
Attachment 1
Example of inclusion into the compulsory conversion arrangement
Example 1
RMB debit balance (adequate
(
HKD balance)
Before
Hong Kong and Mainland’s A-share market
conversion
Currency
Balance
Exchange rate
HKD
5,000
1
5,000
RMB
-2,000
1.25
-2,500
After
Currency
conversion
HKD
2,500
RMB
0
HKD equivalent
Balance
Examples of exclusion from the compulsory conversion arrangement
Example 1
Balance and debit balance in different markets
Cases involving currencies beyond the scope of conversion
Example 2
arrangement