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CONTROL AND RISK MANAGEMENT QUESTIONNAIRE

By Stacy Henderson,2014-08-09 11:47
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CONTROL AND RISK MANAGEMENT QUESTIONNAIRE

    FORM

(Made for the purposes of compliance with the requirements of section 156(1)(a) of the Securities

    and Futures Ordinance (Cap.571) as amplified in section 3(3) of the Securities and Futures

    (Accounts and Audit) Rules (Cap.571P))

    SECURITIES AND FUTURES COMMISSION

    BUSINESS AND RISK MANAGEMENT QUESTIONNAIRE

    FOR ASSOCIATED ENTITY

Name of Associated Entity:

    (The Associated Entity”)

     Name of Intermediary:

    (“The Intermediary”)

Financial year ended:

Completed by:

Name: Position:

Phone No.:

Approved by:

Name: Position:

Phone No.:

    FOREWORD

    Associated Entities are required under the Securities and Futures (Accounts and Audit) Rules to complete a Business and Risk Management Questionnaire (“BRMQ”) and submit it within 4 months after the end of the financial year to the Securities and Futures Commission (“SFC”) together with their audited accounts. The BRMQ aims to obtain information about the business operation and risk management measures of the Associated Entity, including controls and procedures in ensuring compliance with the regulatory requirements applicable to the Associated Entity. The BRMQ may also be used as a self-assessment tool for the Associated Entity to understand its business operation and assess the relevant risk management measures and internal controls. The Associated Entity is expected to complete the questionnaire to the best of its knowledge in order to accurately reflect its own operations and controls.

    The SFC recognises that Associated Entities may adopt different policies and procedures given significant differences that exist in the nature and scope of their business activities, organizational and legal structures as well as degree of management supervision. Therefore, the questions in the BRMQ are not intended to imply, nor should be construed as, a single set of generally acceptable internal control or risk management practices.

    Space is provided in each section for the Associated Entity to supplement its answers with additional information. Please use additional sheets where required.

    Unless defined or the context requires otherwise, terms bear the same meanings given to them in the Securities and Futures Ordinance. If you have any question in relation to this questionnaire, please contact your responsible case officer in the Intermediaries Supervision Department.

Completed BRMQ should be submitted to:

     Intermediaries Supervision Department

     Securities and Futures Commission

     8th Floor, Chater House

     8 Connaught Road Central

     Hong Kong

    SECURITIES AND FUTURES COMMISSION

    BUSINESS AND RISK MANAGEMENT QUESTIONNAIRE

    FOR ASSOCIATED ENTITY

     I. BUSINESS OVERVIEW

     Yes No N/A Management and Supervision

    1. Does the Associated Entity have policies and procedures for the safekeeping of

    client assets?

2. How promptly does the management of the Associated Entity review the

    management information or reports relating to safekeeping of client assets?

    Supplementary Information

    II. RISK MANAGEMENT

    OPERATIONAL RISK

     Handling of Client Accounts

    3. Where the Associated Entity receives or holds client assets as nominee on

    behalf of clients of the intermediary, does it issue any statement of account to

    the clients?

    4. Does the Associated Entity have any clients who are professional investors?

     If yes, please specify the number of clients who are professional investors as at

     the end of financial year.

    5. Does the Associated Entity have any clients who have given hold mail

    instructions to the Associated Entity?

     If yes,

     (i) please specify the number of such clients as at the end of the financial

    year.

     (ii) does the Associated Entity have procedures which are designed to

     (a) obtain or renew written hold mail instructions from the client?

     (b) verify the client’s signature on the instructions against the

    signature records?

     (c) require the client or person authorized by him to acknowledge the

    collection of the receipts and/or statements of account?

    - 1 -

    Supplementary Information

     Asset Protection

Bank and Cash

    6. (i) How frequently does the Associated Entity perform bank reconciliations

    for

     (a) segregated account?

     (b) other bank account?

     (ii) How promptly are the discrepancies in the bank reconciliation followed

    up?

(Questions 7 to 10 below are only applicable to an Associated Entity of a Licensed Corporation which receives

    or holds client money in Hong Kong)

     Yes No N/A 7. Does the Associated Entity have the following procedures which are designed

    to ensure that all payments involving client money are appropriately processed

    by

     (i) obtaining proper instruction from the client?

     (ii) verifying the client’s signature on the instruction against the signature

    records?

     (iii) if the instruction is provided in the form of an electronic record, ensuring

    that the requirements provided in the Electronic Transactions Ordinance

    are satisfied?

     (iv) checking the availability of funds in the client account?

     (v) obtaining management approval?

     (vi) ensuring payment is made only to the client or any person to whom the

    client has instructed in writing the money to be paid?

    8. Does the Associated Entity issue cash or third party cheques to clients?

     If yes, before issuing cash or third party cheques, does the Associated Entity

    require to obtain

     (i) written client authorization?

     (ii) management approval?

    9. Does the Associated Entity have procedures which are designed to ensure that

    cheque / money deposited by a client is correctly credited to the respective

    client account as instructed?

     Yes No N/A 10. Does the Associated Entity allow transfer of account balances among different

    clients?

     If yes, does the Associated Entity have procedures to check that such transfers

    are appropriately processed?

    - 2 -

Supplementary Information

Securities (Questions 11 to 13 below are only applicable to an Associated Entity of an Intermediary which

    receives or holds client securities in Hong Kong)

    11. (i) How frequently does the Associated Entity perform stock reconciliation?

     (ii) How promptly are the discrepancies in the stock reconciliation followed

    up?

    12. Does the Associated Entity have procedures which are designed to require

    clients to provide proof of ownership if the clients deposit physical scrip with

    the Associated Entity?

    13. Does the Associated Entity allow transfer of securities among different clients?

     If yes, does the Associated Entity have procedures to check that such transfers

    are appropriately processed?

    Supplementary Information

     COMPLIANCE RISK

    14. Does the Associated Entity have a designated function overseeing and handling

    the following areas?

     (i) client’s complaints

     (ii) regulatory compliance

     (iii) money laundering

     If no, please state the alternative arrangement:

    15. Does the Associated Entity have the following functions?

     (i) internal audit

     (ii) compliance

     If yes, please specify the reporting line of the internal audit and/or compliance

    function.

     Yes No N/A 16. Has the Associated Entity received any serious client complaints relating to the

    following areas in the last 12 months alleging

     (i) non-receipt of receipt(s) and/or statement(s) of account?

     (ii) unauthorized transactions?

    - 3 -

     (iii) incorrect account balances and/or stock holding on statement(s) of

    account (except for disputes over price and fee charges)?

    Supplementary Information

    - 4 -

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