Question 1 (6 marks) [Reference: Topic 1, 3] The following table shows the details of two trades executed by Sha Tin Securities with the same counterparty. Trade reference Transaction type Trading book Trade date Value date Operation Quantity Security Price Counterparty Sha Tin 20184466 Principal 26th November 28th November Buy 8,000 Hang Seng Bank HKD 176.00 David Securities Trade reference Transaction type Trading book Trade date Value date Operation Quantity Security Price Counterparty Sha Tin 20184473 Principal 26th November 28th November Sell 14,000 Hang Seng Bank HKD 177.00 David Securities The security and cash positions records dated 25th November are given below: Hang Seng Bank Ownership Location Trading book X +17,000 - 17,000 Custodian Forever Bright +17,000 -17,000 Hong Kong Dollars Ownership Location Trading book X +6,060,000.00 -6,060,000.00 Custodian Forever Bright +6,060,000.00 -6,060,000.00 Suppose Sha Tin Securities selects the same custodian Forever Bright to handle the settlement of the two trades above. Required: (a) If Sha Tin Securities and David Securities has bilateral netting agreement, use the following template to prepare the pre-settlement trade record as at 26th November (after the trades) for the security position and cash position. Show the positive sign and/or negative sign properly in your record. Hang Seng Bank Ownership Location Hong Kong Dollars Ownership Location (2 marks) (b) Suppose full settlement has occurred for the trades above. Use the following template to prepare the post-settlement trade record as at 28th November (after the trades are settled) for the security position and cash position. Show the positive sign and/or negative sign properly in your record. Hang Seng Bank Ownership Location Hong Kong Dollars Ownership Location (2 marks) (c) Suppose no other trades are settled by the Custodian Forever Bright within the above period. Use the following template to show how the quantity and dollar value entries should look like on settlement date 28th November Custodian Forever Bright Statement of securities account for Sha Tin Securities Entry date Debit Credit Balance Narrative Balance brought forward from 27th November Instruction reference Sha Tin 20184466 & Sha Tin 20184473 Closing balance is at 28th November 28th Nov Custodian Forever Bright Statement of HKD cash account for Sha Tin Securities Entry date Debit Credit Balance 28th Nov Narrative Balance brought forward from 27th November Instruction reference Sha Tin 20184466 & Sha Tin 20184473 Closing balance as at 28th November Question 1 (6 marks) [Reference: Topic 1, 3] The following table shows the details of two trades executed by Sha Tin Securities with the same counterparty. Trade reference Transaction type Trading book Trade date Value date Operation Quantity Security Price Counterparty Sha Tin 20184466 Principal 26th November 28th November Buy 8,000 Hang Seng Bank HKD 176.00 David Securities Trade reference Transaction type Trading book Trade date Value date Operation Quantity Security Price Counterparty Sha Tin 20184473 Principal 26th November 28th November Sell 14,000 Hang Seng Bank HKD 177.00 David Securities The security and cash positions records dated 25th November are given below: Hang Seng Bank Ownership Location Trading book X +17,000 - 17,000 Custodian Forever Bright +17,000 -17,000 Hong Kong Dollars Ownership Location Trading book X +6,060,000.00 -6,060,000.00 Custodian Forever Bright +6,060,000.00 -6,060,000.00 Suppose Sha Tin Securities selects the same custodian Forever Bright to handle the settlement of the two trades above. Required: (a) If Sha Tin Securities and David Securities has bilateral netting agreement, use the following template to prepare the pre-settlement trade record as at 26th November (after the trades) for the security position and cash position. Show the positive sign and/or negative sign properly in your record. Hang Seng Bank Ownership Location Hong Kong Dollars Ownership Location (2 marks) (b) Suppose full settlement has occurred for the trades above. Use the following template to prepare the post-settlement trade record as at 28th November (after the trades are settled) for the security position and cash position. Show the positive sign and/or negative sign properly in your record. Hang Seng Bank Ownership Location Hong Kong Dollars Ownership Location (2 marks) (c) Suppose no other trades are settled by the Custodian Forever Bright within the above period. Use the following template to show how the quantity and dollar value entries should look like on settlement date 28th November Custodian Forever Bright Statement of securities account for Sha Tin Securities Entry date Debit Credit Balance Narrative Balance brought forward from 27th November Instruction reference Sha Tin 20184466 & Sha Tin 20184473 Closing balance is at 28th November 28th Nov Custodian Forever Bright Statement of HKD cash account for Sha Tin Securities Entry date Debit Credit Balance 28th Nov Narrative Balance brought forward from 27th November Instruction reference Sha Tin 20184466 & Sha Tin 20184473 Closing balance as at 28th November
