FINANCIAL ASSETS AND FINANCIAL LIABILITIES

12 Months Ended

Dec. 31, 2021

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

3.    FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial Assets and Liabilities Measured at Fair Value

The following tables set forth, by level within the fair value hierarchy (see Note 2), financial assets measured at fair value as of December 31, 2020 and 2021. As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement.

	Financial Assets At Fair Value as of
	December 31, 2021
	Level 1	Level 2	Level 3	Total
	(HK$ in thousands)
Financial assets, measured at fair value
Short-term investments	1,169,741	—	—	1,169,741
Other financial assets (1)	—	598	—	598
Total financial assets, measured at fair value	1,169,741	598	—	1,170,339

(3) The Group enters into currency futures contracts to manage currency exposure associated with anticipated receipts and disbursements occurring in a currency other than the functional currency of the entity. The currency futures contracts are valued using broadly distributed bank and broker prices, and are classified as Level 2 of the fair value hierarchy since inputs to their valuation can be generally corroborated by market data.

The Group did not hold any financial assets measured at fair value as of December 31, 2020.

Transfers Between Level 1 and Level 2

Transfers of financial assets and financial liabilities at fair value to or from Levels 1 and 2 arise where the market for a specific financial instrument has become active or inactive during the period. The fair values transferred are ascribed as if the financial assets or financial liabilities had been transferred as of the end of the period. During the years ended December 31, 2021 and 2020, there were no transfers between levels for financial assets and liabilities, at fair value.

3.    FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Continued)

Financial Assets and Liabilities Not Measured at Fair Value

The following financial instruments are not measured at fair value in the Group’s consolidated balance sheets at December 31, 2020 and 2021, but require disclosure of their fair values. The estimated fair value of such instruments at December 31, 2020 and 2021 approximates their carrying value due to their generally short maturities. If measured at fair value in the financial statements, these financial instruments would be classified based on the lowest level of any input that is significant to the fair value measurement.

	As of December 31, 2021
	Carrying	Fair
	Value	Value
	(HK$ in thousands)
Financial assets, not measured at fair value
Cash and cash equivalents	4,555,096	4,555,096
Cash held on behalf of clients	54,734,351	54,734,351
Restricted Cash	2,065	2,065
Securities purchased under resale agreements	106,203	106,203
Loans and advances	29,587,306	29,587,306
Receivables:
Clients	469,577	469,577
Brokers	7,893,927	7,893,927
Clearing organizations	1,961,121	1,961,121
Fund management companies and fund distributors	72,340	72,340
Interest	50,829	50,829
Other financial assets	387,072	387,072
Total financial assets, not measured at fair value	99,819,887	99,819,887

	As of December 31, 2021
	Carrying	Fair
	Value	Value
	(HK$ in thousands)
Financial liabilities, not measured at fair value
Amounts due to related parties	87,459	87,459
Payables:
Clients	59,127,439	59,127,439
Brokers	7,599,233	7,599,233
Clearing organizations	393,782	393,782
Fund management companies and fund distributors	56,690	56,690
Interest	15,359	15,359
Borrowings	6,357,405	6,357,405
Securities sold under agreements to repurchase	4,467,861	4,467,861
Operating lease liabilities	260,579	260,579
Other financial liabilities	937,970	937,970
Total financial liabilities, not measured at fair value	79,303,777	79,303,777

3.    FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Continued)

Financial Assets and Liabilities Not Measured at Fair Value (Continued)

	As of December 31, 2020
	Carrying	Fair
	Value	Value
	(HK$ in thousands)
Financial assets, not measured at fair value
Cash and cash equivalents	1,034,668	1,034,668
Cash held on behalf of clients	42,487,090	42,487,090
Term deposit	300,000	300,000
Loans and advances	18,825,366	18,825,366
Receivables:
Clients	735,145	735,145
Brokers	5,780,461	5,780,461
Clearing organizations	1,243,928	1,243,928
Fund management companies and fund distributors	297,622	297,622
Interest	19,876	19,876
Other financial assets	251,672	251,672
Total financial assets, not measured at fair value	70,975,828	70,975,828

	As of December 31, 2020
	Carrying	Fair
	Value	Value
	(HK$ in thousands)
Financial liabilities, not measured at fair value
Amounts due to related parties	87,169	87,169
Payables:
Clients	46,062,842	46,062,842
Brokers	4,533,581	4,533,581
Clearing organizations	324,266	324,266
Fund management companies and fund distributors	127,442	127,442
Interest	5,493	5,493
Borrowings	5,482,818	5,482,818
Securities sold under agreements to repurchase	5,453,037	5,453,037
Operating lease liabilities	222,231	222,231
Other financial liabilities	96,800	96,800
Total financial liabilities, not measured at fair value	62,395,679	62,395,679

3.    FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Continued)

Financial Assets and Liabilities Not Measured at Fair Value (Continued)

Netting of Financial Assets and Financial Liabilities

The Group’s policy is to net the receivables from and payables to clearing organizations that meet the offsetting requirements prescribed in ASC Topic 210-20. The following tables represents the amounts of financial instruments that are offset in the consolidated balance sheets as of December 31, 2021 and 2020.

	Effects of offsetting on the balance sheet			Related amounts not offset
		Gross		Amounts
		amounts	Net amounts	subject to
		set off in the	Presented in	master	Financial
	Gross	balance	the balance	netting	instrument	Net
As of December 31, 2021	amount	sheet	sheet	arrangements	collateral	amount
	HK$in thousands
Financial Assets
Amounts due from clearing organizations	7,596,090	(5,634,969)	1,961,121	—	—	1,961,121
Financial liabilities
Amounts due to clearing organizations	6,028,751	(5,634,969)	393,782	—	—	393,782

	Effects of offsetting on the balance sheet			Related amounts not offset
		Gross		Amounts
		amounts	Net amounts	subject to
		set off in the	presented in	master	Financial
	Gross	balance	the balance	netting	instrument	Net
As of December 31, 2020	amount	sheet	sheet	arrangements	collateral	amount
	HK$ in thousands
Financial Assets
Amounts due from clearing organizations	12,614,684	(11,370,756)	1,243,928	—	—	1,243,928
Financial liabilities
Amounts due to clearing organizations	11,695,022	(11,370,756)	324,266	—	—	324,266