# FUTU CLEARING INC X-17A-5 (2025-02-28) — Broker-dealer annual report - Company: FUTU CLEARING INC - Form: X-17A-5 - Filed: 2025-02-28 - Period: 2024-12-31 - Accession: 0001753566-25-000003 - CIK: 1753566 - File #: 8-70215 - Type: Broker-dealer - Material weakness: No - Auditor: Baker Tilley US, LLP - Auditor location: New York, NY - Contact: Irene Shen - Phone: 9725910054 - Email: ishen@futuclearing.com - Website: futuclearing.com - Signed by: Patrick Kelly (Chief Executive Officer) Original filing: https://www.sec.gov/Archives/edgar/data/1753566/000175356625000003/FUTUFinStmtsPublic2024.pdf --- {0}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OMB APPROVAL OMB Number: 3235-0123 Expires: Nov. 30, 2026 Estimated average burden hours per response: 12 sec file number 8-70215 # ANNUAL REPORTS FORM X-17A-5 PART III FACING PAGE Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 AND ENDING 12/31/2024 filing for the period beginning 01/01/2024 MM/DD/YY MM/DD/YY A. REGISTRANT IDENTIFICATION # NAME OF FIRM: FUTU Clearing Inc. TYPE OF REGISTRANT (check all applicable boxes): ■ Broker-dealer □ Check here if respondent is also an OTC derivatives dealer □ Major security-based swap participant ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use a P.O. box no.) # 12750 Merit Drive, Suite 475 | | (No. and Street) | | | | | | | |--------------------------------------------------------------------------------------------------|------------------------------------------------------------|--------------------------------------------|--|--|--|--|--| | Dallas | TX | 75251 | | | | | | | (City) | (State) | (Zip Code) | | | | | | | PERSON TO CONTACT WITH REGARD TO THIS FILING | | | | | | | | | Irene Shen | 972-591-0054 | IShen@futuclearing.com | | | | | | | (Name) | (Area Code - Telephone Number) | (Email Address) | | | | | | | | B. ACCOUNTANT IDENTIFICATION | | | | | | | | INDEPENDENT PUBLIC ACCOUNTANT whose reports are contained in this filing*
Baker Tilly US, LLP | | | | | | | | | | | | | | | | | | | (Name - if individual, state last, first, and middle name) | 10001
NY | | | | | | | 66 Hudson Blvd, Suite 2200
(Address) | New York
(City) | (State)
(Zip Code) | | | | | | | 10/22/2003 | | 23 | | | | | | | (Date of Registration with PCAOB)(if applicable) | | (PCAOB Registration Number, if applicable) | | | | | | \* Claims for exemption from the requirement that the annual reports of an independent public accountant must be supported by a statement of facts and circumstances relied on as the basis of the exemption. See 17 CFR 240.17a-5(e)(1)(ii), if applicable. Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. {1}------------------------------------------------ | OATH OR AFFIRMATION | |-----------------------------------------------------------------------------------------------------------------------------------------| | Patrick Kelly
the many and many be and a many swear (or affirm) that, to the best of my knowledge and belief, the | | financial report pertaining to the firm of FUTU Clearing Inc
as of a more and as of | | 12/31
, 2024 , is true and correct. I further swear (or affirm) that neither the company nor any | | partner, officer, director, or equivalent person, as the case may be, has any proprietary interest in any account classified solely | | as that of a customer. | | Signature: | | Title: | | Chief Executive Officer
KEMOND WHITE | | Notary ID #133314812
My Commission Expires | | Notary Public
September 3, 2025 | | This filing ** contains (check all applicable boxes): | | a) Statement of financial condition. | | [ (b) Notes to consolidated statement of financial condition. | | (c) Statement of income (loss) or, if there is other comprehensive income in the period(s) presented, a statement of | | comprehensive income (as defined in § 210.1-02 of Regulation S-X). | | = (d) Statement of cash flows. | | = (e) Statement of changes in stockholders' or partners' or sole proprietor's equity. | | [f) Statement of changes in liabilities subordinated to claims of creditors. | | (g) Notes to consolidated financial statements. | | (h) Computation of net capital under 17 CFR 240.15c3-1 or 17 CFR 240.18a-1, as applicable. | | [i) Computation of tangible net worth under 17 CFR 240.18a-2. | | @ (j) Computation for determination of customer reserve requirements pursuant to Exhibit A to 17 CFR 240.15c3-3. | | (k) Computation for determination of security-based swap reserve requirements pursuant to Exhibit B to 17 CFR 240.15c3-3 or | | Exhibit A to 17 CFR 240.18a-4, as applicable. | | (I) Computation for Determination of PAB Requirements under Exhibit A to § 240.15c3-3. | | (m) Information relating to possession or control requirements for customers under 17 CFR 240.15c3-3. | | [1] Information relating to possession or control requirements for security-based swap customers under 17 CFR | | 240.15c3-3(p)(2) or 17 CFR 240.18a-4, as applicable. | | = | | worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-2, as applicable, and the reserve requirements under 17 | | CFR 240.15c3-3 or 17 CFR 240.18a-4, as applicable, if material differences exist, or a statement that no material differences
exist. | | [] {p} Summary of financial data for subsidiaries not consolidated in the statement of financial condition. | | | - @ (q) Oath or affirmation in accordance with 17 CFR 240.17a-12, or 17 CFR 240.18a-7, as applicable. - (r) Compliance report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [s] Exemption report in accordance with 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [ (t) Independent public accountant's report based on an examination of the statement of financial condition. - | (u) Independent public accountant's report based on an examination of the financial statements under 17 CFR 240.17a-5, 17 CFR 240.18a-7, or 17 CFR 240.17a-12, as applicable. - | (v) Independent public accountant's report based on an examination of certain statements in the compliance report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [ (w) Independent public accountant's report based on a review of the exemption report under 17 CFR 240.17a-5 or 17 CFR 240.18a-7, as applicable. - [ (x) Supplemental reports on applying agreed-upon procedures, in accordance with 17 CFR 240.17a-12, as applicable. - O (y) Report describing any material inadequacies found to have existed since the date of the previous audit, or a statement that no material inadequacies exist, under 17 CFR 240.17a-12(k), O (z) Other: \*\* To request confidential treatment of certain portions of this filing, see 17 CFR 240.17a-5(e)(2), os applicable. {2}------------------------------------------------ Financial Statements and Report of Independent Registered Public Accounting Firm on Financial Statements and Supplemental Information As of December 31, 2024 This report is deemed Confidential in accordance with Rule 17a5-(e)(3) under the Securities Exchange Act of 1934 This report is deemed CONFIDENTIAL in accordance with Rule 17a-5(e)(3) under the Securities Exchange Act of financial condition, bound separately, has been filed with the Securities and Exchange Commission simultaneously herewith as a PUBLIC document. {3}------------------------------------------------ # Table of Contents | Contents | Page | |--------------------------------------------------------------------------------------------------------|--------| | Report of Independent Registered Public Accounting Firm | 1 | | Statement of Financial Condition | 2 | | Statement of Operations | 3 | | Statement of Changes in Shareholder's Equity | 4 | | Statement of Cash Flows | 5 | | Notes to Financial Statements | 6 - 13 | | Supplemental Information | | | Schedule I - Computation of Net Capital Under Rule 15c3-1 of
the Securities and Exchange Commission | 14 | | Schedule II - Computation for Determination of Reserve Requirement under Rule 15c3-3 | 15 | | Schedule III - Computation for PAB Reserve Requirements under Rule 15c3-3 | 16 | | Schedule IV - Information Relating to Possession or Control Requirements under Rule 15c3-3 | 17 | | Report of Independent Registered Public Accounting Firm Regarding Rule 15c3-3 Compliance Report | 18 | | Rule 15c3-3 Compliance Report | 19 | {4}------------------------------------------------ ![](_page_4_Picture_0.jpeg) # Report of Independent Registered Public Accounting Firm To the Shareholder and Those Charged With Governance of Futu Clearing Inc. # Opinion on the Financial Statements We have audited the accompanying statement of financial condition of Futu Clearing Inc. (the Company) as of December 31, 2024, the related statements of operations, changes in shareholder's equity and cash flows for the year then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America. # Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. # Supplemental Information The Schedule I - Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission. Schedule II - Computation for Determination of Reserve Requirement Under Rule 15c3-3, Schedule III -Computation for PAB Reserve Requirements Under Rule 15c3-3, and Schedule IV - Information Relating to Possession or Control Requirements Under Rule 15c3-3 (collectively, the supplemental information), has been subjected to audit procedures performed in conjunction with the audit of the Company's financial statements. The supplemental information is the responsibility of the Company's management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with 17 C.F.R. § 240.17a5. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole. We have served as the Company's auditor since 2019. New York, New York February 27, 2025 Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. {5}------------------------------------------------ ## Statement of Financial Condition December 31, 2024 ## ASSETS | 87.990.181 | |---------------| | 3,889.088.470 | | 23.282.985 | | 169,502,455 | | 197,789,733 | | 1,763,905,618 | | 2.008.058 | | 481,788 | | 1,638,662 | | 322.206 | | 5,639,926 | | | #### TOTAL ASSETS 6,453,596,887 ## LIABILITIES AND SHAREHOLDER'S EQUITY | LIABILITIES | | |-------------------------------------------------------------------------------------|--------------------| | Securities loaned | 5,190,241,299
ക | | Payables to customers and PAB | 386,350,531 | | Payables to brokers or dealers & clearing organizations | 15,168,959 | | Securities sold not yet purchased - at fair market value | 11.760 | | Operating lease liability, net | 552.880 | | Payables to affiliates | 9,730,091 | | Equity Securities-Fractional Share Repurchase Obligations | 322.206 | | Accounts payable and accrued liabilities | 12,821,648 | | TOTAL LIABILITIES | 5.615.199.374 | | Shareholder's Equity | | | Common stock (1,000 shares authorized, issued and outstanding at \$.0001 par value) | | | Additional paid in capital | 488,370,359 | | Retained earnings | 350,027,154 | | TOTAL SHAREHOLDER'S EQUITY | 838,397,513 | | TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | 6,453,596,887
ക | The accompanying notes are an integral part of these financial statements {6}------------------------------------------------ ## Statement of Operations For the Year Ended December 31, 2024 | REVENUES | | | |------------------------------------------|-------|-------------| | Securities lending revenue | ક | 142,360,951 | | Interest income | | 120,339,950 | | Payment for order flow | | 106,007,642 | | Clearing fee revenue | | 37,114,538 | | Other revenue | | 4,360,433 | | | | | | Total revenues | | 410,183,514 | | OPERATING EXPENSES | | | | Securities lending rebate expense | | 158,022,593 | | Salaries and related costs | | 32,293,669 | | Clearing charges | | 5,824,085 | | Data services | | 3,547,012 | | Professional fees | | 412,428 | | Insurance expense | | 45,637 | | Technology costs | | 1,885,721 | | Interest expense | | 11,396,607 | | Furniture, equipment and office expense | | 51,213 | | Order management systems | | 1,192,005 | | Telephone, computer and internet expense | | 389,111 | | Occupancy expenses | | 178,701 | | Regulatory fees | | 1,817,876 | | Depreciation and amortization | | 581,999 | | Other general expenses | | 5,140,180 | | Total expenses | | 22,778,837 | | INCOME BEFORE INCOME TAXES | | 187,404,677 | | Federal Income Tax | | 34,486,386 | | NET INCOME | સ્ત્ર | 152,918,291 | The accompanying notes are an integral part of these financial statements {7}------------------------------------------------ Statement of Changes in Shareholder's Equity For the Year Ended December 31, 2024 | | Common Stock | | | | | | | | | |------------------------------|--------------|---|-----------------------------------|---|-------------------------------|----|----------------------------|----|-------------| | | | | No. of Shares \$0.0001 Par Amount | | Additional Paid in
Capital | | Retained
Earnings | | Total | | Balance at January 1, 2024 | 1,000 | S | 0.10 | 6 | 484.405.991 | 69 | 197,108,863 | 60 | 681,514,854 | | Stock based compensation | | | | | 3.964.368 | | | | 3,964,368 | | Net income | | | | | | | 152.918.291 | | 152.918.291 | | Balance at December 31, 2024 | 1.000 5 | | 0.10 \$ | | | | 488,370,359 \$ 350,027,154 | P | 838.397,513 | {8}------------------------------------------------ ## Statement of Cash Flows For the Year Ended December 31, 2024 | CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | |---------------------------------------------------------------------------------------------------------------------------|------|-----------------|--|--| | Net income | ક્તિ | 152,918,291 | | | | Adjustments to reconcile net income to net cash provided by | | | | | | operating activities | | | | | | Non-cash lease expense | | (17,394) | | | | Depreciation and amortization | | 581,999 | | | | Stock-based compensation | | 3,964,368 | | | | Changes in operating assets and liabilities | | | | | | Receivables from customers | | (1,857,271,866) | | | | Receivables from brokers or dealers | | (20,602,566) | | | | Deposits in and receivables from clearing organizations | | (74,540,277) | | | | Securities owned - At fair value | | 78,474,449 | | | | Securities borrowed | | (1,431,426,748) | | | | Receivables from affiliates | | 1,694,476 | | | | Other assets | | (17,999) | | | | Securities loaned | | 3,321,111,200 | | | | Payables to customers and PAB | | (2,445,838) | | | | Payables to brokers or dealers & clearing organizations | | 7,656,182 | | | | Securities sold not yet purchased - at fair market value | | 11,760 | | | | Payable to affiliates | | 6,832,518 | | | | Accounts payable and accrued expenses | | (8,398,261) | | | | Net cash provided by operating activities | | 178,524,294 | | | | CASH FLOWS FROM NVESTING ACTIVITIES: | | | | | | Assets Purchased | | (50,588) | | | | Net cash used in leasehold improvement | | (50,588) | | | | | | | | | | Net increase in cash and cash equivalents, and cash segregated in accordance with federal laws and other regulations | | 178,473,706 | | | | Cash and cash equivalents, and cash segregated in accordance with federal laws and other regulations at beginning of year | | 221,463,280 | | | | Cash and cash equivalents, and cash segregated in accordance with federal laws and other regulations at end of year | ક્તિ | 399,936,986 | | | | Reconciliation of cash and cash segregated in accordance with federal laws and other regulations | | | | | | ક્તિ
Cash and cash equivalents - end of year | | | | | | Cash segregated in accordance with federal laws and other regulations - end of year | | 87,990,181 | | | | Cash and cash equivalents, and cash segregated in accordance with federal laws and other regulations - end of year | લ્ક | 399,936,986 | | | The accompanying notes are an integral part of these financial statements {9}------------------------------------------------ #### 1. Organization and Nature of Business FUTU Clearing Inc. (the "Company") was incorporated in the state of Delaware on August 13, 2018. The Company is a wholly owned subsidiany of FUTU US Inc. (the Parent). The Company is a broker registered with the Securities and Exchange Commission ("SEC") and a member of the Financial Industry Requlatory ("FINRA"). The Company received its Broker approval from SEC and FINRA on May 28, 2019. The Company provides execution. settlement and clearance services of equities for correspondent clients affiiated with the Company on an omnibus basis, and economically dependent on its relationship with the affiliates; the absence of this relationship could have a material impact on the Company's results. #### 2. Summary of Significant Accounting Policies #### Basis of Presentation The financial statements have been prepared in accounting principles generally accepted in the United States of America ("US GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for financial reporting. #### Use of Estimates The preparation of financial statements in acordance with GAP requires management to make estimations that affect the reported anounts of assels and liabilities and disclosure of continent asses and liabilities at the date of the financial statements and accompanying notes. These estimates and assumptions are based on judgement and the time. Accordingly, actual results could differ from these estimates. Such estimates include valuation of certain investments and compensation accruals. #### Cash and Cash Equivalents Cash and cash equivalents consists of money market funds and highly liguid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet margin requirements at clearing banks. The Company's cash is held at financial institutions which are insurance Corporation and at times may exceed federally insured limits. The Company has not experienced losses in such accounts and believes it is not subject to any significant credit risk on cash. #### Cash Segregated in Accordance with Federal Laws and Other Requlations Cash segregated in compliance with federal regulatied deposits in special reserve bank accounts for the exclusive benefit of customers and broker dealers in accordance with Rule 15c3-3 of Securities Exchange Act of 1934 ( the "Exchange Act") and other regulations. #### Receivables from and Payables to Customers Accurts receivables for and payables to customers are recorded on a settlement date on cash and margin transactions. Securities owned by clients are held as collateral for receivables. #### Restricted Collateral Managed by Third-Party The Company provides a 'fully-paid securities lender which enrolled customers ban their fully paid and excess margin securities to the Company who in turn lends to various market participants. Under the requirements of Rule 153-3, the Company fully collateralized these loans with cash and/or cash equivalents. #### Revenue Recognition The Company follows Financial Accounting Stand (FASB) ASC 606, Revenue from Contracts with Customers ("ASC 606"). The revenue recognition guidance requires that an entity recognize revenue to depict the transfer of customers in an anount that reflects the consideration to which the entitled in exchange for those goods or services. The guidance requires an entity to follow a five step model to (a) identify the contract(s) with a customance obligations in the contract, (c) determine the transaction price, (d) allocale the fransaction price to the performance obligations in the recognize revenue when (or as) the entity satisfies a performance obligation. In delemining the transaction processor only to the exert that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. #### Clearing Fee and Interest Income The Company's revenues mainly consist of clearing fees are billed and collected in accordance with the Company's contracts with its customers. Clearing fees are based upon rate set with the dient. Rates are tiered depending on yolune. The revenue is generally recongnized on a trade basis Income is based on customers debit balance with the Company and accrued daily at a agreed upon rate. Interest Income is charged once at the end of the month and debited from the customers account. #### Payment for Order Flow The Company earns payment for order for routing brokers for routing customer trades to that broker often receives payment from the securities exchange for providing to the market. The executing broker purchases the order flow from the Company at an agreed upon rate for trades routed to them. Payment for order flow is recognized at a point in time upon trade execution. {10}------------------------------------------------ #### Revenue Recognition (continued) #### Securities Lending The Company participates in a securities lending program. the Company loans out customer excess margin securities to a counterparty in exchange for cash at a stated interest rates are determined by the availability and demand for the specifity being lent Revenues from securities loaned are accrued on these agreed upon terms. The Company records receivables for securities loaned transactions at month end and generally collects any outstanding amounts due within 30 days. #### Disaggregation of Revenue All of the Company's revenues for the year ended December 31, 2024 are disaggregated on the statement of operations. | Total Revenue | \$ 410,183.514 | |-------------------------------|----------------| | Other income | 4,360,433 | | Clearing fee revenue | 37.114.538 | | Payment for order flow | 106.007.642 | | Interest income | 120.339.950 | | Securities lending revenue \$ | 142,360,951 | #### Income Taxes The Company is included in the consolidated federal and state income tax returns filed by the Parent, Pursuant to an expense sharing agreement, the Parent allocates to the Company its share of the consolidated feceral and state income tax expense or benefit based upon statutory rates applied to the Company's earnings as if it were filing a separate income tax return. Deferred tax assets and deferred laxlities are recognized for temporary differences between the financial reporting and tax bases and liabilities. Defered taxes are measured the tax rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on deferred tax assets and defered tax lighter changes in income lax laws are recognized in the geriod during which such changes are enacted. As of December 31, 2024, there were no material temporary differences between financial reporting and tax reporting bases. The guidance on accounting for uncertain aw uncertain tax positions should be recognized, measured, presented and disclosed in the Financial Statements. This guidance requires the evaluations taken in the course of preparing the Company's financial statements to deternine whether the lax positions are more likely than not to be realized as a fax benefit or experience wor interest and peraties, as well as the related unreognized in income tax expense. There were no uncertain positions as of December 31, 2024. #### Fixed Assets Fixed assets includes software and leasehold in ost, less accumulated depreciation and anortization. Depreciation is provided on a straight-ine basis using estimated useful linerovements are amortized over the lesser of the economic useful life of the improvement or the term or the lease. #### Financial Instruments-Credit Losses In June 2016, the FASB issued Accounting Standards Coditication "ASC" Topic 326. The ASC provides credit Losses (CECL), which requires earlier recognition additional transcarency about redit risk. The CCL methodology ulilizes a lifetime "expected credit loss" neasurement objective for the recognition of credit losses for bans, held-to-maturity securities and other receivables at the time the financial asset is originaled or acquired to sess are adjusted each period for changes in expected lifeline credit losses. Management does not anticipate any expected credit losses and therefore, has not made any allowance for credit losses for the year ending December 31. 2024. #### Deposits in and receivables from Clearing Organizations Deposits with clearing organizations represent with central clearing agencies for the purposes of supporting clearing and settlement activities. Receivables from clearing organizations include anounts due from the Deposities Clearing Copparities Clearing Copparion ("NSC") and Opions Clearing Corporation ("OCC"). Each has specific industry standard daily reconcilies activity, net settlements, and a daily update of margin and clearing for NSCC and OCC. DTC's clearing fund reguirement is updated monthly. There is no prior loss history with these clearing organizations. Risk of loss from clearing organizations is expected to be immaterial over the life of these receivables. | Deposits in Clearing
Organizations | | | | | | | |---------------------------------------|---|-------------|--|--|--|--| | OCC | S | 97.896.665 | | | | | | NSCC | | 67,213,710 | | | | | | DTC | | 4.392.080 | | | | | | | S | 169,502,455 | | | | | {11}------------------------------------------------ #### Receivable from and Payable to Broker-Dealers Receivables include ancunts receivable relations, non-customer receivables, and amounts related to unsettled securities adivities. Pavables include anounts anyalins, non-customer payables, and amounts related to unsettled securities adjulies. These balances are reported net by counterparty when the right of offset exists. #### Fair Value Of Financial Instruments The Company records its financial assels and liabilities at fair value provides a framework for measuring fair value that clarifies the definition of fair yalle and expanding far yalue measurements. Fair ralue is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting stardard establishes a three-tier hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value. Level 1 - Quoted prices in active markets for ilabilities in active markets that the entity has the ability to access as of the measurement date. Level 2 - Inputs other than Level 1 that are observation indiredly, such as quoted prices for similar asses or labilities, quoted prices in markets that are not active, or other inputs that are observable market data for substantially the full term of the assets or labilities. Level 3 - Unobservable inputs that are supported by int that are significant to the fair value of the assets and liabilities. A financial instrument's level within the fair value hierachy is based on thin the fair value hierarchy of any inout that is significant to the fair value measurement. The Company had no level 3 assets as of December 31, 2024. #### Securities Lending Activities Stock borrowed and stock loaned the amount of cash collateral advanced or received, respectively, with all related securities, collateral, and cash both held at and moving through DTC as appropriate for each counterpary. Stock borrowed the Company to deposit cash or other collateral with the lender. Stock of collateral by the Company in the form of cash in an amount generally in excess of the fair value of stock loaned. The carrying value of stock borrowed and opersimates far value as these items are not materially sensitive to shifts in market interest rates because of their short-term nature interest rates or to credit risk because stock borrowed and baned transactions are substantially collateralized For securities financing transactions, the Company's policy in the fair value of the underlying securities as compared with the amounts of cash advanced or received, and the Company may obtain additional collateral pledged to counterparties when appropriate. Securities financing agreements do not create material credit is a lowance for credit losses is not material. The collateral maintenance provisions consisting of collateral is expected to be maintained into the foreseeable future and any expected losses are assumed to not have a material impact to the Company's statement of financial condition. All securities financing activities are transacted under master securities lending agreements that give the company the right, in the event of default, to liquidate collateral held and to offset receivables with the same counterparty. #### Lines of Credit The Company has established lines of credit with the Company's stress testing projections. The cledit ines are intended to be a liquidity option to address any short to fund the Company's operations. The credit lines can be drawn on at any time up to a specified anount for each separate linerest will acrue at a specified annual rate for any period in which the Company borrows finds. The secured and uncommitted line of credit will be seured by customer 31, 2024, the Company has no outstanding liability associated with any of its lines of credit. As of December 31, 2024, the Company maintained the following lines of credit: | | Committed | Uncommitted | | | | | | |----------------|-----------------------------------|-------------|-------------------------|--------------------------------------|---------------------|---------------------|-------------------| | | Unsecured | Secured | Size | Interest Rate | Collateral | Committed | Expiration | | Facility 1 *** | \$ 300.000.000 \$ \$ 300.0000.000 | | \$ 300,000,000 000 000% | | | Unsecured Committed | December 31. 2025 | | Facility 2 | | | | - \$ 250.000,000 \$ 250,000,000 | Secured | Uncommitted None | | | | | | | Syndicate line | Unsecured Committed | | January 20, 2026 | \*\*\* As further disclosed in Note 7, facility 1 is with a related party, Futu Holdings Ltd. #### Counterparty Credit Risk The Company is exposed to risk of loss if an issuer or a counterparty fails to perform its obligations ("default risk"). The Company has established limits for credit exposure, with specific counterparties, maintaining qualifing collateral and continually assessing the creditworthiness of counterparties. In there normal course of business, the Company customer and brokers and brokers and dealers securities transactions. These activities may expose the Company to default rist a client, or counterparty, may fall to satisfy their obligations. The Company seeks to control the risks associated with its customers and dealers' margin activities by requiring customers and brokers and dealers to maintain collateral in compliance with regulatory and internal guidelines. {12}------------------------------------------------ #### Securities owned The Company caries its securities owned at fair value in accordance with FASB ASC 820 and recorded on a trade date basis. US GAAP establishes a hierarchy for inputs used in measuring the use of observable inputs and minizes the use of unobservable inputs. Observable inputs. Observable inputs are inputs that market paticipants would use in prailable market data. Unobservabe inputs are inputs are inputs that refect the Company's assumptions about the facts market participants would use in valuing the investment in the circumstances, Additional detail of securities owned as of December 31, 2024 is provided within Note 12. #### Equity Securities - User-Held Fractional Shares The Company facilitates customer purchases on a notional or fractional basis through its principal account. Fractional shares held by customers do not meet the criteria for derecomition under ASC 860. Transfers and are accounted for as a secured borrowing with a repurchase bligation. When a customer purchases a fractional share, the cash received for the use-held fractional share as pledged collateral, recorded as Equity securities - user-held fractional shares, and an offsetting lability to repurchase the share, repurchase obligations in the Statement of Financial Condition. The Company measures and the corresponding financial liabilities for fracional shares at fair yalue. The fair value of the fractional share financial asing quoted prices in active markets. The Company earns transaction-based revenue when shares are purchased or sold to fulfill customer fractional share transactions. #### Recently Adopted Accounting Pronouncements The Financial Accounting Standards Board (FASB) issued Asu) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, in November 2023. #### Segment Reporting The Company is designed to engage in a single line of business as a clearing broker-dealer. The Company's segment in the annual statement of operations. The Company has its chief operating decision maker ("CODM"), who uses net income to evaluate the results of the business, predominantly in the foress, to manage the Company, Additionally, the CODM uses excess net capital (see Note 5), which is not a measure of profit and loss, to make operational decuacy, such as whether to reinvest profits or pay dividends. The Company's operations constitute a single reportable segment, because the CODM mages the business activities using information of the Company as a whole. The acounting policies used to measure the segment are the same as those described elsewhere in the summary of significant accounting policies. #### 3. Concentrations of Credit Risk During the year ended December 31 2024, the Company provices to 5 onnibus client accounts. The Company generated revenue mainly from clearing fee, order flow, margin interest and stock ban receivables, respectively 9%, 20%, 21% and 35%. The Company evaluated the receivables and concluded that there is no expectially subject the Company to concentrations of concentrations of ceetit risk consist primarly of cash and cash equivalents. The association is mitigated by having deposits with creatly worldy institutions. At ertain times, amounts on deposit exceed federal insurance 31, 2024 the amount held on bank deposit was \$268,555,317 in excess of federal insurance limits. #### 4. Indemnifications In the normal course of its business, the Company internation service providers against specified polential losses in connection with their acting as an agent of, or providing services to the maximum potential amount of future payments that the Company could be required to make under these indenmifications cannot be estimaly believes that it is unlikely it will have to make material payments under these arrangements and has not recorded any contingent liability in the financial statements for these indemnifications. The Company provides representations and warearlies in connection with a variety of commercial transactions and occasionally indemnifies them against potential losses caused by the breaches. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional laws are withhed. due either to a change in or adverse application of certain tax laws. These indemnfications generally are standare entered into in the normal course of business. The maximum potential anount of future payments that the Company could be required to make under these indemnifications cannot be company believes that it is unlikely it will have to make material payments and has not recorded any contingent liability in the financial statements for these indemnifications #### 5. Requlatory Requirements The Company is subject to SEC Uniform Net Capital (Rule this rule, the Company has elected to operate under the alternate method and is required to maintain net capital of \$250,000 or 2% of aggregate debit balances arising from client transactions, as defined. On December 31, 2024, the Company had net capital of \$81,3,297,905, which was \$716,073,192 in excess of its required net capital of \$97,224,713. The Company, as a clearing broker, is subject to SEC Customer Protection Rule (Rule 15:3-3 of the Exchange Act), which requires segregation of funds in a special reserve account for the benefit of customer 31, 2024, the Company had no deposit requirement and maintained a deposit of \$1,724,111. Certain broker-dealers have chosen to maintain brokerage customs at the Company. To allow these broker-dealers to classify their assets held by the Company as allowable assets in their company computes a separate reserve requirement for Proprietary Accounts of Brokers (PAB). At December 31, 2024, the Company calculated a deposit requirement of \$3,514,772,513. The Company made no subsequent withdrawal or deposit. {13}------------------------------------------------ #### 6 leases The Company accounts for its leasing obligations unders the recognition of lease assets and lease liabilities by lesses for those leases previously classified as operating U.S. GAAP. The lease asset would reflect a right-to-use asset and the lease lability would reflect the present value of the future lease payments. As of December 31, 2024, the Company rents office space under operating in August 2027, and the Company has no financing leases. The leases call for base rent plus escalations as well as other experses. The weighted average remaining lease is approximately 2.8 years and the weighted average discount rate lease labilities is 3.5%. The following table represents the Company's lease right-6-use assets and lease liabilities on the statement of financial condition. | | As of December 31, 2024 | | | | |--------------------------------|-------------------------|---------|--|--| | Assets | | | | | | Right of use-asset, net | S | 481.788 | | | | Liabilities | | | | | | Operating lease liability, net | S | 552.880 | | | The lease is secured by a \$18,021 deposit held by the security deposit on the statement of financial condition. It is accounted for as an operating lease. Maturities of lease liabilities under noncancellable operating leases as of December 31, 2024 are as follows: | | 213,667 | |----|----------| | | 220,969 | | | 149,523 | | | 584.159 | | | (31,279) | | ಳಿ | 552.880 | | | | Rent and occupancy expenses were \$162,383 for the year ended December 31, 2024. #### 7. Related Party Transactions The Company has entered into an expents with multiple affiliated entities. There are many vendor relationships that service the Company and its affiliates and as such, these expense sharing of various expenses between the Company and the affiliated entities. The Company both allocates it pays on behalf of its affiliates and is allocated expenses in wrich the affiliates pay on its behalf. The terms of these arrangements provide that any expenses paid on behalf of the various operating expenses are to be charged or recharged to at cost. At December 31, 2024 the Company owed \$9,730,091 to its affiliates for shared and accrued in payable to affiliates in the acompanying statement of financial condition and was owed \$1,638,662 from its affiliates for shared and accrued in receivables from affiliates in the accompanying statement of financial condition. FUTU US, Inc. ("Parent") - The Company has an expentent with the Parent. Futu Clearing has is own employees. Some of these employees are shared with other affiliated entities and shared from other affiliated entities. The shared portion of employee payol is charged toffrom the other affiliated entities via the year ended December 31, 2024 the net shared portion that was recharged to the Parent was \$1,920,043 which is included in the salaries and related of Operations. Additionally, the Company accues its lability to the Parent since the Parent files one consolidated tax results of the company. The vendor expenses are allocated according headount or usage to other affiliated entilies via the Parent. At December 31, 2024, the Company has a payable of \$641, 110 for shared excenses and employee costs receivable, and \$9,487,663 related to accrued tax payable. Futu Holdings Ltd. ("FUTU Holdings") - The Company has an unsecured revolving line of credit with FUTU Holdings or ate is 0.0% and it matures December 31, 2025 unless either party gives not an earlier date. As of December 31, 2024 the Company has no outstanding balance. ShenZhen Futu Network Technology Co., Ltd. ("FUTU SZ") - The Company entered into an agreement with FUTU SZ to license a proprietary order management system owned by FUTU SZ ("The OMS") on July 1, 2022 for annual licensing fee of \$12,000. The OMS provides market data, analytic tools and order entry functions to The Company's clients. The agreement will force and effect until either party terminates. Futu Securities International (Hong Kong) Financial Institution affiliate ("FUTU HK") and has a customer account that the Company holds. FUTU HK has one account with the Company where it holds cash and securities. FUTU HK uses the contact and clear races for which the Company charges Clearing Fees. FUTU HK Omnibus account also borrows money from the securities as collateral in the form of a margin loan for which the Company charges. For the year ended December 31, 2024, the Company earned \$29,725,402 in clearing fee revenue, of which \$623,716 was due and outstanding at December from affiliates in the accompanying statement of financial condition. At December 31, 2024, FUTU HK has a margin debit balance of \$3,734,191,756. Additionally, due to SEC Rule 15c required to gross-up certain credit items, or payable with the FUTU HKs customer account. For the year ended December 31, 2024, the Company has a payable to related party customer of \$295,692,648 which is reflected in cavables to customers in the statement of financial condition. {14}------------------------------------------------ #### Notes to Financial Statements For the Year Ended December 31, 2024 #### 7. Related Party Transactions (continued) Moonoo Financial Inc, a U.S. broker-dealer affiliate ("MF") (formery FUTU Inc) clears its customers' transactions through the Company on an Omribus basis through an Omnibus Account for the Exclusive Benefit of MF's Customers that the Company holds cash and securities. The Company charges Clearing Fees to MFI and earns paynent for on MF's Omnibus Account transactions. The Company shares certain vendor expenses accourding ESA. For the year ended December 31, 2024, the Company fee revenue. At December 31, 2024, MF's Omnibus Account had free credit balance of \$45.223.976 and short credit balance of \$11.336.313 of which are included in payables to customers in the statement of financial condition. At the year ended December 31, 2024, the Company has a net receivable of \$25,329 was shared expenses and \$203,081 was the clearing fee receivable. Moomoo Financial Singapore Pd. Ltd is a Foreign Finate ("Moomoo SG") and has a customer account that The Company holds for its customers cash and securities on an omribus basing broker and custodian, charges clearing fee to clear trades for Moomoo SG. For the year ended December 31, 2024, the Company earned \$3,843,303 in clearing fee revenue, of which \$11,405 was due and outstanding at December 31, 2024 and included in receivable from affiliates in the accompanying statement of financial condition. At December 1 has margin debit balance of \$154,482,745 and short of \$20,902,179 which are included in payables to customers in the statement of financial condition. Futu Securities (Australia) Ltd.is a Foreign Fifilate ("Futu AU") and has a customer account that The Company hods for its customers cash and securities on an omnibus basis. The Company, as the clearing broker and custodian, charges clearing fee to clear ended December 31, 2024, the Company earned \$46,129 in clearing fee revenue, of which \$849 was due and outstanding at December in receivable from affiliates in the accompanying statement of financial condition. At December 31, 2024, Futu AU's of \$452,451 which is included in payables to customers in the statement of financial condition. Moomoo Securities Jagan Co., Ltd. is a Foreign Finate ("Moomoo JP") and has a customer account that The Company holds for its customers cash and securities on an omibus basis The Company, as the clearing broker and customation on Moomoo JP, For the year ended December 31, 2024, the Company earned \$1,469,082 in clearing fee revenue, and collected on the onnibus account, and there was an outstanding pavable \$177.422 due to the mont. At December 31. 2024. Moomoo JP's omnibus accurt has free credit halance of \$4,520,237 which is included in payables to customers in the statement of financial condition. At December 31, 2024, the Company also held Propietary Acounts for Broker-Dealers ("It affiliates, Futu HK, MFL Monno SG, Futu AU and Moonco Japan. These anounts were \$2,174,482, \$64,719, \$26,067, \$319,966 and \$105,314 respectively. These annunts have been reserved for in a Special Reserve Account for the Exclusive Benefit for PAB, as required under SEA Rule 15c3-3. The Company employees are revarded with stock option of employee benefits plan with a related party. The stock option compensations is further disclosed in Note 10. #### 8. Income Taxes The current and deferred components of the inancial statements, for the year ended December 31, 2024 are as follows | | Current | Deferred | lotal | | | |---------|------------|----------|------------|--|--| | Federal | 34.486.386 | | 34.486.386 | | | | Total | 34.486.386 | | 34.486.386 | | | The Company is part of a consolidated inome tax filing with the Parent by the Company of \$9,487,663 has been included in the payables to affiliates on the statement of financial condition. #### 9. Fixed Assets Fixed assets, net of accumulated depreciation, consisted of the following as of December 31, 2024: | \$ 2,008,058 | |--------------| | (902,795) | | 64.332 | | \$ 2,846,521 | | | Depreciation and amortization expense was \$581.999 for the year ended December 31. 2024. #### 10. Employee Benefit Plan The Company's parent provides Restricted Stock Units to its employees of all of its subsitiaties. Under the employees arm vested units as throughout the term of their employees are eligible to participate in the Plan, based on meeting certain age and term of employment requirements. For the vear ended December 31, 2024, the Company recorded stock based compensation in the anount of \$3,964,368 that was not intended to be settled in cash with the Parent as an allocation from the Parent. The Restircted Stock Units compensation is included in salaries and related to costs on the statement of operations. {15}------------------------------------------------ #### Notes to Financial Statements For the Year Ended December 31, 2024 #### 11. Netting of Financial Assets and Financial Liabilities Substantialy all of the Company's securities lending activity is transacted under master agreements that may allow for net settlement in the ordinary course of business, as well as offeeting of all on counterparty in the event of default by one of the parties. However, for financial statement purposes, the Company does not need to these financial instruments. These financial instruments are presented on a gross basis in the Statement of Financial Condition. The potential effect of rights of setoff associated with the Company's recognized assets and liabilities is as follows: | | Gross Amounts
of Recognized
Assets and
Liabilities | Gross
Net Amounts
Amounts
Presented in the
Offset in the
Statement of
Statement of
Financial
Financial
Condition
Condition | | Collateral
Receive or
Pledged Net
Amount 4 | Net Amount 3 | |-------------------------|-------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|-----------------------------------------------------|--------------| | As of December 31, 2024 | | | | | | | Assets | | | | | | | Securities borrowed | 1.763.905.618 | | 1.763.905.618 | (1,715,442,677) | 48.462.941 | | Liabilities | | | | | | | Securities loaned | 5.190.241.299 | - | 5.190.241.299 | (4.939.840.770) | 250.400.529 | 1. Amounts represent recognized assets and liabilities that are subject to enforceable master agreements with rights of setoff. 2. Represents the fair value of collateral the Company had received or pledged under enforceable master agreements. 3. Represents the amount for which, in the case of ne Company had not received collateral, and in the case of net recognized libilities, the Company had not pledged collateral. #### 12. Fair Value Of Financial Instruments The following table represents the Company for those assets and liabilites measured at fair value on a recurring basis at December 31, 2024: | | | Level 1 | | Level 2 | Level 3 | | Total | | | |---------------------------------|--|----------------|-----------|---------|-----------|--------------|-------|----------------|--| | Assets | | | | | | | | | | | U.S. Treasuries | | \$ 196,142,924 | રે | | 60 | | | \$ 196,142,924 | | | DICC Common Stock | | | | 184.047 | | | | 184,047 | | | DTCC Preferred Stock | | | 1,404,118 | | 1,404,118 | | | | | | Equities | | 58,644 | | | | | | 58,644 | | | Total Securities, at fair value | | \$ 196,201,568 | | | | \$ 1,588,165 | | \$ 197,789,733 | | | Liabilities | | | | | | | | | | | Equities | | 11,760 | 60 | | | | S | 11.760 | | | Total Securities, at fair value | | 11.760 | | | | | | 11,760 | | #### 13. Commitments and Contingencies The Company is subject to lawsuits, and other legal proceedings in connection with its business. A substantial adverse judgment or other unfavorable resolution of these material adverse effect on the Company's statement of financial condition. Management is of the opinion that the Company has adequate legal defenses with respectings to which it is a defendant or respondent and the outcome of these pending proceedings is not likely to have a material adverse effect on the statement of financial condition of the Company. In the normal course of business, the Company dised during regulators raised during regulatory examinations or othervirs. These matters could result in censures. Management believes the outcome of any resulting actions will not be material to the Company's statement of financial condition. However, the Company is unable to predict the ultimate outcome of these matters. #### 14 Financial Instruments with Off-Balance-Sheet Risk In the normal course of business, the Company's custom, settlement, and financing of various customer securities transactions. These activities may expose the cisk in the event the customer or other broker is unable to fulfil its corrected obligations and the Company has to purchase or sell the financed at a loss. The Company's clearing agreements with brokerdealers for which it provides clearing services indemnify the Company if customers fail to satisfy their contractual obligation. {16}------------------------------------------------ #### Notes to Financial Statements For the Year Ended December 31, 2024 The Company's customer securities are transacted on either a cash or margin transactions, the Company extends credit to its customers, subject to various requirements, collateralized by cash and securities in the customer's accounts. In connection with these activities, the Company executes and cleans involving the sale of securities not yet purchased, substantially all of which are fransacted on a margin basis subject o individual exchange regulations may expose the Company to significant off-balance-sheel in the event margin requirements are not sufficient to first may incur. In the event the customer falls to satisfy its obligations, the Company may be required to purchase or sell finance in prevailing market prices to fulfill the customer's chirations. The Company seeks to control the risks associated with its customers to mairlain margin collateral in complance with various regulator and internal guidelines. The Company monitors required maily, and pursuant to such guidelines, requires the customer to deposit additional or to reduce positions when necessary. The Company is engaged in various trading and brokerparties primarily include broker-dealers, banks, and other financial institutions. In the event counterparties do not fulfill their obligations, the risk of default depends on the creditivess of the counterparty or issuer of the instrument. It is the policy to review, as necessary, the credit standing of each counterparty. The Company temporarily loans securities to other in connection with its business. The Company receives as as collateral for the securities loaned. Increases in securities prices may cause of the securities baned to exceed the amount of cash received as collateral. In the event the counterparty to these transactions does not reading, the Company may be exposed to the risk of acquiring the securities at prevaling market prices in order to satisfy its customer obligations. The Company controls this risk by requiring credit approvals for counterpartes, by monitoring the market value on a daily basis, and by requiring additional cash as collateral when necessary. The Company temporarily borrows securities from other-dealers in connection with its business. The Company deposits cash as collateral for the securities porcyled. Decreases in securities price the far yalue of the securities porcwed to fall below the anount of cash deposied as collated. In the event the counterparty to these transactions the cash deposited, the Company may be exposed to the risk of securities at prevaling market prices. The Company contring credit approvals for counterparties, by monitoring the collateral values on a daily basis, and by requiring collateral to be returned by the counterparties when necessary. #### 15. Subsequent Events The Company has evaluated events and transactions than anyary 1, 2025 and February 27, 2025, which is the date ments were available to be issued, for possible discosure and recognition in the financial statemined to be subsequent. The Company announced a dividend payment of \$7,500,000 on February 3, 2025 and made the payment on February 7, 2025. The dividend was paid to the sole owner, the Parent, Futu US Inc. {17}------------------------------------------------ ### Schedule I Computation of Net Capital Under Rule 15c3-1 of the Securities and Exchange Commission December 31, 2024 | TOTAL SHAREHOLDER'S EQUITY QUALIFIED FOR NET CAPITAL | લ્ત્ર | 838,397,513 | |---------------------------------------------------------------------------------------------|-------|--------------| | DEDUCTIONS AND/OR CHARGES | | | | Receivables from affiliates | | (1,638,662) | | Receivable from clearing organizations | | (1,404,118) | | Aged dividends and interest receivable | | (17,812) | | Prepaid expenses and other assets | | (18,127,710) | | Fixed assets, net | | (2,008,058) | | Other deductions and charges | | (1,809,588) | | Total Deductions and/or Charges | | (25,005,948) | | | | | | NET CAPITAL BEFORE HAIRCUTS ON SECURITIES POSITIONS | | 813,391,565 | | LESS: HAIRCUTS AND UNDUE CONCENTRATION | | (93,660) | | | | | | NET CAPITAL | ക | 813.297.905 | | COMPUTATION OF ALTERNATE NET CAPITAL REQUIREMENT | | | | Minimum net capital required | ક | 97,224,713 | | | | | | Excess net capital | S | 716,073,192 | | Net capital and tentative net capital in relation to early warning thresholds | | | | A. Net capital in excess of 120% of minimum net capital requirement | ક | 696,628,249 | | B. Net capital in excess of 5% of combined aggregate debit items as hown in the Formula for | | | | Reserve Requirements pursuant to Rule 15c3-3 | સ્ત્ર | 570,236,122 | | | | | There are no material differences between the apital above and the corresponding schedule included in the Company's unaudied Part II FOCUS Report {18}------------------------------------------------ ## SCHEDULE II - Computation for Determination of Reserve Requirement under Rule 15c3-3 December 31, 2024 | Credit Items
1. Free credit balances and other credit balances in customers' security accounts | S | 382.705.632 | | |--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|---------------|---------------| | 2. Monies borrowed collateralized by securities carned for the accounts of customers. | | | | | 3. Monies payable against customers' securities loaned. | | 3,455,010,720 | | | 4. Customers' securities failed to receive. | | 6,397,308 | | | | | 11.760 | | | 5. Credit balances in firm accounts which are attributable to principal sales to customers. | | | | | 6. Market value of stock dividends, stock splits and similar distributions receivable outstanding over 30 calendar day | | 17,812 | | | 7. Market value of short security count differences over 30 calendar days old. | | | | | 8. Market value of short securities and credits (not to be offset by longs or by debits) in all suspense accounts over 30 calendar days. | | 4,884 | | | 9. Market value of securities which excess of 40 calendar days and have not been confirmed to be in transfer by the
transfer agent or the issuer during the 40 days. | | | | | 10. Other | | 814,124,945 | | | 11. TOTAL CREDIT'S | | | 4,658,273,061 | | Debit Items | | | | | 12. Debit balances in customers' cash and margin accounts excluding unsecured accounts doubtful of collection. | \$ | 3.888.142.888 | | | 13. Securities borowed to effectuate by customers and securities borrowed to make delivery on customers' securities
failed to deliver. | | 156,068,688 | | | 14. Failed to deliver of customers' securities not older than 30 calendar days. | | 2,899,137 | | | 15 Margin required and on deposit with the Option Corporation for all option contracts written or purchased in customer
accounts | | 814,124,945 | | | 16. Margin required and on deposit with a clearing agency registered with the Commission 17A of the Act (15 U.S.C. 78g
1) or a denvatives cleaning organization registered with the Commission under section 5b of the Commodity
Exchange Act (7 U.S.C. 7a-1) related to the following types of positions written, purchased or sold in customer accounts: (1) security
futures products and (2) futures contracts (and opions thereon) caried in a securities account pursuant to an SRO portfolio magining
rule. | | | | | 17. Other | | | | | 18. Aggregate debit Items | | | 4.861,235,658 | | 19.Less 3% of aggregate debits (for alternative method only) | | | (145,837,070) | | 20.Total 15c3-3 debits | | | 4.715.398.588 | | Excess of total debits over credits | \$ | 57,125,527 | | | Excess of total credits over debits | S | | | | Amount held on deposit in Reserve Bank Account | \$ | 1,724,111 | | There are no material differences between the above audied computation of the Customer pursuant to Rule 153-3 and the corresponding schedule included in the Company's unaudited Part II FOCUS Report. {19}------------------------------------------------ ## SCHEDULE III - Computation for PAB Reserve Requirements under Rule 15c3-3 December 31, 2024 | Total Credit Items | સ્ત્ર | 3,514,772 | |-------------------------------------------|-------|-----------| | Debit Balances | | | | Total Debit Items | | | | Reserve Computation | | | | Excess of total credits over total debits | | 3,514,772 | | Required Deposit | | 3,514,772 | | Amount on Deposit in Reserve Bank | | 3,773,513 | There are no material differences between the PAB account reserve requirement pursuant to Rule 15:3-3 and the corresponding schedule included in the Company's unaudited Part II FOCUS Report. {20}------------------------------------------------ #### SCHEDULE IV - Information Relating to Possession or Control Requirements under Rule 15c3-3 December 31, 2024 1. Customers' fully paid and excess margin securities not in the respondent's possession or control as of the report date (for which instructions to reduce to possession or control had been issued as of the report date but for which the required action was not taken by respondent within the time frames specified under Rule 15c3-3) A. Number of items 2. Customers' fully paid securities and excess margin securities for which instructions to reduce to possession or control had not been issued as of the report date, excluding items anising from "temporary lags which result from normal business operations" as permitted under Rule 15c3-3 A. Number of items None \$ ಳಿ {21}------------------------------------------------ ![](_page_21_Picture_0.jpeg) # Report of Independent Registered Public Accounting Firm To the Shareholder and Those Charged With Governance of Futu Clearing Inc. We have examined Futu Clearing Inc.'s statements, included in the accompanying Compliance Report, that (1) Futu Clearing Inc. has established and maintained Internal Controls Over Compliance, as the that term is defined in paragraph (d)(3)(ii) of Rule 17a-5; (2) Futu Clearing Inc.'s Internal Controls Over Compliance was effective during the most recent fiscal year January 1, 2024 through December 31, 2024; (3) Futu Clearing Inc.'s Internal Controls Over Compliance was effective as of the most recent fiscal year January 1, 2024 through December 31, 2024; (4) Futu Clearing Inc. was in compliance with 17 C.F.R. § 240.15c3-1 and 17 C.F.R. § 240.15c3-3(e) as of the end of the most recent fiscal year ended December 31, 2024; and (5) the information Futu Clearing Inc. used to state that Futu Clearing Inc. was in compliance with 17 C.F.R. § 240.15c3-1 and 17 C.F.R. § 240.15c3-3(e) was derived from the books and records of Futu Clearing Inc. Futu Clearing Inc.'s management is responsible for establishing and maintaining a system of internal control over compliance that has the objective of providing Futu Clearing Inc. with reasonable assurance that noncompliance with 17 C.F.R. § 240.15c3-1, 17 C.F.R. § 240.17c3-3, 17 C.F.R. § 240.17a-13 or Rule 2231 of the Financial Industry Regulatory Authority that requires account statements to be sent to the customers of Futu Clearing Inc. will be prevented on a timely basis. Our responsibility is to express an opinion on Futu Clearing Inc.'s statements based on our examination. We conducted our examination in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the examination to obtain reasonable assurance about whether Futu Clearing Inc.'s internal control over compliance was effective as of and during the most recent fiscal year ended December 31, 2024; Futu Clearing Inc. complied with 17 C.F.R. § 240.15c3-1 and 17 C.F.R. § 240.15c3-3(e) as of December 31, 2024; and the information used to assert compliance with 17 C.F.R. § 240.15c3-1 and 17 C.F.R. § 240.15c3-3(e) as of December 31, 2024 was derived from Futu Clearing Inc.'s books and records. Our examination includes testing and evaluating the design and operating effectiveness of internal control over compliance, testing and evaluating Futu Clearing Inc.'s compliance with 17 C.F.R. § 240.15c3-1 and 17 C.F.R. § 240.15c3-3(e), determining whether the information used to assert compliance with 17 C.F.R. §240.15c3-1 and 17 C.F.R. §240.15c3-3(e) was derived from Futu Clearing Inc.'s books and records and performing such other procedures as we considered necessary in the circumstances. We believe that our examination provides a reasonable basis for our opinion. In our opinion, Futu Clearing Inc.'s statements referred to above are fairly stated, in all material respects. New York, New York February 27, 2025 Baker Tilly Advisory Group, LP and Baker Tilly US, LLP, trading as Baker Tilly, are members of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services to their clients and are not licensed CPA firms. {22}------------------------------------------------ ![](_page_22_Picture_0.jpeg) 12750 Merit Drive, Suite 475, Dallas, TX 75251 # Compliance Report Futu Clearing Inc (the "Company") is a registered broker-dealer subject to Rule 17a-5 promulgated by the Securities and Exchange Commission (17 C.F.R. §240.17a-5, "Reports to be made by certain brokers and dealers"). As required by 17 C.F.R. § 240.17a-5(d)(1) and (3), the Company states as follows: year January 1, 2024 through December 31, 2024; fiscal year January 1, 2024 through December 31, 2024; (1) The Company has established and maintained Internal Control Over Compliance, as that term is defined in paragraph (d)(3)(ii) of Rule 17a-5; (2) The Company's Internal Control Over Compliance was effective during the most recent fiscal (3) The Company's Internal Control Over Compliance was effective as of the end of the most recent (4) The Company was in compliance with 17 C.F.R. § 240.15c3-1 and 17 C.F.R. §240.15c3-3(e)as of the end of the most recent fiscal year ended December 31, 2024; and (5) The information the Company used to state that the Company was in compliance with 17 C.F.R. §240.15c3-1 and 17 C.F.R. §240.15c3-3(e) was derived from the books and records of the Company. \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Patrick Kelly, CEO Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.