# FUTU CLEARING INC X-17A-5 (2026-03-04) — Broker-dealer annual report
- Company: FUTU CLEARING INC
- Form: X-17A-5
- Filed: 2026-03-04
- Period: 2025-12-31
- Accession: 0001753566-26-000002
- CIK: 1753566
- File #: 8-70215
- Type: Broker-dealer
- Material weakness: No
- Auditor: Baker Tilly 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/1753566/000175356626000002/FUTUFinStmtsPublic2025.pdf
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## 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
## ANNUAL REPORTS FORM X-17A-5 PART III
.
. 11 -
| SEC FILE NUMBER | |
|-----------------|--|
| 8-70215 | |
| Information Required Pursuant to Rules 17a-5, 17a-12, and 18a-7 under the Securities Exchange Act of 1934 | FACING PAGE | | | | | | |
|-----------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|-----------------|--------------------------------------------|--|--|--|--|
| FILING FOR THE PERIOD BEGINNING 01/01/2025
12/31/2025 | | | | | | | |
| | 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 | | | | | | | |
| 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) | | | | | | |
| 66 Hudson Blvd, Suite 2200 New York | | NY | 10001 | | | | |
| (Address)
10/22/2003 | (City) | (State)
23 | (Zip Code) | | | | |
| (Date of Registration with PCAOB)(if applicable) | FOR OFFICIAL USE ONLY | | (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.
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### OATH OR AFFIRMATION
| Patrick Kelly
swear (or affirm) that, to the best of my knowledge and belief, the financial report pertaining to the firm of FUTU Clearing Inc. the country of the country as fof
12/31 2 025 \_\_ , 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
## 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.
- [] 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.
- [ {|) 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.
- □ (n) 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.
- [0] Reconciliations, including appropriate explanations, of the FOCUS Report with computation of net capible net worth under 17 CFR 240.15c3-1, 17 CFR 240.18a-1, or 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.
- O {p) Summary of financial data for subsidiaries not consolidated in the statement of financial condition.
- | | Oath or affirmation in accordance with 17 CFR 240.17a-5, 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 240.15c3-1e or 17 CFR 200.17a-12, as applicable.
- [] (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)(3) or 17 CFR 240.180-7(d)(2), as applicable.
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# FUTU Clearing Inc.
Financial Statements and Report of Independent Registered Public Accounting Firm on Financial Statements
As of December 31, 2025
This report is deemed CONFIDENTIAL in accordance with Rule 17a-5(e)(3) under the Securities Exchange Act of 1934. A statement of financial condition, bound separately, has been filed with the Securities and Exchange Commission simultaneously herewith as a PUBLIC document.
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FUTU Clearing Inc.
## Table of Contents
| Contents | |
|---------------------------------------------------------|-------|
| Report of Independent Registered Public Accounting Firm | |
| Statement of Financial Condition | 2 |
| Notes to Financial Statements | 3 - 9 |
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## Report of Independent Registered Public Accounting Firm
To the Shareholder and Those Charged With Governance of Futu Clearing Inc.
## Opinion on the Financial Statement
We have audited the accompanying statement of financial condition of Futu Clearing Inc. (the Company) as of December 31, 2025, and the related notes (collectively referred to as the financial statement). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
## Basis for Opinion
The financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement 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 statement is 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 statement, 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 statement. 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 statement. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company's auditor since 2019.
New York, New York March 3, 2026
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#### Statement of Financial Condition December 31, 2025
## ASSETS
| Cash and cash equivalents | မခ | 369,201,145 |
|-----------------------------------------------------------------------|----|---------------|
| Cash segregated in accordance with federal laws and other regulations | | 217.340.638 |
| Receivables from customers | | 3,754,157,263 |
| Receivables from brokers or dealers | | 27.241.497 |
| Deposits in and receivables from clearing organizations | | 285,672,089 |
| Securities owned - At fair value | | 372.481.341 |
| Securities borrowed | | 1,529,172,293 |
| Fixed assets , net | | 1,447,400 |
| Right of use-asset, net | | 308.004 |
| Receivables from affiliates | | 483.236 |
| Equity Securities-User-held fractional shares | | 983.884 |
| Other assets | | 11,352,651 |
| | | |
| TOTAL ASSETS | 6.569.841.441 |
|--------------|---------------|
| | |
### LIABILITIES AND SHAREHOLDER'S EQUITY
| LIABILITIES | |
|-------------------------------------------------------------------------------------|---------------------|
| Securities loaned | 4,454,492,944
રે |
| Payables to customers and PAB | 911,457,690 |
| Payables to brokers or dealers & clearing organizations | 6,537,564 |
| Securities sold not yet purchased - at fair market value | 13 |
| Operating lease liability, net | 357.788 |
| Payables to affiliates | 10,586,637 |
| Equity Securities-Fractional Share Repurchase Obligations | 983,884 |
| Accounts payable and accrued liabilities | 12,618,235 |
| TOTAL LIABILITIES | 5,397,034,755 |
| Shareholder's Equity | |
| Common stock (1,000 shares authorized, issued and outstanding at \$.0001 par value) | |
| Additional paid in capital | 495,676,118 |
| Retained earnings | 677,130,568 |
| TOTAL SHAREHOLDER'S EQUITY | 1.172,806,686 |
| TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | မာ
6 569 841 441 |
The accompanying notes are an integral part of these financial statement
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#### 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 dealer registered with the Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulatory Authority ("FINRA"). The Company received its Broker approval from SEC and FINRA on May 28, 2019. The Company provides execution, settlement and clearance services and options for correspondent clients affiliated 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 reported 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 SEC for financial reporting.
#### Use of Estimates
The reparation of financial statements in accordance management to make estimates and assumptions hat affect the reported anounts of assets and liabilities and disclifies at the date of the financial statements and accompanying notes. These estimates and assumptions are based on judgenent 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 highty liguid investments, with maturities of three months or less, that are not segregated and deposited for regulatory purposes or to meet nequirements at clearing banks. The Company's cash is held at financial institutions which are insurance Conoration and at times may exceed federally insured limits. The Comany 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 Regulations
Cash segregated in compliance with federal regulations of qualified 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
Accounts receivables from and payables to costomers 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 "ully-paid securities lender which enrolled customers loan their fully paid and excess margin securities to the Company who in turn lends to various market participants. Under the requirements of Rule 15c3-3, the Company fully collateralized these loans with cash and/or cash equivalents.
#### 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 federal and state income tax expense or benefit to the Company's earnings as if it were filing a separate income tax return.
Deferred tax assets and defered tax liabilities are recognized for financial reporting and tax bases of the Company's assess and liabilities. Defered taxes are measured to rates at which future taxable amounts will likely be settled or realized. The effects of tax rate changes on defered tax assets and defered tax liabilities, as well as are recognized in the period during which such changes are enacted. As of December 31, 2025, there were no material temporary differences belween financial reporting and tax reporting bases
The quidance on accounting for uncertain any uncertain fax positions should be recognized, measured, presented and disclosed in the Financial Statements. This guidance requires the evaluation of fax positions taken in the course of preparing the Company's financial statements to deternine whether the tax positions are more likely than not to be realized as a tax benefit or expense in the current year. After-lax interest and peralies, as well as the reated unreofits, are recognized in income tax expense. There were no uncertain postions as of December 31, 2025.
#### Fixed Assets
Fixed assets includes software and leasehold in ost, less acumulated depreciation and anotization. Depreciation is provided on a straight-line basis using estimated useful improvements 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 ASC Topic 326. The ASC provides credit Losses ("CEC"), which requires eatler recognition of credit losses, while also providing addit risk. The CECL methodogy uliizes a lifetime "expected credit loss" messurement objective for the recognition of creaturity securities and other receivables at the time the financial asset is originaled or acquired. The expected redit losses are adjusted of changes in expected lifetime 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, 2025.
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#### FUTU Clearing Inc.
#### Notes to Financial Statements For the Year Ended December 31, 2025
#### 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 grganizations include anounts due many ("DTC"), National Securities Clearing Coppration ("NSCC") and Opions Clearing Corporation ("OCC"). Each has specific industry standard daily reconcilites activity, net settlements, and a daily update of margin and dearing for NSCC and OCC. DTC's clearing fund requirement 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 of these receivables.
#### Deposits in Clearing Organizations OCC 4 230 322 694
| | S | 285,672,089 |
|------|---|---------------------------|
| DTC | | 1,397,288 |
| NSCC | | 53.952.107 |
| | | I V V ( V lan lan ( V V 1 |
#### Receivable from and Payable to Broker-Dealers
Receivables include amounts receivable relations, non-customer receivables, and amounts related to unsettled securities activities activities activities activities activities Pavables include anounts payable relains non-customer parables, and announts related to unsettled securities. These balances are reported net by counterparty when the right of offset existied. Specifically, each paty owes the other determinable anounts; the reporting party has the legal right the anount due from the counterpary; the reporting party intents to execuse such right of setoff; and the right of setoff is enforceable under applicable law.
#### Fair Value Of Financial Instruments
The Company records its financial assets and liablities at fair value provides a franework for neasuring far value that clarifies the definition of fair value and expanding fair value measurements. Fair value 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 recorting standard 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 identifies in active markets that the anility to access as of the measurement date.
Level 2 - Inputs other than Level 1 that are observaties or indiredly, such as quoted prices for similar assets or liabilites, quoted prices in markets that are not active, or other inquis that are observable market data for substantially the full term of the asses or labilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and the fair value of the asses and liabilites. A financial instrument's level within the fair value hierel within the fair value hierarchy of any input that is significant to the fair value measurement.
#### Securities Lending Activities
Securities borrowed and securities loaned the anount of cash collateral advanced or received, respectively, with all related securities, collateral, and cash both held at and moving through DTC as appropriate for oved transactions require the Company to deposit cash or other collateral with the lend transactions require the receipt of collateral by the Company in the form of cash in an amount generally in excess of the fair value of securities loaned.
The carving value of securities borowed and loans and mates fair value as these items are not materially sensitive to shifts in market interest rates because of their short-tem nature interest rates or to credit risk because securities borrowed and baned transactions are substantialy collateralized.
For securities financing transactions, the Company's policy in to monton the fair value of the anounts 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 due to the allowance for crecit losses is not material. The othateral maintenance provisions consisting of collateral is expected to be maintained into the foreseable 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 transaced repurchase agreements or master securities lending agreements that give the right. in the event of default, to liguidate 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 credit lines are intended to be a liguidity option to address any short liguid capital to fund the Company's operations. The creatly 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 customers margin collated. As of December 31, 2025, the Company has no outstanding liability associated with any of its lines of credit.
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#### Lines of Credit (continued)
| | Committed | Uncommitted | Total Facility | | | | |
|----------------|----------------|----------------|----------------|--------------------------|------------|-------------|-------------------|
| | Unsecured | Secured | Size | Interest Rate | Collateral | Committed | Expiration |
| Facility 1 *** | \$ 300,000,000 | ટે | \$ 300,000,000 | 0.00% | Unsecured | Committed | December 31, 2026 |
| Facility 2 | ഗ | \$ 250,000,000 | \$ 250,000,000 | 1.5% plus overnight rate | Secured | Uncommitted | None |
| Syndicate line | \$ 75,000,000 | | \$ 75,000,000 | 2.5% plus overnight rate | Unsecured | Committed | January 20, 2026 |
| | \$375,000,000 | \$ 250,000,000 | \$625,000,000 | | | | |
\*\*\* 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 bss if an issuer or a counterparty fails to perform its obligations ("cefault risk"). The Company has established limits for credit exposure, lith specific counterparties, maintaining qualifying collateral and continually assessing the creditworthiness of counterparties
In there normal course of business, the Company dears, settles and trokers 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 requlatory and internal quidelines.
#### Securities owned
The Company carries its securities owned at fair yalue in accorded on a trade date basis. US GAP establishes a hierarchy for inputs used in measuring the use of observable inputs and minizes the use of unobservable inquts. Observable inquis. are inputs that market paticipants would use in pricit based on available market data. Unobservable inputs are inputs that reflect the Company's assumptions about the facts market parting the investment based on the best information in the circumstances. Additional detail of securities owned as of December 31, 2025 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 shares held by customers do not meet the criteria for derecognition und Servicing, and are accounted for as a secured borrowing with a repurchase obligation. When a customer purchases a fractional share the cash received for the use-held fractional share as pledoed collateral, recorded as Equity securities - user-held fractional shares, and an exame, recorded as Equily securities - repurchase obligations in the Statement of Financial Condition. The Company mese financial libilities for fractional liabilities for fractional shares at fair value. The fair value of the fractional share financial sing quoted prices in active markets. The Company earns transaction-based revenue when shares are purchased or sold to fulfill customer fractional share transactions.
#### 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 itentified CEO as its chief operating decision maker ("CODM"), who uses net income to evaluate the results of the business, predominantly in the forecasing process, to many. Additionally, the CODM uses excess net capital is not a measure of profit and loss to make operations while maintaining capital adequacy, such as whether to reinvest profits or pay dividends. The Company's operations constitute a single operating a single reportable segment, because the CODM manages the business activities using information of the Company as a whole. The accounting policies used to measure the segment are the same as those described elsewhere in the summary of significant accounting policies.
#### Recently Adopted Accounting Pronouncements
In December 2023, the FASB issued Accounting Standards Undate 2023-09, "Income faxes (Topic 740): Improvements to Income Taxes Disclosures," This guidance requires annual disclosure of specification and provides additional information for reconciling items that meet a quantitative threshold. The guidance is effective for annual periods beginning after December 15, 2024. Ve adopted this guidance effective January 1, 2025 on a prospective basis. The adoption of this quidance did not have a material impact on our financial statements and related disclosures
#### Recently Adopted Accounting Pronouncements - Not Yet Adopted
In November 2024, the FASB issued Accounting Statement-Reporting Comprehensive Income-Expense Disaggegation Disclosures (Subtopic 220-40)." This guidance requires about certain amounts included in the expense captions presented on the statement of operations as well as disclosures about selling expenses. The guidance is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after 15, 2027. Early adoption is permitted. The guidance can either be applied prospectively or retrospectively. We are currently evaluating the impact of this standard on our disclosures.
#### 3. Concentrations of Credit Risk
During the year ended December 31, 2025, the Company provides to 5 omnibus client accounts. The Company generated revenue mainly from clearing fees, payment for order flow, interest includes lending revenue, respectively 10%, 33%, 22%. At December 31, 2025, under payment for order flow receivables four customately 27%, 27%, 16%, and 16% of total payment for order flow receivables. Under SBSL receivables, four customers accounted for approximately 12%, 11%, and 10% of the Company evaluated the receivables and concluded that there is no expectially subject the Company to concentrations of concentrations of creatir iski consist primarily of cash and cash equivalion is mitigated by having deposits with credit with credit worthy institutions. At certain times, amounts on deposit exceed federal inst. As of December 31, 2025 the anount held on bank deposit was \$309,537,722 in exess of federal insurance limits.
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#### 4. Indemnifications
In the normal course of its business, the Company internation service providers against specified potential loses 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 indemnifications 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 with a variety of commercial transactions and occasions and occasionally indemnifies them against potential losses caused by those representations and warranties. The Company may also provide standard indemnifications to some counterparties to protect them in the event additional taxes are withheld, due either to a change in or adverse application of certain ax laws. These indemnifications generally are standard terms and are entered into in the normal course of business. The maximum potential anount of future payments that the Company could be required to make undermifications cannot be estimated. However, the Company believes that i is unlikely it will have to make mater these arrangements and has not recorded any continent liability in the financial statements for these indemnifications.
#### 5. Regulatory Requirements
The Company is subject to SEC Uniform Net Capital ("Rule 15change Ad"). Under this rule, the Company has elected to operate under the allernate method and is required to maintain net capital of aggregate debit balances arsing from client transactions, as delined. On December 31, 2025, the Company had net capital of \$1,133,26.085, which was \$1,020,798,746 in excess of its required net capital of \$1,2,527,339,
The Company, as a clearing broker, is subject to SEC ("Rule 15c3-3 of the Exchange Ad") which requires segregation of funds in a special reserve account for the benefit of customers 31, 2025, the Company had a deposit requirement of \$32,697,016. The Company made the subsquent deposit of \$32,000,000 on the following business day to maintain a deposit of \$57,746,192 with an excess deposit of \$25,049,176.
Certain broker-dealers have chosen to maintain brokerage coounts at the Company. To allow these brokes 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, 2025, the Company calculated a deposit requirement of \$2,939,614. The Company made the subsquent withdrawal of \$800,000 on the following business day and maintained a deposit of \$5,013,674.
#### 6. Leases
The Company accounts for its leasing obligations unders the recognition of lease assets and lease labilities by lesses for those leases previously classified as operating US GAAP. The lease asset would reflect a right-to-use asset and the lease liability would reflect the present value of the future lease payments.
As of December 31, 2025, the Company rents office space under operating in August 2027, and the Company has no financing leases. The leases call for base rant plus escalations as well as other experses. The weighted average remaining lease is anoroximately 1.8 years and the weighted average discount rate lease liabilities is 4%. The following table represents the Company's lease right-Gruse assets and lease liabilities on the statement of financial condition.
| | As of December 31. 2025 | | |
|--------------------------------|-------------------------|---------|--|
| Assets | | | |
| Right of use-asset, net | ಕ್ಕಾ | 308.004 | |
| Liabilities | | | |
| Operating lease liability, net | ಕ್ಕಾ | 357.788 | |
The lease is secured by a \$18,021 deposit held by the landed in other assets on the statement of financial condition. It is acounted for as an operating lease. Maturities of lease liabilities under noncancellable operating leases as of December 31, 2025 are as follows
| 2026 | લ્ત્ર | 220,969 |
|-----------------------------------|-------|----------|
| 2027 | | 149.523 |
| Total undiscounted lease payments | | 370.492 |
| Less Imputed Interest | | (12,704) |
| Total lease liability | S | 357,788 |
Rent and occupancy expenses were \$256,140 for the year ended December 31, 2025.
#### 7. Related Party Transactions
The Company has entered into an expensents with multiple affiliated entiles. 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 affiiated entities. The Company both allcates it pays on behalf of its affiliates and is allocated expenses in which 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, 2025 the Company owed \$10,586,637 to its affiliates for shared and accrued in payables to affiliates in the acompanying statement of financial condition and was owed \$48,236 from its affiliates for shared and accrued in receivables from affiliates in the accompanying statement of financial condition.
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#### 7. Related Party Transactions (continued)
FUTU US, Inc. ("Parent") - The Company has an expensent with the Parent. Futu Clearing has its own employees. Some of these enployees are shared with other affiliated entilies and shared from other affiliated entiles. The shared portion of employee navol is charged toffrom the other affiliated entities via the year ended December 31, 2025 the net shared portion that was recharged to the Parent was \$3,872,163 which is included in the salaries and the Statement of Operations. Additionally, the Company accues its tax libility to the Parent since the Parent files one consolidated tax results of the company. The vendor expenses are allocated acording headount or usage to other affiliated entities via the Parent. At December 31, 2025, the Company has a net payable \$10,209,319 of which \$26,25 was shared expenses and employee costs payables and \$10.183.084 related to accred tax payable.
Futu Holdings Ltd. ("FUTU Holdings") - The Company has an unsecured revolving line of credit with FUTU Holdings for \$300 million. The interest rate is 0.0% and it matures December 31, 2025 unless either party of termination at an earlier date. As of December 31, 2025 the Company has no outstanding balance.
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 halds cash and securities. FUTU HK uses the Company as its clearing broker trades 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 interest. For the year ended December 31, 2025, the clearing fee revenue, of which \$140.366 vas due and outstanding at December 31. 2025 and included in receivables from affiliates in the accompanying statement of financial condition. At December 31, 2025, FUTU HK has a margin debit balance of \$3,505,576. Additionally, due to SEC Rule 15c3-3, the Company is required to gross-up cetain credit items, or payable with the FUTU HK's customer account. For the year ended December 31, 2025, the Company has a payable to related party customer of \$626.071,700 which is reflected in payables to customers and PAB in the statement of financial condition.
Moomoo Financial Inc, a U.S. broker-dealer affilate ("MF") dears its customers' transactions through an Omilius basis through an Omnibus Account for the Exclusive Benefit of MFI's Customers that the account holds cash and securities. The Company charges Clearing Fees to MFI and earns payment for order floy on MFI's Omnany shares certain verdor expenses according to the ESA. For the year ended December 31, 2025, the Company earned \$1,632,174 in clearing fee revenue. At December 31, 2025, MFIS Omibus Account had free credit balance of \$214,572,969 and short credit balance of \$14,045,259 of which are included in payables to customers of financial condition. At the year ended December 31, 2025, the Company has a payable of \$9,383 for shared expenses and \$65,000 was the clearing fee receivable.
Moonoo Financial Singapore Ptd. Ltd is a Foreign Finate ("Moonoo SG") and has a customer accunt 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 vear ended December 31, 2025, the Company earned \$7,235,881 in clearing fee revenue, of which \$139,977 was due and publisheding at December 31, 2025 and included in receivables in the accompanying statement of financial condition. At December 31, 2025, Moonoo SS's omnibus account has margin debit balance of \$247,421,368 and short credit balance of \$38,471,523 which are included in the statement of financial condition.
Futu Securities (Australia) Ltd.is a Foreign Financial Institution affiliate ("Futu AU") and has a customer account that the Company holds for its customers cash and securities on an omnibus basis. The Company, as the clearing fee to clearing fee to clear trades for Futu AU. For the year ended December 31, 2025, the Company earned \$82,945 in clearing fee revenue, of which \$108,584 was due and outstanding at December 31, 2025 and included in receivables from affiliates in the accompanying statement of financial condition.
Moomoo Securities Japan Co., Ltd. is a Foreign Finate ("Moonoo JP") and has a customer account that the Company holds for its customers cash and securities on an omibus basis The Clearing broker and custodian, charges clearing fee to clear trades for Moomoo JP. For the year ended December 31, 2025, the Company earner of which \$24,613 was due and outstanding at December 31, 2025 and included in receivable from affiliates in the cition. At December 31, 2025, Moonoo JP's omnibus account has free credit balance of \$4,469,231 which is included in payables to customers and PAB in the statement of financial condition.
At December 31, 2025, the Company also held Proprietary Acounts for Brokers ("PAB") on behalf of its affiliates, Futu HK, MFI, Moomoo SG, Futu AU and Moomoo JP, These anounts were \$899.329. \$740.714. \$710.527. \$48.593 and \$105.314 respectively. These anounts 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 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, 2025 are as follows
| Current | Deferred | Total |
|-------------|----------|-------------|
| 100.895.421 | | 100.895.421 |
| 4.834,835 | | 4.834.835 |
| | | |
| 105.730.256 | - | 105,730,256 |
| | | |
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#### 8. Income Taxes (continued)
The Company is part of a consolidated income tax The tax lability oved to the Parent by the Company of \$10,183,04 has been included in the payables to affiliates on the statement of finance tax expense \$4,834,835 has been included in the other general expense on the statement of operations.
The reconciliation of statutory federal income tax rate, for the year ended December 31, 2025 are as follows
| | Amount | Percent |
|-------------------------------------------------|----------------|---------|
| Federal tax at statutory rate | \$ 100,484,755 | 21% |
| State tax (benefit), net of federal benefit | 4,834,835 | 10% |
| Others | 410.666 | 0% |
| Total provision for (benefit from) income taxes | \$ 105,730,256 | 22% |
For the year ended December 31, 2025, total income taxes paid (net of refunds) consisted of the following:
| | Amount |
|----|-------------|
| S | 100.200.000 |
| | 4,834,835 |
| | |
| | |
| રે | 105,034,835 |
| | |
(1) New Jersey income tax paid of \$2,500,000 is the only state and local tax over 50% of the total state and local tax of \$4,834,835.
#### 9. Fixed Assets
Fixed assets, net of accumulated depreciation, consisted of the following as of December 31, 2025:
| Net fixed assets | \$ 1,447,400 |
|----------------------------------------------|--------------|
| Less: Accumulated depreciation | (1.489.853) |
| Leasehold Improvements (5 years useful life) | 90,732 |
| Software license (5 years useful life) | \$ 2.846.521 |
Depreciation and amortization expense was \$587,058 for the year ended December 31, 2025.
#### 10. Employee Benefit Plan
The Parent provides Restricted Stock Units to its employees of all of its subsidiaries. Under the Employees earn vested units as throughout the term of their employees are eligible to participate in the Plan, based on meeting certain age and term of employments. For the year ended December 31, 2025, the Company recorded stock based compensation in the amount of \$7,305,750 that was not intended to be settled in cash with the Parent. The Resticed Stock The Restired Stock Units compensation is included in salaries and related costs on the statement of operations.
#### 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 ontracty in the event of default by one of the parties. However, for financial statement purposes, the Company does not net balances relation 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 Amounts
Offset in the
Statement of
Financial Condition | | | Net Amounts
Presented in the
Statement of
Financial
Condition | Collateral Receive
or Pledged Net
Amount " | | | Net Amount 3 | |
|-------------------------|----|-------------------------------------------------------------|-----------------------------------------------------------------------|---|----|---------------------------------------------------------------------------|--------------------------------------------------|--------------------|-----|--------------|--|
| As of December 31, 2025 | | | | | | | | | | | |
| Assets | | | | | | | | | | | |
| Securities borrowed | S | 1,529,172,293 | \$ | 1 | 49 | 1.529.172.293 | ಳಿ | (1,481,223,130) | ર્દ | 47,949,163 | |
| Liabilities | | | | | | | | | | | |
| Securities loaned | ea | 4,454,492,944 | ਣ | | A | 4,454,492,944 | ಕ್ಕೆ | (4,235,459,017) \$ | | 219,033,927 | |
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}------------------------------------------------
#### 12. Fair Value Of Financial Instruments
The following table represents the Company's for those assets and liabilites measured at fair value on a recuring basis at December 31, 2025:
| | Level 1
Level 2 | | | Level 3 | Total | | |
|---------------------------------|--------------------|---------|---|--------------|-------|----------------|----------------|
| Assets | | | | | | | |
| U.S. Treasuries | \$ 370,621,247 | | હ | 6 | | | \$ 370,621,247 |
| DTCC Common Stock | | | | 1.440,938 | | 1.440.938 | |
| DTCC Preferred Stock | | | | 263.129 | | 263.129 | |
| Equities | | 156.027 | | | | | 156,027 |
| Total Securities, at fair value | \$ 370,777,274 | | | \$ 1,704,067 | | \$ 372.481.341 | |
| Liabilities | | | | | | | |
| Equities | S | 13 | 6 | | | | 13 |
| Total Securities, at fair value | 6 | 13 | S | 47 | | | 13 |
#### 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 discusses maters with its regulatory examinations or otherwise subject to heir inquiry. These matters could result in censures, fines, or other sanctions. Management believes the outcome 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 custion, settlement, and financing of various customer securities transactions. These activities may expose the Company to offer troker is unable is unable to fulfil its contracted oblications and the Company has to purchase or sell the financed at a loss. The Company's clearing arreements with broker dealers for which it provides clearing services indemnify the Company if custisfy their contractual obligation.
The Company's customer securities are transacted on either a cash or margin transactions, the Company extends credit to its customers, subject to various regulatory and internal margin requiries 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 fransaded on a margin basis subject to individual exchans may expose the Company to significant off-balance-sheel in the event margin requirements are not sufficient to ficur. In the event the customer fals to satisfy its obligations, the Company may be required to purchase or sell financial instruments at prevaling market prices to fulfill the customer's obligations. The Company seeks to contol the risks associated with its customers to maintain margin collateral in compliance with various regulator and internal guidelines. The Company monitors required may and pursuant to such guidelines, requires the customer to deposit additional of to reduce positions when necessary.
The Company is engaged in various tradinites in which counterparties primarily include broker-dealers, banks, and other financial institutions. In the event counterparties do not fulfill their obligations, the isk of default depends on the creditivers 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 broker-dealers in connection with its business. The Company receives cash as collateral for the searlies loaned. Increases in securities prices may cause the securities loaned to exceed the amount of cash received as collateral. In the event the counterparty to these transactions does not realines, 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 approvaltes, by monitoring the market value of securities baned 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 borrowed. Decreases in securities prices the far value of the securities borrowed to fall below the amount of cash deposied as collated. In the event the counterparty to these transaction the cash deposited, the Company may be exposed to the risk of selling the 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 that occurred between January 1, 2026, which is the date the financial statements were issued, for possible disclosure and recognition in the financial statements. The following is determined to be subsequent event.
The Company announced a dividend payment of \$10,000,000 on January 30, 2026. The divident was paid to he sole owner, the Parent, Futu US Inc.
Effective on February 4th, 2026, the unsecured line of credit by BMO increased from \$75 million to \$100 million.
Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.