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Document and Entity Information	12 Months Ended
Document and Entity Information	Dec. 31, 2019 shares
Document Information [Line Items]
Document Type	20-F
Document Registration Statement	false
Document Annual Report	true
Document Transition Report	false
Document Shell Company Report	false
Entity Registrant Name	Futu Holdings Ltd
Entity Central Index Key	0001754581
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Entity Filer Category	Non-accelerated Filer
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Entity Interactive Data Current	Yes
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Class A ordinary shares
Document Information [Line Items]
Entity Common Stock, Shares Outstanding	459,090,941
Class B ordinary shares
Document Information [Line Items]
Entity Common Stock, Shares Outstanding	544,552,051

CONSOLIDATED BALANCE SHEETS $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
ASSETS
Cash and cash equivalents	$ 46,547	$ 362,574,000	$ 215,617,000
Cash held on behalf of clients	1,866,750	14,540,863,000	11,771,487,000
Available-for-sale financial securities	12,039	93,773,000	59,348,000
Equity method investment	792	6,166,000	0
Loans and advances	537,742	4,188,689,000	3,086,904,000
Receivables:
Clients	31,712	247,017,000	120,256,000
Brokers	157,438	1,226,348,000	425,849,000
Clearing organization	39,038	304,080,000	175,955,000
Interest	2,169	16,892,000	49,427,000
Prepaid assets	1,601	12,470,000	8,810,000
Operating lease right-of-use assets	20,748	161,617,000
Other assets	30,739	239,435,000	149,279,000
Total assets	2,747,315	21,399,924,000	16,062,932,000
LIABILITIES
Amounts due to related parties	4,317	33,628,000	8,591,000
Payables:
Clients	1,982,037	15,438,879,000	12,304,717,000
Brokers	190,547	1,484,243,000	920,871,000
Interest	67	519,000	2,405,000
Borrowings	188,408	1,467,586,000	1,576,251,000
Securities sold under agreement to repurchase	204	1,590,000
Operating lease liabilities	22,141	172,466,000
Accrued expenses and other liabilities	32,411	252,460,000	149,818,000
Total liabilities	2,420,132	18,851,371,000	14,962,653,000
Contingencies (Note 27)
MEZZANINE EQUITY
Total mezzanine equity			1,250,472,000
SHAREHOLDERS' (DEFICIT)/EQUITY
Ordinary shares			31,000
Additional paid-in capital	325,594	2,536,182,000
Accumulated other comprehensive loss	(570)	(4,446,000)	(1,299,000)
(Accumulated deficit)/Retained earnings	2,149	16,739,000	(148,925,000)
Total shareholders' (deficit)/equity	327,183	2,548,553,000	(150,193,000)
Total liabilities, mezzanine equity and shareholders' (deficit)/equity	2,747,315	21,399,924,000	16,062,932,000
Series A convertible redeemable preferred shares
MEZZANINE EQUITY
Total mezzanine equity			68,072,045
Series A-1 convertible redeemable preferred shares
MEZZANINE EQUITY
Total mezzanine equity			14,586,871
Series B convertible redeemable preferred shares
MEZZANINE EQUITY
Total mezzanine equity			282,627,380
Series C convertible redeemable preferred shares
MEZZANINE EQUITY
Total mezzanine equity			777,835,453
Series C-1 convertible redeemable preferred shares
MEZZANINE EQUITY
Total mezzanine equity			$ 107,351,218
Class A ordinary shares
SHAREHOLDERS' (DEFICIT)/EQUITY
Ordinary shares	5	36,000
Total shareholders' (deficit)/equity		36,000
Class B ordinary shares
SHAREHOLDERS' (DEFICIT)/EQUITY
Ordinary shares	$ 5	42,000
Total shareholders' (deficit)/equity		$ 42,000

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Ordinary shares, par value	$ 0.00001	$ 0.00001
Ordinary shares, shares authorized	0	4,622,068,906
Ordinary shares, shares issued	0	403,750,000
Ordinary shares, shares outstanding	0	403,750,000
Series A convertible redeemable preferred shares
Mezzanine equity, par value	$ 0.00001	$ 0.00001
Mezzanine equity, shares authorized	0	125,000,000
Mezzanine equity, shares issued	0	125,000,000
Mezzanine equity, shares outstanding	0	125,000,000
Series A-1 convertible redeemable preferred shares
Mezzanine equity, par value	$ 0.00001	$ 0.00001
Mezzanine equity, shares authorized	0	23,437,500
Mezzanine equity, shares issued	0	23,437,500
Mezzanine equity, shares outstanding	0	23,437,500
Series B convertible redeemable preferred shares
Mezzanine equity, par value	$ 0.00001	$ 0.00001
Mezzanine equity, shares authorized	0	88,423,500
Mezzanine equity, shares issued	0	88,423,500
Mezzanine equity, shares outstanding	0	88,423,500
Series C convertible redeemable preferred shares
Mezzanine equity, par value	$ 0.00001	$ 0.00001
Mezzanine equity, shares authorized	0	128,844,812
Mezzanine equity, shares issued	0	128,844,812
Mezzanine equity, shares outstanding	0	128,844,812
Series C-1 convertible redeemable preferred shares
Mezzanine equity, par value	$ 0.00001	$ 0.00001
Mezzanine equity, shares authorized	0	12,225,282
Mezzanine equity, shares issued	0	12,225,282
Mezzanine equity, shares outstanding	0	12,225,282
Class A ordinary shares
Ordinary shares, par value	$ 0.00001	$ 0.00001
Ordinary shares, shares authorized	48,700,000,000	0
Ordinary shares, shares issued	459,090,941	0
Ordinary shares, shares outstanding	459,090,941	0
Class B ordinary shares
Ordinary shares, par value	$ 0.00001	$ 0.00001
Ordinary shares, shares authorized	800,000,000	0
Ordinary shares, shares issued	544,552,051	0
Ordinary shares, shares outstanding	544,552,051	0

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)/INCOME $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2019 HKD ($) $ / shares shares	Dec. 31, 2018 HKD ($) $ / shares shares	Dec. 31, 2017 HKD ($) $ / shares shares
Revenues
Brokerage commission and handling charge income	$ 65,649	$ 511,365	$ 407,990	$ 184,918
Interest income	59,684	464,903	360,585	105,872
Other income	10,949	85,287	42,768	20,873
Total revenues	136,282	1,061,555	811,343	311,663
Costs
Interest expenses	(11,456)	(89,238)	(95,624)	(19,879)
Processing and servicing costs	(11,800)	(91,916)	(73,843)	(52,446)
Total costs	(36,165)	(281,704)	(249,594)	(109,102)
Total gross profit	100,117	779,851	561,749	202,561
Operating expenses
Research and development expenses	(33,680)	(262,345)	(151,097)	(95,526)
Selling and marketing expenses	(21,144)	(164,701)	(98,062)	(41,446)
General and administrative expenses	(21,164)	(164,850)	(103,831)	(57,293)
Total operating expenses	(75,988)	(591,896)	(352,990)	(194,265)
Others, net	(1,215)	(9,462)	(7,959)	(4,918)
Income before income tax expenses	22,914	178,493	200,800	3,378
Income tax expenses	(1,577)	(12,286)	(62,288)	(11,480)
Net loss from equity method investments	(70)	(543)
Net (loss)/income	21,267	165,664	138,512	(8,102)
Preferred shares redemption value accretion	(1,580)	(12,309)	(66,998)	(47,715)
Income allocation to participating preferred shareholders	(1,309)	(10,196)	(34,576)
Net (loss)/income attributable to ordinary shareholder of the Company	18,378	143,159	36,938	(55,817)
Net (loss)/income	21,267	165,664	138,512	(8,102)
Other comprehensive income/(loss), net of tax
Foreign currency translation adjustment	(404)	(3,147)	754	3,366
Total comprehensive (loss)/income	$ 20,863	$ 162,517	$ 139,266	$ (4,736)
Net (loss)/income per share attributable to ordinary shareholder of the Company
Basic \| (per share)	$ 0.02	$ 0.17	$ 0.09	$ (0.14)
Diluted \| (per share)	0.02	0.16	$ 0.07	$ (0.14)
Net (loss)/income per ADS
Basic \| (per share)	0.18	1.38
Diluted \| (per share)	$ 0.16	$ 1.25
Weighted average number of ordinary shares used in computing net (loss)/income per share
Basic	832,790,329	832,790,329	403,750,000	403,750,000
Diluted	917,897,426	917,897,426	511,536,122	403,750,000
Brokerage commission and handling charge
Costs
Total costs	$ (12,909)	$ (100,550)	$ (80,127)	$ (36,777)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT)/EQUITY $ in Thousands, $ in Thousands	Ordinary shares HKD ($) shares	Additional Paid-in Capital HKD ($)	Accumulated other comprehensive (loss)/income HKD ($)	(Accumulated deficit)/Retained Earnings HKD ($)	Class A ordinary shares HKD ($) shares	Class B ordinary shares HKD ($) shares	USD ($)	HKD ($)
Beginning balance at Dec. 31, 2016	$ 31	$ 2,500	$ (5,419)	$ (187,331)				$ (190,219)
Beginning balance (in shares) at Dec. 31, 2016 \| shares	403,750,000
Profit / Loss for the year				(8,102)				(8,102)
Share-based compensation		9,769						9,769
Preferred shares redemption value accretion		(12,269)		(35,446)				(47,715)
Foreign currency translation adjustment, net of tax			3,366					3,366
Ending balance at Dec. 31, 2017	$ 31		(2,053)	(230,879)				(232,901)
Ending balance (in shares) at Dec. 31, 2017 \| shares	403,750,000
Profit / Loss for the year				138,512				138,512
Share-based compensation		10,440						10,440
Preferred shares redemption value accretion		(10,440)		(56,558)				(66,998)
Foreign currency translation adjustment, net of tax			754					754
Ending balance at Dec. 31, 2018	$ 31		(1,299)	(148,925)				(150,193)
Ending balance (in shares) at Dec. 31, 2018 \| shares	403,750,000
Profit / Loss for the year				165,664			$ 21,267	165,664
Share-based compensation		15,967						15,967
Preferred shares redemption value accretion		(12,309)					(1,580)	(12,309)
Conversion and redesignation of preferred shares into ordinary shares		1,262,751			$ 19	$ 11		1,262,781
Conversion and redesignation of preferred shares into ordinary shares (In shares) \| shares					237,129,043	140,802,051
Issuance of ordinary shares upon Initial Public Offering ("IPO")		1,259,308			$ 9			1,259,317
Issuance of ordinary shares upon Initial Public Offering ("IPO") (in shares) \| shares					115,666,666
Redesignation of ordinary shares into Class B ordinary shares	$ (31)					$ 31
Redesignation of ordinary shares into Class B ordinary shares (in shares) \| shares	(403,750,000)					403,750,000
Shares issued upon exercise of employee share options		10,465			$ 8			10,473
Shares issued upon exercise of employee share options (in shares) \| shares					106,295,232
Foreign currency translation adjustment, net of tax			(3,147)				(404)	(3,147)
Ending balance at Dec. 31, 2019		$ 2,536,182	$ (4,446)	$ 16,739	$ 36	$ 42	$ 327,183	$ 2,548,553
Ending balance (in shares) at Dec. 31, 2019 \| shares					459,090,941	544,552,051

CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
Cash flows from operating activities
Net (loss)/income	$ 21,267	$ 165,664	$ 138,512	$ (8,102)
Adjustments for:
Depreciation and amortization	2,124	16,547	8,327	4,300
Net loss from equity method investments	70	543
Foreign exchange losses/(gains)	968	7,539	(7,457)	(21,625)
Share-based compensation	2,050	15,967	10,440	9,769
Realized gain from available-for-sale financial securities	(91)	(707)	(83)	(12)
Deferred income tax expenses/(benefit)	(202)	(1,576)	15,507	5,194
Amortization of right-of-use assets	8,313	49,553
Changes in operating assets:
Net (increase)/decrease in amounts due from related parties			6,541	(5,535)
Net increase in loans and advances	(141,447)	(1,101,785)	(178,937)	(2,781,804)
Net (increase)/decrease in accounts receivable from clients and brokers	(119,041)	(927,260)	(221,067)	477,360
Net increase in accounts receivable from clearing organization	(16,449)	(128,125)	(120,063)	(46,278)
Net (increase)/decrease in interest receivable	4,177	32,535	(42,386)	(5,971)
Net (increase)/decrease in prepaid assets	(470)	(3,660)	(5,164)	1,286
Net (increase)/decrease in other assets	2,678	20,860	(89,543)	(19,159)
Changes in operating liabilities:
Net increase/(decrease) in amounts due to related parties	3,214	25,037	(6,096)	8,208
Net increase in accounts payable to clients and brokers	474,688	3,697,534	4,955,073	4,131,287
Net increase/(decrease) in accounts payable to clearing organization			(82,878)	72,437
Net increase in payroll and welfare payable	4,364	33,990	17,121	22,838
Net increase/(decrease) in interest payable	(242)	(1,886)	339	(415)
Net increase in operating lease liabilities	(6,921)	(38,704)
Net increase in securities sold under agreements to repurchase	204	1,590
Net increase in other liabilities	13,580	105,778	71,981	11,550
Net cash generated from operating activities	252,834	1,969,434	4,470,167	1,855,328
Cash flows from investing activities
Proceeds from disposal of property and equipment and intangible assets	1	9	4	20
Purchase of property and equipment and intangible assets	(15,193)	(118,341)	(18,791)	(7,413)
Purchase of available-for-sale financial securities	(36,689)	(285,784)	(123,260)
Proceeds from disposal of available-for-sale financial securities	32,103	250,061	63,912	2,236
Realized gain received from available-for-sale financial securities	91	707	83	12
Acquisition of equity method investments	(861)	(6,709)
Net cash used in investing activities	(20,548)	(160,057)	(78,052)	(5,145)
Cash flows from financing activities
Proceeds from issuance of Series C preferred shares and Series C-1 preferred shares				620,625
Proceeds from borrowings	868,427	6,764,524	6,078,979	2,518,185
Repayment of borrowings	(882,377)	(6,873,188)	(6,043,289)	(982,964)
Proceeds from initial public offering, net of issuance costs	161,671	1,259,317
Proceeds from exercise of share options	124	969
Net cash generated from financing activities	147,845	1,151,622	35,690	2,155,846
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(5,734)	(44,666)	7,457	21,625
Net increase in cash, cash equivalents and restricted cash	374,397	2,916,333	4,435,262	4,027,654
Cash, cash equivalents and restricted cash at beginning of the year	1,538,900	11,987,104	7,551,842	3,524,188
Cash, cash equivalents and restricted cash at end of the year	1,913,297	14,903,437	11,987,104	7,551,842
Cash, cash equivalents and restricted cash
Cash and cash equivalents	46,547		215,617	375,263
Cash held on behalf of clients	1,866,750		11,771,487	7,176,579
Non-cash financing activities
Accretion to preferred shares redemption value	1,580	12,309	66,998	47,715
Issuance of Series C preferred shares from conversion of the convertible notes				32,345
Issuance of Series C preferred shares from repayment of short-term borrowings				153,896
Supplemental disclosure
Interest paid	(11,456)	(89,238)	(95,285)	(20,294)
Income tax paid	(1,941)	(15,117)	$ (18,734)	$ (8,693)
Cash paid for amounts include in operating lease liabilities	$ (6,500)	$ (50,629)

ORGANIZATION AND PRINCIPAL ACTIVITIES

12 Months Ended

Dec. 31, 2019

ORGANIZATION AND PRINCIPAL ACTIVITIES

ORGANIZATION AND PRINCIPAL ACTIVITIES

Principal activities

Futu Holdings Limited (the “Company”) is an investment holding company incorporated in the Cayman Islands with limited liability and conducts its business mainly through its subsidiaries, variable interest entity (“VIE”) and subsidiary of the VIE (collectively referred to as the “Group”). The Group principally engages in online financial services including securities and derivative trades brokerage, margin financing and wealth management services based on independently developed software and websites like “Futu NiuNiu” mobile app. The Group also provides financial information and online community services, etc. The Company completed its IPO on March 8, 2019 on the Nasdaq Global Market. Each American Depositary Shares ("ADSs") of the Company represents eight Class A ordinary shares.

As of December 31, 2019, the Company’s principal subsidiaries, consolidated VIE and subsidiary of VIE are as follows:


			Percentage of
			Direct or
	Date of	Place of	Indirect
	Incorporation/	Incorporation/	Economic
Subsidiaries	Establishment/	Establishment	Interest		Principal Activities
Futu Securities International (Hong Kong) Limited (“Futu Securities” or the “Operating Company”)	April 17, 2012	Hong Kong	100	%	Financial services
Futu Securities (Hong Kong) Limited	May 2, 2014	Hong Kong	100	%	Investment holding
Futu Network Technology Limited	May 17, 2015	Hong Kong	100	%	Research and development and technology services
Futu Network Technology (Shenzhen) Co., Ltd.	October 14, 2015	Shenzhen, PRC	100	%	Research and development and technology services
Shen Si Network Technology (Beijing) Co., Ltd. (“Shen Si”)	September 15, 2014	Beijing, PRC	100	%	No substantial business
Futu Inc.	December 17, 2015	Delaware, USA	100	%	Financial services

VIE
Shenzhen Futu Network Technology Co., Ltd. (1) (“Shenzhen Futu”)	December 18, 2007	Shenzhen, PRC	100	%	Research and development and technology services

Subsidiary of the VIE
Beijing Futu Network Technology Co., Ltd.	April 4, 2014	Beijing, PRC	100	%	No substantial business

Note:

(1)

Mr. Leaf Hua Li and Ms. Lei Li are beneficiary owners of the Company and held 85% and 15% equity interest in Shenzhen Futu, respectively. Mr. Leaf Hua Li is the founder, chairman and chief executive officer of the Company, and Ms. Lei Li is Mr. Leaf Hua Li’s spouse.

Initial Public Offering

On March 8, 2019, the Compangy completed its IPO on the Nasdaq Global Market. In the offering, 8,625,000 ADSs (including 1,125,000 ADSs sold upon the full exercise of the underwriters’ over-allotment option), representing 69,000,000 Class A ordinary shares, were issued and sold to the public at a price of US$12 per ADS. Concurrently with the IPO, 46,666,666 Class A ordinary shares were issued and sold to General Atlantic Singapore FT Pte. Ltd. at a price per share equal to the IPO price per share (“Concurrent Private Placement”). The net proceeds to the Company from the IPO and Concurrent Private Placement, after deducting commissions and offering expenses, were approximately US$161.7 million (HK$1,259,317,000). Upon the completion of the IPO, all 377,931,094 issued and outstanding preferred shares were converted into ordinary shares immediately as of the same date.

In accordance to the written resolutions passed by the Board of Directors of the Company and its shareholders in December 2018, upon the completion of the IPO, the Company completed the redesignation on a one-for-one basis of: (i) all of 403,750,000 original ordinary shares ultimately held by the Company’s founder, chairman of the board of directors and chief executive officer, Mr. Leaf Hua Li and 140,802,051 shares (including ordinary shares resulting from the conversion and re-designation of preferred shares) held by Qiantang River Investment Limited into Class B ordinary shares; (ii) all of remaining ordinary shares (including 237,129,043 ordinary shares resulting from the conversion and re-designation of preferred shares) into Class A ordinary shares.

In respect of all matters subject to shareholders’ vote, each holder of Class A ordinary share is entitled to one and each holder of Class B ordinary share is entitled to twenty votes.

SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2019

SIGNIFICANT ACCOUNTING POLICIES

SIGNIFICANT ACCOUNTING POLICIES

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The consolidated financial statements of the Group have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”). Significant accounting policies followed by the Group in the preparation of the accompanying consolidated financial statements are summarized below.

Basis of Consolidation

The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE and subsidiary of the VIE for which the Company or its subsidiary is the primary beneficiary.

A subsidiary is an entity in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to appoint or remove the majority of the members of the board of directors; or to cast a majority of votes at the meeting of directors; or has the power to govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders.

A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has the power to direct the activities that most significantly impact the entity’s economic performance, bears the risks of and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity.

All transactions and balances among the Company, its subsidiaries, the VIE and subsidiary of the VIE have been eliminated upon consolidation.

VIE Companies

1) Contractual Agreements with VIE

The following is a summary of the contractual agreements (collectively, “Contractual Agreements”) between the Company’s PRC subsidiary, Shen Si, and the VIE, Shenzhen Futu. Through the Contractual Agreements, the VIE is effectively controlled by the Company.

Shareholders’ Voting Rights Proxy Agreements. Pursuant to the Shareholders’ Voting Rights Proxy Agreements, each shareholder of Shenzhen Futu irrevocably authorized Shen Si or any person(s) designated by Shen Si to exercise such shareholder’s rights in Shenzhen Futu, including without limitation, the power to participate in and vote at shareholder’s meetings, the power to nominate and appoint the directors, senior management, and other shareholders’ voting right permitted by the Articles of Association of Shenzhen Futu. The shareholders’ voting rights proxy agreement remains irrevocable and continuously valid from the date of execution until the expiration of the business term of Shen Si and can be renewed upon request by Shen Si.

Business Operation Agreement. Pursuant to the Business Operation Agreement, Shenzhen Futu and its shareholders undertake that without Shen Si’s prior written consent, Shenzhen Futu shall not enter into any transactions that may have a material effect on Shenzhen Futu’s assets, business, personnel, obligations, rights or business operations. Shenzhen Futu and its shareholders shall elect directors nominated by Shen Si and such directors shall nominate officers designated by Shen Si. The business operation agreement will remain effective until the end of Shen Si’s business term, which will be extended if Shen Si’s business term is extended or as required by Shen Si.

Equity Interest Pledge Agreements. Pursuant to the Equity Interest Pledge Agreements, each shareholder of Shenzhen Futu agrees that, during the term of the Equity Interest Pledge Agreements, he or she will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests without the prior written consent of Shen Si. The Equity Interest Pledge Agreements remain effective until the latter of the full payment of all secured debt under the equity interest pledge agreements and Shenzhen Futu and its shareholders discharge all their obligations under the contractual arrangements.

Exclusive Technology Consulting and Services Agreement. Under the Exclusive Technology Consulting and Services Agreement between Shen Si and Shenzhen Futu, Shen Si has the exclusive right to provide Shenzhen Futu with technology consulting and services related to, among other things, technology research and development, technology application and implementation, maintenance of software and hardware. Without Shen Si’s written consent, Shenzhen Futu shall not accept any technology consulting and services covered by this agreement from any third party. Shenzhen Futu agrees to pay a service fee at an amount equivalent to all of its net profit to Shen Si. Unless otherwise terminated in accordance with the terms of this agreement or otherwise agreed with Shen Si, this agreement will remain effective until the expiration of Shen Si’s business term, and will be renewed if Shen Si’s business term is extended.

Exclusive Option Agreement. Pursuant to the Exclusive Option Agreement, each shareholder of Shenzhen Futu has irrevocably granted Shen Si an exclusive option, to the extent permitted by PRC laws, to purchase, or have its designated person or persons to purchase, at its discretion, all or part of the shareholder’s equity interests in Shenzhen Futu. Unless PRC laws and/or regulations require valuation of the equity interests, the purchase price shall be RMB1.00 or the lowest price permitted by the applicable PRC laws, whoever is higher. Each shareholder of Shenzhen Futu undertakes that, without the prior written consent of Shen Si, he or she will not, among other things, (i) create any pledge or encumbrance on his or her equity interests in Shenzhen Futu, (ii) transfer or otherwise dispose of his or her equity interests in Shenzhen Futu, (iii) change Shenzhen Futu’s registered capital, (iv) amend Shenzhen Futu’s articles of association, (v) liquidate or dissolve Shenzhen Futu, or (vi) distribute dividends to the shareholders of Shenshen Futu. In addition, Shenzhen Futu undertakes that, without the prior written consent of Shen Si, it will not, among other things, dispose of Shenzhen Futu’s material assets, provide any loans to any third parties, enter into any material contract with a value of more than RMB500,000, or create any pledge or encumbrance on any of its assets, or transfer or otherwise dispose of its material assets. Unless otherwise terminated by Shen Si, this agreement will remain effective until the expiration of Shen Si’s business term, and will be renewed if Shen Si’s business term is extended.

2) Risks in relation to the VIE structure

The following table sets forth the assets, liabilities, results of operations and changes in cash and cash equivalents of the VIE and its subsidiary taken as a whole, which were included in the Group’s consolidated financial statements with intercompany balances and transactions eliminated between the VIE and its subsidiary:


	As of December 31,
	2018	2019
	(HK$in thousands)
Total assets	57,213	68,480
Total liabilities	74,904	73,271


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Total operating revenue	50,020	68,888	65,681
Net income	18,458	21,262	8,807


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Net cash (used in)/generated from operating activities	(4,613)	1,664	(2,502)
Net cash generated from investing activities	—	—	2,233
Net (decrease)/increase in cash and cash equivalents	(4,613)	1,664	(269)
Cash and cash equivalents at beginning of the year	4,699	86	1,750
Cash and cash equivalents at end of the year	86	1,750	1,481

Under the Contractual Agreements with the VIE, the Company has the power to direct activities of the VIE and VIE’s subsidiary, and can have assets transferred out of the VIE and VIE’s subsidiary. Therefore, the Company considers itself the ultimate primary beneficiary of the VIE and there is no asset of the VIE that can only be used to settle obligations of the VIE and VIE’s subsidiary, except for registered capital of the VIE and its subsidiary amounting to RMB10 million as of December 31, 2017, 2018 and 2019, respectively. Since the VIE are incorporated as limited liability companies under the PRC Company Law, creditors of the VIE do not have recourse to the general credit of the Company. There is currently no contractual arrangement that would require the Company to provide additional financial support to the VIE. However, as the Company is conducting certain businesses through its VIE and VIE’s subsidiary, the Company may provide such support on a discretionary basis in the future, which could expose the Company to a loss.

In the opinion of the Company’s management, the contractual arrangements among its subsidiary, the VIE and its respective Nominee Shareholders are in compliance with current PRC laws and are legally binding and enforceable. However, uncertainties in the interpretation and enforcement of the PRC laws, regulations and policies could limit the Company’s ability to enforce these contractual arrangements. As a result, the Company may be unable to consolidate the VIE and VIE’s subsidiary in the consolidated financial statements.

On March 15, 2019, the Foreign Investment Law was formally passed by the thirteenth National People's Congress and it will take effect on January 1, 2020. The Foreign Investment Law will replace the Law on Sino-Foreign Equity Joint Ventures, the Law on Sino-Foreign Cooperative Joint Ventures and the Law on Foreign-Capital Enterprises to become the legal foundation for foreign investment in the PRC.

The Foreign Investment Law stipulates certain forms of foreign investment. However, the Foreign Investment Law does not explicitly stipulate contractual arrangements such as those we rely on as a form of foreign investment. Notwithstanding the above, the Foreign Investment Law stipulates that foreign investment includes "foreign investors investing through any other methods under laws, administrative regulations or provisions prescribed by the State Council.'' Future laws, administrative regulations or provisions prescribed by the State Council may possibly regard Contractual Arrangements as a form of foreign investment. If this happens, it is uncertain whether the Contractual Arrangements with the VIE and its shareholders would be recognized as foreign investment, or whether the Contractual Arrangements would be deemed to be in violation of the foreign investment access requirements. As well as the uncertainty on how the Contractual Arrangements will be handled, there is substantial uncertainty regarding the interpretation and the implementation of the Foreign Investment Law. The relevant government authorities have broad discretion in interpreting the law. Therefore, there is no guarantee that the Contractual Arrangements, the business of the VIE and financial conditions of the Company will not be materially and adversely affected.

The Company’s ability to control the VIE also depends on the power of attorney Shen Si has to vote on all matters requiring shareholders’ approvals in the VIE. As noted above, the Company believes these power of attorney are legally binding and enforceable but may not be as effective as direct equity ownership. In addition, if the Group’s corporate structure or the contractual arrangements with the VIE were found to be in violation of any existing PRC laws and regulations, the PRC regulatory authorities could, within their respective jurisdictions:

revoke the Group’s business and operating licenses;

require the Group to discontinue or restrict its operations;

restrict the Group’s right to collect revenues;

block the Group’s websites;

require the Group to restructure its operations, re-apply for the necessary licenses or relocate the Group’s businesses, staff and assets;

impose additional conditions or requirements with which the Group may not be able to comply; or

take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business.

The imposition of any of these restrictions or actions may result in a material adverse effect on the Group’s ability to conduct its business. In addition, if the imposition of any of these restrictions causes the Group to lose the right to direct the activities of the VIE or the right to receive their economic benefits, the Group would no longer be able to consolidate the financial statements of the VIE. In the opinion of management, the likelihood of losing the benefits in respect of the Group’s current ownership structure or the contractual arrangements with its VIE is remote.

Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenue, cost and expenses during the reported period in the consolidated financial statements and accompanying notes. Significant accounting estimates reflected in the Group’s consolidated financial statements mainly include, but are not limited to, assessment of whether the Group acts as a principal or an agent in different revenue streams, the determination of estimated selling prices of multiple element revenue contracts, the estimation of selling and marketing expense from incentive program, the valuation and recognition of share-based compensation arrangements, depreciable lives of property and equipment, useful life of intangible assets, assessment for impairment of loans and advances, provision of income tax and valuation allowance for deferred tax asset. Actual results could differ from those estimates.

Comprehensive Income and Foreign Currency Translation

The Group’s operating results are reported in the consolidated statements of comprehensive (loss)/income pursuant to FASB ASC Topic 220, “Comprehensive Income”. Comprehensive income consists of two components: net income and other comprehensive income (“OCI”). The Group’s OCI is comprised of gains and losses resulting from translating foreign currency financial statements of entities, of which functional currency is other than Hong Kong dollar which is the presentational currency of the Group, net of related income taxes, where applicable. Such subsidiaries’ assets and liabilities are translated into Hong Kong dollars at period-end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the period. Adjustments that result from translating amounts from a subsidiary’s functional currency to the Hong Kong dollar (as described above) are reported net of tax, where applicable, in accumulated OCI in the consolidated balance sheets.

Convenience Translation

Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive (loss)/income and consolidated statements of cash flows from HK$ into US$ as of and for the year ended December 31, 2019 are solely for the convenience of the readers and were calculated at the rate of US$1.00=HK$7.7894, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board on December 31, 2019. No representation is made that the HK$ amounts could have been, or could be, converted, realized or settled into US$ at that rate on December 31, 2019, or at any other rate.

Cash and Cash Equivalents

Cash and cash equivalents represent cash on hand, demand deposits and time deposits placed with banks or other financial institutions, which are unrestricted to withdrawal or use, and which have original maturities of three months or less.

Cash Held on Behalf of Clients

The Group has classified the clients’ deposits as cash held on behalf of clients under the assets section in the consolidated balance sheets and recognized the corresponding accounts payables to the respective clients under the liabilities section.

Available-for-Sale Financial Securities

Available-for-sale financial securities include debt securities and are measured at fair value. Investments classified as available-for-sale debt securities are reported at fair value with unrealized gains or losses, if any, recorded in accumulated other comprehensive income in the consolidated statements of changes in shareholders’ (deficit)/equity. Debt securities in this category are wealth management products with expected return rate or variable interest rate indexed to investment horizon, principal amounting to HK$59,348 thousand and HK$93,773 thousand as of December 31, 2018 and 2019, respectively. These wealth management products are issued by a commercial bank in China and the Group can redeem the units held upon request.

The assessment of a decline in the fair value of an individual security is based on whether the decline is other-than-temporary. The Group assesses its available-for-sale debt securities for other-than-temporary impairment by considering factors including, but not limited to, its ability and intent to hold the individual security, severity of the impairment, expected duration of the impairment and forecasted recovery of fair values. If the Group determines a decline in fair value is other-than-temporary, the cost basis of the individual security is written down to fair value as a new cost basis and the amount of the write-down is accounted for as a realized loss charged in the consolidated statements of comprehensive (loss)/income. The fair values of the investments would not be adjusted for subsequent recoveries in fair values. As of December 31, 2018 and 2019, Group did not identify any sign for its available-for-sale debt securities to impair.

Equity method investment

In accordance with ASC 323 Investment-Equity Method and Joint Ventures, the Company accounts for an equity investment over which it has significant influence but does not own a majority of the equity interest or otherwise controls and the investments are either common stock or in substance common stock using the equity method. The Company's share of the investee's profit and loss is recognized in the consolidated statements of comprehensive (loss)/income of the period.

In January 2019, the Company invested in Zhixiang Technology (Shenzhen) Co., Ltd, a professional stock incentive plan service company. The Company acquired 20% ordinary equity interest with a total consideration of HK$6,709 thousand. The Company exercises significant influence in Zhixiang Technology (Shenzhen) Co., Ltd and therefore accounts for this as a long-term investment using equity method.

Loans and advances

Loans and advances include margin loans and IPO loans extended to clients and other advances, collateralized by securities and are carried at the amortized cost, net of an allowance for doubtful accounts.

IPO loans for subscription of new shares are normally settled within one week from the drawdown date. Once IPO stocks are allotted, the Operating Company requires clients to repay the IPO loans. Force liquidation action would be taken if the clients fail to settle their shortfall after the IPO allotment result is announced. There were no outstanding IPO loan balances as of December 31, 2018 and 2019. The allowance for doubtful accounts for clients and related activity was immaterial for the period presented.

Other advances consist of bridge loans to enterprises which pledged unlisted or listed shares they hold as collateral. The allowance for doubtful accounts for clients and related activity was immaterial for the period presented.

Loans and advances are initially recorded net of directly attributable transaction costs and are measured at subsequent reporting dates at amortized cost. Finance charges, premiums payable on settlement or redemption and direct costs are accounted for on an accrual basis to the surplus or deficit using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

Trading Receivables from and Payables to Clients

Trading receivables from and payables to clients include amounts due on brokerage transactions on a trade-date basis.

Receivables from and Payables to Brokers and Clearing Organization

Receivables from and payables to brokers and clearing organization include receivables and payables from unsettled trades on a trade-date basis, including amounts receivable for securities or derivatives trades not delivered by the Operating Company to the purchaser by the settlement date and cash deposits, and amounts payable for securities or derivatives trades not received by the Operating Company from a seller by the settlement date.

Clearing settlement fund deposited in the clearing organization for the clearing purpose is recognized in receivables from clearing organization.

The Operating Company borrowed margin loan from executing brokers in the United States, with the benchmark interest rate plus premium differentiated depending on the trading volume, and immediately lent to margin financing clients. Margin loan borrowed is recognized in the payables to brokers.

Interest Receivable and Payable

Interest receivable is calculated based on the contractual interest rate of bank deposit, loans and advances on an accrual basis, and is recorded as interest income as earned.

Interest payable is calculated based on the contractual interest rates of borrowings on an accrual basis.

Securities Borrowed and Securities Loaned

Securities borrowed and securities loaned are recorded at the amount of the cash collateral advanced or received. Securities borrowed transactions require the Operating Company to provide counterparties with collateral, which may be in the form of cash, or other securities. With respect to securities loaned, the Operating Company receives collateral, which may be in the form of cash or other securities in an amount generally in excess of the fair value of the securities loaned. The Operating Company monitors the market value of securities borrowed and loaned on a daily basis, with additional collateral obtained or refunded as permitted contractually.

Receivables and payables related to securities borrowed and securities loaned are included at receivables from and payables to brokers or clients in the consolidated balance sheets. Securities lending fees received and paid by the Operating Company are included in interest income and interest expense, respectively, in the consolidated statements of comprehensive (loss)/income.

Securities Sold Under Agreements to Repurchase

Transactions involving sales of securities under agreements to repurchase (repurchase agreements) are treated as collateralized financing transactions. Under repurchase agreements, the Operating Company receives cash from counterparties and provides securities as collateral. These agreements are carried at amounts at which the securities will subsequently be repurchased, plus accrued interest, and the interest expense incurred by the Operating Company is recorded as interest expenses on the consolidated statements of comprehensive (loss)/income.

Leases

On January 1, 2019, the Group adopted FASB ASC Topic 842, “Leases,” (“ASC Topic 842”) which requires that a lessee recognize in the consolidated balance sheet a lease liability and a corresponding right-of-use asset, including for those leases that the Group currently classifies as operating leases. The right-of-use asset and the lease liability was initially measured using the present value of the remaining lease payments. ASC Topic 842 was implemented using a modified retrospective approach which resulted in no cumulative-effect adjustment in the opening balance of retained earnings as of January 1, 2019. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated and continues to be reported under FASB ASC Topic 840, “Leases,” (“ASC Topic 840”), which did not require the recognition of a right-of-use asset or lease liability for operating leases. As permitted under ASC Topic 842, the Group adopted the following practical expedients: (1) not to reassess whether an expired or non-lease contract that commenced before January 1, 2019 contained an embedded lease, (2) not to reassess the classification of existing leases, (3) not to determine whether initial direct costs related to existing leases should be capitalized under ASC Topic 842, and (4) not to separate lease and non-lease components.

The Group reviews all relevant contracts to determine if the contract contains a lease at its inception date. A contract contains a lease if the contract conveys to the Group the right to control the use of an underlying asset for a period of time in exchange for consideration. If the Group determines that a contract contains a lease, it recognizes, in the consolidated balance sheets, a lease liability and a corresponding right-of-use asset on the commencement date of the lease. The lease liability is initially measured at the present value of the future lease payments over the lease term using the rate implicit in the lease or, if not readily determinable, the Group’s secured incremental borrowing rate. An operating lease right-of-use asset is initially measured at the value of the lease liability minus any lease incentives and initial direct costs incurred plus any prepaid rent.

Each lease liability is measured using the Group’s secured incremental borrowing rate, which is based on an internally developed yield curve using interest rates of debt issued with a similar risk profile as the Group and a duration similar to the lease term. The Group’s leases have remaining terms of one to five years, and some of which include options to terminate the lease upon notice. The Group considers these options when determining the lease term used to calculate the right-of-use asset and the lease liability when the Group is reasonably certain it will exercise such option.

The Group’s operating leases contain both lease components and non-lease components. Non-lease components are distinct elements of a contract that are not related to securing the use of the underlying assets, such as common area maintenance and other management costs. The Company elected to measure the lease liability by combining the lease and non-lease components as a single lease component. As such, the Company includes the fixed payments and any payments that depend on a rate or index that relate to the lease and non-lease components in the measurement of the lease liability. Some of the non-lease components are variable in nature and not based on an index or rate, and as a result, are not included in the measurement of the operating lease right-of-use assets or operating lease liability.

Operating lease expense is recognized on a straight-line basis over the lease term and is included in rental and other related expenses in the Group’s consolidated statements of comprehensive (loss)/income.

All of the Group’s leases are classified as operating leases and primarily consist of real estate leases for corporate offices, data centers, and other facilities. As a result of the adoption, the Group recognized approximately HK$22,312 of operating lease right-of-use assets and corresponding operating lease liabilities respectively on the consolidated balance sheets as of January 1, 2019. The adoption had no impact on the Group’s opening balance of retained earnings as of January 1, 2019. As of December 31, 2019, the weighted-average remaining lease term on these leases is approximately four years and the weighted-average discount rate used to measure the lease liabilities is approximately 4.75%. For the year ended December 31, 2019, right-of-use assets obtained under operating leases was HK$211,170 thousand. The Group’s lease agreements do not contain any residual value guarantees, restrictions or covenants.

Refundable Deposit

Refundable deposit is included in other assets in the consolidated balance sheets. As a clearing member firm of HKEx, the Group is also exposed to clearing member credit risk. HKEx requires member firms to deposit cash to a clearing fund. If a clearing member defaults in its obligations to the clearing organization in an amount larger than its own margin and clearing fund deposits, the shortfall is absorbed pro rata from the deposits of the other clearing members. HKEx has the authority to assess their members for additional funds if the clearing fund is depleted. A large clearing member default could result in a substantial cost if the Group is required to pay such assessments.

Property and Equipment, net

Property and equipment, which are included in other assets in the consolidated balance sheets are stated at historical cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Residual rate is determined based on the economic value of the property and equipment at the end of the estimated useful lives as a percentage of the original cost.


Category	Estimated useful lives	Residual rate
Computers equipment	3 - 5 years	5	%
Furniture and fixtures	3 - 5 years	5	%
Office equipment	3 - 5 years	5	%
Vehicle	5 years	5	%
Office building	30 years	5	%

Expenditures for maintenance and repairs are expensed as incurred.

Intangible Assets

Intangible assets which are included in other assets in the consolidated balance sheets mainly consist of computer software and golf membership. Identifiable intangible assets are carried at acquisition cost less accumulated amortization and impairment loss, if any. Finite-lived intangible assets are tested for impairment if impairment indicators arise. Amortization of finite-lived intangible assets is computed using the straight-line method over their estimated useful lives, which are as follows:


Category		Estimated useful lives
Computer software		5 years
Golf membership		10 years

Infinite-lived intangible assets mainly consist of the trading right and license. The Operating Company had hold a futures trading right as a clearing member firm of Hong Kong Exchanges and Clearing Limited (“HKEx”) in order to trade futures through the trading facilities of the Stock Exchange, and has recognized it as intangible assets. The Operating Company obtained an insurance broker license through auquiring a member of the HongKong Professional Insurance Brokers Association .The future trading right and insurance broker licence have an indefinite useful life and are carried at cost less accumulated impairment losses. The Group will not amortize the future trading right and insurance broker license until its useful life is determined to be finite.

Fair Value Measurements

Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be used to measure fair value:

Level 1 — Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.

Level 2 — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.

Level 3 — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

When available, the Group uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Group will measure fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.

The carrying amount of cash and cash equivalents, cash held on behalf of clients, receivables from and payables to clients, brokers and clearing organization, amounts due to related parties, other financial assets and liabilities approximates fair value because of their short-term nature. Loans and advances and accrued interest receivable, borrowings and accrued interest payable and operating lease liabilities are carried at amortized cost. The carrying amount of loans and advances, borrowings, accrued interest receivable, accrued interest payable and operating lease liabilities approximate their respective fair value as the interest rates applied reflect the current quoted market yield for comparable financial instruments. Available-for-sale financial securities are measured at fair value.

The Group's non-financial assets, such as operating lease right-of-use assets, property and equipment and intangible assets, would be measured at fair value only if they were determined to be impaired.

Revenue Recognition

Brokerage commission and handling charge income

Brokerage commission income earned for executing and/or clearing transactions are accrued on a trade-date basis.

Handling charge income arise from the services such as settlement services, subscription and dividend collection handling services, etc., are accrued on a trade-date basis.

Interest Income

The Group earns interest income primarily in connection with its margin financing and securities lending services, IPO financing, bridge loan and deposits with banks, which are recorded on an accrual basis and are included in interest income in the consolidated statements of comprehensive (loss)/income. Interest income is recognized as it accrued using the effective interest method.

Other income

Other income consists of enterprise public relations service charge income provided to corporate clients, underwriting fee income, IPO subscription service charge income, currency exchange service income from clients, income from market data service, client referral income from brokers and funds distribution service income from fund management companies, employee share option plan (“ESOP”) management service income, etc.

Enterprise public relations service charge income is charged to corporate clients by providing platform to post their detailed stock information and latest news in Futu NiuNiu app, as well as providing a lively, interactive community among their potential investors to exchange investment views, share trading experience and socialize with each other. Unearned enterprise public relations service income of which the Group had received the consideration is recorded as contract liabilities (deferred revenue).

IPO subscription service charge income is derived from provision of new share subscription services in relation to IPOs in the Hong Kong capital market.

Underwriting fee income is generated from investment banking business primarily by providing equity sub-underwriting to corporate issuers.

Funds distribution service income is charged to fund management companies for providing fund products distribution service to Futu's individual clients. The Operating Company, as an intermediary would receive subscription fees from fund management companies as agreed in the service contracts.

Market information and data income are the amounts charged to Futu NiuNiu app users for market data service.

Currency exchange service income are the amounts charged to the Group’s paying clients for providing currency exchange service.

Client referral income from brokers is derived from referring clients to China A-share licensed brokers by embedding on the Group’s website or online platform a link which can lead clients to the account opening interface of these brokers.

ESOP management service income is derived from establishing and administrating the platforms for corporate clients’ ESOP. This includes all workflow and administration surrounding ESOP fulfillment, including employee communications, records management, data protection, users and administrators education, and other upgrading and customizing services on the ESOP platforms as agreed.

For enterprise public relations service charge income, funds distribution service income, market information and data income, client referral income from brokers and ESOP management service income, the service revenues are recognized ratably over the term of the service contracts.

For IPO subscription service charge income, underwriting fee income and currency exchange service income, the Group recognizes the revenues upon the time when the services are rendered to customers.

Incentives

The Group offers a self-managed client loyalty program points, which can be used in mobile app and website to redeem a variety of concessions or service, such as commission-deduction coupon, Level 2 A shares securities market data card and etc. Clients have a variety of ways to obtain the points. The major accounting policy for the points program is described as follows:

Sales contracts related scenarios

The sales contracts related scenarios include client entering into the first Hong Kong brokerage transaction, first US brokerage transaction, IPO stock brokerage transactions, and currency exchange services. The Group concludes the points offered linked to the purchase transaction of these scenarios is a material right and accordingly a separate performance obligation according to ASC 606, and should be taken into consideration when allocating the transaction price of the sales. The Group determines the value of each point based on fair value of the concessions and services that can be redeemed with points. The Group also estimates the probability of the points redemption when performing the allocation. Since there is no lapse requirement of the points and no historical of forfeitures observed, coupled with the fact that most services can be redeemed without requiring a significant amount of points comparing with the amount of points provided to users, the Group believes it is reasonable to assume all points will be redeemed and no forfeiture is estimated currently. The Group will apply and update the estimated redeem rate and the estimated value of each point at each reporting period. The amount allocated to the points as separate performance obligation is recorded as contract liabilities (deferred revenue) and revenue should be recognized when future concessions or services are transferred.

For the years ended December 31, 2017, 2018 and 2019, the revenue portion allocated to the points as separate performance obligation were HK$2,042 thousand, HK$1,865 thousand and HK$1,059 thousand, respectively, which is recorded as contract liabilities (deferred revenue). For the years ended December 31, 2017, 2018 and 2019, the total points recorded as a reduction of revenue were HK$330 thousand, HK$275 thousand and HK$187 thousand, respectively. As of December 31, 2018 and 2019, contract liabilities recorded related to unredeemed points were HK$3,022 thousand and HK$2,126 thousand, respectively.

Other scenarios

Clients or the users of the mobile application can also obtain points through other ways such as log-ins to the mobile application, opening a trade account and inviting friends, etc. The Group believes these points are to encourage user engagement and generate market awareness. As a result, the Group accounts for such points as selling and marketing expenses with a corresponding liability recorded under accrued expenses and other liabilities of its consolidated balance sheets upon the points offering. The Group estimates liabilities under the client loyalty program based on cost of the concessions or services that can be redeemed, and its estimate of full redemption. At the time of redemption, the Group records a reduction of accrued expenses and other liabilities.

For the years ended December 31, 2017, 2018 and 2019, the total redeemed points recorded as selling and marketing expenses were HK$198 thousand, HK$220 thousand and HK$1,604 thousand, respectively. As of December 31, 2018 and 2019, liabilities recorded related to unredeemed points in other scenarios were HK$485 thousand and HK$3,518 thousand, respectively.

Brokerage Commission and Handling Charge Expenses

Commission expenses for executing and/or clearing transactions are accrued on a trade-date basis. The commission expenses are charged by executing brokers for securities and derivative trades in the United States stock and derivative markets as the Operating Company makes securities and derivative trades with these brokers as principal.

Handling and settlement fee is charged by HKEx or executing brokers for clearing and settlement services, are accrued on a trade-date basis.

IPO subscription service charge expenses are charged by commercial banks in connection with new share subscription services in relation to IPOs in the Hong Kong capital market.

Interest Expenses

Interest Expenses primarily consists of interest expenses of borrowings from banks, other licensed financial institutions and other parties paid to fund the Operating Company’s margin financing business and IPO financing business.

Processing and Servicing Costs

Processing and servicing costs consists of market data and information fee, data transmission fee, cloud service fee, system cost, and SMS service fee, etc. The nature of market information and data fee mainly represents for information and data fee paid to stock exchanges like HKEx, NASDAQ, and New York stock exchange, etc. Data transmission fee is the fee of data transmission among cloud server and data centers located in Shenzhen, PRC and Hong Kong, etc. Cloud service fee and SMS service fee mainly represent the data storage and computing service and the SMS channel service fee. The nature of system cost mainly represents for the fee to access and use the systems paid to software providers.

Research and Development Expenses

Research and development expenses consist of expenses related to developing transaction platform and website like Futu NiuNiu app and other products, including payroll and welfare, rental expenses and other related expenses for personnel engaged in research and development activities. All research and development costs have been expensed as incurred as the costs qualifying for capitalization have been insignificant.

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of advertising and promotion costs, payroll, rental and related expenses for personnel engaged in marketing and business development activities. Advertising and promotion costs are expensed as incurred and are included within selling and marketing expenses in the consolidated statements of comprehensive (loss)/income.

General and Administrative Expenses

General and administrative expenses consist of payroll, rental, and related expenses for employees involved in general corporate functions, including finance, legal and human resources; costs associated with use of facilities and equipment, such as depreciation expenses, rental and other general corporate related expenses.

Others, net

Others, net, mainly consist of non-operating income and expenses, foreign currency gains or losses, other impairment for all periods presented. Non-operating expenses mainly consist of accrued social security underpayment surcharge.

Foreign Currency Gains and Losses

Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are remeasured at the applicable rates of exchange in effect at that date. Foreign currency gain or loss resulting from the settlement of such transactions and from remeasurement at period-end is recognized in "Others, net" in the consolidated statements of comprehensive (loss)/income.

Share-Based Compensation

The Company follows ASC 718 to determine whether a share option should be classified and accounted for as a liability award or equity award. All share-based awards to employees and directors classified as equity awards , such as stock options, are measured at the grant date based on the fair value of the awards. Share-based compensation, net of estimated forfeitures, is recognized as expenses on a straight-line method over the requisite service period, which is the vesting period. Options granted generally vest over four or five years.

The modification of the terms or conditions of the existing shared-based award is treated as an exchange of the original award for a new award. The incremental compensation expenses are equal to the excess of the fair value of the modified award immediately after the modification over the fair value of the original award immediately before the modification. For stock options already vested as of the modification date, the Group immediately recognized the incremental value as compensation expenses. For stock options still unvested as of the modification date, the incremental compensation expenses are recognized over the remaining service period of these stock options.

The Company utilizes the binomial option pricing model to estimate the fair value of stock options granted, with the assistance of an independent valuation firm. Prior to completion of the IPO, the Group uses the fair value of each of the Company's ordinary shares on the grant date to estimate the fair value of stock options. After the IPO, the exercise price of each granted stock option is determined by the closing price of the Company’s ordinary share on the grant date.

Forfeitures are estimated at the time of grant and revised in subsequent periods if actual forfeitures differ from those estimates. The Group uses historical data to estimate pre-vesting options and records share-based compensation expenses only for those awards that are expected to vest. See Note 14 for further discussion on share-based compensation.

Fair Value of Preferred Shares and Pre-IPO Ordinary Shares

Shares of the Company, which did not have quoted market prices, were valued based on the income approach. The income approach involves applying the discounted cash flow analysis based on projected cash flow using the Group's best estimate as of the valuation dates. Estimating future cash flow requires the Group to analyze projected revenue growth, gross margins, effective tax rates, capital expenditures and working capital requirements. In determining an appropriate discount rate, the Group considered the cost of equity and the rate of return expected by venture capitalists. The Group also applied a discount for lack of marketability given that the shares underlying the award were not publicly traded at the time of grant. Determination of estimated fair value of the Group requires complex and subjective judgments due to its limited financial and operating history, unique business risks and limited public information on companies in China similar to the Group.

Option-pricing method was used to allocate enterprise value to preferred shares and pre-IPO ordinary shares. The method treats preferred shares and pre-IPO ordinary shares as call options on the enterprise's value, with exercise prices based on the liquidation preference of the preferred shares. The strike prices of the “options” based on the characteristics of the Group's capital structure, including number of shares of each class of pre-IPO ordinary shares, seniority levels, liquidation preferences, and conversion values for the preferred shares. The option-pricing method also involves making estimates of the anticipated timing of a potential liquidity event, such as a sale of the Group or an IPO, and estimates of the volatility of the Group's equity securities. The anticipated timing is based on the plans of board of directors and management of the Group. Estimating the volatility of the share price of a privately held company is complex because there is no readily available market for the shares. Volatility is estimated based on annualized standard deviation of daily stock price return of comparable companies.

Taxation

Income tax

Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are accounted for using an asset and liability method. Under this method, deferred income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purpose. The effect on deferred taxes of a change in tax rates is recognized in the consolidated statements of comprehensive (loss)/income in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized.

Uncertain tax positions

The Group did not recognize any interest and penalties associated with uncertain tax positions for the years ended December 31, 2017, 2018 and 2019. As of December 31, 2018 and 2019, the Group did not have any significant unrecognized uncertain tax positions.

Net (loss)/income per share

Basic net (loss)/income per share is computed by dividing net (loss)/income attributable to ordinary shareholder, considering the accretion of redemption feature and cumulative dividend related to the Company’s redeemable convertible preferred shares, and undistributed earnings allocated to redeemable convertible preferred shares by the weighted average number of ordinary shares outstanding during the period using the two-class method. Under the two-class method, net income is allocated between ordinary shares and other participating securities based on their participating rights. Net loss is not allocated to other participating securities if based on their contractual terms they are not obligated to share the losses.

Diluted net (loss)/income per share is calculated by dividing net (loss)/income attributable to ordinary shareholder, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the redeemable convertible preferred shares, using the if-converted method, and shares issuable upon the exercise of share options using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted net (loss)/income per share calculation when inclusion of such share would be anti-dilutive.

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-makers has been identified as the Chief Executive Officer who allocates resources to and assesses the performance of the operating segments of an entity. The Group’s reporting segments are decided based on its operating segments while taking full consideration of various factors such as products and services, geographic location and regulatory environment related to administration of the management. Operating segments meeting the same qualifications are allocated as one reporting segment, providing independent disclosures.

The Group engages primarily in online brokerage services and margin financing services. The Group does not distinguish between markets or segments for the purpose of internal reports. The Group does not distinguish revenues, costs and expenses between segments in its internal reporting, and reports costs and expenses by nature as a whole. Hence, the Group has only one reportable segment.

Significant Risks and Uncertainties

Currency risk

Currency risk arises from the possibility that fluctuations in foreign exchange rates will impact the financial instruments. The Operating Company is not exposed to significant transactional foreign currency risk since almost all of its transactions, assets and liability are denominated in Hong Kong dollars and U.S. dollars and Hong Kong dollars are pegged against U.S. dollars. The impact of foreign currency fluctuations in the Group’s earnings is included in “others, net” in the consolidated statements of comprehensive (loss)/income. At the same time, the Group is exposed to translational foreign currency risk since some of the Group's major subsidiaries have RMB as their functional currency. Therefore, RMB depreciation against Hong Kong dollars could have a material adverse impact on the foreign currency translation adjustment in the consolidated statements of comprehensive (loss)/income.

As of December 31, 2018 and 2019, the Group had RMB-denominated cash of HK$12.3 million (US$1.6 million) and HK$46.7 million (US$6.0 million) respectively. We estimate that a 10% depreciation of Renminbi against the U.S. dollar based on the foreign exchange rate on December 31, 2018 and 2019 would result in a decrease of US$0.2 million and US$0.6 million, respectively, in the Group’s total assets as of December 31, 2018 and 2019, and a 10% appreciation of Renminbi against the U.S. dollar based on the foreign exchange rate on December 31, 2018 and 2019 would result in an increase of US$0.2 million and US$0.6 million, respectively, in the Group’s total assets as of December 31, 2018 and 2019.

Credit risk

Cash held on behalf of clients are segregated and deposited in financial institutions as required by Securities and Futures Ordinance. These financial institutions are of sound credit ratings, therefore management believes that there is no significant credit risk related to cash held on behalf of clients

The Group’s securities and derivative trades activities are transacted on either a cash or margin basis. The Group's credit risk is limited in that substantially all of the contracts entered into are settled directly at securities and derivatives clearing organization. In margin transactions, the Group extends credit to the client, subject to various regulatory and internal margin requirements, collateralized by cash and securities in the client’s account. IPO loans are exposed to credit risk from clients who fails to repay the loans upon IPO stock allotment. The Group monitors the clients’ collateral level and has the right to dispose the newly allotted stocks once the stocks first start trading. Bridge loans to enterprise pledged by shares are exposed to credit risk from counterparties who fail to repay the loans, the Group monitors on the collateral level of bridge loans in real time, and has the right to dispose of the pledged shares once the collateral level falls under the minimal level required to get the loans repaid.

Liabilities to other brokers and dealers related to unsettled transactions are recorded at the amount for which the securities were purchased, and are paid upon receipt of the securities from other brokers or dealers.

In connection with its clearing activities, the Group is obligated to settle transactions with brokers and other financial institutions even if its clients fail to meet their obligations to the Group. Clients are required to complete their transactions by the settlement date, generally two business days after the trade date. If clients do not fulfill their contractual obligations, the Group may incur losses. The Group has established procedures to reduce this risk by generally requiring that clients deposit sufficient cash and/or securities into their account prior to placing an order.

For cash management purposes, the Group enters into short-term securities sold under agreements to repurchase transactions ("repos") in addition to securities borrowing and lending arrangements, all of which may result in credit exposure in the event the counterparty to a transaction is unable to fulfill its contractual obligations. Repos are collateralized by securities with a market value in excess of the obligation under the contract. Similarly, securities lending agreements are collateralized by deposits of cash or securities. The Group attempts to minimize credit risk associated with these activities by monitoring collateral values on a daily basis and requiring additional collateral to be deposited with or returned to the Group as permitted under contractual provisions.

Concentrations of Credit Risk

The Group's exposure to credit risk associated with its brokerage and other activities is measured on an individual counterparty basis, as well as by groups of counterparties that share similar attributes. There was no revenue from clients which individually represented greater than 10% of the total revenues for the years ended December 31, 2017, 2018 and 2019, respectively. Concentrations of credit risk can be affected by changes in political, industry, or economic factors. To reduce the potential for risk concentration, credit limits are established and exposure is monitored in light of changing counterparty and market conditions. As of December 31, 2018 and 2019, the Group did not have any material concentrations of credit risk outside the ordinary course of business.

Interest rate risk

Fluctuations in market interest rates may negatively affect the Group’s financial condition and results of operations. The Group are exposed to floating interest rate risk on cash deposit and floating rate borrowings. We use net interest simulation modeling techniques to evaluate the effect that changes in interest rates might have on pre-tax income. The model includes all interest-sensitive assets and liabilities. The simulations involve assumptions that are inherently uncertain and, as a result, cannot precisely predict the impact that changes in interest rates will have on pre-tax income. Actual results may differ from simulated results due to differences in timing and frequency of rate changes, changes in market conditions and changes in management strategy that lead to changes in the mix of interest-sensitive assets and liabilities.

The simulations assume that the asset and liability structure of the consolidated balance sheets would not be changed as a result of a simulated change in interest rates. The results of the simulations based on the Group’s financial position as of December 31, 2019 indicate that a gradual 1% (100 basis points) increase in interest rates over a 12-month period would result in approximately HK$57.9 million (US$7.4 million) pre-tax income and a gradual 1% (100 basis points) decrease in interest rates over a 12-month period would result in approximately HK$57.9 million (US$7.4 million) pre-tax loss, depending largely on the extent and timing of possible changes in floating rates.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842). The ASU is effective for reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The ASU will require lessees to report most leases as assets and liabilities on the balance sheet, while lessor accounting will remain substantially unchanged. The ASU requires a modified retrospective transition approach for existing leases, whereby the new rules will be applied to the earliest year presented.

The Group adopted ASC Topic 842 on January 1, 2019, and the impact about adoption has been recorded on the consolidated financial statements (see Note 5).

In June 2016, FASB amended guidance related to impairment of financial instruments as part of ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will be effective on January 1, 2020. The guidance replaces the incurred loss impairment methodology with an expected credit loss model for which a group is required to recognize an allowance based on its estimate of expected credit loss. In November 2018, FASB issued ASU No, 2018-19, Codification Improvements to Topic 326, further clarified the scope of the guidance in the amendments in ASU 2016-13. In May 2019, FASB issued ASU No.2019-05, Financial instrument—Credit Losses(Topic 326), Targeted Transition Relief, which provides an irrevocably fair value option to elect for eligible instruments. In November 2019, FASB issued ASU 2019-11 Codification Improvements to Topic 326, Financial Instruments-Credit Losses, which clarified and improved various aspects of ASU 2016-13. The ASC Topic 326 will be effective on January 1, 2020. The Group is currently evaluating the impact of this new guidance on the consolidated financial statements and expected that the adoption will not have a material impact on its consolidated financial statements, as the Group will apply the practical expedient relating to financial assets subject to collacteral maintenance provisions.

In August 2018, the FASB issued ASU 2018‑13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this standard will remove, modify and add certain disclosures under ASC Topic 820, Fair Value Measurement, with the objective of improving disclosure effectiveness. ASU 2018‑13 will be effective for the Group’s fiscal year beginning January 1, 2020, with early adoption permitted. The transition requirements are dependent upon each amendment within this update and will be applied either prospectively or retrospectively. Since this update is intended to modify disclosures, the adoption of ASU 2018‑13 is not expected to have a material impact on the Group’s consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. Under the ASU, entities should account for costs associated with implementing a cloud computing arrangement that is considered a service contract in the same way as accounting for implementation costs incurred to develop or obtain software for internal use using the guidance in ASU 350-40. The amendment address when costs should be capitalized rather than expensed, the item to use when amortizing capitalized costs, and how to evaluate the unamortized portion of these capitalized implementation costs for impairment. The ASU also includes guidance on how to present implementation costs in the financial statements and creates additional disclosure requirements. ASU 2018-15 will be effective for the Group's fiscal year beginning January 1, 2020, with early adoption permitted. The adoption of ASU 2018-15 is not expected to have a material impact on the Group's consolidated financial statements.

In December 2019, FASB issued ASU 2019-12, Income taxes (Topic 740)-Simplifying the accounting for income taxes, which simplifys the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, Income Taxes. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Group is currently evaluating the impact of this new guidance on the consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Under the guidance, public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. The Group does not expect the adoption to have a material impact on its consolidated financial statements.

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

12 Months Ended

Dec. 31, 2019

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

3. FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial Assets and Liabilities Measured at Fair Value

The following tables set forth, by level within the fair value hierarchy (see Note 2), financial assets measured at fair value as of December 31, 2019 and 2018. As required by ASC Topic 820, financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the respective fair value measurement.


	Financial Assets At Fair Value as of
	December 31, 2019
	Level 1	Level 2	Level 3	Total
	(HK$in thousands)
Available-for-sale financial securities	—	93,773	—	93,773


	Financial Assets At Fair Value as of
	December 31, 2018
	Level 1	Level 2	Level 3	Total
	(HK$in thousands)
Available-for-sale financial securities	—	59,348	—	59,348

Transfers Between Level 1 and Level 2

Transfers of financial assets and financial liabilities at fair value to or from Levels 1 and 2 arise where the market for a specific financial instrument has become active or inactive during the period. The fair values transferred are ascribed as if the financial assets or financial liabilities had been transferred as of the end of the period. During the years ended December 31, 2019 and 2018, there were no transfers between levels for financial assets and liabilities, at fair value.

Financial Assets and Liabilities Not Measured at Fair Value

The following tables represent the carrying value, fair value, and fair value hierarchy category of certain financial assets and liabilities that are not recorded at fair value in the Group’s consolidated balance sheets. The following table excludes all non-financial assets and liabilities:


	As of December 31, 2019
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
	(HK$in thousands)
Financial assets, not measured at fair value
Cash and cash equivalents	362,574	362,574	362,574	—	—
Cash held on behalf of clients	14,540,863	14,540,863	14,540,863	—	—
Loans and advances	4,188,689	4,188,689	—	4,188,689	—
Receivables:
Clients	247,017	247,017	—	247,017	—
Brokers	1,226,348	1,226,348	—	1,226,348	—
Clearing organization	304,080	304,080	—	304,080	—
Interest	16,892	16,892	—	16,892	—
Other financial assets	64,184	64,184	—	64,184	—
Total financial assets, not measured at fair value	20,950,647	20,950,647	14,903,437	6,047,210	—


	As of December 31, 2019
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
	(HK$in thousands)
Financial liabilities, not measured at fair value
Amounts due to related parties	33,628	33,628	—	33,628	—
Payables:
Clients	15,438,879	15,438,879	—	15,438,879	—
Brokers	1,484,243	1,484,243	—	1,484,243	—
Interest	519	519	—	519	—
Borrowings	1,467,586	1,467,586	—	1,467,586	—
Securities sold under agreements to repurchase	1,590	1,590	—	1,590	—
Operating lease liabilities	172,466	172,466	—	172,466	—
Other financial liabilities	31,993	31,993	—	31,993	—
Total financial liabilities, not measured at fair value	18,630,904	18,630,904	—	18,630,904	—


	As of December 31, 2018
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
	(HK$in thousands)
Financial assets, not measured at fair value
Cash and cash equivalents	215,617	215,617	215,617	—	—
Cash held on behalf of clients	11,771,487	11,771,487	11,771,487	—	—
Loans and advances	3,086,904	3,086,904	—	3,086,904	—
Receivables:
Clients	120,256	120,256	—	120,256	—
Brokers	425,849	425,849	—	425,849	—
Clearing organization	175,955	175,955	—	175,955	—
Interest	49,427	49,427	—	49,427	—
Other financial assets	41,019	41,019	—	41,019	—
Total financial assets, not measured at fair value	15,886,514	15,886,514	11,987,104	3,899,410	—


	As of December 31, 2018
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
	(HK$ in thousands)
Financial liabilities, not measured at fair value
Amounts due to related parties	8,591	8,591	—	8,591	—
Payables:
Clients	12,304,717	12,304,717	—	12,304,717	—
Brokers	920,871	920,871	—	920,871	—
Interest	2,405	2,405	—	2,405	—
Borrowings	1,576,251	1,576,251	—	1,576,251	—
Other financial liabilities	11,503	11,503	—	11,503	—
Total financial liabilities, not measured at fair value	14,824,338	14,824,338	—	14,824,338	—

Netting of Financial Assets and Financial Liabilities

In the tables below, the amounts of financial instruments that are not offset in the consolidated balance sheets, but could be netted against cash or financial instruments with specific counterparties under master netting agreements, according to the terms of the agreements, including clearing organization, are presented to provide financial statement readers with the Group’s net payable or receivable with counterparties for these financial instruments, as of December 31, 2019 and 2018.


	Effects of offsetting on the balance sheet			Related amounts not offset
			Net
		Gross	amounts	Amounts
		amounts	presented	subject to
		set off in	in the	master	Financial
	Gross	the balance	balance	netting	instrument	Net
2019	amount	sheet	sheet	arrangements	collateral	amount
	HK$in thousands
Financial Assets
Amounts due from clearing organization	2,925,936	(2,621,856)	304,080	—	—	304,080
Deposit paid for securities borrowed (1)	1,126,300	—	1,126,300	—	(935,443)	190,857
Financial liabilities
Amounts due to clearing organization	—	—	—	—	—	—
Deposit received for securities lent (1)	1,342,738	—	1,342,738	—	(935,443)	407,295


	Effects of offsetting on the balance sheet			Related amounts not offset
			Net
		Gross	amounts	Amounts
		amounts	presented	subject to
		set off in	in the	master	Financial
	Gross	the balance	balance	netting	instrument	Net
2018	amount	sheet	sheet	arrangements	collateral	amount
	HK$ in thousands
Financial Assets
Amounts due from clearing organization	1,472,596	(1,296,641)	175,955	—	—	175,955
Deposit paid for securities borrowed (1)	397,675	—	397,675	—	(299,173)	98,502
Financial liabilities
Amounts due to clearing organization	—	—	—	—	—	—
Deposit received for securities lent (1)	488,068	—	488,068	—	(299,173)	188,895

(1)

The Operating Company borrows securities from a securities lender and subsequently lends the securities to clients or vice versa under Stock Yield Enhancement Program. Under these agreements, the Operating Company receives or provides deposits for securities lending and borrowing purpose. For presentation purposes, these amounts presented are included in “Receivables from brokers/clients” and "Payables to clients/brokers" in the consolidated balance sheets.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

EQUITY METHOD INVESTMENT	12 Months Ended
EQUITY METHOD INVESTMENT	Dec. 31, 2019
EQUITY METHOD INVESTMENT
EQUITY METHOD INVESTMENT	4. EQUITY METHOD INVESTMENT As of December 31, 2018 and 2019, the Group’s investments accounted for under the equity method totaled nil and HK$6,166 thousand, respectively. The Group applies the equity method of accounting to account for its equity investments over which it has significant influence but does not own a majority equity interest or otherwise control.

LEASE

12 Months Ended

Dec. 31, 2019

LEASE

LEASE

5. LEASE

The following table presents balances reported in the consolidated balance sheets related to the Group's leases:


		As at December 31, 2019
		(HK$ in thousands)

Operating lease right-of-use assets		161,617
Operating lease liabilities		172,466

The following table presents operating lease cost reported in the consolidated statements of comprehensive (loss)/income related to the Group's leases:


		Year ended
		December 31, 2019
		(HK$ in thousands)

Operating lease cost		64,756

The following table reconciles the undiscounted cash flows of the Group's leases as of December 31, 2019 to the present value of its operating lease payments:


		December 31, 2019
		(HK$ in thousands)

2020		56,714
2021		46,968
2022		44,354
2023		40,346
Thereafter		—
Total undiscounted operating lease payments		188,382
Less: imputed interest		(15,916)
Present value of operating lease liabilities		172,466

The Group's minimum annual lease commitments as of December 31, 2018, in accordance with ASC Topic 840, were as follows:


		December 31, 2018
		(HK$ in thousands)

2019		54,417
2020		56,705
2021		42,090
2022		46,232
2023		42,701
Thereafter		—
		242,145

LOANS AND ADVANCES

12 Months Ended

Dec. 31, 2019

LOANS AND ADVANCES

LOANS AND ADVANCES

6. LOANS AND ADVANCES


	As of December 31,
	2018	2019
	(HK$ in thousands)
Margin loans	2,886,105	4,141,962
Other advances	200,799	46,727
Total	3,086,904	4,188,689

PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2019

PROPERTY AND EQUIPMENT, NET

PROPERTY AND EQUIPMENT, NET

7. PROPERTY AND EQUIPMENT, NET


	As of December 31,
	2018	2019
	(HK$ in thousands)
Gross carrying amount
Computers and equipment	12,981	56,175
Furniture and fixtures	4,961	34,588
Office equipment	20,501	29,938
Office building	—	28,110
Vehicle	638	634
Total of gross carrying amount	39,081	149,445

Less: accumulated depreciation
Computers and equipment	(4,542)	(8,289)
Furniture and fixtures	(3,063)	(6,234)
Office equipment	(8,204)	(16,241)
Office building	—	(519)
Vehicle	(414)	(532)
Total of accumulated depreciation	(16,223)	(31,815)
Property and equipment, net	22,858	117,630

Depreciation expenses on property and equipment which are included in research and development expenses, selling and marketing expenses and general and administrative expenses in the consolidated statements of comprehensive (loss)/income for the years ended December 31, 2017, 2018 and 2019 were HK$3,998 thousand, HK$8,012 thousand and HK$15,647 thousand, respectively.

INTANGIBLE ASSETS , NET

12 Months Ended

Dec. 31, 2019

INTANGIBLE ASSETS , NET

INTANGIBLE ASSETS , NET

8. INTANGIBLE ASSETS , NET


	As of December 31,
	2018	2019
	(HK$ in thousands)
Gross carrying amount
Computer software	1,161	6,328
License	—	2,000
Trading right	1,000	1,000
Golf membership	687	678
Total of gross carrying amount	2,848	10,006

Less: accumulated amortization
Computer software	(804)	(1,647)
Trading right	(500)	(500)
Golf membership	(133)	(166)
Total of accumulated amortization	(1,437)	(2,313)
Intangible assets, net	1,411	7,693

Amortization expenses on intangible assets which are included in research and development expenses, selling and marketing expense and general and administrative expenses in the consolidated statements of comprehensive (loss)/income for the years ended December 31, 2017, 2018 and 2019 were HK$302 thousand, HK$315 thousand and HK$900 thousand, respectively.

OTHER ASSETS

12 Months Ended

Dec. 31, 2019

OTHER ASSETS

OTHER ASSETS

9. OTHER ASSETS


	As of December 31,
	2018	2019
	(HK$ in thousands)
Property and equipment, net (Note 7)	22,858	117,630
Staff advances	65,177	61,745
Refundable deposit	17,519	32,873
Intangible assets, net (Note 8)	1,411	7,693
Deferred tax assets (Note 24)	—	1,576
Deferred IPO cost	20,948	—
Others	21,366	17,918
Total	149,279	239,435

BORROWINGS

12 Months Ended

Dec. 31, 2019

BORROWINGS

BORROWINGS

10. BORROWINGS


	As of December 31,
	2018	2019
	(HK$ in thousands)
Borrowings from:
Banks (1)	1,176,251	1,467,586
Third party (2)	400,000	—
Total	1,576,251	1,467,586

The Group loaned borrowings mainly to support its margin financing business in Hong Kong securities market. Those borrowings bear weighted average interest rates of 4.46% and 4.29% as of December 31, 2018 and 2019, respectively.

(1)

The Group has unused borrowing facilities of HK$4,190,779 thousand and HK$3,326,555 thousand from banks as of December 31, 2018 and 2019, respectively. These facilities are uncommitted and could be withdrawn upon the request of the Group. As of December 31, 2018 and 2019, the Group had an outstanding borrowing balance of HK$1,176,251 thousand and HK$1,467,586 thousand, respectively. These unused facilities were pledged by margin clients’ shares as the primary source of credit risk mitigation of the lenders, and bear floating interest rates based on various benchmarks including Hong Kong Prime Rate, Hong Kong Interbank Offered Rate (“HIBOR”), CHN HIBOR, etc.

(2)

The Group has an unused facility of HK$1,100,000 thousand and nil from a third party as of December 31, 2018 and 2019, respectively.

ACCRUED EXPENSES AND OTHER LIABILITIES

12 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES AND OTHER LIABILITIES

ACCRUED EXPENSES AND OTHER LIABILITIES

11. ACCRUED EXPENSES AND OTHER LIABILITIES


	As of December 31,
	2018	2019
	(HK$ in thousands)
Accrued employee welfare expense	65,027	100,228
Tax payables	48,841	50,803
Payables to fund management companies	—	26,381
Payables to corporate clients in relation to ESOP management services	—	16,492
Refund from depositary bank	—	12,689
Accrued advertising and promotion fee	1,390	10,862
Accrued professional fee	772	5,710
Accrued market information and data fee	2,947	5,646
Stamp duty, trading levy and trading fee payables	3,540	5,612
Contract liabilities	4,774	2,126
Accrued IPO fees and costs	18,138	—
Others	4,389	15,911
Total	149,818	252,460

ORDINARY SHARES	12 Months Ended
ORDINARY SHARES	Dec. 31, 2019
ORDINARY SHARES
ORDINARY SHARES	12. ORDINARY SHARES The Company’s original Memorandum and Articles of Association authorizes the Company to issue 807,500 ordinary shares with a par value of US$0.0050 per share. After a share split effective on September 22, 2016, the Company’s amended Memorandum and Articles of Association authorizes the Company to issue 403,750,000 ordinary shares with a par value of US$0.00001 per share. Each ordinary share is entitled to one vote. The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors, subject to prior rights of holders of all other classes of shares outstanding. Dividend distribution Dividend distribution to the Company’s shareholder is recognized as a liability in the Group’s consolidated financial statements in the period in which the dividends are approved by the Group’s shareholders or directors, where appropriate. Cash dividend on ordinary shares, if any, will be paid in U.S. dollars. Variation of share capital On March 8, 2019, the Company completed its IPO on the Nasdaq Global Market. In the offering, 8,625,000 ADSs (including 1,125,000 ADSs sold upon the full exercise of the underwriters' over-allotment option), representing 69,000,000 Class A ordinary shares, were issued and sold to the public at a price of US$12 per ADS. Concurrently with the IPO, 46,666,666 Class A ordinary shares were issued and sold to General Atlantic Singapore FT Pte. Ltd. at a price per share equal to the IPO price per share. The net proceeds to the Company from the IPO and Concurrent Private Placement, after deducting commissions and offering expenses, were approximately US$161.7 million (HK$1,259,317,000). Upon the completion of the IPO, all 377,931,094 issued and outstanding preferred shares were converted into ordinary shares immediately as of the same date. Concurrently the Company completed the redesignation on a one-for-one basis of: (i) all of 403,750,000 original ordinary shares ultimately held by the Company’s founder, chairman of the board of directors and chief executive officer, Mr. Leaf Hua Li and 140,802,051 shares (including ordinary shares resulting from the conversion and re-designation of preferred shares) held by Qiantang River Investment Limited into Class B ordinary shares; (ii) all of remaining ordinary shares (including 237,129,043 ordinary shares resulting from the conversion and re-designation of preferred shares) into Class A ordinary shares. The Group concluded that the adoption of dual-class share structure did not have a material impact on its consolidated financial statements. In respect of all matters subject to shareholders’ vote, each holder of Class A ordinary share is entitled to one and each holder of Class B ordinary share is entitled to twenty votes. During year ended December 31, 2019, 106,295,232 shares of Class A Ordinary Shares were issued upon exercise of outstanding stock options under the Group’s share-based incentive plans (Note 14).

REDEEMABLE CONVERTIBLE PREFERRED SHARES

12 Months Ended

Dec. 31, 2019

REDEEMABLE CONVERTIBLE PREFERRED SHARES

REDEEMABLE CONVERTIBLE PREFERRED SHARES

13. REDEEMABLE CONVERTIBLE PREFERRED SHARES

From 2014 to 2017, the Group issued several rounds of Preferred Shares to certain investors. All series of Preferred Shares had the same par value of US$0.00001 per share. Upon the completion of the Company's IPO in March 2019, all of the issued and outstanding Preferred Shares were automatically converted and redesignated into Class A or Class B Ordinary Shares on a one-for-one basis.

Prior to the automatic conversion into Class A Ordinary Shares, the Preferred Shares were entitled to certain preferences with respect to conversion, dividend, liquidation and redemption. The holders of Preferred Shares were entitled to vote together with the holders of ordinary shares on all matters submitted to a vote of the shareholders of the Company on an as-if-converted basis and not as a separate class. Immediately prior to the IPO, the Preferred Shares comprised the following:

In October 2014, the Group issued 250,000 Series A Convertible Redeemable Preferred Shares (“Series A Preferred Shares”) for an aggregate purchase price of US$7,000 thousand and 46,875 Series A‑1 Convertible Redeemable Preferred Shares (“Series A‑1 Preferred Shares”) for an aggregate purchase price of US$1,500 thousand.

In May 2015, the Group issued 176,847 Series B Convertible Redeemable Preferred Shares (“Series B Preferred Shares”) for an aggregate purchase price of US$30,000 thousand.

All the Series A, Series A‑1 and Series B Preferred Shares were issued for cash consideration and have the same par value of US$0.005 per share at each issuance date.

After a share split effective on September 22, 2016, the number of shares of Series A, Series A‑1 and Series B Preferred Shares were proportionally split with par value of US$0.00001 per share. 125,000,000 Series A Preferred Shares, 23,437,500 Series A‑1 Preferred Shares and 88,423,500 Series B Preferred Shares were issued in the Company’s amended Memorandum and Articles of Association.

In May 2017, the Group issued 128,844,812 Series C Convertible Redeemable Preferred Shares (“Series C Preferred Shares”) for an aggregate purchase price of US$91,362 thousand and 12,225,282 Series C‑1 Convertible Redeemable Preferred Shares (“Series C‑1 Preferred Shares”) for an aggregate purchase price of US$12,609 thousand.

Out of the total Series C Preferred Shares, i) 95,094,173 Series C Preferred Shares were issued for cash consideration of US$67,430 thousand; ii) 5,878,794 Series C Preferred Shares were converted from the convertible note with the principal amount of US$3,855 thousand plus accrued but unpaid interest of US$314 thousand at the price per share of US$0.71; and iii) 27,871,845 Series C Preferred Shares were issued from the repayment of an outstanding principal amount of US$19,274 thousand plus accrued but unpaid interest of US$490 thousand loaned by the fellow subsidiary of the investor of Series C Preferred Shares to the Company. The total Series C‑1 Preferred Shares were issued for cash consideration.

The Series A, Series A‑1, Series B, Series C and Series C‑1 Preferred Shares are collectively referred to as the “Preferred Shares”. All series of Preferred Shares have the same par value of US$0.00001 per share.

Accounting of the Preferred Shares

The Company classified the Preferred Shares as mezzanine equity in the consolidated balance sheets because they were redeemable at the holders’ option any time after a certain date and were contingently redeemable upon the occurrence of certain liquidation events outside of the Company’s control. The Preferred Shares are recorded initially at fair value, net of issuance costs.

The Group determined that the embedded conversion features and the redemption features do not require bifurcation as they either are clearly and closely related to the Preferred Shares or do not meet the definition of a derivative.

The Group has determined that there was no embedded beneficial conversion feature attributable to the Preferred Shares. In making this determination, the Group compared the initial effective conversion prices of the Preferred Shares and the fair values of the Group’s ordinary shares determined by the Group at the issuance dates. The initial effective conversion prices were greater than the fair values of the ordinary shares to which the Preferred Shares are convertible into at the issuance dates.

In March, 2019, all 377,931,094 issued and outstanding preferred shares were converted into Class A or Class B ordinary shares upon the completion of the IPO.

The Group’s Preferred Shares activities for the years ended December 31, 2017, 2018, 2019 are summarized below:


	Series A		Series A-1		Series B		Series C		Series C-1
	Preferred Shares		Preferred Shares		Preferred Shares		Preferred Shares		Preferred Shares
	No. of	Amount in	No. of	Amount in	No. of	Amount in	No. of	Amount in	No. of	Amount in
	shares	HK$	shares	HK$	shares	HK$	shares	HK$	shares	HK$
Balances at December 31, 2016	125,000,000	61,506,395	23,437,500	13,179,946	88,423,500	254,488,880	—	—	—	—
Issuance of Preferred Shares	—	—	—	—	—	—	128,844,812	708,765,649	12,225,282	97,818,708
Preferred Shares redemption value accretion	—	3,273,858	—	701,541	—	14,030,820	—	26,106,072	—	3,602,966
Balances at December 31, 2017	125,000,000	64,780,253	23,437,500	13,881,487	88,423,500	268,519,700	128,844,812	734,871,721	12,225,282	101,421,674
Preferred Shares redemption value accretion	—	3,291,792	—	705,384	—	14,107,680	—	42,963,732	—	5,929,544
Balances at December 31, 2018	125,000,000	68,072,045	23,437,500	14,586,871	88,423,500	282,627,380	128,844,812	777,835,453	12,225,282	107,351,218
Preferred Shares redemption value accretion	—	604,779	—	129,595	—	2,591,909	—	7,893,436	—	1,089,395
Conversion and redesignation of Preferred Shares	(125,000,000)	(68,676,824)	(23,437,500)	(14,716,466)	(88,423,500)	(285,219,289)	(128,844,812)	(785,728,889)	(12,225,282)	(108,440,613)
Balances at December 31, 2019	—	—	—	—	—	—	—	—	—	—

SHARE-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

14. SHARE-BASED COMPENSATION

Share-based compensation was recognized in operating expenses for the years ended December 31, 2017, 2018 and 2019 as follows:


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
Research and development expenses	8,854	9,223	12,055
General and administrative expenses	754	1,113	3,374
Selling and marketing expenses	161	104	538
Total share-based compensation expenses	9,769	10,440	15,967

Share Options

In October 2014, the Board of Directors of the Group approved the establishment of 2014 Share Incentive Plan, the purpose of which is to provide an incentive for employees contributing to the Group. The 2014 Share Incentive Plan shall be valid and effective until October 30, 2024. The maximum number of shares that may be issued pursuant to all awards (including incentive share options) under 2014 Share Incentive Plan shall be 135,032,132 shares. Option awards are granted with an exercise price determined by the Board of Directors. Those option awards generally vest over a period of four or five years and expire in ten years.

In October 2019, the Company adopted its 2019 Share Incentive Plan, pursuant to which the maximum number of shares of the Company available for issuance shall be a number of up to 2% of the total number of shares issued and outstanding on September 29, 2019 as determined by the Board, plus an annual increase on each September 30 during the term of this 2019 Share Incentive Plan commencing on September 30, 2020, by an amount determined by the Board; provided, however, that (i) the number of shares increased in each year shall not be more than 2% of the total number of shares issued and outstanding on September 29 of the same year and (ii) the aggregate number of shares initially reserved and subsequently increased during the term of this 2019 Share Incentive Plan shall not be more than 8% of the total number of shares issued and outstanding on September 29, 2019 immediately preceding the most recent increase.

On December 30, 2019, the Company modified the exercise price of 8,113,145 stock options granted under 2014 Share Incentive Plan to US$0.60. The incremental compensation expenses of HK$3 million (US$0.4 million) was equal to the excess of the fair value of the modified award immediately after the modification over the fair value of the original award immediately before the modification.

For the years ended December 31, 2017, 2018 and 2019, the Group granted 217,455, 9,625,690 and 9,791,200 stock options to employees pursuant to the 2014 Share Incentive Plan and 2019 Share Incentive Plan.

A summary of the stock option activity under the 2014 and 2019 Share Incentive Plan for the years ended December 31, 2017, 2018 and 2019 is included in the table below.


	Options granted	Weighted average
	share Number	exercise price (US$)
Outstanding at January 1, 2017	111,407,320	0.0168
Granted	217,455	0.9188
Outstanding at December 31, 2017	111,624,775	0.0186
Granted	9,625,690	1.1065
Cancelled/forfeited	(42,627)	0.2000
Outstanding at December 31, 2018	121,207,838	0.1049
Exercised	(106,295,232)	0.0126
Granted	9,791,200	0.6500
Cancelled/forfeited	(985,180)	0.8402
Outstanding at December 31, 2019	23,718,626	0.5161

The following table summarizes information regarding the share options outstanding as of December 31, 2019 and exercise prices and aggregate instrinsic value have been adjusted according to the modification of exercise price in December 2019:



	As of December 31, 2019
		Weighted-	Weighted-average
		average	remaining exercise
	Options	exercise price	contractual life	Aggregate
	number	per option	(years)	intrinsic value
		US$		US$ in thousand
Options
Outstanding	23,718,626	0.5161	4.84	18,356
Exercisable	2,802,821	0.4061	4.84	2,459
Expected to vest	20,915,805	0.5307	4.84	15,897

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the fair value of the underlying stock at December 31, 2019.

The weighted average grant date fair value of options granted for the years ended December 31, 2017, 2018 and 2019 were US$0.0998, US$0.6010 and US$0.7345 per option, respectively.

Options exercised for the years ended December 31, 2017, 2018 and 2019 were nil, nil and 106,295,232, respectively. The total intrinsic value of options exercised during year ended December 31, 2019 was approximately HK$1,094 million (US$140 million).

The fair value of each option granted during 2017, 2018 and 2019 was estimated on the date of each grant using the binomial option pricing model with the assumptions (or ranges thereof) in the following table:


	2017		2018		2019
Exercise price (US$)	0.8-1.03		0.3-1.2		0.65
Fair value of the ordinary shares on the date of option grant (US$)	0.4220		1.2820		1.2460
Risk-free interest rate	1.30	%	2.33	%	1.67	%
Expected term (in years)	7.3		5.98		5.00
Expected dividend yield	0	%	0	%	0	%
Expected volatility	46	%	44	%	45	%
Expected forfeiture rate (post-vesting)	15	%	15	%	15	%

Risk-free interest rate is estimated based on the yield curve of US Sovereign Bond as of the option valuation date. The expected volatility at the grant date and each option valuation date is estimated based on annualized standard deviation of daily stock price return of comparable companies with a time horizon close to the expected expiry of the term of the options. The Company has never declared or paid any cash dividends on its capital stock, and the Group does not anticipate any dividend payments in the foreseeable future. Expected term is the contract life of the options.

As of December 31, 2019, there was HK$100,437 thousand (US$12,894 thousand) of unrecognized compensation expenses related to the options, adjusted for estimated forfeitures, which is expected to be recognized over a weighted-average period of 4.44 years, respectively, and may be adjusted for future changes in estimated forfeitures.

NET (LOSS)/INCOME PER SHARE

12 Months Ended

Dec. 31, 2019

NET (LOSS)/INCOME PER SHARE

NET (LOSS)/INCOME PER SHARE

15. NET (LOSS)/INCOME PER SHARE

For the years ended December 31, 2017, 2018 and 2019, the Group has determined that its all classes of convertible redeemable preferred shares are participating securities as they participate in undistributed earnings on an as-if-converted basis. The holders of the Preferred Shares are entitled to receive dividends on a pro rata basis, as if their shares had been converted into ordinary shares. Accordingly, the Group uses the two-class method of computing net (loss)/income per share, for ordinary shares and preferred shares according to the participation rights in undistributed earnings.

Basic net (loss)/income per share and diluted net (loss)/income per share have been calculated in accordance with ASC 260 on computation of earnings per share for the years ended December 31, 2017, 2018 and 2019 as follows:


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands, except for share and per share data)
Basic net (loss)/income per share calculation:
Numerator:
Net (loss)/income attributable to ordinary shareholder of the Company	(55,817)	36,938	143,159
Denominator:
Weighted average ordinary shares outstanding - basic	403,750,000	403,750,000	832,790,329
Net (loss)/income per share attributable to ordinary shareholder - basic	(0.14)	0.09	0.17
Diluted net (loss)/income per share calculation:
Numerator:
Net (loss)/income attributable to ordinary Shareholder of the Company	(55,817)	36,938	143,159
Denominator:
Weighted average ordinary shares outstanding - basic	403,750,000	403,750,000	832,790,329
Dilutive effect of share options	—	107,786,122	85,107,097
Weighted average ordinary shares outstanding - diluted	403,750,000	511,536,122	917,897,426
Net (loss)/income per share attributable to ordinary shareholder - diluted	(0.14)	0.07	0.16

For the years ended December 31, 2017, 2018 and 2019, options to purchase ordinary shares that were anti-dilutive and excluded from the calculation of diluted net (loss)/income per share were 99,355,769, 3,418,090 and 3,747,975 shares on a weighted average basis, respectively. For the years ended December 31, 2017, 2018 and 2019, the preferred shares convertible into ordinary shares that were anti-dilutive and excluded from the calculation of diluted net (loss)/income per share of the Company were 323,435,523, 377,931,094 and nil shares on a weighted average basis, respectively.

COLLATERALIZED TRANSACTIONS

12 Months Ended

Dec. 31, 2019

COLLATERALIZED TRANSACTIONS

COLLATERALIZED TRANSACTIONS

16. COLLATERALIZED TRANSACTIONS

The Operating Company engages in margin financing transactions with its clients. Client receivables generated from margin lending activity are collateralized by cash and/or client-owned securities held by the Operating Company. In addition, the Operating Company repledge the clients owned securities to collateralize its margin loans. Clients' required margin levels and established credit limits are monitored continuously by risk management staff using automated systems. Pursuant to the Operating Company's policy and as enforced by such systems, clients are required to deposit additional collateral or reduce positions, when necessary to avoid forced liquidation of their positions.

Margin loans are extended to clients on a demand basis and are not committed facilities. Underlying collateral for margin loans is evaluated with respect to the liquidity of the collateral positions, valuation of securities, volatility analysis and an evaluation of industry concentrations. Adherence to the Operating Company’s collateral policies significantly limits the Operating Company’s credit exposure to margin loans in the event of a client’s default. As of December 31, 2018 and 2019, approximately HK$2,886,105 thousand and HK$4,141,962 thousand, respectively, of client margin loans were outstanding.

The following table summarizes the amounts related to collateralized transactions of margin financing as of December 31, 2018 and 2019:


	As of December 31,
	2018		2019
	HK$ in thousands		HK$ in thousands
	Permitted to		Permitted to
	repledge	Repledged	repledge	Repledged
Market value of collateral	9,214,950	1,904,545	19,503,649	3,031,767

The Operating Company also enters into securities borrowing and lending transactions and agreements to repurchase securities. As at December 31, 2019, the total fair value of securities borrowed was HK$935,443 thousand, while the total fair value of securities lent was HK$935,443 thousand, and the Operating Company provided and received cash collateral of HK$1,126,300 thousand and HK$1,342,738 thousand, respectively, in relations to the securities borrowing and lending transactions. As at December 31, 2018, the total fair value of securities borrowed was HK$299,173 thousand, while the total fair value of securities lent was HK$299,173 thousand, and the Operating Company provided and received cash collateral of HK$397,675 thousand and HK$488,068 thousand, respectively, in relations to the securities borrowing and lending transactions.

BROKERAGE COMMISSION AND HANDLING CHARGE INCOME

12 Months Ended

Dec. 31, 2019

BROKERAGE COMMISSION AND HANDLING CHARGE INCOME

BROKERAGE COMMISSION AND HANDLING CHARGE INCOME

17. BROKERAGE COMMISSION AND HANDLING CHARGE INCOME


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
Brokerage commission income	101,275	276,097	352,625
Handling charge income	83,643	131,893	158,740
Total	184,918	407,990	511,365

INTEREST INCOME

12 Months Ended

Dec. 31, 2019

INTEREST INCOME

INTEREST INCOME

18. INTEREST INCOME


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
Interest income from:
Margin financing	62,165	211,762	221,648
Bank deposits	34,050	123,775	187,223
Bridge loan	863	7,827	6,172
IPO financing	5,470	2,921	12,658
Securities lending	3,324	14,300	37,202
Total	105,872	360,585	464,903

OTHER INCOME

12 Months Ended

Dec. 31, 2019

OTHER INCOME

OTHER INCOME

19. OTHER INCOME


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
IPO subscription service charge income	6,570	16,139	26,537
Underwriting fee income	1,599	10,494	19,579
Enterprise public relations service charge income	6,717	9,187	16,156
Currency exchange service income	2,954	2,711	4,670
Client referral income from brokers	1,934	2,166	1,451
Market information and data income	311	1,465	2,692
Funds distribution service income	—	—	10,447
ESOP management service income	—	270	1,275
Other	788	336	2,480
Total	20,873	42,768	85,287

INTEREST EXPENSES

12 Months Ended

Dec. 31, 2019

INTEREST EXPENSES

INTEREST EXPENSES

20. INTEREST EXPENSES


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Interest expenses for margin financing
Borrowings from banks	7,189	37,983	36,206
Borrowings from other licensed financial institutions	5,142	24,194	28,636
Borrowings from other parties	5,276	28,771	3,930
Interest expenses for securities borrowed
Borrowings from clients	—	—	1,298
Borrowings from brokers	1,151	1,814	9,077
Interest expenses for IPO financing
Borrowings from banks	1,121	2,862	10,091
Total	19,879	95,624	89,238

NON-INTEREST COST AND EXPENSES BY NATURE

12 Months Ended

Dec. 31, 2019

NON-INTEREST COST AND EXPENSES BY NATURE

NON-INTEREST COST AND EXPENSES BY NATURE

21. NON-INTEREST COST AND EXPENSES BY NATURE


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
Employee compensation and benefits	134,468	211,978	327,441
Marketing and branding	30,369	79,891	130,528
Brokerage commission and handling charge expenses(Note22)	36,777	80,127	100,550
Processing and servicing costs(Note23)	52,446	73,843	91,916
Rental and other related expenses	10,847	21,256	64,756
Depreciation and amortization	4,300	8,327	16,547
Professional services	5,239	18,724	28,757
Others	9,042	12,814	23,867
Total	283,488	506,960	784,362

BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES

12 Months Ended

Dec. 31, 2019

BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES

BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES

22. BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Commission, handling and settlement expenses	35,643	78,581	95,064
IPO subscription service charge expenses	1,134	1,546	5,486
Total	36,777	80,127	100,550

PROCESSING AND SERVICING COSTS

12 Months Ended

Dec. 31, 2019

PROCESSING AND SERVICING COSTS

PROCESSING AND SERVICING COSTS

23. PROCESSING AND SERVICING COSTS


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Market information and data fee	37,482	46,669	54,282
Cloud service fee	7,636	14,081	16,729
Data transmission fee	5,822	9,145	13,890
System cost	—	949	4,334
SMS service fee	1,148	1,834	1,523
Others	358	1,165	1,158
Total	52,446	73,843	91,916

TAXATION

12 Months Ended

Dec. 31, 2019

TAXATION

TAXATION

24. TAXATION

Income Tax

Cayman Islands

The Group was incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to tax on either income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.

2)The United States ("US")

The Group's subsidiaries, incorporated in the United States are subject to statutory income tax at a rate up to 35% for taxable income earned in the United States. On December 22, 2017, the Tax Cuts and Jobs Act (the "Tax Act") was enacted, significantly revising the U.S corporate income tax law. Changes include a reduction in the federal corporate tax, changes to operating loss carry-forwards and carrybacks, and a repeal of the corporate alternative minimum tax. This legislation resulted in a reduction of the U.S. federal corporate income tax rates from a maximum of 35% to 21%, to which the subsidiaries incorporated in the United States are subject.

Hong Kong

Under the current Hong Kong Inland Revenue Ordinance, Installment Hong Kong is subject to 16.5% income tax rate on its taxable income generated from operations in Hong Kong. Additionally, payments of dividends by the subsidiaries incorporated in Hong Kong to the Company are not subject to any Hong Kong withholding tax.

China

The Group's subsidiaries, consolidated VIE and subsidiary of the VIE established in the PRC are subject to statutory income tax at a rate of 25%, unless preferential tax rates were applicable.

The Enterprise Income Tax (“EIT”) Law and its implementing rules permit High and New Technology Enterprise” (“HNTE”) to enjoy a reduced 15% EIT rate. One of the Group’s subsidiary, Futu Network Technology (Shenzhen) Co., Ltd., obtained the qualification certificate of High and New Technology Enterprise under the EIT Law in 2019, subject to the tax rate of 15% with a valid period of three years starting from December 2019.

According to the relevant EIT Laws jointly promulgated by the Ministry of Finance of the PRC, State Tax Bureau of the PRC, and Ministry of Science of the PRC that became effective from 2018 onwards, enterprises engaging in research and development activities are entitled to claim 175% of their research and development expenses so incurred as tax deductible expenses when deterning their assessable profites for that year (“Super Deduction”).

Under the EIT Law enacted by the National People’s Congress of PRC on March 16, 2007 and its implementation rules which became effective on January 1, 2008, dividends generated after January 1, 2008 and payable by FIEs in the PRC to its foreign investors who are non-resident enterprises are subject to a 10% withholding tax, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with the PRC that provides for a different withholding arrangement. Under the taxation arrangement between the PRC and Hong Kong, a qualified Hong Kong tax resident which is the “beneficial owner” and directly holds 25% or more of the equity interest in a PRC resident enterprise is entitled to a reduced withholding tax rate of 5%. The Cayman Islands, where the Company was incorporated, does not have a tax treaty with PRC.

The EIT Law includes a provision specifying that legal entities organized outside of the PRC will be considered resident enterprises for the PRC income tax purposes if the place of effective management or control is within the PRC. The implementation rules to the EIT Law provide that non-resident legal entities will be considered as PRC resident enterprises if substantial and overall management and control over the manufacturing and business operations, personnel, accounting, properties, etc., occurs within the PRC. Despite the present uncertainties resulting from the limited PRC tax guidance on the issue, the Group does not believe that the Group’s entities organized outside of the PRC should be treated as resident enterprises for the PRC income tax purposes. If the PRC tax authorities subsequently determine that the Company and its subsidiary registered outside the PRC should be deemed resident enterprises, the Company and its subsidiary registered outside the PRC will be subject to the PRC income tax, at a rate of 25%.

Composition of income tax expense

The following table sets forth current and deferred portion of income tax (benefit)/expense:


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Current income tax expense	6,286	46,781	13,858
Deferred income tax (benefit)/expense	5,194	15,507	(1,572)
Income tax expense	11,480	62,288	12,286

Tax Reconciliation

Reconciliation between the income tax expenses computed by applying the Hong Kong enterprise tax rate to income before income taxes and actual provision were as follows:


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Income before income tax	3,378	200,800	178,493

Tax expense at Hong Kong profit tax rate of 16.5%	557	33,132	29,451
Changes of valuation allowance	4,464	9,735	30,172
Tax effect of permanence differences	7,333	6,825	5,486
Effect of income tax in jurisdictions other than Hong Kong	(898)	12,670	(4,143)
Super deduction of research and development expenses	—	—	(19,277)
Final settlement differences	—	—	(18,038)
Income not subject to tax (1)	—	—	(11,365)
Others	24	(74)	—
Income tax expense	11,480	62,288	12,286

(1)

This amount represents tax exemption relating to the offshore income of the Operating Company. The brokerage commission income derived from executing the clients' orders of US listed securities was treated as offshore-sourced and non-taxable on the basis that these transactions were executed outside Hong Kong.

Deferred Tax Assets

Deferred income tax expense reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the deferred tax assets are as follows:


	As of December 31,
	2018	2019
	(HK$in thousands)
Deferred tax assets
Net operating loss carryforwards	19,084	42,736
Accrued expenses and others	4,165	12,261
Less: valuation allowance	(23,249)	(53,421)
Net deferred tax assets	—	1,576

Movement of Valuation Allowance


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Balance at beginning of the year	9,050	13,514	23,249
Additions	4,464	9,735	30,188
Reversals	—	—	(16)
Balance at end of the year	13,514	23,249	53,421

Valuation allowance is provided against deferred tax assets when the Group determines that it is more-likely-than-not that the deferred tax assets will not be utilized in the future. The Group considers positive and negative evidence to determine whether some portion or all of the deferred tax assets will be more-likely-than-not realized. This assessment considers, among other matters, the nature, frequency and severity of recent losses and forecasts of future profitability. These assumptions require significant judgment and the forecasts of future taxable income are consistent with the plans and estimates the Group is using to manage the underlying businesses. The statutory rate of 25%, 21%, 16.5% or the preferential tax rate of 15%, depending on which entity, was applied when calculating deferred tax assets.

As of December 31, 2018 and 2019, the Group had net operating loss carryforwards of approximately HK$89,534 thousand and HK$223,629 thousand, respectively, which arose from the subsidiaries, VIE and the VIE’s subsidiary established in Hong Kong, the U.S and PRC. As of December 31, 2018 and 2019, of the net operating loss carryforwards, HK$89,534 thousand and HK$217,999 thousand was provided for valuation allowance against deferred tax assets in entities where it was determined it was more likely than not that the benefits of the deferred tax assets of accrued expenses and others will not be realized. While the remaining nil and HK$5,630 is expected to be utilized prior to expiration considering future taxable income for respective entities.

The Company intends to indefinitely reinvest all the undistributed earnings of the Company’s VIE and subsidiary of the VIE in China, and does not plan to have any of its PRC subsidiaries to distribute any dividend; therefore no withholding tax is expected to be incurred in the foreseeable future. Accordingly, no income tax is accrued on the undistributed earnings of the Company's VIE and subsidiary of the VIE as of December 31, 2018 and 2019. As of December 31, 2018 and 2019, most of the Group's PRC subsidiaries were still in accumulated non-taxable position.

Uncertain Tax Position

The Group evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. As of December 31, 2018 and 2019, the Group did not have any significant unrecognized uncertain tax positions.

DEFINED CONTRIBUTION PLAN	12 Months Ended
DEFINED CONTRIBUTION PLAN	Dec. 31, 2019
DEFINED CONTRIBUTION PLAN
DEFINED CONTRIBUTION PLAN	25. DEFINED CONTRIBUTION PLAN Full-time employees of the Group in the PRC are entitled to welfare benefits including pension insurance, medical insurance, unemployment insurance, maternity insurance, on-the-job injury insurance, and housing fund plans through a PRC government-mandated defined contribution plan. Chinese labor regulations require that the Group makes contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributions. Total contributions by the Group for such employee benefits were RMB20,038 thousand and RMB32,556 thousand for the years ended December 31, 2018 and 2019, respectively. For the employees in Hong Kong, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. Included in employee compensation and benefits expenses in the consolidated statements of comprehensive (loss)/income were HK$938 thousand and HK$1,044 thousand of plan contributions for the years ended December 31, 2018 and 2019, respectively.

REGULATORY REQUIREMENTS

12 Months Ended

Dec. 31, 2019

REGULATORY REQUIREMENTS

REGULATORY REQUIREMENTS

26. REGULATORY REQUIREMENTS

The Group's broker-dealer subsidiaries, Futu Securities, Futu Inc. and Futu clearing Inc., are subject to capital requirements determined by its respective regulators. Futu Securities, the Group's subsidiary located in Hong Kong, was subject to Securities and Futures (Financial Resources) Rules and the Securities and Futures Ordinance, Futu Securities is required to maintain minimum paid-up share capital and liquid capital. Futu Inc. and Futu clearing Inc., the Group's subsidiaries located in the United States, were subject to the Uniform Net Capital Rule (Rule 15c3-1) under the Exchange Act, which requires the maintenance of minimum net capital. The tables below summaries the net capital, the requirement and the excess capital for the Group's broker-dealer subsidiaries as of December 31, 2019:


	As of December 31, 2019
	Net Capital/
	Eligible Equity	Requirement	Excess
	(HK$ in thousands)
Futu Securities	1,469,200	235,481	1,233,719
Futu Inc.	15,832	1,947	13,885
Futu Clearing Inc.	72,908	1,947	70,961
Total	1,557,940	239,375	1,318,565

Regulatory capital requirements could restrict the operating subsidiaries from expanding their business and declaring dividends if their net capital does not meet regulatory requirements.

As of December 31, 2018 and 2019, all of the regulated operating subsidiaries were in compliance with their respective regulatory capital requirements.

CONTINGENCIES	12 Months Ended
CONTINGENCIES	Dec. 31, 2019
CONTINGENCIES
CONTINGENCIES	27. CONTINGENCIES The financial services industry is highly regulated. From time to time, the licensed companies in the financial industry may be required to assist in and/or are subject to inquiries and/or examination by the regulatory authorities of the jurisdiction where they operate. As of the date of this report, the Operating Company is involved in ongoing regulatory inquiries by the regulator where no conclusion has not been reached. The Operating Company has procedures for evaluating whether potential regulatory fines are probable, estimable and material and for updating its contingency reserves and disclosures accordingly. For the years ended December 31, 2018 and 2019, the Group did not make any accrual for the aforementioned loss contingency.

RELATED PARTY BALANCES AND TRANSACTIONS

12 Months Ended

Dec. 31, 2019

RELATED PARTY BALANCES AND TRANSACTIONS

28. RELATED PARTY BALANCES AND TRANSACTIONS

The table below sets forth major related parties of the Group and their relationships with the Group:


Entity of individual name		Relationship with the Group

Mr. Leaf Hua Li and his spouse		Principal shareholder and member of his immediate families
Tencent Holdings Limited and its subsidiaries(“Tencent Group”)		Principal shareholder
Individual directors and officers and their spouses		Directors or officers of the Group and members of their immediate families

(a) Cash and cash equivalent


	As of December 31,
	2018	2019
	(HK$ in thousands)
Cash and cash equivalent	260	240

The balance represents the cash deposited by the Group in various payment channels of Tencent Group for funding marketing campaigns, of which could be withdrawn on demand.

(b) Short-term borrowings and interest expenses


	As of December 31,
	2018	2019
	(HK$ in thousands)

Short-term borrowings	—	—


	As of December 31,
	2018	2019
	(HK$ in thousands)
Payable in relation to cloud equipment and services from Tencent Group	8,409	33,153
SMS channel services from Tencent Group	182	475
	8,591	33,628

(d) Transactions with Related Parties


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)

Equipment purchased	—	—	40,218
Cloud service fee	7,636	14,081	16,729
SMS channel service fee	1,148	1,834	1,523
Advertising expenses	—	112	682
ESOP management service income	—	202	550
	8,784	16,229	59,702

The Group utilizes the cloud services and equipment provided by Tencent Group to process large amount of complicated data in-house, which reduces the risks involved in data storage and transmission. SMS channel services is provided by Tencent Group, including verification code, notification and marketing message services for the Group to reach its end users. Tencent Group provides advertising services to the Group via Tencent Group’s social media. The Group also earns revenue from Tencent Group by providing ESOP management service.

(e) Traded related transactions with Related Parties

Included in payables to clients in the consolidated balance sheets as of December 31, 2018 and 2019, were payables of HK$308,073 thousand and HK$19,553 thousand, respectively. Revenue earned by providing brokerage services and margin loans to directors and officers and their spouses amounts to HK$3,040 thousand, HK$6,797 thousand and HK$2,211 thousand for the years ended December 31, 2017, 2018 and 2019, respectively.

SUBSEQUENT EVENTS	12 Months Ended
SUBSEQUENT EVENTS	Dec. 31, 2019
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	29. SUBSEQUENT EVENTS With respect to the outbreak of the coronavirus (COVID-19) and significant volatility in the global financial markets, the Group has experienced some delay of new products and services launch, as well as increase in credit risk in the margin loan portfolio during the subsequent period up to the date of the audit report. Despite the events mentioned, the Group has assessed and preliminarily concluded that there was no significant negative impact to the financial performance, financial position and cash flow of the Group subsequent to the year ended December 31, 2019 and up to the date of this report. The Group will keep continuous attention on the situation of the COVID-19 and financial market conditions to react actively to its impacts to the Group.

SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2019

SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

Basis of Consolidation

All transactions and balances among the Company, its subsidiaries, the VIE and subsidiary of the VIE have been eliminated upon consolidation.

VIE Companies

1) Contractual Agreements with VIE

2) Risks in relation to the VIE structure


	As of December 31,
	2018	2019
	(HK$in thousands)
Total assets	57,213	68,480
Total liabilities	74,904	73,271


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Total operating revenue	50,020	68,888	65,681
Net income	18,458	21,262	8,807


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Net cash (used in)/generated from operating activities	(4,613)	1,664	(2,502)
Net cash generated from investing activities	—	—	2,233
Net (decrease)/increase in cash and cash equivalents	(4,613)	1,664	(269)
Cash and cash equivalents at beginning of the year	4,699	86	1,750
Cash and cash equivalents at end of the year	86	1,750	1,481

revoke the Group’s business and operating licenses;

require the Group to discontinue or restrict its operations;

restrict the Group’s right to collect revenues;

block the Group’s websites;

require the Group to restructure its operations, re-apply for the necessary licenses or relocate the Group’s businesses, staff and assets;

impose additional conditions or requirements with which the Group may not be able to comply; or

take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business.

Use of Estimates

Comprehensive Income and Foreign Currency Translation

Convenience Translation

Cash and Cash Equivalents

Cash Held on Behalf of Clients

Available-for-Sale Financial Securities

Equity method investment

Loans and advances

Trading Receivables from and Payables to Clients

Trading receivables from and payables to clients include amounts due on brokerage transactions on a trade-date basis.

Receivables from and Payables to Brokers and Clearing Organization

Clearing settlement fund deposited in the clearing organization for the clearing purpose is recognized in receivables from clearing organization.

Interest Receivable and Payable

Interest receivable is calculated based on the contractual interest rate of bank deposit, loans and advances on an accrual basis, and is recorded as interest income as earned.

Interest payable is calculated based on the contractual interest rates of borrowings on an accrual basis.

Securities Borrowed and Securities Loaned

Securities Sold Under Agreements to Repurchase

Leases

Refundable Deposit

Property and Equipment, net


Category	Estimated useful lives	Residual rate
Computers equipment	3 - 5 years	5	%
Furniture and fixtures	3 - 5 years	5	%
Office equipment	3 - 5 years	5	%
Vehicle	5 years	5	%
Office building	30 years	5	%

Expenditures for maintenance and repairs are expensed as incurred.

Intangible Assets


Category		Estimated useful lives
Computer software		5 years
Golf membership		10 years

Fair Value Measurements

Revenue Recognition

Brokerage commission and handling charge income

Brokerage commission income earned for executing and/or clearing transactions are accrued on a trade-date basis.

Handling charge income arise from the services such as settlement services, subscription and dividend collection handling services, etc., are accrued on a trade-date basis.

Interest Income

Other income

IPO subscription service charge income is derived from provision of new share subscription services in relation to IPOs in the Hong Kong capital market.

Underwriting fee income is generated from investment banking business primarily by providing equity sub-underwriting to corporate issuers.

Market information and data income are the amounts charged to Futu NiuNiu app users for market data service.

Currency exchange service income are the amounts charged to the Group’s paying clients for providing currency exchange service.

For IPO subscription service charge income, underwriting fee income and currency exchange service income, the Group recognizes the revenues upon the time when the services are rendered to customers.

Incentives

Sales contracts related scenarios

Other scenarios

Brokerage Commission and Handling Charge Expenses

Handling and settlement fee is charged by HKEx or executing brokers for clearing and settlement services, are accrued on a trade-date basis.

IPO subscription service charge expenses are charged by commercial banks in connection with new share subscription services in relation to IPOs in the Hong Kong capital market.

Interest Expenses

Processing and Servicing Costs

Research and Development Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Others, net

Foreign Currency Gains and Losses

Share-Based Compensation

Fair Value of Preferred Shares and Pre-IPO Ordinary Shares

Taxation

Income tax

Uncertain tax positions

Net (loss)/income per share

Segment Reporting

Significant Risks and Uncertainties

Currency risk

Credit risk

Concentrations of Credit Risk

Interest rate risk

Recent Accounting Pronouncements

The Group adopted ASC Topic 842 on January 1, 2019, and the impact about adoption has been recorded on the consolidated financial statements (see Note 5).

ORGANIZATION AND PRINCIPAL ACTIVITIES (Tables)

12 Months Ended

Dec. 31, 2019

ORGANIZATION AND PRINCIPAL ACTIVITIES

Schedule of principal subsidiaries, consolidated VIE and subsidiary of VIE


			Percentage of
			Direct or
	Date of	Place of	Indirect
	Incorporation/	Incorporation/	Economic
Subsidiaries	Establishment/	Establishment	Interest		Principal Activities
Futu Securities International (Hong Kong) Limited (“Futu Securities” or the “Operating Company”)	April 17, 2012	Hong Kong	100	%	Financial services
Futu Securities (Hong Kong) Limited	May 2, 2014	Hong Kong	100	%	Investment holding
Futu Network Technology Limited	May 17, 2015	Hong Kong	100	%	Research and development and technology services
Futu Network Technology (Shenzhen) Co., Ltd.	October 14, 2015	Shenzhen, PRC	100	%	Research and development and technology services
Shen Si Network Technology (Beijing) Co., Ltd. (“Shen Si”)	September 15, 2014	Beijing, PRC	100	%	No substantial business
Futu Inc.	December 17, 2015	Delaware, USA	100	%	Financial services

VIE
Shenzhen Futu Network Technology Co., Ltd. (1) (“Shenzhen Futu”)	December 18, 2007	Shenzhen, PRC	100	%	Research and development and technology services

Subsidiary of the VIE
Beijing Futu Network Technology Co., Ltd.	April 4, 2014	Beijing, PRC	100	%	No substantial business

Note:

(1)

SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2019

SIGNIFICANT ACCOUNTING POLICIES

Schedule of consolidated financial statements with intercompany balances and transactions eliminated between the VIE and its subsidiary


	As of December 31,
	2018	2019
	(HK$in thousands)
Total assets	57,213	68,480
Total liabilities	74,904	73,271


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Total operating revenue	50,020	68,888	65,681
Net income	18,458	21,262	8,807


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Net cash (used in)/generated from operating activities	(4,613)	1,664	(2,502)
Net cash generated from investing activities	—	—	2,233
Net (decrease)/increase in cash and cash equivalents	(4,613)	1,664	(269)
Cash and cash equivalents at beginning of the year	4,699	86	1,750
Cash and cash equivalents at end of the year	86	1,750	1,481

Schedule of property and equipment at the end of the estimated useful lives


Category	Estimated useful lives	Residual rate
Computers equipment	3 - 5 years	5	%
Furniture and fixtures	3 - 5 years	5	%
Office equipment	3 - 5 years	5	%
Vehicle	5 years	5	%
Office building	30 years	5	%

Schedule of finite-lived intangible assets using estimated useful lives


Category		Estimated useful lives
Computer software		5 years
Golf membership		10 years

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

+ References + Details

FINANCIAL ASSETS AND FINANCIAL LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2019

FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Summary of financial assets measured at fair value


	Financial Assets At Fair Value as of
	December 31, 2019
	Level 1	Level 2	Level 3	Total
	(HK$in thousands)
Available-for-sale financial securities	—	93,773	—	93,773


	Financial Assets At Fair Value as of
	December 31, 2018
	Level 1	Level 2	Level 3	Total
	(HK$in thousands)
Available-for-sale financial securities	—	59,348	—	59,348

Summary of carrying value, fair value, and fair value hierarchy category of certain financial assets and liabilities that are not recorded at fair value


	As of December 31, 2019
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
	(HK$in thousands)
Financial assets, not measured at fair value
Cash and cash equivalents	362,574	362,574	362,574	—	—
Cash held on behalf of clients	14,540,863	14,540,863	14,540,863	—	—
Loans and advances	4,188,689	4,188,689	—	4,188,689	—
Receivables:
Clients	247,017	247,017	—	247,017	—
Brokers	1,226,348	1,226,348	—	1,226,348	—
Clearing organization	304,080	304,080	—	304,080	—
Interest	16,892	16,892	—	16,892	—
Other financial assets	64,184	64,184	—	64,184	—
Total financial assets, not measured at fair value	20,950,647	20,950,647	14,903,437	6,047,210	—


	As of December 31, 2019
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
	(HK$in thousands)
Financial liabilities, not measured at fair value
Amounts due to related parties	33,628	33,628	—	33,628	—
Payables:
Clients	15,438,879	15,438,879	—	15,438,879	—
Brokers	1,484,243	1,484,243	—	1,484,243	—
Interest	519	519	—	519	—
Borrowings	1,467,586	1,467,586	—	1,467,586	—
Securities sold under agreements to repurchase	1,590	1,590	—	1,590	—
Operating lease liabilities	172,466	172,466	—	172,466	—
Other financial liabilities	31,993	31,993	—	31,993	—
Total financial liabilities, not measured at fair value	18,630,904	18,630,904	—	18,630,904	—


	As of December 31, 2018
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
	(HK$in thousands)
Financial assets, not measured at fair value
Cash and cash equivalents	215,617	215,617	215,617	—	—
Cash held on behalf of clients	11,771,487	11,771,487	11,771,487	—	—
Loans and advances	3,086,904	3,086,904	—	3,086,904	—
Receivables:
Clients	120,256	120,256	—	120,256	—
Brokers	425,849	425,849	—	425,849	—
Clearing organization	175,955	175,955	—	175,955	—
Interest	49,427	49,427	—	49,427	—
Other financial assets	41,019	41,019	—	41,019	—
Total financial assets, not measured at fair value	15,886,514	15,886,514	11,987,104	3,899,410	—


	As of December 31, 2018
	Carrying	Fair
	Value	Value	Level 1	Level 2	Level 3
	(HK$ in thousands)
Financial liabilities, not measured at fair value
Amounts due to related parties	8,591	8,591	—	8,591	—
Payables:
Clients	12,304,717	12,304,717	—	12,304,717	—
Brokers	920,871	920,871	—	920,871	—
Interest	2,405	2,405	—	2,405	—
Borrowings	1,576,251	1,576,251	—	1,576,251	—
Other financial liabilities	11,503	11,503	—	11,503	—
Total financial liabilities, not measured at fair value	14,824,338	14,824,338	—	14,824,338	—

Summary of amounts of financial instruments that are not offset in the consolidated balance sheets, but could be netted against cash or financial instruments with specific counterparties under master netting agreements


	Effects of offsetting on the balance sheet			Related amounts not offset
			Net
		Gross	amounts	Amounts
		amounts	presented	subject to
		set off in	in the	master	Financial
	Gross	the balance	balance	netting	instrument	Net
2019	amount	sheet	sheet	arrangements	collateral	amount
	HK$in thousands
Financial Assets
Amounts due from clearing organization	2,925,936	(2,621,856)	304,080	—	—	304,080
Deposit paid for securities borrowed (1)	1,126,300	—	1,126,300	—	(935,443)	190,857
Financial liabilities
Amounts due to clearing organization	—	—	—	—	—	—
Deposit received for securities lent (1)	1,342,738	—	1,342,738	—	(935,443)	407,295


	Effects of offsetting on the balance sheet			Related amounts not offset
			Net
		Gross	amounts	Amounts
		amounts	presented	subject to
		set off in	in the	master	Financial
	Gross	the balance	balance	netting	instrument	Net
2018	amount	sheet	sheet	arrangements	collateral	amount
	HK$ in thousands
Financial Assets
Amounts due from clearing organization	1,472,596	(1,296,641)	175,955	—	—	175,955
Deposit paid for securities borrowed (1)	397,675	—	397,675	—	(299,173)	98,502
Financial liabilities
Amounts due to clearing organization	—	—	—	—	—	—
Deposit received for securities lent (1)	488,068	—	488,068	—	(299,173)	188,895

(1)

LEASE (Tables)

12 Months Ended

Dec. 31, 2019

LEASE

Summary of balances reported in the consolidated balance sheet related to the leases


		As at December 31, 2019
		(HK$ in thousands)

Operating lease right-of-use assets		161,617
Operating lease liabilities		172,466

Summary of operating lease cost reported in the consolidated statements of comprehensive (loss)/income


		Year ended
		December 31, 2019
		(HK$ in thousands)

Operating lease cost		64,756

Summary of undiscounted cash flows of leases to present value of operating lease payments


		December 31, 2019
		(HK$ in thousands)

2020		56,714
2021		46,968
2022		44,354
2023		40,346
Thereafter		—
Total undiscounted operating lease payments		188,382
Less: imputed interest		(15,916)
Present value of operating lease liabilities		172,466

Summary of minimum annual lease commitments in accordance with ASC Topic 840


		December 31, 2018
		(HK$ in thousands)

2019		54,417
2020		56,705
2021		42,090
2022		46,232
2023		42,701
Thereafter		—
		242,145

LOANS AND ADVANCES (Tables)

12 Months Ended

Dec. 31, 2019

LOANS AND ADVANCES

Schedule of loans and advances


	As of December 31,
	2018	2019
	(HK$ in thousands)
Margin loans	2,886,105	4,141,962
Other advances	200,799	46,727
Total	3,086,904	4,188,689

PROPERTY AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2019

PROPERTY AND EQUIPMENT, NET

Schedule of property and equipment


	As of December 31,
	2018	2019
	(HK$ in thousands)
Gross carrying amount
Computers and equipment	12,981	56,175
Furniture and fixtures	4,961	34,588
Office equipment	20,501	29,938
Office building	—	28,110
Vehicle	638	634
Total of gross carrying amount	39,081	149,445

Less: accumulated depreciation
Computers and equipment	(4,542)	(8,289)
Furniture and fixtures	(3,063)	(6,234)
Office equipment	(8,204)	(16,241)
Office building	—	(519)
Vehicle	(414)	(532)
Total of accumulated depreciation	(16,223)	(31,815)
Property and equipment, net	22,858	117,630

INTANGIBLE ASSETS , NET (Tables)

12 Months Ended

Dec. 31, 2019

INTANGIBLE ASSETS , NET

Schedule of Intangible assets


	As of December 31,
	2018	2019
	(HK$ in thousands)
Gross carrying amount
Computer software	1,161	6,328
License	—	2,000
Trading right	1,000	1,000
Golf membership	687	678
Total of gross carrying amount	2,848	10,006

Less: accumulated amortization
Computer software	(804)	(1,647)
Trading right	(500)	(500)
Golf membership	(133)	(166)
Total of accumulated amortization	(1,437)	(2,313)
Intangible assets, net	1,411	7,693

OTHER ASSETS (Tables)

12 Months Ended

Dec. 31, 2019

OTHER ASSETS

Schedule of other assets


	As of December 31,
	2018	2019
	(HK$ in thousands)
Property and equipment, net (Note 7)	22,858	117,630
Staff advances	65,177	61,745
Refundable deposit	17,519	32,873
Intangible assets, net (Note 8)	1,411	7,693
Deferred tax assets (Note 24)	—	1,576
Deferred IPO cost	20,948	—
Others	21,366	17,918
Total	149,279	239,435

BORROWINGS (Tables)

12 Months Ended

Dec. 31, 2019

BORROWINGS

Schedule of borrowings


	As of December 31,
	2018	2019
	(HK$ in thousands)
Borrowings from:
Banks (1)	1,176,251	1,467,586
Third party (2)	400,000	—
Total	1,576,251	1,467,586

(1)

(2)

The Group has an unused facility of HK$1,100,000 thousand and nil from a third party as of December 31, 2018 and 2019, respectively.

ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2019

ACCRUED EXPENSES AND OTHER LIABILITIES

Schedule of accrued expenses and other liabilities


	As of December 31,
	2018	2019
	(HK$ in thousands)
Accrued employee welfare expense	65,027	100,228
Tax payables	48,841	50,803
Payables to fund management companies	—	26,381
Payables to corporate clients in relation to ESOP management services	—	16,492
Refund from depositary bank	—	12,689
Accrued advertising and promotion fee	1,390	10,862
Accrued professional fee	772	5,710
Accrued market information and data fee	2,947	5,646
Stamp duty, trading levy and trading fee payables	3,540	5,612
Contract liabilities	4,774	2,126
Accrued IPO fees and costs	18,138	—
Others	4,389	15,911
Total	149,818	252,460

REDEEMABLE CONVERTIBLE PREFERRED SHARES (Tables)

12 Months Ended

Dec. 31, 2019

REDEEMABLE CONVERTIBLE PREFERRED SHARES

Schedule of group's Preferred Shares activities

The Group’s Preferred Shares activities for the years ended December 31, 2017, 2018, 2019 are summarized below:


	Series A		Series A-1		Series B		Series C		Series C-1
	Preferred Shares		Preferred Shares		Preferred Shares		Preferred Shares		Preferred Shares
	No. of	Amount in	No. of	Amount in	No. of	Amount in	No. of	Amount in	No. of	Amount in
	shares	HK$	shares	HK$	shares	HK$	shares	HK$	shares	HK$
Balances at December 31, 2016	125,000,000	61,506,395	23,437,500	13,179,946	88,423,500	254,488,880	—	—	—	—
Issuance of Preferred Shares	—	—	—	—	—	—	128,844,812	708,765,649	12,225,282	97,818,708
Preferred Shares redemption value accretion	—	3,273,858	—	701,541	—	14,030,820	—	26,106,072	—	3,602,966
Balances at December 31, 2017	125,000,000	64,780,253	23,437,500	13,881,487	88,423,500	268,519,700	128,844,812	734,871,721	12,225,282	101,421,674
Preferred Shares redemption value accretion	—	3,291,792	—	705,384	—	14,107,680	—	42,963,732	—	5,929,544
Balances at December 31, 2018	125,000,000	68,072,045	23,437,500	14,586,871	88,423,500	282,627,380	128,844,812	777,835,453	12,225,282	107,351,218
Preferred Shares redemption value accretion	—	604,779	—	129,595	—	2,591,909	—	7,893,436	—	1,089,395
Conversion and redesignation of Preferred Shares	(125,000,000)	(68,676,824)	(23,437,500)	(14,716,466)	(88,423,500)	(285,219,289)	(128,844,812)	(785,728,889)	(12,225,282)	(108,440,613)
Balances at December 31, 2019	—	—	—	—	—	—	—	—	—	—

SHARE-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2019

SHARE-BASED COMPENSATION

Schedule of Share-based compensation recognized in operating expenses


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
Research and development expenses	8,854	9,223	12,055
General and administrative expenses	754	1,113	3,374
Selling and marketing expenses	161	104	538
Total share-based compensation expenses	9,769	10,440	15,967

Summary of the stock option activity under the 2014 and 2019 Share Incentive Plan


	Options granted	Weighted average
	share Number	exercise price (US$)
Outstanding at January 1, 2017	111,407,320	0.0168
Granted	217,455	0.9188
Outstanding at December 31, 2017	111,624,775	0.0186
Granted	9,625,690	1.1065
Cancelled/forfeited	(42,627)	0.2000
Outstanding at December 31, 2018	121,207,838	0.1049
Exercised	(106,295,232)	0.0126
Granted	9,791,200	0.6500
Cancelled/forfeited	(985,180)	0.8402
Outstanding at December 31, 2019	23,718,626	0.5161

Summary of share options outstanding



	As of December 31, 2019
		Weighted-	Weighted-average
		average	remaining exercise
	Options	exercise price	contractual life	Aggregate
	number	per option	(years)	intrinsic value
		US$		US$ in thousand
Options
Outstanding	23,718,626	0.5161	4.84	18,356
Exercisable	2,802,821	0.4061	4.84	2,459
Expected to vest	20,915,805	0.5307	4.84	15,897

Summary of fair value of options granted using the binomial option pricing model


	2017		2018		2019
Exercise price (US$)	0.8-1.03		0.3-1.2		0.65
Fair value of the ordinary shares on the date of option grant (US$)	0.4220		1.2820		1.2460
Risk-free interest rate	1.30	%	2.33	%	1.67	%
Expected term (in years)	7.3		5.98		5.00
Expected dividend yield	0	%	0	%	0	%
Expected volatility	46	%	44	%	45	%
Expected forfeiture rate (post-vesting)	15	%	15	%	15	%

NET (LOSS)/INCOME PER SHARE (Tables)

12 Months Ended

Dec. 31, 2019

NET (LOSS)/INCOME PER SHARE

Schedule of earnings per share, basic and diluted


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands, except for share and per share data)
Basic net (loss)/income per share calculation:
Numerator:
Net (loss)/income attributable to ordinary shareholder of the Company	(55,817)	36,938	143,159
Denominator:
Weighted average ordinary shares outstanding - basic	403,750,000	403,750,000	832,790,329
Net (loss)/income per share attributable to ordinary shareholder - basic	(0.14)	0.09	0.17
Diluted net (loss)/income per share calculation:
Numerator:
Net (loss)/income attributable to ordinary Shareholder of the Company	(55,817)	36,938	143,159
Denominator:
Weighted average ordinary shares outstanding - basic	403,750,000	403,750,000	832,790,329
Dilutive effect of share options	—	107,786,122	85,107,097
Weighted average ordinary shares outstanding - diluted	403,750,000	511,536,122	917,897,426
Net (loss)/income per share attributable to ordinary shareholder - diluted	(0.14)	0.07	0.16

COLLATERALIZED TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2019

COLLATERALIZED TRANSACTIONS

Schedule of collateralized transactions


	As of December 31,
	2018		2019
	HK$ in thousands		HK$ in thousands
	Permitted to		Permitted to
	repledge	Repledged	repledge	Repledged
Market value of collateral	9,214,950	1,904,545	19,503,649	3,031,767

BROKERAGE COMMISSION AND HANDLING CHARGE INCOME (Tables)

12 Months Ended

Dec. 31, 2019

BROKERAGE COMMISSION AND HANDLING CHARGE INCOME

Schedule of brokerage commission and handling charge income


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
Brokerage commission income	101,275	276,097	352,625
Handling charge income	83,643	131,893	158,740
Total	184,918	407,990	511,365

INTEREST INCOME (Tables)

12 Months Ended

Dec. 31, 2019

INTEREST INCOME

Schedule of interest income


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
Interest income from:
Margin financing	62,165	211,762	221,648
Bank deposits	34,050	123,775	187,223
Bridge loan	863	7,827	6,172
IPO financing	5,470	2,921	12,658
Securities lending	3,324	14,300	37,202
Total	105,872	360,585	464,903

OTHER INCOME (Tables)

12 Months Ended

Dec. 31, 2019

OTHER INCOME

Schedule of other income


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
IPO subscription service charge income	6,570	16,139	26,537
Underwriting fee income	1,599	10,494	19,579
Enterprise public relations service charge income	6,717	9,187	16,156
Currency exchange service income	2,954	2,711	4,670
Client referral income from brokers	1,934	2,166	1,451
Market information and data income	311	1,465	2,692
Funds distribution service income	—	—	10,447
ESOP management service income	—	270	1,275
Other	788	336	2,480
Total	20,873	42,768	85,287

INTEREST EXPENSES (Tables)

12 Months Ended

Dec. 31, 2019

INTEREST EXPENSES

Schedule of interest expenses


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Interest expenses for margin financing
Borrowings from banks	7,189	37,983	36,206
Borrowings from other licensed financial institutions	5,142	24,194	28,636
Borrowings from other parties	5,276	28,771	3,930
Interest expenses for securities borrowed
Borrowings from clients	—	—	1,298
Borrowings from brokers	1,151	1,814	9,077
Interest expenses for IPO financing
Borrowings from banks	1,121	2,862	10,091
Total	19,879	95,624	89,238

NON-INTEREST COST AND EXPENSES BY NATURE (Tables)

12 Months Ended

Dec. 31, 2019

NON-INTEREST COST AND EXPENSES BY NATURE

Summary of non-interest cost and expenses by nature


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)
Employee compensation and benefits	134,468	211,978	327,441
Marketing and branding	30,369	79,891	130,528
Brokerage commission and handling charge expenses(Note22)	36,777	80,127	100,550
Processing and servicing costs(Note23)	52,446	73,843	91,916
Rental and other related expenses	10,847	21,256	64,756
Depreciation and amortization	4,300	8,327	16,547
Professional services	5,239	18,724	28,757
Others	9,042	12,814	23,867
Total	283,488	506,960	784,362

BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES (Tables)

12 Months Ended

Dec. 31, 2019

BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES

Schedule of brokerage commission and handling charge expenses


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Commission, handling and settlement expenses	35,643	78,581	95,064
IPO subscription service charge expenses	1,134	1,546	5,486
Total	36,777	80,127	100,550

PROCESSING AND SERVICING COSTS (Tables)

12 Months Ended

Dec. 31, 2019

PROCESSING AND SERVICING COSTS

Schedule of processing and servicing costs


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Market information and data fee	37,482	46,669	54,282
Cloud service fee	7,636	14,081	16,729
Data transmission fee	5,822	9,145	13,890
System cost	—	949	4,334
SMS service fee	1,148	1,834	1,523
Others	358	1,165	1,158
Total	52,446	73,843	91,916

TAXATION (Tables)

12 Months Ended

Dec. 31, 2019

TAXATION

Schedule of current and deferred portion of income tax (benefit)/expense


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Current income tax expense	6,286	46,781	13,858
Deferred income tax (benefit)/expense	5,194	15,507	(1,572)
Income tax expense	11,480	62,288	12,286

Schedule of reconciliation between the income tax (benefit)/expenses computed by applying the Hong Kong enterprise tax rate to income before income taxes and actual provision


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Income before income tax	3,378	200,800	178,493

Tax expense at Hong Kong profit tax rate of 16.5%	557	33,132	29,451
Changes of valuation allowance	4,464	9,735	30,172
Tax effect of permanence differences	7,333	6,825	5,486
Effect of income tax in jurisdictions other than Hong Kong	(898)	12,670	(4,143)
Super deduction of research and development expenses	—	—	(19,277)
Final settlement differences	—	—	(18,038)
Income not subject to tax (1)	—	—	(11,365)
Others	24	(74)	—
Income tax expense	11,480	62,288	12,286

(1)

Schedule of components of the deferred tax assets


	As of December 31,
	2018	2019
	(HK$in thousands)
Deferred tax assets
Net operating loss carryforwards	19,084	42,736
Accrued expenses and others	4,165	12,261
Less: valuation allowance	(23,249)	(53,421)
Net deferred tax assets	—	1,576

Schedule of movement of valuation allowance


	Year ended December 31,
	2017	2018	2019
	(HK$in thousands)
Balance at beginning of the year	9,050	13,514	23,249
Additions	4,464	9,735	30,188
Reversals	—	—	(16)
Balance at end of the year	13,514	23,249	53,421

REGULATORY REQUIREMENTS (Tables)

12 Months Ended

Dec. 31, 2019

REGULATORY REQUIREMENTS

Summary of the net capital, the requirement and the excess capital for the Group's broker-dealer subsidiaries


	As of December 31, 2019
	Net Capital/
	Eligible Equity	Requirement	Excess
	(HK$ in thousands)
Futu Securities	1,469,200	235,481	1,233,719
Futu Inc.	15,832	1,947	13,885
Futu Clearing Inc.	72,908	1,947	70,961
Total	1,557,940	239,375	1,318,565

RELATED PARTY BALANCES AND TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Related Party Transactions


Entity of individual name		Relationship with the Group

Mr. Leaf Hua Li and his spouse		Principal shareholder and member of his immediate families
Tencent Holdings Limited and its subsidiaries(“Tencent Group”)		Principal shareholder
Individual directors and officers and their spouses		Directors or officers of the Group and members of their immediate families

(a) Cash and cash equivalent


	As of December 31,
	2018	2019
	(HK$ in thousands)
Cash and cash equivalent	260	240

The balance represents the cash deposited by the Group in various payment channels of Tencent Group for funding marketing campaigns, of which could be withdrawn on demand.

(b) Short-term borrowings and interest expenses


	As of December 31,
	2018	2019
	(HK$ in thousands)

Short-term borrowings	—	—


	As of December 31,
	2018	2019
	(HK$ in thousands)
Payable in relation to cloud equipment and services from Tencent Group	8,409	33,153
SMS channel services from Tencent Group	182	475
	8,591	33,628

(d) Transactions with Related Parties


	Year ended December 31,
	2017	2018	2019
	(HK$ in thousands)

Equipment purchased	—	—	40,218
Cloud service fee	7,636	14,081	16,729
SMS channel service fee	1,148	1,834	1,523
Advertising expenses	—	112	682
ESOP management service income	—	202	550
	8,784	16,229	59,702

ORGANIZATION AND PRINCIPAL ACTIVITIES (Details) $ / shares in Units, $ in Millions				1 Months Ended	12 Months Ended
	Mar. 08, 2019 USD ($) Vote $ / shares shares	Mar. 08, 2019 HKD ($) Vote shares	Sep. 22, 2016 Vote	Dec. 31, 2018 shares	Dec. 31, 2019 Vote shares	Mar. 31, 2019 shares	Dec. 18, 2007
ORGANIZATION AND PRINCIPAL ACTIVITIES
Number of shares issued and outstanding preferred shares converted into ordinary shares	377,931,094					377,931,094
Number of Votes Per Share \| Vote			1
IPO
ORGANIZATION AND PRINCIPAL ACTIVITIES
Net proceeds after deducting commissions and offering expenses	$ 161.7	$ 1,259,317,000
Number of shares issued and outstanding preferred shares converted into ordinary shares	377,931,094
ADSs \| IPO
ORGANIZATION AND PRINCIPAL ACTIVITIES
Number of share issued (in shares)	8,625,000	8,625,000
ADSs \| Over-allotment
ORGANIZATION AND PRINCIPAL ACTIVITIES
Number of share issued (in shares)	1,125,000	1,125,000
Class A ordinary shares
ORGANIZATION AND PRINCIPAL ACTIVITIES
Number of share issued (in shares)	69,000,000	69,000,000			115,666,666
Price per share \| $ / shares	$ 12
Number of shares issued and outstanding preferred shares converted into ordinary shares	140,802,051			140,802,051
Number of Votes Per Share \| Vote	1	1			1
Class A ordinary shares \| IPO
ORGANIZATION AND PRINCIPAL ACTIVITIES
Number of share issued (in shares)	69,000,000	69,000,000
Price per share \| $ / shares	$ 12
Class A ordinary shares \| Concurrent Private Placement
ORGANIZATION AND PRINCIPAL ACTIVITIES
Number of share issued (in shares)	46,666,666	46,666,666
Class B ordinary shares
ORGANIZATION AND PRINCIPAL ACTIVITIES
Number of shares issued and outstanding preferred shares converted into ordinary shares	237,129,043			237,129,043
Redesignation of ordinary shares into Class B ordinary shares				403,750,000
Number of Votes Per Share \| Vote	20	20			20
"Futu Securities" or the "Operating Company"
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of Direct or Indirect Economic Interest, Subsidiaries					100.00%
Futu Securities (Hong Kong) Limited
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of Direct or Indirect Economic Interest, Subsidiaries					100.00%
Futu Network Technology Limited
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of Direct or Indirect Economic Interest, Subsidiaries					100.00%
Futu Network Technology (Shenzhen) Co., Ltd
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of Direct or Indirect Economic Interest, Subsidiaries					100.00%
Shen Si
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of Direct or Indirect Economic Interest, Subsidiaries					100.00%
Futu Inc
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of Direct or Indirect Economic Interest, Subsidiaries					100.00%
Shenzhen Futu
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of Direct or Indirect Economic Interest, VIE's and Subsidiaries of VIE's					100.00%
Beijing Futu Network Technology Co., Ltd
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of Direct or Indirect Economic Interest, VIE's and Subsidiaries of VIE's					100.00%
Mr. Leaf Hua Li \| Shenzhen Futu
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of equity interest (as a percent)							85.00%
Ms. Lei Li \| Shenzhen Futu
ORGANIZATION AND PRINCIPAL ACTIVITIES
Percentage of equity interest (as a percent)							15.00%

SIGNIFICANT ACCOUNTING POLICIES - Exclusive Option Agreement (Details)	12 Months Ended
	Dec. 31, 2019 USD ($) $ / shares
SIGNIFICANT ACCOUNTING POLICIES
Purchase price for equity interests in Shenzhen Futu under exclusive option agreement \| $ / shares	$ 1.00
Threshold of Shenzhen Futu disposes of Shenzhen Futu's material assets without prior written consent of Shen Si \| $	$ 500,000

SIGNIFICANT ACCOUNTING POLICIES - VIE Companies (Details) $ in Thousands, $ in Thousands, ¥ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 CNY (¥)
Variable Interest Entity [Line Items]
Total assets						$ 2,747,315	$ 21,399,924		$ 16,062,932
Total liabilities						$ 2,420,132	18,851,371		14,962,653
Total operating revenue	$ 136,282	$ 1,061,555	$ 811,343	$ 311,663
Net (loss)/income	21,267	165,664	138,512	(8,102)
Net cash (used in)/generated from operating activities	252,834	1,969,434	4,470,167	1,855,328
Net cash generated from investing activities	(20,548)	(160,057)	(78,052)	(5,145)
Net (decrease)/increase in cash and cash equivalents	374,397	2,916,333	4,435,262	4,027,654
Cash, cash equivalents and restricted cash at beginning of the year	1,538,900	11,987,104	7,551,842	3,524,188
Cash, cash equivalents and restricted cash at end of the year	$ 1,913,297	14,903,437	11,987,104	7,551,842
VIE and its subsidiary
Variable Interest Entity [Line Items]
Total assets							68,480		57,213
Total liabilities							$ 73,271		$ 74,904
Total operating revenue		65,681	68,888	50,020
Net (loss)/income		8,807	21,262	18,458
Net cash (used in)/generated from operating activities		(2,502)	1,664	(4,613)
Net cash generated from investing activities		2,233
Net (decrease)/increase in cash and cash equivalents		(269)	1,664	(4,613)
Cash, cash equivalents and restricted cash at beginning of the year		1,750	86	4,699
Cash, cash equivalents and restricted cash at end of the year		$ 1,481	$ 1,750	$ 86
Registered capital \| ¥					¥ 10			¥ 10		¥ 10

SIGNIFICANT ACCOUNTING POLICIES - Convenience Translation (Details)	Dec. 31, 2019
Convenience Translation
Exchange rate of HK$ per US$1.00	7.7894

SIGNIFICANT ACCOUNTING POLICIES - Available-for-sale Financial Securities (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
Available-for-Sale Financial Securities
Available-for-sale debt securities	$ 12,039	$ 93,773	$ 59,348

SIGNIFICANT ACCOUNTING POLICIES - Equity Method Investments (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)
Schedule of Equity Method Investments [Line Items]
Total consideration	$ 861	$ 6,709
Zhixiang Technology (Shenzhen) Co., Ltd
Schedule of Equity Method Investments [Line Items]
Ownership interest acquired	20.00%	20.00%
Total consideration		$ 6,709

SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 HKD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Jan. 01, 2019 HKD ($)
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets		$ 20,748	$ 161,617
Operating lease liabilities		$ 22,141	$ 172,466
Weighted-average remaining lease term		4 years	4 years
Weighted-average discount rate		4.75%	4.75%
Right-of-use assets obtained under operating leases	$ 211,170
ASU 2016-02
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets				$ 22,312
Operating lease liabilities				$ 22,312
Minimum
Lessee, Lease, Description [Line Items]
Remaining terms	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining terms	5 years

SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment, net (Details)	12 Months Ended
	Dec. 31, 2019
Computers and equipment
PROPERTY AND EQUIPMENT, NET
Residual rate (as a percent)	5.00%
Computers and equipment \| Minimum
PROPERTY AND EQUIPMENT, NET
Estimated useful lives	P3Y
Computers and equipment \| Maximum
PROPERTY AND EQUIPMENT, NET
Estimated useful lives	P5Y
Furniture and fixtures
PROPERTY AND EQUIPMENT, NET
Residual rate (as a percent)	5.00%
Furniture and fixtures \| Minimum
PROPERTY AND EQUIPMENT, NET
Estimated useful lives	P3Y
Furniture and fixtures \| Maximum
PROPERTY AND EQUIPMENT, NET
Estimated useful lives	P5Y
Office equipment
PROPERTY AND EQUIPMENT, NET
Residual rate (as a percent)	5.00%
Office equipment \| Minimum
PROPERTY AND EQUIPMENT, NET
Estimated useful lives	P3Y
Office equipment \| Maximum
PROPERTY AND EQUIPMENT, NET
Estimated useful lives	P5Y
Vehicle
PROPERTY AND EQUIPMENT, NET
Estimated useful lives	P5Y
Residual rate (as a percent)	5.00%
Office building
PROPERTY AND EQUIPMENT, NET
Estimated useful lives	P30Y
Residual rate (as a percent)	5.00%

SIGNIFICANT ACCOUNTING POLICIES - Intangible Assets (Details)	12 Months Ended
	Dec. 31, 2019
Computer software
Intangible assets
Estimated useful lives	5 years
Golf membership
Intangible assets
Estimated useful lives	10 years

SIGNIFICANT ACCOUNTING POLICIES - Incentives (Details) - HKD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
SIGNIFICANT ACCOUNTING POLICIES
Revenue portion allocated to the points as separate performance obligation	$ 1,059	$ 1,865	$ 2,042
Loyalty program points recorded as reduction of revenue	187	275	330
Contract liabilities recorded related to unredeemed points	2,126	3,022
Loyalty program points recorded as selling and marketing expenses	1,604	220	$ 198
Liabilities recorded to unredeemed points in other scenarios	$ 3,518	$ 485

SIGNIFICANT ACCOUNTING POLICIES - Share-Based Compensation (Details) - Share Options	12 Months Ended
	Dec. 31, 2019
Minimum
SHARE-BASED COMPENSATION
Options vesting period	4 years
Maximum
SHARE-BASED COMPENSATION
Options vesting period	5 years

SIGNIFICANT ACCOUNTING POLICIES - Taxation (Details) - HKD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Uncertain tax positions
Interest and penalties associated with uncertain tax positions	$ 0	$ 0	$ 0

SIGNIFICANT ACCOUNTING POLICIES - Segment Reporting (Details)	12 Months Ended
	Dec. 31, 2019 segment
Segment Reporting
Number of reportable segments	1

SIGNIFICANT ACCOUNTING POLICIES - Significant Risks and Uncertainties (Details) ¥ in Millions, $ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2018 HKD ($)
Currency risk
Gradual increase in basis		1.00%	1.00%
pre-tax income	¥ 57.9	$ 7.4
Gradual decrease in basis	1.00%	1.00%
Pre-tax loss	¥ 57.9	$ 7.4
China, Yuan Renminbi
Currency risk
Cash		$ 6.0	$ 46.7	$ 1.6	$ 12.3
Estimated depreciation of Renminbi against the U.S. dollar (as a percent)		10.00%	10.00%	10.00%	10.00%
Depreciation in our total assets		$ 0.6		$ 0.2
Estimated appreciation of Renminbi against the U.S. dollar (as a percent)		10.00%	10.00%	10.00%	10.00%
Appreciation in our total assets		$ 0.6		$ 0.2

FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Financial Assets and Liabilities Measured at value (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale financial securities	$ 12,039	$ 93,773	$ 59,348
Other financial assets			59,348
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale financial securities		$ 93,773
Other financial assets			$ 59,348

FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Transfers Between Level 1 and Level 2 (Details) - HKD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
FINANCIAL ASSETS AND FINANCIAL LIABILITIES
Fair value asset transferred from level 1 to level 2	$ 0	$ 0	$ 0
Fair value asset transferred from level 2 to level 1	0	0	0
Fair value liabilities transferred from level 2 to level 1	0	0	0
Fair value liabilities transferred from level 2 to level 1	$ 0	$ 0	$ 0

FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Netting of Financial Assets (Details) - HKD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Amounts due from clearing organization
Effects of offsetting on the balance sheet
Gross amounts	$ 2,925,936	$ 1,472,596
Gross amounts set off in the balance sheet	(2,621,856)	(1,296,641)
Net amounts presented in the balance sheet	304,080	175,955
Related amounts not offset
Net amount	304,080	175,955
Deposit paid for securities borrowed
Effects of offsetting on the balance sheet
Gross amounts	1,126,300	397,675
Net amounts presented in the balance sheet	1,126,300	397,675
Related amounts not offset
Financial instrument collateral	(935,443)	(299,173)
Net amount	$ 190,857	$ 98,502

FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Netting of Financial Liabilities (Details) - Deposit received for securities lent - HKD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Effects of offsetting on the balance sheet
Gross amounts	$ 1,342,738	$ 488,068
Net amounts presented in the balance sheet	1,342,738	488,068
Related amounts not offset
Financial instrument collateral	(935,443)	(299,173)
Net amount	$ 407,295	$ 188,895

EQUITY BASED INVESTMENT - (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
EQUITY METHOD INVESTMENT
Equity method investment	$ 792	$ 6,166	$ 0

LEASE - Balances reported in the consolidated balance sheets (Details) - Dec. 31, 2019 $ in Thousands, $ in Thousands	USD ($)	HKD ($)
Balances reported in the consolidated balance sheets related to the leases
Operating lease right-of-use assets	$ 20,748	$ 161,617
Operating lease liabilities	$ 22,141	$ 172,466

LEASE - Operating lease cost reported in the consolidated statements (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 HKD ($)
Operating lease cost
Operating lease cost	$ 64,756

LEASE - Undiscounted cash flows of the Group's leases (Details) - Dec. 31, 2019 $ in Thousands, $ in Thousands	USD ($)	HKD ($)
Undiscounted cash flows of the leases to the present value of its operating lease payments
2020		$ 56,714
2021		46,968
2022		44,354
2023		40,346
Total undiscounted operating lease payments		188,382
Less: imputed interest		(15,916)
Present value of operating lease liabilities	$ 22,141	$ 172,466

LEASE - Minimum annual lease commitments (Details) $ in Thousands	Dec. 31, 2018 HKD ($)
Minimum annual lease commitments in accordance with ASC Topic 840
2019	$ 54,417
2020	56,705
2021	42,090
2022	46,232
2023	42,701
Total	$ 242,145

LOANS AND ADVANCES (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
Total	$ 537,742	$ 4,188,689	$ 3,086,904
Margin Loans
Total		4,141,962	2,886,105
Other Advances
Total		$ 46,727	$ 200,799

PROPERTY AND EQUIPMENT, NET (Details) - HKD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
PROPERTY AND EQUIPMENT, NET
Gross carrying amount	$ 149,445	$ 39,081
Less: accumulated depreciation	(31,815)	(16,223)
Property and equipment, net	117,630	22,858
Depreciation	15,647	8,012	$ 3,998
Computers and equipment
PROPERTY AND EQUIPMENT, NET
Gross carrying amount	56,175	12,981
Less: accumulated depreciation	(8,289)	(4,542)
Furniture and fixtures
PROPERTY AND EQUIPMENT, NET
Gross carrying amount	34,588	4,961
Less: accumulated depreciation	(6,234)	(3,063)
Office equipment
PROPERTY AND EQUIPMENT, NET
Gross carrying amount	29,938	20,501
Less: accumulated depreciation	(16,241)	(8,204)
Office building
PROPERTY AND EQUIPMENT, NET
Gross carrying amount	28,110
Less: accumulated depreciation	(519)
Vehicle
PROPERTY AND EQUIPMENT, NET
Gross carrying amount	634	638
Less: accumulated depreciation	$ (532)	$ (414)

INTANGIBLE ASSETS , NET (Details) - HKD ($) $ in Thousands	12 Months Ended
INTANGIBLE ASSETS , NET (Details) - HKD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
INTANGIBLE ASSETS , NET
Gross carrying amount	$ 10,006	$ 2,848
Less: accumulated amortization	(2,313)	(1,437)
Intangible assets, net	7,693	1,411
Amortization expense on intangible assets	900	315	$ 302
Computer software
INTANGIBLE ASSETS , NET
Gross carrying amount	6,328	1,161
Less: accumulated amortization	(1,647)	(804)
License
INTANGIBLE ASSETS , NET
Gross carrying amount	2,000
Trading right
INTANGIBLE ASSETS , NET
Gross carrying amount	1,000	1,000
Less: accumulated amortization	(500)	(500)
Golf membership
INTANGIBLE ASSETS , NET
Gross carrying amount	678	687
Less: accumulated amortization	$ (166)	$ (133)

OTHER ASSETS (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
OTHER ASSETS
Property and equipment, net		$ 117,630	$ 22,858
Staff advances		61,745	65,177
Refundable deposit		32,873	17,519
Intangible assets, net		7,693	1,411
Deferred tax assets		1,576
Deferred IPO cost			20,948
Others		17,918	21,366
Total	$ 30,739	$ 239,435	$ 149,279

BORROWINGS (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
Borrowings
Total borrowings	$ 188,408	$ 1,467,586	$ 1,576,251
Banks
Borrowings
Total borrowings		$ 1,467,586	1,176,251
Third party
Borrowings
Total borrowings			$ 400,000

BORROWINGS - Additional Information (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
Borrowings
Borrowings weighted average interest rate	4.29%	4.29%	4.46%
Borrowings	$ 188,408	$ 1,467,586	$ 1,576,251
Banks
Borrowings
Unused borrowing facilities		3,326,555	4,190,779
Borrowings		1,467,586	1,176,251
Third party
Borrowings
Unused borrowing facilities		$ 0	1,100,000
Borrowings			$ 400,000

ACCRUED EXPENSES AND OTHER LIABILITIES (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued employee welfare expense		$ 100,228	$ 65,027
Tax payables		50,803	48,841
Payables to fund management companies		26,381
Payables to corporate clients in relation to ESOP management services		16,492
Refund from depositary bank		12,689
Accrued advertising and promotion fee		10,862	1,390
Accrued professional fee		5,710	772
Accrued market information and data fee		5,646	2,947
Stamp duty, trading levy and trading fee payables		5,612	3,540
Contract liabilities		2,126	4,774
Accrued IPO fees and costs			18,138
Others		15,911	4,389
Total	$ 32,411	$ 252,460	$ 149,818

ORDINARY SHARES (Details) $ / shares in Units, $ in Millions				12 Months Ended
	Mar. 08, 2019 USD ($) Vote $ / shares shares	Mar. 08, 2019 HKD ($) Vote shares	Sep. 22, 2016 Vote $ / shares shares	Dec. 31, 2019 Vote $ / shares shares	Mar. 31, 2019 shares	Dec. 31, 2018 $ / shares shares	Sep. 21, 2016 $ / shares shares
Class of Stock [Line Items]
Ordinary shares, shares authorized			403,750,000	0		4,622,068,906	807,500
Ordinary shares, par value (in dollars per share) \| $ / shares			$ 0.00001	$ 0.00001		$ 0.00001	$ 0.0050
Number of vote \| Vote			1
Number of shares issued and outstanding preferred shares converted into ordinary shares	377,931,094				377,931,094
IPO
Class of Stock [Line Items]
Net proceeds after deducting commissions and offering expenses	$ 161.7	$ 1,259,317,000
Number of shares issued and outstanding preferred shares converted into ordinary shares	377,931,094
ADSs \| IPO
Class of Stock [Line Items]
Number of share issued (in shares)	8,625,000	8,625,000
ADSs \| Over-allotment
Class of Stock [Line Items]
Number of share issued (in shares)	1,125,000	1,125,000
Class A ordinary shares
Class of Stock [Line Items]
Ordinary shares, shares authorized				48,700,000,000		0
Ordinary shares, par value (in dollars per share) \| $ / shares				$ 0.00001		$ 0.00001
Number of vote \| Vote	1	1		1
Number of share issued (in shares)	69,000,000	69,000,000		115,666,666
Price per share \| $ / shares	$ 12
Number of shares issued and outstanding preferred shares converted into ordinary shares	140,802,051					140,802,051
Shares issued upon exercise of employee share options (in shares)				106,295,232
Class A ordinary shares \| IPO
Class of Stock [Line Items]
Number of share issued (in shares)	69,000,000	69,000,000
Price per share \| $ / shares	$ 12
Class A ordinary shares \| Concurrent Private Placement
Class of Stock [Line Items]
Number of share issued (in shares)	46,666,666	46,666,666
Class B ordinary shares
Class of Stock [Line Items]
Ordinary shares, shares authorized				800,000,000		0
Ordinary shares, par value (in dollars per share) \| $ / shares				$ 0.00001		$ 0.00001
Number of vote \| Vote	20	20		20
Number of shares issued and outstanding preferred shares converted into ordinary shares	237,129,043					237,129,043
Redesignation of ordinary shares into Class B ordinary shares	403,750,000	403,750,000		403,750,000

REDEEMABLE CONVERTIBLE PREFERRED SHARES (Details) $ / shares in Units, $ in Thousands		1 Months Ended				12 Months Ended
	Sep. 22, 2016 Vote $ / shares shares	Mar. 31, 2019 shares	May 31, 2017 USD ($) $ / shares shares	May 31, 2015 USD ($) $ / shares shares	Oct. 31, 2014 USD ($) $ / shares shares	Dec. 31, 2019 $ / shares shares	Dec. 31, 2017 HKD ($) shares	Mar. 08, 2019 shares	Dec. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares	Dec. 31, 2016 $ / shares shares	Dec. 31, 2015 $ / shares	Dec. 31, 2014 $ / shares
Temporary Equity [Line Items]
Preferred shares, par value \| $ / shares										$ 0.00001	$ 0.00001	$ 0.00001	$ 0.00001
Preferred shares, conversion and redesignation, ratio		1
Shares issued for each shares converted		377,931,094						377,931,094
Voting rights \| Vote	1
Series A convertible redeemable preferred shares
Temporary Equity [Line Items]
Number of share issued (in shares)					250,000
Aggregate purchase price \| $					$ 7,000
Par value \| $ / shares	$ 0.00001		$ 0.00001		$ 0.005	$ 0.00001			$ 0.00001
Shares issued (in shares)	125,000,000					0			125,000,000	125,000,000	125,000,000
Number of shares converted (in shares)						(125,000,000)
Series A-1 convertible redeemable preferred shares
Temporary Equity [Line Items]
Number of share issued (in shares)					46,875
Aggregate purchase price \| $					$ 1,500
Par value \| $ / shares	$ 0.00001		0.00001		$ 0.005	$ 0.00001			$ 0.00001
Shares issued (in shares)	23,437,500					0			23,437,500	23,437,500	23,437,500
Number of shares converted (in shares)						(23,437,500)
Series B convertible redeemable preferred shares
Temporary Equity [Line Items]
Number of share issued (in shares)				176,847
Aggregate purchase price \| $				$ 30,000
Par value \| $ / shares	$ 0.00001		$ 0.00001	$ 0.005		$ 0.00001			$ 0.00001
Shares issued (in shares)	88,423,500					0			88,423,500	88,423,500	88,423,500
Number of shares converted (in shares)						(88,423,500)
Series C convertible redeemable preferred shares
Temporary Equity [Line Items]
Number of share issued (in shares)			128,844,812				128,844,812
Aggregate purchase price			$ 91,362				$ 708,765,649
Par value \| $ / shares			$ 0.00001			$ 0.00001			$ 0.00001
Shares issued (in shares)						0			128,844,812	128,844,812
Number of shares converted (in shares)			5,878,794			(128,844,812)
Principal amount of convertible note \| $			$ 3,855
Accrued but unpaid interest of convertible note \| $			$ 314
Shares conversion price per share \| $ / shares			$ 0.71
Series C Preferred Shares, issued for cash consideration
Temporary Equity [Line Items]
Number of share issued (in shares)			95,094,173
Aggregate purchase price \| $			$ 67,430
Series C Preferred Shares, issued for repayment of an outstanding loan
Temporary Equity [Line Items]
Number of share issued (in shares)			27,871,845
Repayments of outstanding related party debt \| $			$ 19,274
Accrued but unpaid interest of related party debt \| $			$ 490
Series C-1 convertible redeemable preferred shares
Temporary Equity [Line Items]
Number of share issued (in shares)			12,225,282				12,225,282
Aggregate purchase price			$ 12,609				$ 97,818,708
Par value \| $ / shares			$ 0.00001			$ 0.00001			$ 0.00001
Shares issued (in shares)						0			12,225,282	12,225,282
Number of shares converted (in shares)						(12,225,282)

REDEEMABLE CONVERTIBLE PREFERRED SHARES - Group's Preferred Shares activities (Details) $ in Thousands	1 Months Ended			12 Months Ended
	May 31, 2017 USD ($) shares	May 31, 2015 USD ($) shares	Oct. 31, 2014 USD ($) shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2019 HKD ($) shares	Dec. 31, 2018 HKD ($) shares	Dec. 31, 2017 HKD ($) shares
Temporary Equity [Line Items]
Balance at the beginning of the period					$ 1,250,472,000
Preferred shares redemption value accretion				$ 1,580	12,309,000	$ 66,998,000	$ 47,715,000
Conversion and redesignation of Preferred Shares					$ 1,262,781,000
Balance at the end of the period						$ 1,250,472,000
Series A convertible redeemable preferred shares
Temporary Equity [Line Items]
Balance at the beginning of the period \| shares				125,000,000	125,000,000	125,000,000	125,000,000
Issuance of Preferred Shares \| shares			250,000
Conversion and redesignation of preferred shares into ordinary shares (In shares) \| shares				(125,000,000)	(125,000,000)
Balance at the end of the period \| shares				0	0	125,000,000	125,000,000
Balance at the beginning of the period					$ 68,072,045	$ 64,780,253	$ 61,506,395
Issuance of Preferred Shares			$ 7,000
Preferred shares redemption value accretion					604,779	3,291,792	3,273,858
Conversion and redesignation of Preferred Shares					$ (68,676,824)
Balance at the end of the period						$ 68,072,045	$ 64,780,253
Series A-1 convertible redeemable preferred shares
Temporary Equity [Line Items]
Balance at the beginning of the period \| shares				23,437,500	23,437,500	23,437,500	23,437,500
Issuance of Preferred Shares \| shares			46,875
Conversion and redesignation of preferred shares into ordinary shares (In shares) \| shares				(23,437,500)	(23,437,500)
Balance at the end of the period \| shares				0	0	23,437,500	23,437,500
Balance at the beginning of the period					$ 14,586,871	$ 13,881,487	$ 13,179,946
Issuance of Preferred Shares			$ 1,500
Preferred shares redemption value accretion					129,595	705,384	701,541
Conversion and redesignation of Preferred Shares					$ (14,716,466)
Balance at the end of the period						$ 14,586,871	$ 13,881,487
Series B convertible redeemable preferred shares
Temporary Equity [Line Items]
Balance at the beginning of the period \| shares				88,423,500	88,423,500	88,423,500	88,423,500
Issuance of Preferred Shares \| shares		176,847
Conversion and redesignation of preferred shares into ordinary shares (In shares) \| shares				(88,423,500)	(88,423,500)
Balance at the end of the period \| shares				0	0	88,423,500	88,423,500
Balance at the beginning of the period					$ 282,627,380	$ 268,519,700	$ 254,488,880
Issuance of Preferred Shares		$ 30,000
Preferred shares redemption value accretion					2,591,909	14,107,680	14,030,820
Conversion and redesignation of Preferred Shares					$ (285,219,289)
Balance at the end of the period						$ 282,627,380	$ 268,519,700
Series C convertible redeemable preferred shares
Temporary Equity [Line Items]
Balance at the beginning of the period \| shares				128,844,812	128,844,812	128,844,812
Issuance of Preferred Shares \| shares	128,844,812						128,844,812
Conversion and redesignation of preferred shares into ordinary shares (In shares) \| shares	5,878,794			(128,844,812)	(128,844,812)
Balance at the end of the period \| shares				0	0	128,844,812	128,844,812
Balance at the beginning of the period					$ 777,835,453	$ 734,871,721
Issuance of Preferred Shares	$ 91,362						$ 708,765,649
Preferred shares redemption value accretion					7,893,436	42,963,732	26,106,072
Conversion and redesignation of Preferred Shares					$ (785,728,889)
Balance at the end of the period						$ 777,835,453	$ 734,871,721
Series C-1 convertible redeemable preferred shares
Temporary Equity [Line Items]
Balance at the beginning of the period \| shares				12,225,282	12,225,282	12,225,282
Issuance of Preferred Shares \| shares	12,225,282						12,225,282
Conversion and redesignation of preferred shares into ordinary shares (In shares) \| shares				(12,225,282)	(12,225,282)
Balance at the end of the period \| shares				0	0	12,225,282	12,225,282
Balance at the beginning of the period					$ 107,351,218	$ 101,421,674
Issuance of Preferred Shares	$ 12,609						$ 97,818,708
Preferred shares redemption value accretion					1,089,395	5,929,544	3,602,966
Conversion and redesignation of Preferred Shares					$ (108,440,613)
Balance at the end of the period						$ 107,351,218	$ 101,421,674

SHARE-BASED COMPENSATION - Share-based compensation expenses (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
SHARE-BASED COMPENSATION
Total share-based compensation expenses	$ 2,050	$ 15,967	$ 10,440	$ 9,769
Research and development expenses
SHARE-BASED COMPENSATION
Total share-based compensation expenses		12,055	9,223	8,854
General and administrative expenses
SHARE-BASED COMPENSATION
Total share-based compensation expenses		3,374	1,113	754
Selling and marketing expenses
SHARE-BASED COMPENSATION
Total share-based compensation expenses		$ 538	$ 104	$ 161

SHARE-BASED COMPENSATION - Share Options (Details) - Share Options $ / shares in Units, $ in Millions, $ in Millions			1 Months Ended		12 Months Ended
	Dec. 30, 2019 USD ($) $ / shares shares	Dec. 30, 2019 HKD ($) shares	Oct. 31, 2019	Oct. 31, 2014 shares	Dec. 31, 2019 $ / shares shares	Dec. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares
Summary of the stock option activity, Options granted share Number:
Exercisable (in shares)					(106,295,232)	0	0
Outstanding at end of year (in shares)					23,718,626
Summary of the stock option activity, Weighted average exercise price:
Outstanding at end of year (in dollars per share) \| $ / shares					$ 0.5161
Minimum
SHARE-BASED COMPENSATION
Vesting period (in years)					4 years
Maximum
SHARE-BASED COMPENSATION
Vesting period (in years)					5 years
2014 Share Incentive Plan
SHARE-BASED COMPENSATION
Maximum number of shares under the plan				135,032,132
Expire period				10 years
Modification of exercise price of number of stock options granted	8,113,145	8,113,145
Modified of exercise price of stock options granted \| $ / shares	$ 0.60
Incremental compensation expenses	$ 0.4	$ 3
2014 Share Incentive Plan \| Minimum
SHARE-BASED COMPENSATION
Vesting period (in years)				4 years
2014 Share Incentive Plan \| Maximum
SHARE-BASED COMPENSATION
Vesting period (in years)				5 years
2019 Share Incentive Plan \| Maximum
SHARE-BASED COMPENSATION
Maximum percentage of shares available for issuance, based on total number of shares issued and outstanding on September 29, 2019			2.00%
Maximum percentage of number of shares increased in each year			2.00%
Maximum percentage of aggregate number of shares initially reserved and subsequently increased during the term of the total number of shares issued and outstanding on September 29			8.00%
2014 Share Incentive Plan and 2019 Share Incentive Plan
Summary of the stock option activity, Options granted share Number:
Outstanding at beginning of year (in shares)					121,207,838	111,624,775	111,407,320
Exercisable (in shares)					(106,295,232)
Granted (in shares)					9,791,200	9,625,690	217,455
Cancelled/forfeited (in shares)					(985,180)	(42,627)
Outstanding at end of year (in shares)					23,718,626	121,207,838	111,624,775
Summary of the stock option activity, Weighted average exercise price:
Outstanding at beginning of year (in dollars per share) \| $ / shares					$ 0.1049	$ 0.0186	$ 0.0168
Granted (in dollars per share) \| $ / shares					0.6500	1.1065	0.9188
Exercised (in dollars per share) \| $ / shares					0.0126
Cancelled/forfeited (in dollars per shares) \| $ / shares					0.8402	0.2000
Outstanding at end of year (in dollars per share) \| $ / shares					$ 0.5161	$ 0.1049	$ 0.0186

SHARE-BASED COMPENSATION - Share Options Granted (Details) - Share Options $ / shares in Units, $ in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2019 HKD ($) shares	Dec. 31, 2018 $ / shares shares	Dec. 31, 2017 $ / shares shares	Dec. 31, 2019 HKD ($) shares
SHARE-BASED COMPENSATION
Outstanding (in shares) \| shares					23,718,626
Exercisable (in shares) \| shares					2,802,821
Expected to vest (in shares) \| shares					20,915,805
Outstanding (in dollars per share) \| $ / shares	$ 0.5161
Exercisable (in dollars per share) \| $ / shares	0.4061
Expected to vest (in dollars per share) \| $ / shares	$ 0.5307
Outstanding (in years)	4 years 10 months 2 days	4 years 10 months 2 days
Exercisable (in years)	4 years 10 months 2 days	4 years 10 months 2 days
Expected to vest (in years)	4 years 10 months 2 days	4 years 10 months 2 days
Outstanding (in dollars) \| $					$ 18,356
Exercisable (in dollars) \| $					2,459
Expected to vest (in dollars) \| $					$ 15,897
Weighted average grant date fair value \| $ / shares	$ 0.7345		$ 0.6010	$ 0.0998
Shares issued upon exercise of employee share options (in shares) \| shares	106,295,232	106,295,232	0	0
Intrinsic value of options exercised	$ 140	$ 1,094,000

SHARE-BASED COMPENSATION - Fair value of options granted and compensation expenses (Details) $ / shares in Units, $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 $ / shares	Dec. 31, 2018 $ / shares	Dec. 31, 2017 USD ($) $ / shares	Dec. 31, 2017 HKD ($)
Fair value of options granted estimation:
Unrecognized compensation expenses			$ 12,894	$ 100,437
Weighted-average period expected to be recognized for unrecognized compensation expense (in years)		4 years 5 months 9 days
Share Options
Fair value of options granted estimation:
Exercise price (in dollars per share)	$ 0.65
Fair value of the ordinary shares on the date of option grant (in dollars)	$ 1.2460	$ 1.2820	$ 0.4220
Risk-free interest rate (as a percent)	1.67%	2.33%	1.30%
Expected term (in years)	5 years	5 years 11 months 23 days	7 years 3 months 18 days
Expected dividend yield (as a percent)	0.00%	0.00%	0.00%
Expected volatility (as a percent)	45.00%	44.00%	46.00%
Expected forfeiture rate (post-vesting) (as a percent)	15.00%	15.00%	15.00%
Share Options \| Minimum
Fair value of options granted estimation:
Exercise price (in dollars per share)		$ 0.3	$ 0.8
Share Options \| Maximum
Fair value of options granted estimation:
Exercise price (in dollars per share)		$ 1.2	$ 1.03

NET (LOSS)/INCOME PER SHARE (Details) $ / shares in Units, $ / shares in Units, $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($) $ / shares shares	Dec. 31, 2019 HKD ($) $ / shares shares	Dec. 31, 2018 HKD ($) $ / shares shares	Dec. 31, 2017 HKD ($) $ / shares shares
Numerator:
Net (loss)/income attributable to ordinary shareholder of the Company	$ 18,378	$ 143,159	$ 36,938	$ (55,817)
Denominator:
Weighted average ordinary shares outstanding - basic	832,790,329	832,790,329	403,750,000	403,750,000
Net (loss)/income per share attributable to ordinary shareholder - basic \| (per share)	$ 0.02	$ 0.17	$ 0.09	$ (0.14)
Numerator:
Net (loss)/income attributable to ordinary shareholder of the Company	$ 18,378	$ 143,159	$ 36,938	$ (55,817)
Denominator:
Weighted average ordinary shares outstanding - basic	832,790,329	832,790,329	403,750,000	403,750,000
Dilutive effect of share options	85,107,097	85,107,097	107,786,122
Weighted average ordinary shares outstanding - diluted	917,897,426	917,897,426	511,536,122	403,750,000
Net (loss)/income per share attributable to ordinary shareholder - diluted \| (per share)	$ 0.02	$ 0.16	$ 0.07	$ (0.14)

NET (LOSS)/INCOME PER SHARE - Antidilutive securities (Details) - shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares excluded from the calculation of diluted net (loss)/income per share	3,747,975	3,418,090	99,355,769
Convertible preferred shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive shares excluded from the calculation of diluted net (loss)/income per share	0	377,931,094	323,435,523

COLLATERALIZED TRANSACTIONS (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)
COLLATERALIZED TRANSACTIONS
Loans and advances	$ 537,742	$ 4,188,689	$ 3,086,904
Market value of collateral, Permitted to repledge		19,503,649	9,214,950
Market value of collateral, Repledged		3,031,767	1,904,545
Total fair value of securities borrowed		935,443	299,173
Total fair value of securities lent		935,443	299,173
Cash collateral provided for borrowed securities		1,126,300	397,675
Cash collateral received for borrowed securities		1,342,738	488,068
Margin Loans
COLLATERALIZED TRANSACTIONS
Loans and advances		$ 4,141,962	$ 2,886,105

BROKERAGE COMMISSION AND HANDLING CHARGE INCOME (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME
Total	$ 65,649	$ 511,365	$ 407,990	$ 184,918
Brokerage commission income
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME
Total		352,625	276,097	101,275
Handling and settlement fee income
BROKERAGE COMMISSION AND HANDLING CHARGE INCOME
Total		$ 158,740	$ 131,893	$ 83,643

INTEREST INCOME (Details) $ in Thousands, $ in Thousands	12 Months Ended
INTEREST INCOME (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
INTEREST INCOME
Interest income from margin financing		$ 221,648	$ 211,762	$ 62,165
Interest income from Bank deposits		187,223	123,775	34,050
Interest income from Bridge loan		6,172	7,827	863
Interest income from IPO financing		12,658	2,921	5,470
Interest income from Securities lending		37,202	14,300	3,324
Total	$ 59,684	464,903	360,585	105,872
Client Referral Income from Brokers		$ 1,451	$ 2,166	$ 1,934

OTHER INCOME (Details) $ in Thousands, $ in Thousands	12 Months Ended
OTHER INCOME (Details) $ in Thousands, $ in Thousands	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
OTHER INCOME
IPO subscription service charge income		$ 26,537	$ 16,139	$ 6,570
Underwriting fee income		19,579	10,494	1,599
Enterprise public relations service charge income		16,156	9,187	6,717
Currency exchange service income		4,670	2,711	2,954
Client referral income from brokers		1,451	2,166	1,934
Market information and data income		2,692	1,465	311
Funds distribution service income		10,447
ESOP management service income		1,275	270
Other		2,480	336	788
Total	$ 10,949	$ 85,287	$ 42,768	$ 20,873

INTEREST EXPENSES (Details) - HKD ($) $ in Thousands	12 Months Ended
INTEREST EXPENSES (Details) - HKD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
INTEREST EXPENSES
Interest expenses for margin financing - Borrowings from banks	$ 36,206	$ 37,983	$ 7,189
Interest expenses for margin financing - Borrowings from other licensed financial institutions	28,636	24,194	5,142
Interest expenses for margin financing - Borrowings from other parties	3,930	28,771	5,276
Interest expenses for securities borrowed - Borrowings from clients	1,298
Interest expenses for securities borrowed - Borrowings from brokers	9,077	1,814	1,151
Interest expenses for IPO financing - Borrowings from banks	10,091	2,862	1,121
Total	$ 89,238	$ 95,624	$ 19,879

NON-INTEREST COST AND EXPENSES BY NATURE (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
NON-INTEREST COST AND EXPENSES BY NATURE
Employee compensation and benefits		$ 327,441	$ 211,978	$ 134,468
Marketing and branding		130,528	79,891	30,369
Brokerage commission and handling charge expenses(Note22)		100,550	80,127	36,777
Processing and servicing costs(Note23)	$ 11,800	91,916	73,843	52,446
Rental and other related expenses		64,756	21,256	10,847
Depreciation and amortization		16,547	8,327	4,300
Professional services		28,757	18,724	5,239
Others		23,867	12,814	9,042
Total		$ 784,362	$ 506,960	$ 283,488

BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES
Total	$ 36,165	$ 281,704	$ 249,594	$ 109,102
Brokerage commission and handling charge
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES
Total	$ 12,909	100,550	80,127	36,777
Commission, handling and settlement expenses
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES
Total		95,064	78,581	35,643
IPO subscription service charge expenses
BROKERAGE COMMISSION AND HANDLING CHARGE EXPENSES
Total		$ 5,486	$ 1,546	$ 1,134

PROCESSING AND SERVICING COSTS (Details) - HKD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
PROCESSING AND SERVICING COSTS
Market information and data fee	$ 54,282	$ 46,669	$ 37,482
Cloud service fee	16,729	14,081	7,636
Data transmission fee	13,890	9,145	5,822
System cost	4,334	949
SMS service fee	1,523	1,834	1,148
Others	1,158	1,165	358
Total	$ 91,916	$ 73,843	$ 52,446

TAXATION - Income Tax - Applicable Tax Rates (Details)		12 Months Ended
TAXATION - Income Tax - Applicable Tax Rates (Details)	Dec. 21, 2017	Dec. 31, 2019
TAXATION
Withholding tax rate (as a percent)		10.00%
Withholding tax rate applicable to beneficial owner ( as a percent)		5.00%
The United States ("US")
TAXATION
Applicable tax rate (as a percent)	35.00%	21.00%
Hong Kong
TAXATION
Applicable tax rate (as a percent)		16.50%
China
TAXATION
Preferential tax rate (as a percent)		15.00%
Super deduction of research and development expenses (as a percent)		175.00%
Applicable tax rate (as a percent)		25.00%
China \| Futu Network Technology (Shenzhen) Co., Ltd
TAXATION
Preferential tax rate (as a percent)		15.00%
Preferential tax rate, valid period		3 years

TAXATION - Composition of income tax (benefit)/expense (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
TAXATION
Current income tax expense		$ 13,858	$ 46,781	$ 6,286
Deferred income tax (benefit)/expense		(1,572)	15,507	5,194
Income tax expense	$ 1,577	$ 12,286	$ 62,288	$ 11,480

TAXATION - Tax Reconciliation (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
Income Tax Disclosure [Line Items]
Income before income tax		$ 178,493	$ 200,800	$ 3,378
Tax expense at Hong Kong profit tax rate of 16.5%		29,451	33,132	557
Changes of valuation allowance		30,172	9,735	4,464
Tax effect of permanence differences		5,486	6,825	7,333
Effect of income tax in jurisdictions other than Hong Kong		(4,143)	12,670	(898)
Super deduction of research and development expenses		(19,277)
Final settlement differences		(18,038)
Income not subject to tax (1)		(11,365)
Others			(74)	24
Income tax expense	$ 1,577	$ 12,286	$ 62,288	$ 11,480
Hong Kong
Income Tax Disclosure [Line Items]
Hong Kong profit tax rate (as a percent)	16.50%	16.50%

TAXATION - Components of the deferred tax assets (Details) - HKD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets
Net operating loss carryforwards	$ 42,736	$ 19,084
Accrued expenses and others	12,261	4,165
Less: valuation allowance	(53,421)	$ (23,249)	$ (13,514)	$ (9,050)
Net deferred tax assets	$ 1,576

TAXATION - Movement of Valuation Allowance (Details) - HKD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Movement of Valuation Allowance
Balance at beginning of the year	$ 23,249	$ 13,514	$ 9,050
Additions	30,188	9,735	4,464
Reversals	(16)
Balance at end of the year	$ 53,421	$ 23,249	$ 13,514

TAXATION - Net operating loss carry forwards (Details) - HKD ($) $ in Thousands		12 Months Ended
	Dec. 21, 2017	Dec. 31, 2019	Dec. 31, 2018
Income Tax Disclosure [Line Items]
Net operating loss carryforwards		$ 223,629	$ 89,534
Net operating loss carryforwards, expected to be utilized prior to expiration		5,630	0
Net operating loss carryforwards, provided for valuation allowance		217,999	89,534
Income tax accrued on the undistributed earnings of the Company's VIE and subsidiary of the VIE		$ 0	$ 0
The United States ("US")
Income Tax Disclosure [Line Items]
Applicable tax rate (as a percent)	35.00%	21.00%
Hong Kong
Income Tax Disclosure [Line Items]
Applicable tax rate (as a percent)		16.50%
China
Income Tax Disclosure [Line Items]
Preferential tax rate (as a percent)		15.00%
Applicable tax rate (as a percent)		25.00%

DEFINED CONTRIBUTION PLAN - Additional Information (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 CNY (¥)	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 CNY (¥)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)
Defined Contribution Plan Disclosure [Line Items]
Employee compensation and benefits expenses		$ 327,441		$ 211,978	$ 134,468
China
Defined Contribution Plan Disclosure [Line Items]
Government-mandated defined contribution plan contributed by employer \| ¥	¥ 32,556		¥ 20,038
Hong Kong
Defined Contribution Plan Disclosure [Line Items]
Employee compensation and benefits expenses		$ 1,044		$ 938

REGULATORY REQUIREMENTS (Details) $ in Thousands	Dec. 31, 2019 HKD ($)
Regulatory Requirements, Disclosure [Line Items]
Net Capital/ Eligible Equity	$ 1,557,940
Requirement	239,375
Excess	1,318,565
Futu Securities (Hong Kong) Limited
Regulatory Requirements, Disclosure [Line Items]
Net Capital/ Eligible Equity	1,469,200
Requirement	235,481
Excess	1,233,719
Futu Inc
Regulatory Requirements, Disclosure [Line Items]
Net Capital/ Eligible Equity	15,832
Requirement	1,947
Excess	13,885
Futu Clearing Inc
Regulatory Requirements, Disclosure [Line Items]
Net Capital/ Eligible Equity	72,908
Requirement	1,947
Excess	$ 70,961

RELATED PARTY BALANCES AND TRANSACTION (Details) $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019 HKD ($)	Dec. 31, 2018 HKD ($)	Dec. 31, 2017 HKD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2019 HKD ($)
Related Party Transaction [Line Items]
Cash and cash equivalent		$ 215,617	$ 375,263	$ 46,547	$ 362,574
Interest expenses		17,129	3,457
Amounts due to related parties		8,591		$ 4,317	33,628
Tencent Group
Related Party Transaction [Line Items]
Cash and cash equivalent		260			240
Transactions with Related Parties	$ 59,702	16,229	8,784
Tencent Group \| Equipment purchased
Related Party Transaction [Line Items]
Services provided by related parties	40,218
Tencent Group \| Cloud service
Related Party Transaction [Line Items]
Amounts due to related parties		8,409			33,153
Services provided by related parties	16,729	14,081	7,636
Tencent Group \| SMS channel services
Related Party Transaction [Line Items]
Amounts due to related parties		182			$ 475
Services provided by related parties	1,523	1,834	$ 1,148
Tencent Group \| Advertising expenses
Related Party Transaction [Line Items]
Services provided by related parties	682	112
Tencent Group \| ESOP management service income
Related Party Transaction [Line Items]
ESOP management service income	$ 550	$ 202

RELATED PARTY BALANCES AND TRANSACTION - Additional Information (Details) - HKD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Payables to clients
Related Party Transaction [Line Items]
Payable to related parties	$ 19,553	$ 308,073
Directors and officers and their spouses \| Brokerage Services and Margin Loans
Related Party Transaction [Line Items]
Revenues earned	$ 2,211	$ 6,797	$ 3,040

FINANCIAL ASSETS AND FINANCIAL LIABILITIES - Financial Assets and Liabilities Not Measured at Fair Value (Details) - HKD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	$ 20,950,647	$ 15,886,514
Total financial liabilities, not measured at fair value	18,630,904	14,824,338
Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	20,950,647	15,886,514
Total financial liabilities, not measured at fair value	18,630,904	14,824,338
Cash and cash equivalents \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	362,574	215,617
Cash and cash equivalents \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	362,574	215,617
Cash held on behalf of clients \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	14,540,863	11,771,487
Cash held on behalf of clients \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	14,540,863	11,771,487
Loans and advances \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	4,188,689	3,086,904
Loans and advances \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	4,188,689	3,086,904
Receivables: Clients \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	247,017	120,256
Receivables: Clients \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	247,017	120,256
Receivables: Brokers \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	1,226,348	425,849
Receivables: Brokers \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	1,226,348	425,849
Receivables: Clearing organization \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	304,080	175,955
Receivables: Clearing organization \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	304,080	175,955
Receivables: Interest \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	16,892	49,427
Receivables: Interest \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	16,892	49,427
Other financial assets \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	64,184	41,019
Other financial assets \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	64,184	41,019
Amounts due to related parties \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	33,628	8,591
Amounts due to related parties \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	33,628	8,591
Payables: Clients \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	15,438,879	12,304,717
Payables: Clients \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	15,438,879	12,304,717
Payables: Brokers \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,484,243	920,871
Payables: Brokers \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,484,243	920,871
Payables: Interest \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	519	2,405
Payables: Interest \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	519	2,405
Payables: Borrowings \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,467,586
Payables: Borrowings \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,467,586
Borrowings \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value		1,576,251
Borrowings \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value		1,576,251
Securities sold under agreement to repurchase \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,590
Securities sold under agreement to repurchase \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,590
Operating lease liabilities \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	172,466
Operating lease liabilities \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	172,466
Other financial liabilities \| Carrying Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	31,993	11,503
Other financial liabilities \| Fair Value
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	31,993	11,503
Level 1
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	14,903,437	11,987,104
Level 1 \| Cash and cash equivalents
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	362,574	215,617
Level 1 \| Cash held on behalf of clients
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	14,540,863	11,771,487
Level 2
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	6,047,210	3,899,410
Total financial liabilities, not measured at fair value	18,630,904	14,824,338
Level 2 \| Loans and advances
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	4,188,689	3,086,904
Level 2 \| Receivables: Clients
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	247,017	120,256
Level 2 \| Receivables: Brokers
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	1,226,348	425,849
Level 2 \| Receivables: Clearing organization
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	304,080	175,955
Level 2 \| Receivables: Interest
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	16,892	49,427
Level 2 \| Other financial assets
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial assets, not measured at fair value	64,184	41,019
Level 2 \| Amounts due to related parties
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	33,628	8,591
Level 2 \| Payables: Clients
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	15,438,879	12,304,717
Level 2 \| Payables: Brokers
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,484,243	920,871
Level 2 \| Payables: Interest
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	519	2,405
Level 2 \| Payables: Borrowings
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,467,586
Level 2 \| Borrowings
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value		1,576,251
Level 2 \| Securities sold under agreement to repurchase
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	1,590
Level 2 \| Operating lease liabilities
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	172,466
Level 2 \| Other financial liabilities
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total financial liabilities, not measured at fair value	$ 31,993	$ 11,503