HKSI LE Paper 15 flashcards
HKSI LE Paper 15 · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- HKEX group structure
- Hong Kong Exchanges and Clearing Limited owns SEHK, HKFE, the SEHK Options Clearing House, HKCC and the London Metal Exchange, operating the cash and derivatives markets and their clearing houses.
- Volatility control mechanism
- A SEHK mechanism for specified instruments that triggers a cooling-off period when a trade price deviates from the last traded price by a prescribed percentage, preventing extreme price swings.
- Covered short selling
- Short selling permitted only for designated securities and only when the seller has borrowed the securities or has an arrangement to borrow them; naked short selling is prohibited in Hong Kong.
- Stock Connect
- A mutual market access link allowing Mainland and Hong Kong investors to trade eligible securities on each other's exchanges through SEHK and Mainland clearing infrastructure, subject to quotas.
- SFC statutory role
- The Securities and Futures Commission is Hong Kong's statutory regulator under the SFO, licensing intermediaries, supervising markets, approving listings and enforcing securities law.
- Dual filing regime
- A regime under which listing applications and related disclosure documents are filed with both SEHK and the SFC, allowing the SFC to review and object to listing documents.
- HKMA registration
- The Hong Kong Monetary Authority registers banks and their staff to conduct regulated activities, supervising their securities business under conduct rules aligned with SFC requirements.
- Takeovers Codes
- The Codes on Takeovers and Mergers and Share Buy-backs regulate mandatory general offers, offer periods and buy-backs, administered by the SFC's Takeovers Executive and Panel.
- General mandate limit
- A share issuance mandate approved by shareholders allowing directors to issue up to 20% of issued shares without specific approval, subject to Listing Rules conditions.
- Connected transaction
- A transaction between a listed issuer and a connected person, such as a director or substantial shareholder, requiring disclosure and often independent shareholders' approval unless exempt.
- Percentage ratios
- Listing Rules tests (assets, profits, revenue, consideration, equity capital) used to classify transactions as discloseable, major or very substantial, determining disclosure and shareholder approval requirements.
- Share buy-back rules
- SEHK-listed companies may buy back shares under a general mandate, within price restrictions, with bought-back shares cancelled; the Codes on Share Buy-backs and Listing Rules apply.
- Preference shares
- Equity securities ranking ahead of ordinary shares for dividends and winding-up proceeds, usually with fixed dividend rates and limited or no voting rights.
- SFC-authorised fund
- A collective investment scheme authorised by the SFC under the Code on Unit Trusts and Mutual Funds; authorisation permits retail marketing but is not a performance guarantee.
- Professional investor exemption
- An offering exemption allowing securities or funds to be sold to professional investors, such as institutions or individuals meeting prescribed asset or portfolio thresholds.
- Listed REIT requirements
- SEHK-listed real estate investment trusts must hold primarily income-producing real estate, distribute at least 90% of net income and comply with gearing and valuation rules.
- Futures margin
- Exchange-traded futures require initial margin and daily variation margin, marked to market through the clearing house, managing counterparty risk through central clearing.
- Option premium components
- An option premium equals intrinsic value (in-the-money amount) plus time value, which reflects time to expiry, volatility, interest rates and the underlying price.
- Interest rate swap
- An OTC derivative in which two parties exchange fixed and floating interest payment streams on a notional principal over an agreed period, used to manage interest rate exposure.
- Callable bull/bear contract
- A listed structured product with a mandatory call feature; if the underlying touches the call price, the contract terminates and may leave residual value for holders.
- Sharpe ratio
- A risk-adjusted performance measure calculated as portfolio return minus the risk-free rate, divided by the portfolio's standard deviation of returns.
- Beta
- A measure of a security's sensitivity to market movements; beta above one indicates greater volatility than the market, below one indicates lower sensitivity.
- Type 9 asset management
- A regulated activity covering discretionary management of securities or futures portfolios, requiring an SFC licence and compliance with the Fund Manager Code of Conduct.
- Strategic asset allocation
- Long-term target weights across asset classes based on objectives and risk tolerance; tactical allocation makes shorter-term deviations from these targets.
- Know your client
- The obligation to collect and verify a client's identity, financial situation, investment experience, objectives and risk tolerance before making recommendations or executing orders.
- Suitability obligation
- A requirement that recommendations and solicitations reasonably suit the client's circumstances; complex products require a suitability assessment and risk disclosure.
- Market misconduct
- Conduct prohibited under the SFO, including insider dealing, false trading, price rigging, disclosure of false information and market manipulation, heard by the Market Misconduct Tribunal.
- Conflicts of interest
- Situations where a firm's or employee's interests may conflict with a client's; they must be avoided, disclosed or managed, with personal account dealing restricted.
- Enhanced due diligence
- Additional checks applied to higher-risk customers such as politically exposed persons, high-risk jurisdictions and complex ownership structures, requiring senior management approval.
- Suspicious transaction report
- A report filed with the Joint Financial Intelligence Unit when a firm suspects money laundering or terrorist financing; tipping off the customer is a criminal offence.
- Politically exposed person
- An individual entrusted with prominent public functions, or a close associate or family member, who is treated as higher risk and requires enhanced due diligence.
- AML record retention
- Customer due diligence and transaction records must be kept for at least five years after the business relationship ends or the transaction is completed, supporting investigations and audits.