HKSI LE Paper 3 study guide
HKSI LE Paper 3 · Work through your exam, one topic at a time.
HKSI Licensing Examination Paper 3, Fundamentals of Securities and Futures Regulation, is the regulation paper set by the Hong Kong Securities and Investment Institute. It tests the legal and regulatory framework that licensed representatives and responsible officers must know: the Securities and Futures Ordinance, the role and powers of the Securities and Futures Commission, licensing and registration, conduct of business and client dealings, market misconduct and disciplinary action, market structure and participants, offers of securities and corporate regulation, and anti-money laundering and counter-terrorist financing. The HKSI LE Paper 3 study guide has 7 sections and about 3,177 words.
01Regulatory Framework and the SFC
This domain tests the statutory architecture of the Securities and Futures Ordinance (Cap. 571), how regulatory power is divided between the SFC, the Hong Kong Monetary Authority, the exchange companies and other bodies, and what legal effect each type of SFC instrument carries.
522 words, about 3 min02Licensing and Registration of Intermediaries and Individuals
This domain tests who needs which permission to carry on a regulated activity in Hong Kong, how the SFC and HKMA divide that work, and the continuing obligations that follow licensing. Corporations and individuals are licensed by the SFC; authorized institutions are registered with the HKMA and their staff approved as relevant individuals.
457 words, about 2 min03Conduct of Business and Client Dealings
This domain tests the Code of Conduct for Persons Licensed by or Registered with the SFC: how firms take on clients, advise them, handle and allocate orders, hold their assets, and manage conflicts. Honesty and fairness; diligence; capability; information about clients; information for clients; conflicts of interest; compliance; client assets; and responsibility of senior management.
443 words, about 2 min04Offences, Market Misconduct and Disciplinary Action
This domain tests the three enforcement tracks open to the SFC, the conduct that amounts to market misconduct, and the penalties each track can produce. Criminal prosecution in the courts for statutory offences, including the criminal insider dealing offence.
422 words, about 2 min05Securities and Futures Markets and Their Participants
This domain tests the structure of the Hong Kong market: who operates it, who may trade on it, how trades are executed and settled, and the special regimes that restrict short selling and protect investors. HKEX is the listed holding company.
452 words, about 2 min06Offers of Securities and Corporate Regulation
This domain tests the two gateways for offering investments to the Hong Kong public, the exemptions that let an offer proceed without a prospectus, and the corporate regulation that follows listing: the Takeovers Codes and listed-company disclosure. Section 103 of the SFO prohibits issuing advertisements, invitations or documents relating to investments unless authorised by the SFC or covered by an exemption.
440 words, about 2 min07Anti-Money Laundering and Counter-Terrorist Financing
This domain tests the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615) as applied to licensed corporations through the SFC's AML/CFT Guideline, and how a firm builds a risk-based programme rather than a checklist.
441 words, about 2 min