Mock paper #1

HKSI Licensing Examination Paper 1

A full paper drawn to the blueprint. Answers and worked explanations are at the back of this file.

Questions: 60
Time: 90minutes
Mark: 70%to pass
Paper: #1of 5

Single-user licence. You may print this file and write on it. You may not redistribute, resell or post it. © Sitonce 2026.

Before you start

Sit this the way you will sit the real one. A mock done in pieces over three evenings measures your notes, not your recall.

Questions

60

Minutes

90

Per question

90s

Started at

Set a timer for 90 minutes and do not stop it. Running over is the commonest way a prepared candidate fails, and the only place you can find that out safely is here.
Mark one answer for each question on the answer sheet.
Answer every question. There is no penalty for a wrong answer. A blank is a guaranteed zero and a guess is not.
Flag anything you are unsure of as you go. When you mark the paper, a question you flagged and got right is worth as much of your attention as one you got wrong - you do not yet know it, you guessed it.
When the timer runs out, turn to the Answers section at the back of this file. Mark the paper against the quick-reference key first, fill in the score table, and only then read the worked explanations.

What this paper covers

Area	Questions	Share
Topic 4 - Licensing and registration, and subsidiary legislation	14	23%
Topic 5 - Business conduct and client relations	11	18%
Topic 6 - Business operations and practices	10	17%
Topic 3 - Securities and Futures Ordinance	8	13%
Topic 7 - Participating in the Hong Kong exchanges	6	10%
Topic 8 - Accessing public capital	4	7%
Topic 9 - Market misconduct and improper trading practices	3	5%
Topic 1 - Regulatory overview of the Hong Kong financial industry	2	3%
Topic 2 - Principles of relevant Hong Kong law and the Companies Ordinance	2	3%
Total	60	100%

Answer sheet - paper #1

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Paper #1

60 questions. 90 minutes.

1

Which OTC derivative transactions are specified for the purposes of the clearing obligation?

AAll OTC derivative transactions other than a transaction in an excluded currency contract
BStandardized interest rate swaps with the currency, index and tenor features in Schedule 1
CInterest rate swaps and single name credit default swaps of any currency and any tenor
DDeliverable foreign exchange forwards and swaps entered into with a financial services provider

2

An employee of the Commission is sued in defamation over a statement made in good faith while performing a function under the Ordinance. What is the position?

AHe is liable unless he can prove the statement was true in substance and in fact
BHe is liable, but the Commission must indemnify him against the damages
CHe incurs no civil liability by reason only of that performance in good faith
DHe is liable, because the immunity protects only the Commission and not its employees

3

Compliance with what may an authorized person check when supervising an intermediary under section 180?

AEvery Hong Kong ordinance and subsidiary legislation binding on the corporation
BThe Securities and Futures Ordinance and nothing made under it
CThe Ordinance, license terms, codes and guidelines, and AMLO Part 2
DThe Ordinance and license terms and conditions, but not codes or guidelines

Worked explanations

The paper carries one for every question, at the back. These are the three above.

Q1 B Ch. 4: Topic 4 - Licensing and registration, and subsidiary legislation

Answer: B - Standardized interest rate swaps with the currency, index and tenor features in Schedule 1

Because Only the transactions specified in section 2 of Schedule 1 are specified for the clearing obligation, and those are basis swaps, fixed-to-floating swaps and overnight index swaps that carry all the currency, floating rate index, tenor, optionality and constant notional features listed for an item in the tables. Cap. 571AN s.4

The same specified transactions define the scope of the record keeping obligation in these rules. Cap. 571AN s.5

Where the other options lead

A.Reporting scope applied to clearing. That is the scope of the reporting obligation, which is far wider; clearing reaches only the listed standardized interest rate swaps.
C.Product class assumed to be enough. Credit default swaps are not specified at all, and even an interest rate swap is caught only if it matches a listed set of features.
D.Excluded products treated as caught. Deliverable foreign exchange forwards and swaps are excluded from the definition of an outstanding trade and are not specified for clearing.

Q2 C Ch. 3: Topic 3 - Securities and Futures Ordinance

Answer: C - He incurs no civil liability by reason only of that performance in good faith

Because A person incurs no civil liability in contract, tort, defamation, equity or otherwise by reason only of his performance in good faith of a function under any of the relevant provisions. SFO s.380(1)

Where the other options lead

A.Immunity made truth-dependent. The protection turns on good faith performance, not on proving the statement true.
B.Immunity confused with indemnity. The statute removes the liability itself rather than shifting who pays for it, and imposes no indemnity on the Commission.
D.Immunity narrowed to the body. The protection is expressed to cover any person performing the function.

Q3 C Ch. 6: Topic 6 - Business operations and practices

Answer: C - The Ordinance, license terms, codes and guidelines, and AMLO Part 2

Because The requirement checked is the requirement not to contravene the Ordinance, notices made under it, the terms and conditions of the license, other imposed conditions, and any provision in a code or guideline published under the Ordinance. SFO s.180(2)

It extends expressly to any provision of Part 2, except section 6, of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).

Where the other options lead

A.Perimeter read too widely. The limbs are a specific list; general Hong Kong law is not within section 180(2).
B.Perimeter read too narrowly. The Ordinance is only the first of several limbs listed in section 180(2).
D.Codes excluded. Codes and guidelines published under the Ordinance were brought inside the supervisory check by section 180(2)(e).

Worked explanations

The paper carries one for every question, at the back. These are the three above.

Q1 B Ch. 4: Topic 4 - Licensing and registration, and subsidiary legislation

Answer: B - Standardized interest rate swaps with the currency, index and tenor features in Schedule 1

Because Only the transactions specified in section 2 of Schedule 1 are specified for the clearing obligation, and those are basis swaps, fixed-to-floating swaps and overnight index swaps that carry all the currency, floating rate index, tenor, optionality and constant notional features listed for an item in the tables. Cap. 571AN s.4

The same specified transactions define the scope of the record keeping obligation in these rules. Cap. 571AN s.5

Where the other options lead

A.Reporting scope applied to clearing. That is the scope of the reporting obligation, which is far wider; clearing reaches only the listed standardized interest rate swaps.
C.Product class assumed to be enough. Credit default swaps are not specified at all, and even an interest rate swap is caught only if it matches a listed set of features.
D.Excluded products treated as caught. Deliverable foreign exchange forwards and swaps are excluded from the definition of an outstanding trade and are not specified for clearing.

Q2 C Ch. 3: Topic 3 - Securities and Futures Ordinance

Answer: C - He incurs no civil liability by reason only of that performance in good faith

Because A person incurs no civil liability in contract, tort, defamation, equity or otherwise by reason only of his performance in good faith of a function under any of the relevant provisions. SFO s.380(1)

Where the other options lead

A.Immunity made truth-dependent. The protection turns on good faith performance, not on proving the statement true.
B.Immunity confused with indemnity. The statute removes the liability itself rather than shifting who pays for it, and imposes no indemnity on the Commission.
D.Immunity narrowed to the body. The protection is expressed to cover any person performing the function.

Q3 C Ch. 6: Topic 6 - Business operations and practices

Answer: C - The Ordinance, license terms, codes and guidelines, and AMLO Part 2

Because The requirement checked is the requirement not to contravene the Ordinance, notices made under it, the terms and conditions of the license, other imposed conditions, and any provision in a code or guideline published under the Ordinance. SFO s.180(2)

It extends expressly to any provision of Part 2, except section 6, of the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615).

Where the other options lead

A.Perimeter read too widely. The limbs are a specific list; general Hong Kong law is not within section 180(2).
B.Perimeter read too narrowly. The Ordinance is only the first of several limbs listed in section 180(2).
D.Codes excluded. Codes and guidelines published under the Ordinance were brought inside the supervisory check by section 180(2)(e).

The rest of this mock paper comes with the course

HKSI LE Paper 1: the whole syllabus taught, the questions that test it, 5 timed mocks, and all 6 PDFs to print.