Back HKSI LE Paper 1 - Mock paper #2 Preview - 4 sheets of this paper
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Mock paper #2

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
#2of 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
 
  1. 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.
  2. Mark one answer for each question on the answer sheet.
  3. Answer every question. There is no penalty for a wrong answer. A blank is a guaranteed zero and a guess is not.
  4. 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.
  5. 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

AreaQuestionsShare
Topic 4 - Licensing and registration, and subsidiary legislation1423%
Topic 5 - Business conduct and client relations1118%
Topic 6 - Business operations and practices1017%
Topic 3 - Securities and Futures Ordinance813%
Topic 7 - Participating in the Hong Kong exchanges610%
Topic 8 - Accessing public capital47%
Topic 9 - Market misconduct and improper trading practices35%
Topic 1 - Regulatory overview of the Hong Kong financial industry23%
Topic 2 - Principles of relevant Hong Kong law and the Companies Ordinance23%
Total60100%

Answer sheet - paper #2

Circle one letter for each question.

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Paper #2

60 questions. 90 minutes.

1

Kowloon Alpha Ltd is based in Singapore, has no Hong Kong office, and actively markets to the Hong Kong public a discretionary portfolio service that would be Type 9 regulated activity if provided here. How does section 115 treat it?

  1. AIts provision of the marketed services is regarded as carrying on a business in that regulated activity
  2. BIt falls outside section 114 because the services are in fact provided from a place outside Hong Kong
  3. CIt must register with the Monetary Authority before it may market those services to the Hong Kong public
  4. DIt may market the services freely provided each Hong Kong client signs a written acknowledgement of risk
2

What must be proved for the offence of dealing with property representing the proceeds of an indictable offence under OSCO?

  1. AThat the person dealt with the property intending to conceal its true origin from an authorized officer
  2. BThat the person dealt with the property and was convicted of the underlying indictable offence
  3. CThat the person dealt with the property knowing or having reasonable grounds to believe what it was
  4. DThat the person dealt with the property and failed to report the dealing to an authorized officer
3

A listed group offers shares to its employees and their spouses under a scheme operated by a trustee the group established. Is the offer document a prospectus?

  1. AYes, because employees and their spouses are a section of the public under section 48A.
  2. BNo, but only if the offer is made to fewer than 50 persons in the aggregate.
  3. CYes, unless the Commission issues a certificate of exemption for the scheme.
  4. DNo, an offer to qualifying persons is specified in the Seventeenth Schedule.

Worked explanations

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

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

Answer: A - Its provision of the marketed services is regarded as carrying on a business in that regulated activity

Because Where a person actively markets to the public services that would constitute a regulated activity if provided in Hong Kong, the provision of those services is regarded as carrying on a business in that regulated activity and the marketing as holding out. SFO s.115(1)

Kowloon Alpha therefore needs a license notwithstanding that it has no place of business in Hong Kong. SFO s.114(1)

Where the other options lead

  • B.Territorial limit read too narrowly. Section 115 exists precisely to reach marketing conducted from outside Hong Kong, so the location of the provider does not settle the question.
  • C.Wrong regulator. The Monetary Authority registers no one; registration under section 119 is done by the Commission and only for authorized financial institutions.
  • D.Client consent treated as a cure. Nothing in section 114 or 115 allows a client acknowledgement to displace the licensing requirement.
Q2 C Ch. 6: Topic 6 - Business operations and practices

Answer: C - That the person dealt with the property knowing or having reasonable grounds to believe what it was

Because A person commits an offence if, knowing or having reasonable grounds to believe that property in whole or in part directly or indirectly represents any person's proceeds of an indictable offence, he deals with that property. OSCO s.25(1)

The offence carries a fine of $5,000,000 and imprisonment for 14 years on conviction upon indictment. OSCO s.25(3)

Where the other options lead

  • A.Intent to conceal read in. No purpose of concealment is required. Reasonable grounds to believe is enough, which is an objective test.
  • B.Predicate conviction assumed. No conviction for the underlying offence is needed, and the conduct may have occurred outside Hong Kong.
  • D.Two offences merged. Failure to disclose is a separate offence under section 25A(1); section 25 is about the dealing itself.
Q3 D Ch. 8: Topic 8 - Accessing public capital

Answer: D - No, an offer to qualifying persons is specified in the Seventeenth Schedule.

Because An offer of shares to qualifying persons of a company or of a group company, made by such a company or by the trustees of a trust they established, and carrying the prescribed warning, is specified in Part 1 of the Seventeenth Schedule. CWUMPO (Cap. 32) Seventeenth Schedule Pt 1 s.8

Qualifying persons include bona fide directors, employees, officers and consultants, and their bona fide dependents, which covers a spouse. CWUMPO (Cap. 32) Seventeenth Schedule Pt 4 s.6

Where the other options lead

  • A.Section-of-the-public reasoning taken too far. Employees and their dependents would indeed be a section of the public under section 48A, which is why the Schedule carves this offer out expressly.
  • B.Headcount test imported. The 50-person limit is a different item in Part 1 and does not govern qualifying-person offers.
  • C.Wrong relief sought. A certificate of exemption modifies what a prospectus must contain; it does not decide whether a document is a prospectus.

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.