Back HKSI LE Paper 1 - Mock paper #3 Preview - 4 sheets of this paper
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Mock paper #3

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
#3of 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 #3

Circle one letter for each question.

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Paper #3

60 questions. 90 minutes.

1

A licensed corporation realizes on a Monday morning that it can no longer maintain the specified amount requirements that apply to it. What must it do?

  1. ANotify the Commission in writing as soon as reasonably practicable and cease its regulated activity at the end of that same business day
  2. BNotify the Commission in writing as soon as reasonably practicable and immediately cease regulated activity, save as the Commission permits
  3. CNotify the Commission in writing within one business day and continue its regulated activity until the Commission directs it in writing to stop
  4. DNotify the Commission in writing within 3 business days and confine itself to closing out its clients' open positions
2

Under section 181, from whom may an authorized person require information about a futures contract transaction?

  1. AOnly from the licensed corporation that executed the transaction on the client's behalf
  2. BFrom a person reasonably believed to have acquired or disposed of the contract
  3. COnly from a person entered in a register of members kept under the Companies Ordinance
  4. DOnly from the recognized clearing house through which the contract was cleared
3

Ferngate Advisory is a licensed corporation advising on corporate finance, and Chan is one of its licensed representatives. Who bears the paragraph 2 conduct of business requirements of the CFA Code?

  1. AFerngate only, and its Senior Management must ensure compliance with them.
  2. BFerngate and Chan equally, each answerable for its own compliance.
  3. CChan only, because paragraph 2 governs individual conduct of business.
  4. DFerngate only, with the Designated Compliance Officer answerable for them.

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 - Notify the Commission in writing as soon as reasonably practicable and immediately cease regulated activity, save as the Commission permits

Because A licensed corporation that becomes aware it cannot maintain, or cannot ascertain whether it maintains, financial resources in accordance with the specified amount requirements must notify the Commission in writing as soon as reasonably practicable and immediately stop carrying on regulated activity, other than to complete such transactions as the Commission permits. SFO s.146(1)

The Commission may nevertheless permit the corporation to carry on regulated activity subject to conditions it imposes by notice. SFO s.146(2)

Where the other options lead

  • A.Grace period assumed. The Ordinance says immediately, so trading on to the close of business is already a contravention.
  • C.Cessation treated as discretionary. The duty to stop is automatic and does not wait on a direction; one business day is the deadline for a breach of the other rules under section 146(3).
  • D.Wind-down assumed permitted. Completing transactions is allowed only to the extent the Commission permits, and three business days is not the notification period.
Q2 B Ch. 7: Topic 7 - Participating in the Hong Kong exchanges

Answer: B - From a person reasonably believed to have acquired or disposed of the contract

Because An authorized person may require information from a person he has reasonable cause to believe has acquired or disposed of a futures contract, whether directly or through a nominee, trustee or agent. SFO s.181

Where the other options lead

  • A.Power confined to the broker. Section 181 reaches holders and counterparties as well as the intermediary through whom the trade passed.
  • C.Register of members limb over-read. That limb concerns holders registered under the Companies Ordinance, and is only one of four.
  • D.Clearing house treated as the sole source. Section 181 does not confine the power to any single body.
Q3 A Ch. 5: Topic 5 - Business conduct and client relations

Answer: A - Ferngate only, and its Senior Management must ensure compliance with them.

Because Paragraph 2 applies to all Corporate Finance Advisers other than individuals, and it is the responsibility of the Senior Management of a Corporate Finance Adviser to ensure compliance with it. CFA Code 2

Under that paragraph the firm must ensure that its business is properly established and conducted and that it, its directors and its representatives are fit and proper and properly licensed. CFA Code 2.1

Where the other options lead

  • B.Firm and individual treated alike. Paragraph 2 expressly applies to Corporate Finance Advisers other than individuals, so Chan is not one of its addressees.
  • C.Individual read as the subject. The paragraph is dis-applied to individuals. Chan remains bound by the rest of the Code, but not by the conduct of business requirements in paragraph 2.
  • D.Compliance officer treated as the responsible party. A Designated Compliance Officer heads the compliance function, but paragraph 2 places responsibility for compliance on Senior Management.

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.