United States
Hong KongType 1: the dealing in securities licence
A Type 1 licence permits dealing in securities: making or offering to make an agreement to buy or sell securities, or inducing someone to do so. It is the licence brokers, execution desks and most client-facing securities staff hold. Paper 1 plus a securities dealing paper is the usual examination route.
If you only ever learn one regulated activity, learn this one. Type 1 is the spine of the Hong Kong regime. More firms hold it than any other type, more individuals are accredited to it, and a large share of the conduct rules in the SFC's Code of Conduct were written with a Type 1 business in mind.
What dealing in securities actually means
The Ordinance defines it functionally rather than by job title. Dealing covers making, or offering to make, an agreement with another person to buy, sell, subscribe for or underwrite securities. It also covers inducing, or attempting to induce, another person to enter such an agreement. That second limb catches far more people than the first, which is why salespeople who never touch an order ticket still need the licence.
Two words do a lot of work there. Offering.Inducing. You do not have to execute anything.
- Activity
- Type 1 - Dealing in securities
- Core conduct
- Making or offering to make an agreement to buy, sell, subscribe for or underwrite securities; inducing another person to do so
- Typical holders
- Brokers, execution and sales traders, IPO placing desks, private bank RMs who take orders
- Usual examination route
- HKSI Paper 1 plus a securities dealing practical paper
- Commonly held with
- Type 4 (advising on securities), Type 2 (futures), Type 8 (margin financing)
- Key conduct source
- SFC Code of Conduct for Persons Licensed by or Registered with the SFC
Dealing versus advising, and why firms hold both
A clean Type 1 firm executes what the client asks for and expresses no view. In reality almost nobody operates that cleanly. The moment a salesperson says a stock looks cheap, they are into Type 4 territory, and the firm needs to be licensed for it or the conversation should not happen. That is why the Type 1 plus Type 4 combination is so common that people treat it as a single thing.
| What you do | Likely activity | The line |
|---|---|---|
| Take an order and route it to the market | Type 1 | Pure execution |
| Call a client to suggest they buy a stock | Type 1 and Type 4 | You are inducing and you are advising |
| Publish a research note with a recommendation | Type 4 | Advising, even with no client contact |
| Place an IPO with institutional accounts | Type 1 | Offering to make an agreement to subscribe |
| Decide trades yourself under a discretionary mandate | Type 9 | Managing, not dealing |
The bottom row is the one that trips people. Discretion moves you out of dealing and into asset management, which we cover in the Type 9 asset management licence.
What a Type 1 role looks like day to day
Order handling and best execution. Client agreements and account opening. Know-your-client and suitability where you cross into advice. Client money and client securities rules, which are unusually strict in Hong Kong and are a recurring source of enforcement. Contract notes and statements. Short selling rules. Error trades and how you book them.
Nearly all of that appears somewhere in the Paper 1 syllabus, which is the argument for taking the exam seriously rather than cramming it. The client assets material in particular is examinable and it is also the thing most likely to end a career if you get it wrong in practice.
The examination route
Paper 1 is the common regulatory paper and it applies to Type 1 applicants like everyone else. On top of it sits a practical paper about securities dealing - order handling, exchange rules, settlement, the mechanics of the market you will be working in. HKSI publishes the current pairing and you should confirm it there before you enrol, because paper structures change and a wrong enrolment costs you a sitting.
If you already hold a recognised qualification, some of this may fall away. The SFC publishes the list of recognised industry and academic qualifications. Check it against what you have before you pay for anything, and read our note on Paper 1 exemptions for what can and cannot be confirmed from the outside.
Is Type 1 a good licence to start with?
Yes, and this is the opinion: if you are trying to get into Hong Kong financial services and you do not yet know which corner of it suits you, Type 1 is the most liquid credential in the market. It is the licence with the widest range of employers, it sits underneath sales, execution, wealth and IPO distribution roles, and adding Type 4 later is a smaller step than switching in from a specialist type. Optionality has real value early in a career.
The concession is that Type 1 is also the most crowded. Execution is being automated steadily, brokerage margins have compressed, and a licence that everybody has is not a differentiator. The people doing well hold Type 1 as a floor and build something scarcer on top of it - product knowledge, a client book, a language, or a second type like Type 6 or Type 9 that is harder to get.
Your licence can only cover activities your employer is licensed for. Search the firm on the SFC public register and confirm it actually holds Type 1 before you accept a role that assumes you will be dealing.
Common questions
What does a Type 1 SFC licence allow you to do?
It permits dealing in securities: making or offering to make an agreement to buy, sell, subscribe for or underwrite securities, and inducing another person to do so. It does not by itself permit giving investment advice, managing money on a discretionary basis, or lending against securities.
Do I need Type 1 if I never place orders myself?
Possibly. The definition catches inducing or attempting to induce someone to enter a securities transaction, so client-facing sales work can require the licence even with no order handling. What matters is the substance of your conversations with clients, not whether you touch the trading system.
What is the difference between Type 1 and Type 4?
Type 1 is dealing - executing, offering, inducing. Type 4 is advising on securities - giving an opinion on the merits of buying or selling. Many client-facing roles involve both, which is why a large number of firms and individuals hold the two types together.
Which HKSI exams do I need for a Type 1 licence?
The usual examination route is Paper 1, the common regulatory paper, plus a practical paper covering securities dealing. HKSI publishes the current pairing on its licensing examination pages and it does change, so confirm before enrolling rather than relying on a colleague's memory.
Can I hold a Type 1 licence without an employer?
Not as an individual. A licensed representative must be accredited to a licensed corporation, so you need a sponsoring firm. A corporation can hold the licence in its own right, but that is a separate and much heavier application involving capital, systems and responsible officers.