Practice and exam technique

HKSI Paper 1 practice questions: Topic 3, the Ordinance

Compiled by the Sitonce editorial team from the HKSI and SFC sources listed belowUpdated 11 August 20269 min readFacts verified 5 September 2026

The short answer

Topic 3 is the largest block on the paper and we estimate it at about 8 of 60 questions. Nearly every wrong option is a neighbouring Part of the Ordinance. Six worked questions below, cited by Part and by name, with each distractor explained.

The Ordinance is not hard to understand. It is hard to hold in your head, because it consolidated ten separate statutes and reads as a sequence of self-contained regimes rather than one argument. Sixteen questions of sixty, on our estimate. You cannot pass this paper while guessing on Topic 3.

The good news is that Topic 3 questions are mostly mapping questions, and mapping is learnable in an evening once you accept that it is memorisation.

The Part map, which is most of the topic

Part	What it governs	Confused with
I	Preliminary and interpretation	-
II	The SFC: constitution, funding, objectives	-
III and IIIA	Exchanges and clearing houses; over-the-counter derivatives	IV, for anything involving products
IV and IVA	Offers of investments; open-ended fund companies	VI, for anything involving money
V	Licensing and registration	VII, because both concern intermediaries
VI	Capital, client assets, records and audit	V and VII
VII	Business conduct of intermediaries	V and VI
VIII	Supervision and investigation: production and examination powers	X, constantly
IX	Discipline: sanctions after a finding	X, constantly
X	Intervention: restricting business, protective and immediate	VIII and IX
XI	Review by the Securities and Futures Appeals Tribunal	IX
XII	Investor compensation	VI, because both touch client assets
XIII	Market misconduct before the Market Misconduct Tribunal, civil standard	XIV
XIV	The same conducts as criminal offences	XIII
XIVA	Disclosure of inside information by listed corporations	XIII and XIV
XV	Disclosure of interests in listed corporations	XIVA
XVI and XVII	Miscellaneous and consequential provisions	-

Learn the third column as carefully as the second. That is where the distractors come from.

Why we cite by Part and not by section

Section numbers are unreliable in secondary sources, particularly for insider dealing, unsolicited calls, and the SFC's applications to the Court of First Instance. We cite by Part and by name throughout, and where a section is genuinely load-bearing we send you to the current text on e-Legislation. The syllabus itself is organised by Part, so nothing is lost.

Six practice questions

Question 1 - investigation powers

The SFC suspects that trading records at a licensed corporation have been altered. It wants to require a person to produce documents and to answer questions on oath. Which Part of the Ordinance contains that power?

Part VII, business conduct
Part VIII, supervision and investigations
Part IX, discipline
Part X, intervention

Answer: B. Part VIII holds the supervision and investigation machinery, including production and examination powers. Option A is the conduct Part, which sets standards rather than granting evidence-gathering powers. Option C is discipline, which comes after a finding and is therefore the wrong stage of the process. Option D is intervention, and the confusion between gathering evidence and restricting a business is the most persistent error in this topic: Part VIII finds out what happened, Part X stops the harm continuing.

Question 2 - disclosure of interests

A substantial shareholder's interest in a listed corporation falls from 8% to 6% after a disposal. What does Part XV require?

Nothing, because the duty is triggered only by acquisitions
Notification to the listed corporation and to the Exchange, because a whole percentage level has been crossed
Notification to the SFC, which administers the regime
Nothing until the interest falls below 5%

Answer: B. Once a holding is above the initial threshold, a further notification is due whenever it crosses a whole percentage level, in either direction, and it goes to the corporation and the Exchange so that the Exchange can publish it. Option A gets the direction of the duty wrong. Option C picks the regulator as the recipient, which is the natural guess and is wrong: publication through the Exchange is what makes the interest visible to the market. Option D treats the initial notification as the end of the obligation rather than the start of a continuing one.

Question 3 - inside information

The board of a listed corporation is in confidential negotiations to acquire a business. No agreement has been reached and the discussions have been kept strictly confidential. Must the corporation announce them immediately?

Yes, in every case, as soon as negotiations begin
No, because a safe harbour may apply to an incomplete proposal or negotiation where confidentiality is preserved
No, because listed corporations have no statutory disclosure obligation
Only if the SFC directs the corporation to disclose

Answer: B. The statutory duty under Part XIVA is to disclose inside information as soon as reasonably practicable, and it comes with safe harbours, one of which covers an incomplete proposal or negotiation kept confidential. Option A ignores the safe harbours and would make deal-making impossible. Option C denies the duty outright, which is almost never right on a syllabus heading. Option D reads a statutory duty as reactive, waiting for the regulator, when the obligation arises by operation of the Ordinance.

Question 4 - the two misconduct regimes

Which statement about the relationship between the civil and criminal market misconduct regimes in the Ordinance is correct?

The civil regime covers insider dealing only and the criminal regime covers the remaining conducts
The same six conducts appear in both, one routed to the Market Misconduct Tribunal on the civil standard and one to the criminal courts, and the SFC must choose a route
The criminal regime applies only to listed corporations
The Market Misconduct Tribunal may impose a term of imprisonment

Answer: B. The two regimes cover the same six behaviours through different doors, and double jeopardy across them is barred, so the SFC elects. Option A narrows the scope of both Parts. Option C narrows the audience: the conducts bind persons generally, not only issuers. Option D confuses a tribunal with a court, and it is worth being precise here, since the Tribunal can make orders such as disqualification and cold shoulder orders, and breaching one of those is itself a criminal matter dealt with elsewhere.

Question 5 - the prudential Part

The Financial Resources Rules, the Client Money Rules and the Client Securities Rules are subsidiary legislation made under which Part of the Ordinance?

Part IV
Part V
Part VI
Part VII

Answer: C. Part VI is the prudential and client-asset Part, covering capital, client assets, records and audit, and it is the enabling Part for those rules. Option A is offers of investments, a products Part. Option B is licensing, which governs status rather than the handling of money and securities, and it is the most attractive wrong answer because candidates associate anything about firms with licensing. Option D is business conduct, which sets standards of dealing with clients rather than the mechanics of holding their assets.

Question 6 - offers of investments

A fund manager offers interests in a collective investment scheme in Hong Kong exclusively to professional investors. What follows under Part IV?

The offering document must still be authorised by the SFC before the offer is made
The public-offer regime is not engaged, so authorisation is not required, although conduct obligations still govern how the offer is made
The Stock Exchange must approve the offer
The offer is prohibited

Answer: B. The Part IV prohibition bites on invitations to the public, and an offer confined to professional investors falls outside it. Option A overlooks the carve-out, which is the practically important feature of the regime. Option C reaches for the wrong body: the Exchange administers the Listing Rules and has no role in authorising investment offers. Option D reads a carve-out as a prohibition, which is the panic answer and the reverse of the position.

What the wrong options were testing

Pattern	Where it appeared	How to defend against it
Neighbouring Part	Questions 1 and 5	Learn Parts VIII, IX, X and XI as a sequence: find out, punish, prevent, appeal
Duty treated as one-off	Question 2	For every duty, write down when it starts and whether it continues
Regulator treated as recipient	Question 2	Ask who the disclosure is for. Part XV is for the market, so it goes through the Exchange
Safe harbour ignored	Question 3	Never pick an absolute on a topic you know has exemptions
Duty read as reactive	Question 3	Statutory duties arise by operation of law, not on a regulator's instruction
Scope narrowed	Question 4	Check who the rule binds before you check what it does
Exemption read as prohibition	Question 6	A carve-out permits, it does not ban

How to revise Topic 3 efficiently

Three passes, and the first one is the shortest.

Learn the Part map above until you can write it from memory. Not the detail, just the labels. An hour, maybe two.
For each Part, learn one sentence on what it does and one on the Part it is most confused with. That second sentence is what earns marks.
Only then read the detail, and read it in the order of the map rather than in the order of your notes.

Here is the opinion. Candidates over-invest in Topic 3 and it is the syllabus structure that misleads them: eleven second-level headings under one topic looks like eleven topics' worth of work. It is not. Most of it is mapping, and mapping saturates quickly. Once you can place any power in the right Part, additional reading on the Ordinance has a poor return compared with the same hour spent on business conduct.

The concession: the harder Topic 3 items do not announce themselves as mapping questions. They wrap the mapping in a scenario, as question 1 above does, so that keyword matching fails. If you have only learned the map as a list of labels you will lose those. Practice the mapping inside situations, not as flashcards alone.

The topic explainer sits at Topic 3, the Securities and Futures Ordinance, and the misconduct conducts are covered in more depth at the six market misconduct offences.

Common questions

How many Paper 1 questions come from the Securities and Futures Ordinance?

HKSI does not publish a breakdown. Our estimate scales the topic's eleven second-level syllabus headings to 60 questions and puts it at around 16, the largest single block on the paper. Treat it as a study-time guide, not a fact.

Do I need to memorise SFO section numbers for Paper 1?

No. Learn the Parts and what each governs. Section pairings are reported inconsistently in secondary material, and the syllabus itself is organised by Part, so citing by Part and by name is both safer and closer to how the exam frames the material.

What is the difference between Part VIII, Part IX and Part X?

Part VIII is investigation: gathering evidence through production and examination powers. Part IX is discipline: sanctions imposed after a finding. Part X is intervention: restricting a firm's business immediately to protect clients, available before anything is proved.

What is the difference between Part XIII and Part XIV?

They cover the same six market misconduct behaviours. Part XIII routes them to the Market Misconduct Tribunal on the civil standard; Part XIV makes them criminal offences prosecuted in the courts. The SFC chooses one route, because proceeding under both for the same conduct is barred.

Which Part covers client money and client securities?

Part VI, the prudential and client-asset Part, which is the enabling Part for the Financial Resources Rules, the Client Money Rules, the Client Securities Rules and the record-keeping rules. Licensing sits in Part V and business conduct in Part VII.