English HKSI LE Paper 6 Pass Paper Question Bank (QB)

2CEXAM Mock Question
Licensing Examination Paper 6
16-Sep-19
19:44:53
1 The existence of the financial markets in Hong Kong can satisfy which of the following demands? Topic 1
I. Meet demands for investment, capitalization and risk management.
II. Meet demands for employment
III. Provide an avenue for price discovery
IV. Provide liquidity for investments
A I, II, IV Chapter 1
B I, III, IV Section 1
C II, III QID 1
D II, III, IV Ans B Hot
Exp The demands for employment is not a function satisfied by financial market alone, thus is not a primary
reason for the existence of the financial markets in Hong Kong.
2 The principal regulator of the securities industry in Hong Kong is the Topic 1
A HKMA Chapter 1
B Financial Secretary Section 2
C SFC QID 781
D HKEX Ans C Hot
Exp The SFC was created by law under the Securities and Futures Commission Ordinance (now repealed and
subsumed in the SFO). It is independent, meaning that it is not part of the Government machinery of the
Civil Service or the ministerial system. Nevertheless, it reports to and is accountable to the Government as
described in section 2 above.
3 Which of the following regulators in Hong Kong assumes responsibility for front-line regulation and Topic 1
discipline of participants of the securities and futures industry?
A HKMA Chapter 1
B Financial Secretary Section 2
C SFC QID 788
D HKEX Ans C Hot
Exp Except in relation to the management of business risk, and the enforcement of their own listing, trading,
clearing and settlement rules, HKEX, the exchanges and the clearing houses are not responsible for front-
line prudential and conduct regulation of market participants, which is carried out by the SFC.
Website: www.2cexam.com Phone: 21109644 Wechat:hk2cexam P.1

Please be reminded our company has no relationship with the Hong Kong Securities and Investment Institute (HKSI). The study materials we provide are
not related to the Hong Kong Securities and Investment Institute (HKSI) in any manner. The Hong Kong Securities and Investment Institute (HKSI) does
not offer any HKSI Past Paper or HKSI Mock Paper for sale.
4 Which of the following is an accurate description of Hong Kong's financial regulatory structure? Topic 1
A Led by the Financial Secretary, the Financial Secretary has effective overall authority over the regulatory Chapter 1
bodies.
B The regulatory body has a system of checks and balances to ensure the interests of the stakeholders are Section 2
not violated.
C The regulatory body will hire government employees as short-term contract staff to meet regulatory needs. QID 172
D The regulatory body has full discretion in determining all administrative matters. Ans B Hot
Exp The broad points stated by the Securities Review Committee under Ian Hay Davison were
the need for:
(e) checks and balances on the system, with the exchanges being supervised by a
commission independent of the Government, with the Government only to intervene if
and when the Commission failed to regulate properly
5 The SFC is a/an _______ in Hong Kong. Topic 1
A Governmental Department Chapter 1
B Regulator Section 2
C Operator QID 782
D Legislative Body Ans B Hot
subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is
accountable to the Government as described in section 2 above. It is considered the securities and futures
market prime regulator.
6 What are the two regulatory authorities primarily involved in regulating the asset management industry Topic 1
I. SFC
II. HKMA
III. SEHK
IV. HKEX
A I ,II Chapter 1
B I, III Section 2
C II, III QID 1181
D II, IV Ans A Hot
Exp Under the SFO and the Banking Ordinance, AFIs, which are regulated by the HKMA and include banks,
have to be registered with the SFC as registered institutions if they wish to carry out an SFC-RA.
7 Which of the following organization is responsible for front-line prudential and conduct regulation of Topic 1
market participants?
A HKMA Chapter 1
B HKEX Section 3
C The Chief Executive QID 105
D SFC Ans D Hot
Exp Except in relation to the management of business risk, and the enforcement of their own listing, trading,
clearing and settlement rules, HKEX, the exchanges and the clearing houses are not responsible for front-
line prudential and conduct regulation of market participants, which is carried out by the SFC.

8 “While the SFC has firm principles of regulation on which it operates, it seeks to maintain an open Topic 1
dialogue with the industry to achieve an appropriate degree of flexibility within the boundaries of those
principles.” is describing which principle of the SFC?
A Accessibility Chapter 1
B Efficiency Section 3
C Pragmatism QID 1492
D International Aspects Ans A Hot
Exp The SFC seeks to work in partnership with the industry it regulates, encouraging a two-way dialogue that
fosters a forum for an exchange of views and that encourages a strong regulator/regulate relationship.
9 Which of the following regulatory approaches adopted by the SFC is given more regulatory attention Topic 1
towards the areas where the SFC perceives the highest risks to lie?
A Disclosure-based Chapter 1
B Merit-based Section 3
C Risk-based QID 786
D Fact-based Ans C Hot
Exp An expression used by the SFC to explain its approach to regulation is that it is “risk-based”. This
basically means that regulation is weighted towards the areas that pose the greatest risk to the markets
and the participants.
10 The SFC regime adopts which of the following regulatory approaches? Topic 1
A A disclosure-based approach Chapter 1
B A transparency-oriented approach Section 3
C A risk-based approach QID 785
D A fact-oriented approach Ans C Hot
11 Which of the following is a regulatory objective of the SFC? Topic 1
A Provide protection to the controlling shareholders Chapter 1
B Minimize crime and misconduct in the securities and futures industries Section 3
C Enhance the competitiveness of the financial industry of Hong Kong QID 61
D Maintain the profitability of the financial industry of Hong Kong Ans B Hot
Exp The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(d) minimise crime and misconduct in the market.

12 Which of the following is not a general principle that reflects the SFC's approach to regulating asset Topic 1
management?
A Pragmatism Chapter 1
B Protection Section 3
C Fair and consistent drafting and application of the regulations QID 1496
D Profitability Ans D Hot
Exp The SFC's operations are subject to both internal control processes and, externally, judicial review and the
scrutiny of the Process Review Panel, a panel established by the Government. The decisions of the SFC
are also subject to an appeal process.
As regards the SFC's treatment of breaches, the SFC has indicated that it will adopt a pragmatic approach
and take all relevant factors into account, for example, the size of the business or the use of any
management and supervisory measures to compensate for the apparent failure to meet any specified
requirement.
The SFC has adopted the following as a statement of its mission: “To strengthen and protect the integrity
and soundness of the Hong Kong securities and futures markets for the benefit of investors and the
industry”.
13 A risk-based regulatory system refers to a system in which: Topic 1
A The highest risk areas of the markets are given more regulatory attention. Chapter 1
B The lowest risk areas of the markets are given more regulatory attention. Section 3
C Regulations are focused on front-line operations of the markets. QID 784
D Regulations are focused on logistics operations of the markets. Ans A Hot
14 Which of the following are the principles guiding the SFC's work? Topic 1
I. Pragmatism
II. Protection of Directors and Senior Management
III. Fair and consistent application of the law and rules
IV. Efficiency of operation,
A I, III, IV Chapter 1
B I, II Section 3
C I, II, III QID 1493
D II, III, IV Ans A Hot
Exp The SFC's operations are subject to both internal control processes and, externally, judicial review and the
scrutiny of the Process Review Panel, a panel established by the Government. The decisions of the SFC
are also subject to an appeal process.
As regards the SFC's treatment of breaches, the SFC has indicated that it will adopt a pragmatic approach
and take all relevant factors into account, for example, the size of the business or the use of any
management and supervisory measures to compensate for the apparent failure to meet any specified
requirement.
The SFC has adopted the following as a statement of its mission: “To strengthen and protect the integrity
and soundness of the Hong Kong securities and futures markets for the benefit of investors and the
industry”.

15 Which of the following is not a principle guiding the SFC's work? Topic 1
A Accessibility to participants Chapter 1
B Consultation with the industry Section 3
C A national outlook QID 1490
D Openness to change Ans C Hot
Exp The SFC seeks to work in partnership with the industry it regulates, encouraging a two-way dialogue that
fosters a forum for an exchange of views and that encourages a strong regulator/regulate relationship.
In seeking the right balance, the SFC consults both industry practitioners and the public on proposed
regulatory developments.
Rather than implement detailed standards, the SFC focuses on a higher-level articulation of what the SFC
expects registered and licensed persons to do. This allows standards to be maintained for a variety of
scenarios in a fast-changing marketplace, and enables businesses to decide how best to secure
compliance with regulations having regard to their particular business context.
16 What approach does the SFC take to regulate market intermediaries? Topic 1
A A review results-oriented approach Chapter 1
B A risk-based approach Section 3
C A disclosure-based approach QID 783
D A regulations-based approach Ans B Hot
17 Which of the following is a regulatory objective of the SFC? Topic 1
I. Provide protection to the investing public
II. Reduce non-systematic risk in the industry
III.Assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate
steps in relation to the industry.
IV. Assist the HKMA in maintaining the stability of currency in
Hong Kong
A I, III Chapter 1
B I, III, IV Section 3
C II, IV QID 58
D I, II, IV Ans A Hot
(c) provide protection to the investing public;
(f) assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate
steps in relation to the industry.

18 The SFC﹕ Topic 1
I. Reports to the government
II. Was formed under the Securities and Futures Ordinance
III. Is not responsible for licensing of intermediaries
IV. Is a part of the government
A I, II Chapter 1
B I, II, III Section 3
C II, IV QID 57
D II, III, IV Ans A Hot
subsumed in the SFO). It is independent, meaning that it is not part of the
Government machinery of the Civil Service or the ministerial system. Nevertheless, it reports to and is
accountable to the Government as described in section 2 above.
19 Which of the following are functions and duties of the SFC? Topic 1
I. Supervise the securities and futures markets in Hong Kong
II. Regulate the securities and futures industries
III. Provide professional assistance to the government
IV. Supervise all settlement banks in Hong Kong
A I, II Chapter 1
B II, III Section 3
C I, II, IV QID 63
D I, II, III Ans A Hot
Exp The functions and powers of the SFC are wide and are set out in s. 5, SFO. The principal functions are to:
(b) supervise, monitor and regulate the activities of:
(i) recognised exchange, clearing houses, exchange controllers and investor compensation companies or
persons carrying on regulated activities; and
(ii) registered institutions that are regulated or to be regulated by the SFC under any relevant provisions.
20 Which of the following regulatory approach is adopted by the SFC? Topic 1
A Merit-Based, meaning that the regulations are designed to diminish and eliminate unfavourable Chapter 1
investment products or schemes.
B Disclosure-based, meaning that regulations are geared towards enhancing market transparency. Section 3
C Risk-Based, meaning that regulations are weighted towards the areas where the SFC perceives the highest QID 787
risk to lie.
D Free-Based, meaning that the regulations are designed to provide the greatest freedom to investors Ans C Hot
investing in Hong Kong.

21 The major functions of the SFC include﹕ Topic 1
I. Supervise all of the activities conducted by Registered Institution
II. Promote, encourage and enforce the proper conduct, competence and integrity of persons carrying on
regulated activities
III. Promote, encourage and enforce internal control and risk management systems by persons carrying on
regulated activities, including registered institutions in the case of any regulated activities they conduct.
IV. Maintain market liquidity in the securities and futures markets.
A I, IV Chapter 1
B II, III Section 3
C I, II, III QID 62
D II, III, IV Ans B Hot
Exp The functions and powers of the SFC are wide and are set out in s. 5, SFO. The principal functions are to:
(c) promote, encourage and enforce the proper conduct, competence and integrity of persons carrying on
regulated activities;
(g) promote, encourage and enforce internal control and risk management systems by persons carrying
on regulated activities, including registered institutions in the case of any regulated activities they
conduct.
22 Under the SFO, which of the following are objectives of the SFO Topic 1
I. Promote understanding by the public of financial services including the operation and functioning of
the industry.
II. Ensure the regulatory standards are identical to international standards.
III. Check and approve new financial products.
IV. Minimize crime and misconduct within the industry.
B II, III, IV Section 3
C I, IV QID 59
D I, II, III Ans C Hot
(b) promote public's understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the market
23 Which system or philosophy of regulations is adopted by the SFC to regulate securities and futures Topic 1
markets?
A Merit Based Chapter 1
B Sanction-Based Section 3
C Disclosure-Based QID 10
D Risk-Based Ans D Hot
Exp SFC adopts a“risk-based”approach towards regulations. This basically means that regulation is weighted
towards the areas that pose the greatest risk to the markets and the participants.

24 The regulator objectives of the SFC includes: Topic 1
I. Consumer rights protection
II. Minimize crime and misconduct within the securities and futures industry.
III. Promote public's understanding of the securities and futures industry.
IV. Provide advice on the enforcement of economic policies to the government
A I, III, IV Chapter 1
B II, III, IV Section 3
C II, III QID 60
D I, IV Ans C Hot
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the market.
25 Which of the following are powers that the SFC may NOT delegate to others? Topic 1
I.Making subsidiary legislations.
II.Establishing committees.
III.Suspending exchange companies.
IV.Intervene in the business operation of registered institutions.
B I, IV Section 3
C II, III, IV QID 802
D I, II, III Ans D Hot
Exp In addition, the SFO provides that it may not delegate certain functions of the SFC to others. They are
detailed in Schedule 2, Part 2, SFO. They include powers:
(a) to make subsidiary legislation;
(b) to establish committees under s. 8, SFO;
(c.) to suspend exchange companies;
(d) to appoint external investigators; and
(e.) to intervene in the business operations of licensed corporations.
26 Mr Liu has advertised himself in multiple newspapers in Hong Kong. He claimed to be a futures contracts Topic 1
expert and can assist clients in dealing with foreign futures contracts. As a matter of fact, Mr Liu was not
licenced by or registered with the SFC. Had he done anything wrong?
A It is against the SFO. Chapter 1
B It is against the Code of Conduct. Section 3
C It is against the Internal Control Guidelines. QID 999
D It is perfectly fine. Ans A Hot
Exp To advertise oneself as operating a regulated activity is the same as operating a regulated activity.
Conducting a regulated activity without licence or registration is against the SFO.

27 What is the primary function of Registered Institution in the Asset Management Business? Topic 1
A Act as a trustee of CIS Schemes Chapter 1
B Distributing CISs Products Section 4
C Regulate Asset management Businesses QID 1494
D Monitor the administration of CIS Schemes Ans B Hot
Exp Many AFIs participate in the fund management industry as distributors of CISs products. Accordingly, the
HKMA, in its capacity as the banking regulatory authority, is concerned with the asset management
industry insofar as it affects AFIs engaged in the regulated activity of asset management, i.e. registered
institutions.
28 Which of the following activities is Mandatory Provident Fund Schemes Authority (“MPFA”) responsible Topic 1
for ?
A Registering Insurance Schemes Chapter 1
B Authorizing Collective Investment Schemes Section 5
C Approving trustees of MPF Schemes and regulating the affairs and activities of such approved trustees QID 48
D Managing the Government Pension Plan Ans C Hot
Exp The MPFA has responsibility for: (f) approving MPF trustees and regulating the affairs and activities of
such approved trustees.
29 Which of the following matters is the Securities and Futures Commission (SFC) responsible for relating to Topic 1
Mandatory Provident Fund (MPF) products?
I. Authorisation of the offering documents for the investment products of MPF Schemes.
II. Licensing of investment managers of investment products of MPF Schemes.
III. Regulate, supervise and monitor MPF Schemes
IV. Registration of employer sponsored MPF schemes for employers.
A I, II Chapter 1
B III, IV Section 5
C I, II, III QID 51
D I, III, IV Ans A Hot
Exp Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC, which are:
(a) vetting and authorising MPF products and related marketing materials in accordance with the
provisions of the SFC Code on MPF Products and the relevant ordinances (including the SFO);
(b) registering and approving investment managers and continued monitoring of their conduct in the
investment management of MPF products
30 The Mandatory Provident Fund Authority (MPFA) was established under the Topic 1
A Common Law Chapter 1
B Basic Law Section 5
C Securities and Futures Ordinance (SFO) QID 44
D Mandatory Provident Fund Scheme Ordinance (MPFO) Ans D Hot
Exp The MPFA is the primary regulator for the MPF system under the MPFSO, and is responsible for the overall
management and administration of the MPF system, including the registration and regulation of the
various schemes established under the ordinance.

31 Which of the following are primary functions of the MPFA? Topic 1
I. Approving fund managers of the investment products of MPF Schemes
II. Regulating supervise and monitoring MPF Schemes
III. Monitoring compliance with the MPFSO
IV. Authorizing the offer documents and marketing materials of the investment products of the MPF prior
to their issue or publication
A I, II Chapter 1
B I, III Section 5
C II, III QID 45
D II, IV Ans C Hot
Exp The MPFA has responsibility for: (d) ongoing monitoring of compliance by MPF products with the
Mandatory Provident
Fund Schemes Ordinance (“MPFSO”); (e) investigating alleged breaches of the provisions of the MPFSO;
32 Which of the following is not a general principles followed by the Topic 1
MPFA?
A It aims to ensure that through prudent regulation and Chapter 1
supervision the mandatory privately managed and fully
funded contribution schemes registered under the MPFSO are
provided with a well-controlled environment for their
operations
B It conducts its operations so as to ensure that the trustees and Section 7
the service providers perform their respective parts in the
operation of the retirement schemes so that the schemes
collect, maintain and invest the assets of the workforce in
Hong Kong in a prudent manner.
C It ensures that the schemes are operated to maximize the QID 1497
capital or income growth specified in the objectives of the
schemes, or to advise on, or ensure, the employers' and
scheme members' choice of the best schemes/funds to
achieve their objectives.
D It does not ensure that the schemes are operated to maximize Ans C Hot
the capital or income growth specified in the objectives of the
schemes, or to advise on, or ensure, the employers' and
scheme members' choice of the best schemes/funds to
achieve their objectives.
Exp It is not an obligation on the MPFA's part to ensure that the schemes are operated to maximise the capital
or income growth specified in the objectives of the schemes, or to advise on, or ensure, the employers’
and scheme members' choice of the best schemes/funds to achieve their objectives.
33 The Mandatory Provident Fund Schemes Authority (MPFA) does NOT have which ONE of the following Topic 1
objectives?
A To ensure that MPF schemes collect and hold scheme assets in Chapter 1
a prudent manner.
B To provide MPF schemes with a well controlled environment Section 7
for their operations.
C To ensure that MPF schemes are operated so as to achieve QID 1495
their investment objectives and maximise their investment
returns.
D To regulate MPF intermediaries including trustees and Ans C Hot
custodians.
Exp It is not an obligation on the MPFA's part to ensure that the schemes are operated to maximise the capital
or income growth specified in the objectives of the schemes.


English HKSI LE Paper 6 Pass Paper Question Bank (QB)

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

English HKSI LE Paper 6 Pass Paper Question Bank (QB)

Uploaded by

Copyright:

Available Formats

2CEXAM Mock Question

Licensing Examination Paper 6

C II, III QID 1

D II, III, IV Ans B Hot

B Financial Secretary Section 2

C SFC QID 781

D HKEX Ans C Hot

B Financial Secretary Section 2

C SFC QID 788

D HKEX Ans C Hot

Website: www.2cexam.com Phone: 21109644 Wechat:hk2cexam P.1

A Governmental Department Chapter 1

C Operator QID 782

D Legislative Body Ans B Hot

C II, III QID 1181

D II, IV Ans A Hot

C The Chief Executive QID 105

D SFC Ans D Hot

Website: www.2cexam.com Phone: 21109644 Wechat:hk2cexam P.2

C Pragmatism QID 1492

D International Aspects Ans A Hot

C Risk-based QID 786

D Fact-based Ans C Hot

A A disclosure-based approach Chapter 1

B A transparency-oriented approach Section 3

C A risk-based approach QID 785

D A fact-oriented approach Ans C Hot

A Provide protection to the controlling shareholders Chapter 1

C Enhance the competitiveness of the financial industry of Hong Kong QID 61

Website: www.2cexam.com Phone: 21109644 Wechat:hk2cexam P.3

D Profitability Ans D Hot

C Regulations are focused on front-line operations of the markets. QID 784

D Regulations are focused on logistics operations of the markets. Ans A Hot

C I, II, III QID 1493

D II, III, IV Ans A Hot

Website: www.2cexam.com Phone: 21109644 Wechat:hk2cexam P.4

A Accessibility to participants Chapter 1

B Consultation with the industry Section 3

C A national outlook QID 1490

D Openness to change Ans C Hot

A A review results-oriented approach Chapter 1

B A risk-based approach Section 3

C A disclosure-based approach QID 783

D A regulations-based approach Ans B Hot

D I, II, IV Ans A Hot

Website: www.2cexam.com Phone: 21109644 Wechat:hk2cexam P.5

B I, II, III Section 3

D II, III, IV Ans A Hot

B II, III Section 3

D I, II, III Ans A Hot

Website: www.2cexam.com Phone: 21109644 Wechat:hk2cexam P.6

B II, III Section 3

C I, II, III QID 62

D II, III, IV Ans B Hot

B II, III, IV Section 3

D I, II, III Ans C Hot

D Risk-Based Ans D Hot

Website: www.2cexam.com Phone: 21109644 Wechat:hk2cexam P.7

B II, III, IV Section 3

C II, III QID 60

C II, III, IV QID 802

D I, II, III Ans D Hot

B It is against the Code of Conduct. Section 3

C It is against the Internal Control Guidelines. QID 999