English HKSI Paper 6 Topic 1
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- Answered
- Review
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Question 1 of 673
1. Question
1 pointsQID1:The existence of the financial markets in Hong Kong can satisfy which of the following demands?
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 investmentsCorrect
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.
Incorrect
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.
Hint
Reference Chapter:1.1.1
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Question 2 of 673
2. Question
1 pointsQID1498:The regulation of the asset management industry needs to cover
I. Products
II. Services
III. Intermediaries
IV. InvestorsCorrect
The regulation of the asset management industry needs to cover not only products and services but also intermediaries and investors.
Incorrect
The regulation of the asset management industry needs to cover not only products and services but also intermediaries and investors.
Hint
Reference Chapter:1.1.10
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Question 3 of 673
3. Question
1 pointsQID625:Which of the following are examples of products of collective investment schemes?
I. Equity Funds
II. Sovereign Fund
III. Money Market Fund
IV. Index FundCorrect
A Sovereign Fund doesn’t meet the established criteria to be considered a CIS.
Incorrect
A Sovereign Fund doesn’t meet the established criteria to be considered a CIS.
Hint
Reference Chapter:1.1.12
-
Question 4 of 673
4. Question
1 pointsQID2674:Which of the following activity is subject to supervision by the financial regulators?
Correct
Providing a loan and charging interest is a financial actitiy that is subjected to supervision by the financial regulators.
Incorrect
Providing a loan and charging interest is a financial actitiy that is subjected to supervision by the financial regulators.
Hint
Reference Chapter:1.1.13
-
Question 5 of 673
5. Question
1 pointsQID1500:Which of the following are service providers in the asset management industry?
I. Banks
II. Trustees
III. Custodians
IV. Financial PlannersCorrect
Typical service providers include:
(d) banks; (e.) trustees; (f) custodians; (g) financial plannersIncorrect
Typical service providers include:
(d) banks; (e.) trustees; (f) custodians; (g) financial plannersHint
Reference Chapter:1.1.13
-
Question 6 of 673
6. Question
1 pointsQID1499:Which of the following are service providers of the Asset Management Industry in Hong Kong?
I. Fund houses
II. Auditors
III. Fund management companies
IV. StockbrokersCorrect
Typical service providers include:
(a) fund houses; (b) fund management companies; (c.) stockbrokersIncorrect
Typical service providers include:
(a) fund houses; (b) fund management companies; (c.) stockbrokersHint
Reference Chapter:1.1.13
-
Question 7 of 673
7. Question
1 pointsQID5:Which of the followings is not a service provider in the asset management industry?
Correct
The definition of asset management is to manage securities and futures portfolio or real estate investment trust for others. Auditors do not manage asset; they merely audit as their primary business. Fund managers manage Collective Investment Schemes; that is managing portfolios of securities and futures or real estate trust for a group of people. Therefore they are service providers in the asset management industry. Stockbrokers buy and sell Collective Investments Schemes on behalf of clients and may also manage securities portfolio for clients. Therefore they are service providers in the asset management industry. Independent Financial Advisers (IFA) provides advice on buying and selling Collective Investment Schemes. Therefore they are service providers of the asset management industry.
Incorrect
The definition of asset management is to manage securities and futures portfolio or real estate investment trust for others. Auditors do not manage asset; they merely audit as their primary business. Fund managers manage Collective Investment Schemes; that is managing portfolios of securities and futures or real estate trust for a group of people. Therefore they are service providers in the asset management industry. Stockbrokers buy and sell Collective Investments Schemes on behalf of clients and may also manage securities portfolio for clients. Therefore they are service providers in the asset management industry. Independent Financial Advisers (IFA) provides advice on buying and selling Collective Investment Schemes. Therefore they are service providers of the asset management industry.
Hint
Reference Chapter:1.1.13
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Question 8 of 673
8. Question
1 pointsQID4:Which of the following is a financial service provided by a financial intermediary?
Correct
Financial Intermediaries must be compensated in a financial transaction to be view as providing financial services. Setting up a tutorial company is not providing financial services to a third party because it is not a financial transaction. Managing assets for free is not a financial service since it is not compensated. Signing a rental agreement on behalf of a bank is not a financial service because rental agreement itself is not a financial instrument. Providing loans to others with interest is a form of financial service since it is a service in exchange for compensation in a financial transaction.
Incorrect
Financial Intermediaries must be compensated in a financial transaction to be view as providing financial services. Setting up a tutorial company is not providing financial services to a third party because it is not a financial transaction. Managing assets for free is not a financial service since it is not compensated. Signing a rental agreement on behalf of a bank is not a financial service because rental agreement itself is not a financial instrument. Providing loans to others with interest is a form of financial service since it is a service in exchange for compensation in a financial transaction.
Hint
Reference Chapter:1.1.14
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Question 9 of 673
9. Question
1 pointsQID1501:Which of the following are classified as investors in the asset management industry?
I. Private Banking Clients
II. Retail Clients
III. Institutions
IV. Sovereign statesCorrect
Investors vary from individuals with limited wealth at their disposal to very large institutions handling over hundred millions of Hong Kong dollars, and include:
(a) private banking clients or high net worth individuals; (b) retail clients; and (c.) institutions.Incorrect
Investors vary from individuals with limited wealth at their disposal to very large institutions handling over hundred millions of Hong Kong dollars, and include:
(a) private banking clients or high net worth individuals; (b) retail clients; and (c.) institutions.Hint
Reference Chapter:1.1.15
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Question 10 of 673
10. Question
1 pointsQID1502:Which of the following are correct identification of Investors?
I. High Net Worth Investors
II. Retail Investors
III. Institutional investors
IV. Governmental InvestorsCorrect
Investors vary from individuals with limited wealth at their disposal to very large institutions handling over hundred millions of Hong Kong dollars, and include:
(a) private banking clients or high net worth individuals; (b) retail clients; and (c.) institutions.Incorrect
Investors vary from individuals with limited wealth at their disposal to very large institutions handling over hundred millions of Hong Kong dollars, and include:
(a) private banking clients or high net worth individuals; (b) retail clients; and (c.) institutions.Hint
Reference Chapter:1.1.15
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Question 11 of 673
11. Question
1 pointsQID903:Which of the following are not common objectives of financial regulators in Hong Kong?
I. Promote intervention to enhance international and local market confidence.
II. Provide investment advice to retail investors
III. Encourage the installation of a sound technical infrastructure for the functioning of the financial markets
IV. Ensure that the legal framework of financial regulation is certain, adequate and fairly enforcedCorrect
Frequent Intervention is not an objective of financial regulators in Hong Kong. Providing Investment advice is not a job that regulators will do, it’s the job of intermediaries.
Incorrect
Frequent Intervention is not an objective of financial regulators in Hong Kong. Providing Investment advice is not a job that regulators will do, it’s the job of intermediaries.
Hint
Reference Chapter:1.1.16
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Question 12 of 673
12. Question
1 pointsQID908:Which of the following is one of the objectives of the SFO
Correct
SFO treats all investors fairly and equally. Regulators should be transparent and its power should be in check.
Incorrect
SFO treats all investors fairly and equally. Regulators should be transparent and its power should be in check.
Hint
Reference Chapter:1.1.16
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Question 13 of 673
13. Question
1 pointsQID6:Which of the following is a primary objective of Hong Kong financial regulators?
Correct
Encouraging the development of new products, operating profitable exchanges in Hong Kong and reducing trading hours are all actions. They are action verbs but not objective description. Objectives can only be objective description, therefore, these phrases can never be objectives and primary objective of Hong Kong financial regulators. Objectives are status that financial regulators hope for, enhancing confidence is an objective description that financial regulators hope for.
Incorrect
Encouraging the development of new products, operating profitable exchanges in Hong Kong and reducing trading hours are all actions. They are action verbs but not objective description. Objectives can only be objective description, therefore, these phrases can never be objectives and primary objective of Hong Kong financial regulators. Objectives are status that financial regulators hope for, enhancing confidence is an objective description that financial regulators hope for.
Hint
Reference Chapter:1.1.16
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Question 14 of 673
14. Question
1 pointsQID1503:The SFC commonly face challenges when carrying out the regulatory mandate given to it by the SFO with regard to the Asset Management Business. What are the reasons?
I. The investors investing in investment Schemes are not in Hong Kong
II. Custodians and trustees in collective investment schemes are not in Hong Kong
III. The management of investment schemes is not located in Hong Kong
IV. The operation of the Investment Scheme is not in Hong KongCorrect
As the persons involved in the management, operation and holding of the assets under management are often not located in Hong Kong, this poses certain issues for the SFC in carrying out the regulatory mandate given to it by the SFO.
Incorrect
As the persons involved in the management, operation and holding of the assets under management are often not located in Hong Kong, this poses certain issues for the SFC in carrying out the regulatory mandate given to it by the SFO.
Hint
Reference Chapter:1.1.17
-
Question 15 of 673
15. Question
1 pointsQID47:Which of the following are duties and functions of the Mandatory
Provident Fund Schemes Authority (MPFA) in MPF Schemes?
I. Registering MPF schemes
II. Approving Pooled Investment Schemes
III. Approving trustees and regulating the affairs and activities of such approved trustees
IV. Dealing with complaints about MPF products and approved trustees, and referring them to the SFC and other regulators for action where necessaryCorrect
The MPFA has responsibility for: (a) registering mandatory provident fund (“MPF”) schemes; (b) approving pooled investment funds; (f) approving trustees and regulating the affairs and activities of such approved trustees; (g) dealing with complaints about MPF products and approved trustees, and referring them to the SFC and other regulators for action where necessary.
Incorrect
The MPFA has responsibility for: (a) registering mandatory provident fund (“MPF”) schemes; (b) approving pooled investment funds; (f) approving trustees and regulating the affairs and activities of such approved trustees; (g) dealing with complaints about MPF products and approved trustees, and referring them to the SFC and other regulators for action where necessary.
Hint
Reference Chapter:1.1.19
-
Question 16 of 673
16. Question
1 pointsQID781:The principal regulator of the securities industry in Hong Kong is the
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.2
-
Question 17 of 673
17. Question
1 pointsQID788:Which of the following regulators in Hong Kong assumes responsibility for front-line regulation and discipline of participants of the securities and futures industry?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.2
-
Question 18 of 673
18. Question
1 pointsQID172:Which of the following is an accurate description of Hong Kong’s financial regulatory structure?
Correct
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 properlyIncorrect
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 properlyHint
Reference Chapter:1.1.2
-
Question 19 of 673
19. Question
1 pointsQID2832:Which of the following is not a financial regulator in Hong Kong?
Correct
The Securities Commission option is wrong, the correct name is Securities and Futures Commission.
Incorrect
The Securities Commission option is wrong, the correct name is Securities and Futures Commission.
Hint
Reference Chapter:1.1.2
-
Question 20 of 673
20. Question
1 pointsQID1181:What are the two regulatory authorities primarily involved in regulating the asset management industry
I. SFC
II. HKMA
III. SEHK
IV. HKEXCorrect
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.
Incorrect
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.
Hint
Reference Chapter:1.1.2
-
Question 21 of 673
21. Question
1 pointsQID782:The SFC is a/an _______ in Hong Kong.
Correct
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. It is considered the securities and futures market prime regulator.Incorrect
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. It is considered the securities and futures market prime regulator.Hint
Reference Chapter:1.1.2
-
Question 22 of 673
22. Question
1 pointsQID1192:Insurance brokers should register with which of the following organizations?
Correct
Insurance Brokers should apply for a licence with the Insurance Authority.
Incorrect
Insurance Brokers should apply for a licence with the Insurance Authority.
Hint
Reference Chapter:1.1.22
-
Question 23 of 673
23. Question
1 pointsQID63:Which of the following are functions and duties of the SFC?
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 KongCorrect
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.Incorrect
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.Hint
Reference Chapter:1.1.3
-
Question 24 of 673
24. Question
1 pointsQID62:The major functions of the SFC include﹕
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.Correct
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.Incorrect
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.Hint
Reference Chapter:1.1.3
-
Question 25 of 673
25. Question
1 pointsQID61:Which of the following is a regulatory objective of the SFC?
Correct
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.Incorrect
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.Hint
Reference Chapter:1.1.3
-
Question 26 of 673
26. Question
1 pointsQID60:The regulator objectives of the SFC includes:
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 governmentCorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the market.Incorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the market.Hint
Reference Chapter:1.1.3
-
Question 27 of 673
27. Question
1 pointsQID59:Under the SFO, which of the following are objectives of the SFO
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.Correct
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the marketIncorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(b) promote public’s understanding of the industry including its operation and functioning;
(d) minimise crime and misconduct in the marketHint
Reference Chapter:1.1.3
-
Question 28 of 673
28. Question
1 pointsQID58:Which of the following is a regulatory objective of the SFC?
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 KongCorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(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.Incorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(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.Hint
Reference Chapter:1.1.3
-
Question 29 of 673
29. Question
1 pointsQID787:Which of the following regulatory approach is adopted by the SFC?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 30 of 673
30. Question
1 pointsQID1493:Which of the following are the principles guiding the SFC’s work?
I. Pragmatism
II. Protection of Directors and Senior Management
III. Fair and consistent application of the law and rules
IV. Efficiency of operation,Correct
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”.Incorrect
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”.Hint
Reference Chapter:1.1.3
-
Question 31 of 673
31. Question
1 pointsQID1492:“While the SFC has firm principles of regulation on which it operates, it seeks to maintain an open dialogue with the industry to achieve an appropriate degree of flexibility within the boundaries of those principles.” is describing which principle of the SFC?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 32 of 673
32. Question
1 pointsQID1490:Which of the following is not a principle guiding the SFC’s work?
Correct
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.Incorrect
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.Hint
Reference Chapter:1.1.3
-
Question 33 of 673
33. Question
1 pointsQID802:Which of the following are powers that the SFC may NOT delegate to others?
I. Making subsidiary legislations.
II. Establishing committees.
III. Suspending exchange companies.
IV. Intervene in the business operation of registered institutions.Correct
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.Incorrect
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.Hint
Reference Chapter:1.1.3
-
Question 34 of 673
34. Question
1 pointsQID57:The SFC﹕
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 governmentCorrect
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.Incorrect
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.Hint
Reference Chapter:1.1.3
-
Question 35 of 673
35. Question
1 pointsQID105:Which of the following organization is responsible for front-line prudential and conduct regulation of market participants?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 36 of 673
36. Question
1 pointsQID10:Which system or philosophy of regulations is adopted by the SFC to regulate securities and futures markets?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 37 of 673
37. Question
1 pointsQID8:Which two of the following philosophies and systems of regulations are commonly used by financial regulators in Hong Kong?
I. Merit Based
II. Sanction Based
III. Disclosure Based
IV. Income BasedCorrect
Sanction Based regulations and Income Based regulations do not exist in Hong Kong. Merit Based regulations is to reduce access to unfavourable investment products or projects by investors. The interest of investors are protected by doing so. Disclosure Based regulations require investment products and projects disclose their strengths and weaknesses maximally, so that investors can make an informed decision.
Incorrect
Sanction Based regulations and Income Based regulations do not exist in Hong Kong. Merit Based regulations is to reduce access to unfavourable investment products or projects by investors. The interest of investors are protected by doing so. Disclosure Based regulations require investment products and projects disclose their strengths and weaknesses maximally, so that investors can make an informed decision.
Hint
Reference Chapter:1.1.3
-
Question 38 of 673
38. Question
1 pointsQID783:What approach does the SFC take to regulate market intermediaries?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 39 of 673
39. Question
1 pointsQID784:A risk-based regulatory system refers to a system in which:
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 40 of 673
40. Question
1 pointsQID785:The SFC regime adopts which of the following regulatory approaches?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 41 of 673
41. Question
1 pointsQID786:Which of the following regulatory approaches adopted by the SFC is given more regulatory attention towards the areas where the SFC perceives the highest risks to lie?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 42 of 673
42. Question
1 pointsQID2676:Whats the objective of SFC requiring the disclosure of rights?
Correct
Disclosure requiremetns are in place to enhance transperancy
Incorrect
Disclosure requiremetns are in place to enhance transperancy
Hint
Reference Chapter:1.1.3
-
Question 43 of 673
43. Question
1 pointsQID2680:Which of the following description does not fit financial regulators in Hong Kong?
Correct
Decisions made by the regulators can be overturned or overruled.
Incorrect
Decisions made by the regulators can be overturned or overruled.
Hint
Reference Chapter:1.1.3
-
Question 44 of 673
44. Question
1 pointsQID1496: Which of the following is not a general principle that reflects the SFC’s approach to regulating asset management?
Correct
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”.Incorrect
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”.Hint
Reference Chapter:1.1.3
-
Question 45 of 673
45. Question
1 pointsQID999:Mr Liu has advertised himself in multiple newspapers in Hong Kong. He claimed to be a futures contracts 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?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.3
-
Question 46 of 673
46. Question
1 pointsQID1494:What is the primary function of Registered Institution in the Asset Management Business?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.4
-
Question 47 of 673
47. Question
1 pointsQID45:Which of the following are primary functions of the MPFA?
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 publicationCorrect
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;Incorrect
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;Hint
Reference Chapter:1.1.5
-
Question 48 of 673
48. Question
1 pointsQID44:The Mandatory Provident Fund Authority (MPFA) was established under the
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.5
-
Question 49 of 673
49. Question
1 pointsQID48:Which of the following activities is Mandatory Provident Fund Schemes Authority (“MPFA”) responsible for ?
Correct
The MPFA has responsibility for: (f) approving MPF trustees and regulating the affairs and activities of such approved trustees.
Incorrect
The MPFA has responsibility for: (f) approving MPF trustees and regulating the affairs and activities of such approved trustees.
Hint
Reference Chapter:1.1.5
-
Question 50 of 673
50. Question
1 pointsQID51:Which of the following matters is the Securities and Futures Commission (SFC) responsible for relating to 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.Correct
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 productsIncorrect
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 productsHint
Reference Chapter:1.1.5
-
Question 51 of 673
51. Question
1 pointsQID1495:The Mandatory Provident Fund Schemes Authority (MPFA) does NOT have which ONE of the following objectives?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.7
-
Question 52 of 673
52. Question
1 pointsQID1497:Which of the following is not a general principles followed by the
MPFA?Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.1.7
-
Question 53 of 673
53. Question
1 pointsQID1193:The Insurance Authority is responsible for prudential supervision of the insurance industry, it seeks to
I. ensure the financial stability of the industry
II. promote a high level efficiency in the administration of the industry
III. encourage the professionalism of the fund managers participating in insurance-related business, the insurance agents and brokers
IV. achieve the best balance between its overall supervision and the maximum effective self-regulation of the industry through
self-regulatory organizationsCorrect
The Insurance Authority has the following major duties and powers:
(a) the authorization and regulation of insurers;
(b) the regulation of insurance agents, who must be appointed by an insurer and registered with the Insurance Agents Registration Board, established by The Hong Kong Federation of Insurers. The agents are not directly authorised or supervised by the Insurance Authority. Supervision is by the appointing insurers, who are required to comply with the Code of Practice for the Administration of Insurance Agents issued by The Hong Kong Federation of Insurers and approved by the Insurance Authority;
(c) the regulation of insurance brokers, who may obtain authorization from the Insurance Authority or from one of two bodies approved by the Insurance Authority, the Hong Kong
Confederation of Insurance Brokers and the Professional Insurance Brokers Association. These bodies are charged with the responsibility of ensuring that their members comply with the statutory requirements and that the interests of policy holders are properly protected; they also handle complaints; and
(d) the promotion of self-regulation by the industry and the maintenance of close contact with the industry through a consultative process.Incorrect
The Insurance Authority has the following major duties and powers:
(a) the authorization and regulation of insurers;
(b) the regulation of insurance agents, who must be appointed by an insurer and registered with the Insurance Agents Registration Board, established by The Hong Kong Federation of Insurers. The agents are not directly authorised or supervised by the Insurance Authority. Supervision is by the appointing insurers, who are required to comply with the Code of Practice for the Administration of Insurance Agents issued by The Hong Kong Federation of Insurers and approved by the Insurance Authority;
(c) the regulation of insurance brokers, who may obtain authorization from the Insurance Authority or from one of two bodies approved by the Insurance Authority, the Hong Kong
Confederation of Insurance Brokers and the Professional Insurance Brokers Association. These bodies are charged with the responsibility of ensuring that their members comply with the statutory requirements and that the interests of policy holders are properly protected; they also handle complaints; and
(d) the promotion of self-regulation by the industry and the maintenance of close contact with the industry through a consultative process.Hint
Reference Chapter:1.1.8
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Question 54 of 673
54. Question
1 pointsQID40:What is the most material difference between the Insurance Authority and other regulators?
Correct
The Insurance Authority has the following major duties and powers:
(d) the promotion of self-regulation by the industry and the maintenance of close contact with the industry through a consultative process.Incorrect
The Insurance Authority has the following major duties and powers:
(d) the promotion of self-regulation by the industry and the maintenance of close contact with the industry through a consultative process.Hint
Reference Chapter:1.1.9
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Question 55 of 673
55. Question
1 pointsQID1237:Which of the following descriptions about corporate governance are correct?
I. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders.
II. The governance issue is also concerned with the system by which companies are directed and controlled.
III. The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market.
IV. Markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.Correct
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers). The governance issue is therefore also concerned with the system by which companies are directed and controlled.
The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market. It is now generally accepted that investors attach considerable importance to corporate governance when assessing the value of a stock, and that markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.Incorrect
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers). The governance issue is therefore also concerned with the system by which companies are directed and controlled.
The activities of intermediaries frequently concern listed corporations. Accordingly, in addition to considering their own regulatory and corporate governance position, intermediaries need to be aware of the wider impact of corporate governance on their clients and the market. It is now generally accepted that investors attach considerable importance to corporate governance when assessing the value of a stock, and that markets which exhibit a higher degree of good corporate governance are regarded as more competitive in the international arena.Hint
Reference Chapter:1.10.
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Question 56 of 673
56. Question
1 pointsQID2441:A good corporate-governance is not related to which of the following people?
Correct
A good corporate-governance is not related to former employees.
Incorrect
A good corporate-governance is not related to former employees.
Hint
Reference Chapter:1.10.1
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Question 57 of 673
57. Question
1 pointsQID1239:Corporate governance describes which of the following relationship?
Correct
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Incorrect
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Hint
Reference Chapter:1.10.1
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Question 58 of 673
58. Question
1 pointsQID1684:Good Corporate governance are not required to be responsible for the interest of which of the following
Correct
Good Corporate governance are not required to be responsible for the interest of Former Employees.
Incorrect
Good Corporate governance are not required to be responsible for the interest of Former Employees.
Hint
Reference Chapter:1.10.1
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Question 59 of 673
59. Question
1 pointsQID509:Corporate governance refers to the system of by which companies are directed and controlled and concerns which of the following groups of people?
I. Company management.
II. Board of Directors.
III. Shareholders.
IV. Stakeholders.Correct
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Incorrect
Corporate governance has been defined in various ways. It can be seen as primarily concerned with the proper relationship between a company’s management, its board and its shareholders, and possibly also its stakeholders (i.e. groups who have a stake in the healthy existence of a corporation, such as employees, creditors and customers).
Hint
Reference Chapter:1.10.1
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Question 60 of 673
60. Question
1 pointsQID1508:The Securities and Futures Commission (SFC) uses which of the following general principles in regulating asset management?
I. It recognises overseas jurisdictions with acceptable regimes as domiciles for authorised collective investment schemes (CIS).
II. It recognises supervision by specified inspection regimes overseas of management companies located in the respective jurisdictions as acceptable for its purposes.
III. It employs a consultative process involving the industry before making significant regulatory changes.
IV. It seeks to protect the interests of all investors in authorised CIS in Hong Kong and overseas.Correct
Certain jurisdictions are deemed to have rules governing the operations of CISs which are comparable with those in Hong Kong; schemes domiciled in such jurisdictions are RJSs.
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern.Incorrect
Certain jurisdictions are deemed to have rules governing the operations of CISs which are comparable with those in Hong Kong; schemes domiciled in such jurisdictions are RJSs.
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern.Hint
Reference Chapter:1.10.10
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Question 61 of 673
61. Question
1 pointsQID1244:In order to facilitate compliance with applicable legal and regulatory requirements in Hong Kong and overseas jurisdictions, which of the following measures can intermediaries take for better coordination?
I. Engage a dedicated compliance officer to oversee adherence to the compliance manual.
II. Appoint a director to serve as a Compliance Officer to oversee adherence to the compliance manual.
III. Maintain close contact with the regulators.
IV. Complement the manual with well defined operational procedures and practices.Correct
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency to adopt a detailed compliance manual which sets out the securities dealer’s or adviser’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is engaged to oversee adherence to the manual, maintain close contact with the regulators and keep abreast of regulatory developments affecting the securities dealer’s or adviser’s business.
Incorrect
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency to adopt a detailed compliance manual which sets out the securities dealer’s or adviser’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is engaged to oversee adherence to the manual, maintain close contact with the regulators and keep abreast of regulatory developments affecting the securities dealer’s or adviser’s business.
Hint
Reference Chapter:1.10.10
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Question 62 of 673
62. Question
1 pointsQID1509:Asset management companies should carry which of the following functions to facilitate compliance with applicable laws and regulations?
I. Assign designated compliance officers
II. Prepare a set of written compliance procedures, operational procedures and manuals
III. Encourage the use of mobile phones and instant messaging system to enhance workplace communication efficiency
IV. Ban the use of paper-based instructions between departments to minimize human errorsCorrect
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is appointed who oversees adherence to the manual and also maintains close contact with the regulators and keeps abreast of regulatory developments affecting the asset manager’s business.
Incorrect
In order to facilitate compliance with applicable legal and regulatory requirements (in Hong Kong and, where applicable, in overseas jurisdictions), there is a growing tendency, particularly among larger asset managers, to adopt a detailed compliance manual which sets out the asset manager’s policies and procedures in relation to matters of regulatory concern. In many cases, a dedicated compliance officer is appointed who oversees adherence to the manual and also maintains close contact with the regulators and keeps abreast of regulatory developments affecting the asset manager’s business.
Hint
Reference Chapter:1.10.10
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Question 63 of 673
63. Question
1 pointsQID1629:VitaSauce is a corporation planning to be listed on the SEHK. VitaSauce has been in losses in the past 3 years, and profited over one billion in the recent year. Yet, there was less than 10 million cash flow in these 3 years. Investment bankers estimated that if VitaSauce is listed, the market value will be over 6 billion. Which of the following quantitative tests is more likely to be applied on VitaSauce?
Correct
The issuer must satisfy at least one of the following quantitative tests: profit test; market capitalisation/revenue/cash flow test; market capitalisation/revenue test.
The issuer must have a market capitalisation of at least HK$4 billion at the time of listing, and revenue of at least HK$500 million for the most recent audited financial year.Incorrect
The issuer must satisfy at least one of the following quantitative tests: profit test; market capitalisation/revenue/cash flow test; market capitalisation/revenue test.
The issuer must have a market capitalisation of at least HK$4 billion at the time of listing, and revenue of at least HK$500 million for the most recent audited financial year.Hint
Reference Chapter:1.10.3
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Question 64 of 673
64. Question
1 pointsQID1241:The primary objective of good corporate governance is to:
Correct
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company.
Incorrect
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company.
Hint
Reference Chapter:1.10.5
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Question 65 of 673
65. Question
1 pointsQID929:Which of the following are not examples of good corporate governance?
I. Set up remuneration committee to control the remuneration of management.
II. Assign the management to multiple roles to cut cost.
III. Offer high degree of discretionary powers to the management to allow them to enhance efficiency.
IV. Install check and balances to limited the power of the managementCorrect
The essence of corporate governance is to enhance transparency and check and balance. The powers of the management should be limited, therefore, installation of check and balances and limiting the management’s remuneration are good practices.
Incorrect
The essence of corporate governance is to enhance transparency and check and balance. The powers of the management should be limited, therefore, installation of check and balances and limiting the management’s remuneration are good practices.
Hint
Reference Chapter:1.10.5
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Question 66 of 673
66. Question
1 pointsQID1242:A company may improve its corporate governance through the following means with the exception of:
Correct
Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of the chairman and chief executive officer, appointment of independent non-executive directors, establishment of independent audit committees, and setting up committees to control the remuneration and benefits of directors and senior management;
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(d) installing strong protective structures for minority shareholders, creditors and other lendersIncorrect
Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of the chairman and chief executive officer, appointment of independent non-executive directors, establishment of independent audit committees, and setting up committees to control the remuneration and benefits of directors and senior management;
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(d) installing strong protective structures for minority shareholders, creditors and other lendersHint
Reference Chapter:1.10.5
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Question 67 of 673
67. Question
1 pointsQID510:Corporate governance includes which of the following features?
I. The recruitment of experienced executive directors who are realistically rewarded to ensure that the business is run
efficiently.
II. The installation of a well regulated structure incorporating close and detailed top managerial supervision of day-to-day
operations of the business.
III. The recruitment of experienced non-executive directors with the objective of ensuring a good balance between executive
and non-executive directors.
IV. Installation of audit and remuneration committees who will ensure independent audits and fair performance geared reward structures.Correct
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of Chairman and CEO; appointment of independent non-executive directors; establishment of independent audit committees; setting up committees to control the remuneration and benefits of directors and senior management.Incorrect
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances, such as separating the functions of Chairman and CEO; appointment of independent non-executive directors; establishment of independent audit committees; setting up committees to control the remuneration and benefits of directors and senior management.Hint
Reference Chapter:1.10.5
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Question 68 of 673
68. Question
1 pointsQID1240:Which of the following is NOT a probable measure that can be taken to improve corporate governance?
Correct
It’s not required to protect the interests of the management.
Incorrect
It’s not required to protect the interests of the management.
Hint
Reference Chapter:1.10.5
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Question 69 of 673
69. Question
1 pointsQID511:Which of the following measures reflect effective corporate governance?
I. Installing appropriate checks and balances.
II. Increasing transparency and disclosure to shareholders , stakeholders and the public.
III. Adopting international accounting and auditing standards.
IV. Installing strong protective structures for minority shareholders, creditors and other lenders.Correct
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) adopting international accounting and auditing standards;
(d) installing strong protective structures for minority shareholders, creditors and other lenders.Incorrect
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) adopting international accounting and auditing standards;
(d) installing strong protective structures for minority shareholders, creditors and other lenders.Hint
Reference Chapter:1.10.5
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Question 70 of 673
70. Question
1 pointsQID512:Good governance practices can include which of the following ways?
I. Installing appropriate checks and balances on the board of
directors and senior management.
II. Having sufficient transparency and disclosure of important facts and information to stakeholders.
III. Installing strong protective structures for majority shareholder.
IV. Identifying and penalizing corporate wrongdoing.Correct
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) installing strong protective structures for minority shareholders, creditors and other lenders.
(d) identifying and penalising corporate wrongdoing.Incorrect
A key objective of good governance in any corporate business is to avoid management taking improper advantage of its position to benefit itself in preference to the legitimate interests of the company. Having regard to the general concepts set out by the OECD, some of the ways a company may improve its governance are as follows:
(a) installing appropriate checks and balances.
(b) increasing transparency and disclosure to shareholders, stakeholders and the public;
(c) installing strong protective structures for minority shareholders, creditors and other lenders.
(d) identifying and penalising corporate wrongdoing.Hint
Reference Chapter:1.10.5
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Question 71 of 673
71. Question
1 pointsQID971:Good corporate governance should separate the functions of
Correct
Good corporate governance should separate the functions of Chairman and CEO.
Incorrect
Good corporate governance should separate the functions of Chairman and CEO.
Hint
Reference Chapter:1.10.5
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Question 72 of 673
72. Question
1 pointsQID2757:Which of the following is a concept provided by the Organisation for Economic Co-operation and Development that a company can improve the level of corporate governance?
I. Distinguish between the Chief Executive Officer and the Chairman of the Board
II. Enhance transparency disclosure to shareholders and stakeholders
III. Establish a compensation committee to monitor senior management compensation
IV. Establish a robust protection structure for minority shareholders, creditors or other stakeholdersCorrect
The Organisation for Economic Co-operation and Development offers the concept that companies can improve the level of corporate governance by the following methods:
I. Distinguish between the Chief Executive Officer and the Chairman
II. Enhance transparency disclosure to shareholders and stakeholders
III. Establish a compensation committee to monitor senior management compensation
IV. Establish a strong protection structure for minority shareholders, creditors, or other stakeholders
V. Establish an independent audit committee
VI. Identify business misconduct
VII. Adopt international accounting and auditing standardsIncorrect
The Organisation for Economic Co-operation and Development offers the concept that companies can improve the level of corporate governance by the following methods:
I. Distinguish between the Chief Executive Officer and the Chairman
II. Enhance transparency disclosure to shareholders and stakeholders
III. Establish a compensation committee to monitor senior management compensation
IV. Establish a strong protection structure for minority shareholders, creditors, or other stakeholders
V. Establish an independent audit committee
VI. Identify business misconduct
VII. Adopt international accounting and auditing standardsHint
Reference Chapter:1.10.5
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Question 73 of 673
73. Question
1 pointsQID1238:To promote, encourage and enforce good compliance practices. Senior management of Licensed Corporations (LC)s and Registered Institutions (RI)s must establish:
I. Good line and reporting structures.
II. Well defined functions and responsibilities.
III. Effective communications channels.
IV. Appropriate transparency and disclosure practices.Correct
Senior management must provide the leadership and drive to promote, encourage and enforce, if necessary, good compliance practices. It must establish:
(a) good line and reporting structures;
(b) clearly defined functions and responsibilities;
(c.) effective communications;
(d) appropriate transparency and disclosure practices.Incorrect
Senior management must provide the leadership and drive to promote, encourage and enforce, if necessary, good compliance practices. It must establish:
(a) good line and reporting structures;
(b) clearly defined functions and responsibilities;
(c.) effective communications;
(d) appropriate transparency and disclosure practices.Hint
Reference Chapter:1.10.5
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Question 74 of 673
74. Question
1 pointsQID2718:Which of the following is not a common consequence of inadequate corporate governance standards?
Correct
Common consequences of deficit in corporate governance standards:
I. Insider trading and other forms of market misconduct
II. Misfeasance, fraud, and misconduct by directors, managers, and other staff causing losses to the company or shareholders
IV. The price of the connected transaction deviates from the market price, causing losses to the company and shareholdersIncorrect
Common consequences of deficit in corporate governance standards:
I. Insider trading and other forms of market misconduct
II. Misfeasance, fraud, and misconduct by directors, managers, and other staff causing losses to the company or shareholders
IV. The price of the connected transaction deviates from the market price, causing losses to the company and shareholdersHint
Reference Chapter:1.10.6
-
Question 75 of 673
75. Question
1 pointsQID1243:The SFC performs its regulatory mandate to supervise the industry through which of the following means?
I. Regular inspections, including on-site inspections.
II. Unscheduled inspections, including on-site inspections.
III. Obtaining information from Licensed Corporations (LC)s.
IV. Obtaining information from the Registered Institutions (RI)s.Correct
In furtherance of these aims, the SFC conducts regular inspections of licensed corporations which may be conducted either on-site or via a request for information to be provided. The maintenance of proper documentation is critical in this regard.
Incorrect
In furtherance of these aims, the SFC conducts regular inspections of licensed corporations which may be conducted either on-site or via a request for information to be provided. The maintenance of proper documentation is critical in this regard.
Hint
Reference Chapter:1.10.7
-
Question 76 of 673
76. Question
1 pointsQID49:Which of the following statements is incorrect?
Correct
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). This means the IA doesn’t regulate MPF products at all.Incorrect
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). This means the IA doesn’t regulate MPF products at all.Hint
Reference Chapter:1.11.
-
Question 77 of 673
77. Question
1 pointsQID1510:Which of the following are requirements in the Code of Conduct for Mandatory Provident Fund (MPF) Intermediaries regarding the manner in which an MPF intermediary should deal with clients?
I. It should discuss the calibre of investment managers using all
available information such as the past performance records of
SFC collective investment schemes (CIS) and MPF schemes
they have managed, as successful past records would assist in
predicting their future performance.
II. An MPF individual intermediary acting for more than one
corporation should disclose for which corporation he is acting
when dealing with a client.
III. When advising a client on the selection of constituent funds, it
should consider, where practicable, the client’s interests, financial situation, risk preference, investment knowledge, experience and objectives.
IV. The intermediary should not receive any cash payments for or on behalf of clients and should ensure that all client payments
are made payable to the management company of the scheme.Correct
A principal intermediary must apply for the approval of either (i) a subsidiary intermediary or (ii) an individual, which will in each case be attached to the principal intermediary for the purpose
of carrying on activities regulated by the MPFSO and be appointed as a responsible officer.
The main performance requirements that MPF intermediaries should meet are that they must:
when advising clients on the selection of constituent funds, consider, where practicable, the client’s interests, financial situation, risk preference, investment knowledge, experience and objectivesIncorrect
A principal intermediary must apply for the approval of either (i) a subsidiary intermediary or (ii) an individual, which will in each case be attached to the principal intermediary for the purpose
of carrying on activities regulated by the MPFSO and be appointed as a responsible officer.
The main performance requirements that MPF intermediaries should meet are that they must:
when advising clients on the selection of constituent funds, consider, where practicable, the client’s interests, financial situation, risk preference, investment knowledge, experience and objectivesHint
Reference Chapter:1.11.
-
Question 78 of 673
78. Question
1 pointsQID1511:Which of the following are some requirements imposed on a corporate trustee by the Mandatory Provident Fund Schemes Authority (MPFA)?
I. It must have paid-up share capital of at least HKD100 million.
II. It must hold net assets of at least HKD150 million.
III. Its directors and Chief Executive must have at least 3 years relevant experience, and the Chief Executive must ordinarily reside in Hong Kong.
IV. Its day-to-day business must be conducted in Hong Kong and its records kept in Hong Kong.Correct
Only authorised financial institutions and registered trust companies that meet the specified
criteria are eligible to act as custodians, provided in each case they have a sufficient presence and control in Hong Kong. The specified criteria are primarily concerned with the financial standing of the entity, such as the amount of paid-up share capital and its net assets.Incorrect
Only authorised financial institutions and registered trust companies that meet the specified
criteria are eligible to act as custodians, provided in each case they have a sufficient presence and control in Hong Kong. The specified criteria are primarily concerned with the financial standing of the entity, such as the amount of paid-up share capital and its net assets.Hint
Reference Chapter:1.11.10
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Question 79 of 673
79. Question
1 pointsQID1512:Which of the following activities relating to the marketing of Mandatory Provident Fund (MPF) schemes would trigger the licensing requirement for Type 4 regulated activity (advising on securities)?
I. Comparing advantages and disadvantage of investing in different underlying products and investments.
II. Commenting on the performance, merits and demerits of specific securities relating to MPF products.
III. Advising on the structure of an MPF scheme in relation to the long term objectives of a potential participant.
IV. Giving generic advice on a constituent fund of an MPF scheme that does not include detailed advice on underlying
investments.Correct
The issue of an advertisement, invitation or document authorised by the SFC under the provisions of the SFO will not constitute a regulated activity for the purposes of the MPFSO. However, where such an advertisement, invitation or document is issued but is not authorised by the SFO, an offence under the SFO is committed that is punishable by imprisonment and/or a fine whether or not the person in question is a registered MPF intermediary.
Incorrect
The issue of an advertisement, invitation or document authorised by the SFC under the provisions of the SFO will not constitute a regulated activity for the purposes of the MPFSO. However, where such an advertisement, invitation or document is issued but is not authorised by the SFO, an offence under the SFO is committed that is punishable by imprisonment and/or a fine whether or not the person in question is a registered MPF intermediary.
Hint
Reference Chapter:1.11.21
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Question 80 of 673
80. Question
1 pointsQID1618:If there is any infraction in a licensed corporation, which of the following persons is responsible for making a report to the SFC?
Correct
In general, the duties of responsible officers and executive officers who actively participate in, or supervise, the intermediary’s business may include:
(l) reporting to the SFC on discovery of any breaches of The Code of Conduct.Incorrect
In general, the duties of responsible officers and executive officers who actively participate in, or supervise, the intermediary’s business may include:
(l) reporting to the SFC on discovery of any breaches of The Code of Conduct.Hint
Reference Chapter:1.11.37
-
Question 81 of 673
81. Question
1 pointsQID1603:Which of the following products are not being traded on the SEHK?
Correct
Treasury Bill are not being traded on the SEHK
Incorrect
Treasury Bill are not being traded on the SEHK
Hint
Reference Chapter:1.2.
-
Question 82 of 673
82. Question
1 pointsQID179:The principal ordinance applicable to the asset management industry is the
Correct
The principal ordinances applicable to the asset management industry are the SFO, the Mandatory Provident Fund Schemes Ordinance (“MPFSO”), the Occupational Retirement
Schemes Ordinance (“ORSO”), the Insurance Ordinance and, to a lesser extent, the Banking Ordinance, the Employment Ordinance, the Inland Revenue Ordinance and the Trustee
Ordinance.Incorrect
The principal ordinances applicable to the asset management industry are the SFO, the Mandatory Provident Fund Schemes Ordinance (“MPFSO”), the Occupational Retirement
Schemes Ordinance (“ORSO”), the Insurance Ordinance and, to a lesser extent, the Banking Ordinance, the Employment Ordinance, the Inland Revenue Ordinance and the Trustee
Ordinance.Hint
Reference Chapter:1.2.1
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Question 83 of 673
83. Question
1 pointsQID1035:The Securities and Futures Ordinance (SFO) is the principal legislative document governing which markets in Hong Kong?
Correct
The SFO is the principal legislative document governing the securities market in Hong Kong.
Incorrect
The SFO is the principal legislative document governing the securities market in Hong Kong.
Hint
Reference Chapter:1.2.1
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Question 84 of 673
84. Question
1 pointsQID332:According to the Securities and Futures Ordinance, which of the following definitions of a futures contract?
I. One party agrees to deliver to the other party at an agreed
future time an agreed property, or an agreed quantity of a property, at an agreed price.
II. The buyer agrees to deliver to the seller at an agreed future time an agreed quantity of a property, at an agreed price. The
buyer reserves the right not to carry out the contract and the seller must act in compliance to the wishes of the buyer.
III. The parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factors stands at a higher or lower level, than a value or level agreed at the time of making of the contract.
IV. The parties will make an adjustment between them at an agreed future time according to the agreed value of the agreed property at the time of making the contract; there should be no increase or decrease.Correct
According to Schedule 1, SFO, a futures contract means:
(a) That one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price and;
(b) That the parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factor stands at a higher or lower level, than a value or level agreed at the time of making of the contract.Incorrect
According to Schedule 1, SFO, a futures contract means:
(a) That one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price and;
(b) That the parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factor stands at a higher or lower level, than a value or level agreed at the time of making of the contract.Hint
Reference Chapter:1.2.10
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Question 85 of 673
85. Question
1 pointsQID333:Which of the following activities is not a case of Type 2 or Type 5 Activities?
Correct
Any activities that are not conducted on behalf of others cannot be a regulated activity.
Incorrect
Any activities that are not conducted on behalf of others cannot be a regulated activity.
Hint
Reference Chapter:1.2.10
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Question 86 of 673
86. Question
1 pointsQID746:A type 1 license will also enable the licensee to conduct which of the following categories?
I. Type 4 activity wholly incidental to Type 1
II. Type 5 activity wholly incidental to Type 1
III. Type 6 activity wholly incidental to Type 1
IV. Type 9 activity wholly incidental to Type 1Correct
Regulated activities 4, 6 or 9 will be permitted if wholly incidental to Type 1.
Incorrect
Regulated activities 4, 6 or 9 will be permitted if wholly incidental to Type 1.
Hint
Reference Chapter:1.2.10
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Question 87 of 673
87. Question
1 pointsQID2682:If a solicitor is conducting a Type 4 acitivity, should he/she apply for a licence?
Correct
As long as its wholly incidental to his/her professional capacity, solicitors are not require to apply for a licence for conducting Type 4,5,6,9 activities.
Incorrect
As long as its wholly incidental to his/her professional capacity, solicitors are not require to apply for a licence for conducting Type 4,5,6,9 activities.
Hint
Reference Chapter:1.2.10
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Question 88 of 673
88. Question
1 pointsQID344:The SFC’s codes and guidelines on asset management are UNLIKELY to be applicable to which of the following activities?
Correct
Margin financing is not an activity directly related with asset management, so regulations and guidelines associated with asset management will not cover those kinds of transactions.
Incorrect
Margin financing is not an activity directly related with asset management, so regulations and guidelines associated with asset management will not cover those kinds of transactions.
Hint
Reference Chapter:1.2.10
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Question 89 of 673
89. Question
1 pointsQID1571:Which of the following activities are not considered as securities or futures contracts management?
I. An accountant managing a portfolio of securities for a group of people.
II. A staff member of a firm managing securities or futures contracts for a subsidiary of his/her company.
III. A staff member of a firm managing securities or futures contracts for a JV of the company’s majority shareholder and the company’s director.
IV. A solicitor withholding a portfolio of securities for clients wholly incidental to his professional capacity.Correct
Option I did not specify that the accountant is working in his professional capacity, therefore should not be exempted.
This is defined as managing a portfolio of securities or futures contracts for another person by a person other than certain excluded persons. Persons specifically excluded from the definition of securities or futures contracts management include the following:
(a) corporations that carry on securities or futures contracts management solely for their
wholly owned subsidiaries, their holding companies which hold all their issued shares,
or other wholly owned subsidiaries of the latter;
€ solicitors, counsel (barristers), professional accountants and trustees who provide securities or futures contracts management services wholly incidental to their professional practices.Incorrect
Option I did not specify that the accountant is working in his professional capacity, therefore should not be exempted.
This is defined as managing a portfolio of securities or futures contracts for another person by a person other than certain excluded persons. Persons specifically excluded from the definition of securities or futures contracts management include the following:
(a) corporations that carry on securities or futures contracts management solely for their
wholly owned subsidiaries, their holding companies which hold all their issued shares,
or other wholly owned subsidiaries of the latter;
€ solicitors, counsel (barristers), professional accountants and trustees who provide securities or futures contracts management services wholly incidental to their professional practices.Hint
Reference Chapter:1.2.10
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Question 90 of 673
90. Question
1 pointsQID331:Which of the following descriptions of futures are CORRECT, as defined in the Securities and Futures Ordinance (SFO)?
I. Future contracts are agreements made between the buyer and seller.
II. Future contracts are made based on the future prices of securities.
III. One party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of property, at an agreed price.
IV. The traded products of futures contracts are not securities.Correct
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market.
(b) That one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Incorrect
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market.
(b) That one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Hint
Reference Chapter:1.2.10
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Question 91 of 673
91. Question
1 pointsQID1001:Under which of the following circumstances does a Type 2 licenced person or registered person need to acquire a Type 5 licence or registration?
Correct
Provide futures dealing advice to clients and charge separately is not a type 5 regulated activity that is wholly incidental to type 2 regulated activity. Therefore, registration or licence for type 5 regulated activity is required.
Incorrect
Provide futures dealing advice to clients and charge separately is not a type 5 regulated activity that is wholly incidental to type 2 regulated activity. Therefore, registration or licence for type 5 regulated activity is required.
Hint
Reference Chapter:1.2.10
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Question 92 of 673
92. Question
1 pointsQID2599:Which of the following activity is considered as asset management?
I. Accountants manage securities and futures portfolios for their friends and charge “tips”.
II. Trading companies manage securities and futures portfolios for their wholly-owned subsidiaries.
III. Trading companies manage securities and futures portfolios for their 60%-owned subsidiaries.
IV. Licensed corporations provide their customers who engage in securities trading with securities portfolio management wholly incidental to securities trading services.Correct
Accountants manage securities and futures portfolios for their friends and charge “tips”. Since it’s not wholly incidental to professional activities of accountants, it’s not excluded. As for trading companies managing securities and futures portfolios for their 60%-owned subsidiaries, since the subsidiaries are not wholly-owned, it’s not excluded. Since both are not excluded, they are asset management activities.
Incorrect
Accountants manage securities and futures portfolios for their friends and charge “tips”. Since it’s not wholly incidental to professional activities of accountants, it’s not excluded. As for trading companies managing securities and futures portfolios for their 60%-owned subsidiaries, since the subsidiaries are not wholly-owned, it’s not excluded. Since both are not excluded, they are asset management activities.
Hint
Reference Chapter:1.2.10
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Question 93 of 673
93. Question
1 pointsQID326:Which of the following are defined as Securities under s. 392, SFO as securities?
I. CISs
II. Bonds
III. Stocks
IV. Other interests prescribed by the Financial SecretaryCorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments, including:
(a) shares, stocks, debentures, loan stocks, funds, bonds or notes;
(d) interests in CISs;
(f) interests, rights or property which are prescribed by the Financial Secretary under s. 392, SFO as securities.Incorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments, including:
(a) shares, stocks, debentures, loan stocks, funds, bonds or notes;
(d) interests in CISs;
(f) interests, rights or property which are prescribed by the Financial Secretary under s. 392, SFO as securities.Hint
Reference Chapter:1.2.11
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Question 94 of 673
94. Question
1 pointsQID327:The definition of “securities” is extensive and includes
I. Shares, Bonds, Debentures
II. Interests, rights in collective investment schemes
III. Ownership of investment linked Insurance schemes
IV. Interest in any CISsCorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments. Option III (Investment linked Insurance Scheme) is not covered by this definition.
Incorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments. Option III (Investment linked Insurance Scheme) is not covered by this definition.
Hint
Reference Chapter:1.2.11
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Question 95 of 673
95. Question
1 pointsQID1227:Which of the following entities can prescribe other arrangements on security by notice under s. 393 SFO?
Correct
Interests, rights or property which are prescribed by the Financial Secretary under s. 392, SFO as securities.
Incorrect
Interests, rights or property which are prescribed by the Financial Secretary under s. 392, SFO as securities.
Hint
Reference Chapter:1.2.12
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Question 96 of 673
96. Question
1 pointsQID222:Which of the following agencies or individuals may prescribe, by notice in the Gazette, new financial products as being (or not being) securities or futures contracts?
Correct
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Incorrect
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Hint
Reference Chapter:1.2.12
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Question 97 of 673
97. Question
1 pointsQID2428:According to the Securities and Futures Ordinance, which of the following is not securities?
Correct
According to the Securities and Futures Ordinance, futures options belongs to futures.
Incorrect
According to the Securities and Futures Ordinance, futures options belongs to futures.
Hint
Reference Chapter:1.2.12
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Question 98 of 673
98. Question
1 pointsQID325:Which of the following are not examples of securities?
I. Shares in a private company
II. Shares in a public company
III. Interests in CISs that are either registered mandatory
provident fund schemes under MPFSO, occupational
retirement schemes under ORSO
IV. Contracts of insurance in relation to any class of insurance
business under the Insurance Companies Ordinance (“ICO”).Correct
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments. Options I, III and IV are not covered by this definition.
Incorrect
Securities are defined in Schedule 1, SFO, to cover a wide range of instruments. Options I, III and IV are not covered by this definition.
Hint
Reference Chapter:1.2.12
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Question 99 of 673
99. Question
1 pointsQID2716:Which of the following may amend what is regulated activity by Gazette?
Correct
The Financial Secretary shall amend by the Gazette what is a regulated activity.
Incorrect
The Financial Secretary shall amend by the Gazette what is a regulated activity.
Hint
Reference Chapter:1.2.12
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Question 100 of 673
100. Question
1 pointsQID970:Which of the following are examples of security?
I. Listed Stocks
II. Equity Warrants
III. Derivative Warrants
IV. BondsCorrect
A security is a tradable financial asset. The term commonly refers to any form of financial instrument including stocks, bonds and warrants.
Incorrect
A security is a tradable financial asset. The term commonly refers to any form of financial instrument including stocks, bonds and warrants.
Hint
Reference Chapter:1.2.12
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Question 101 of 673
101. Question
1 pointsQID35:Which of the following is responsible for authorizing and supervising Insurance Companies?
Correct
The Insurance Authority is concerned with the regulation of insurance companies and insurance intermediaries.
Incorrect
The Insurance Authority is concerned with the regulation of insurance companies and insurance intermediaries.
Hint
Reference Chapter:1.2.13
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Question 102 of 673
102. Question
1 pointsQID347:Which of the following types of interests in Collective Investment
Schemes (CISs) are not considered as securities?
I. A registered Mandatory Provident Fund scheme under the MPFSO or its constituent fund.
II. An occupational retirement scheme under the ORSO
III. A contract of insurance in relation to any class of insurance business under the Insurance Companies Ordinance.
IV. Real estate investments management as stipulated in the Securities and Futures Ordinance.Correct
The definition of asset management speaking of managing
“securities”, is specifically includes interests in any CIS; but does not include any interest in a CIS that is:
(a) a registered Mandatory Provident Fund scheme under the MPFSO or its constituent fund;
(b) an occupational retirement scheme under the ORSO; or
© a contract of insurance in relation to any class of insurance business under the Insurance Ordinance.Incorrect
The definition of asset management speaking of managing
“securities”, is specifically includes interests in any CIS; but does not include any interest in a CIS that is:
(a) a registered Mandatory Provident Fund scheme under the MPFSO or its constituent fund;
(b) an occupational retirement scheme under the ORSO; or
© a contract of insurance in relation to any class of insurance business under the Insurance Ordinance.Hint
Reference Chapter:1.2.13
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Question 103 of 673
103. Question
1 pointsQID771:Which of the following correctly describe the characteristics of futures contracts?
I. Futures contracts must be settled at a designated time and at a designated price agreed by both parties in the future.
II. The parties of the futures contracts are obliged to settle the contracts.
III. Futures contracts made under the rules or conventions of a futures market.
IV. The delivery of a futures contract can be delayed if both parties of the contract come to an agreement.Correct
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market; also
A person deals in futures contracts if he:
(a) makes or offers to make an agreement with another person to enter into, acquire or dispose of a futures contract; and
(b) induces or attempts to induce another person to enter into, acquire or dispose of a futures contract.
In such contracts, one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Incorrect
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market; also
A person deals in futures contracts if he:
(a) makes or offers to make an agreement with another person to enter into, acquire or dispose of a futures contract; and
(b) induces or attempts to induce another person to enter into, acquire or dispose of a futures contract.
In such contracts, one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Hint
Reference Chapter:1.2.14
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Question 104 of 673
104. Question
1 pointsQID2378:According to the Securities and Futures Ordinance, a futures contract is that:
I. Futures in Hong Kong has to be settled physically.
II. In Hong Kong, futures contracts refer to contracts established according to rules or practices of futures market.
III. One party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.
IV. In Hong Kong, both parties of futures contract can agree to delay the settlement.Correct
According to the Securities and Futures Ordinance, a futures contract is that:
I. can be either cash settlement or
physical delivery
II. In Hong Kong, futures contracts refer to contracts established according to rules or practices of futures market.
III. One party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Incorrect
According to the Securities and Futures Ordinance, a futures contract is that:
I. can be either cash settlement or
physical delivery
II. In Hong Kong, futures contracts refer to contracts established according to rules or practices of futures market.
III. One party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price.Hint
Reference Chapter:1.2.14
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Question 105 of 673
105. Question
1 pointsQID1000:According to the SFO, the definition of Futures contracts is
Correct
According to the SFO, the definition of Futures contracts are contracts made under the rules or conventions of a futures market.
Incorrect
According to the SFO, the definition of Futures contracts are contracts made under the rules or conventions of a futures market.
Hint
Reference Chapter:1.2.14
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Question 106 of 673
106. Question
1 pointsQID221:What are the powers of the Financial Secretary in relation to securities and CISs?
Correct
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Incorrect
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO)Hint
Reference Chapter:1.2.14
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Question 107 of 673
107. Question
1 pointsQID772:Which of the following correctly describe the characteristics of futures contracts?
I. Futures contract must be settled at a designated time and at a designated price agreed by both parties in the future.
II. The parties trading futures contracts must pay margin to the clearing house (HKCC).
III. Futures contracts of stocks traded on SEHK must be physically settled.
IV. Futures contracts must be traded at the exchange.Correct
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market.
A person deals in futures contracts if he:
(a) makes or offers to make an agreement with another person to enter into, acquire or dispose of a futures contract; and
(b) induces or attempts to induce another person to enter into, acquire or dispose of a futures contract.
Contracts determine:
(i) that one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price; or
(ii) that the parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factor stands at a higher or lower level, than a value or level agreed at the time of making of the contract.Incorrect
According to Schedule 1, SFO, a futures contract means:
(a) a contract or an option on a contract made under the rules or conventions of a futures market.
A person deals in futures contracts if he:
(a) makes or offers to make an agreement with another person to enter into, acquire or dispose of a futures contract; and
(b) induces or attempts to induce another person to enter into, acquire or dispose of a futures contract.
Contracts determine:
(i) that one party agrees to deliver to the other party at an agreed future time an agreed property, or an agreed quantity of a property, at an agreed price; or
(ii) that the parties will make an adjustment between them at an agreed future time according to whether at that time an agreed property is worth more or less, or an index or other factor stands at a higher or lower level, than a value or level agreed at the time of making of the contract.Hint
Reference Chapter:1.2.14
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Question 108 of 673
108. Question
1 pointsQID627:How do CISs and asset management relate to each other in the SFO regime?
I. The definition of asset management includes “securities” as a class of assets which may be managed under Type 9 regulated activity. The definition of securities includes CISs.
II. Asset management has no relation with CIS in the SFO regime
III. CISs is the only form of authorised asset management.
IV. CISs is one aspect of asset management activity in Hong KongCorrect
Option II and III are incorrect since CIS are indeed considered an asset management activity by the SFO, but they are not the ONLY form of asset management recognized by the SFO.
Incorrect
Option II and III are incorrect since CIS are indeed considered an asset management activity by the SFO, but they are not the ONLY form of asset management recognized by the SFO.
Hint
Reference Chapter:1.2.15
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Question 109 of 673
109. Question
1 pointsQID622:Which of the following are key elements of a Collective Investment Scheme (CIS)?
I. an arrangement in respect of property under which the management of the property is not subject to the day-to-day control of the scheme’s participants
II. an arrangement in respect of property under which the management of the property is subject to the day-to-day control of the scheme’s participants
III. The purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.
IV. The purpose of the arrangement is to enable the managers of the scheme to receive profits, income or other payments or returns from the property or dealings relating to it.Correct
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the property is managed as a whole by or for the person operating the arrangement; or
(ii) the participants’ contributions and accruing profits or income are pooled; and
(b) the purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.Incorrect
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the property is managed as a whole by or for the person operating the arrangement; or
(ii) the participants’ contributions and accruing profits or income are pooled; and
(b) the purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.Hint
Reference Chapter:1.2.16
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Question 110 of 673
110. Question
1 pointsQID223:Which of the following correctly describes the features of CISs under the SFO?
Correct
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the property is managed as a whole by or for the person operating the arrangement; or
(ii) the participants’ contributions and accruing profits or income are pooled; and
(b) the purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.Incorrect
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the property is managed as a whole by or for the person operating the arrangement; or
(ii) the participants’ contributions and accruing profits or income are pooled; and
(b) the purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.Hint
Reference Chapter:1.2.16
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Question 111 of 673
111. Question
1 pointsQID626:Which of the following is not a major element of a CIS?
Correct
Answer C is not a major element in the definition of a CIS since segregation is a particular subject of the operation and not a broad definition of the CISs as a whole.
Incorrect
Answer C is not a major element in the definition of a CIS since segregation is a particular subject of the operation and not a broad definition of the CISs as a whole.
Hint
Reference Chapter:1.2.17
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Question 112 of 673
112. Question
1 pointsQID621:Which of the following is NOT a characteristic of collective investment schemes?
Correct
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the property is managed as a whole by or for the person operating the arrangement; or
(ii) the participants’ contributions and accruing profits or income are pooled; and
(b) the purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.
They are not in any way the most direct way to invest.Incorrect
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the property is managed as a whole by or for the person operating the arrangement; or
(ii) the participants’ contributions and accruing profits or income are pooled; and
(b) the purpose of the arrangement is to enable the participants to receive profits, income or other payments or returns from the property or dealings relating to it.
They are not in any way the most direct way to invest.Hint
Reference Chapter:1.2.17
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Question 113 of 673
113. Question
1 pointsQID2723:The main elements of a collective investment scheme include
I. The property is primarily managed by the professionals who run the scheme
II. Participant’s contributions and accrued profits or gains are pooled
III. The purpose of the collective investment scheme is to earn profit income or other returns
IV. CIS participants will be involved in major investment decisionsCorrect
The main elements of a collective investment scheme include
I. The property is primarily managed by the professionals who run the scheme
II. Participant’s contributions and accrued profits or gains are pooled
III. The purpose of the collective investment scheme is to earn profit income or other returnsIncorrect
The main elements of a collective investment scheme include
I. The property is primarily managed by the professionals who run the scheme
II. Participant’s contributions and accrued profits or gains are pooled
III. The purpose of the collective investment scheme is to earn profit income or other returnsHint
Reference Chapter:1.2.17
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Question 114 of 673
114. Question
1 pointsQID624:Which of the following is/are major elements of a collective investment scheme?
I. Investors (Participants) can manage investments directly.
II. Only employees can take part
III. Investors (Participants) and the operator of the arrangement belong to the same group of the companies.
IV. Investors (Participants)s’ contributions and accruing profits or income are pooled.Correct
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the participants’ contributions and accruing profits or income are pooled.Incorrect
The key elements of what constitutes a CIS are:
(a) an arrangement in respect of a property under which the management of the property is not subject to the day-to-day control of the scheme’s participants, and either:
(i) the participants’ contributions and accruing profits or income are pooled.Hint
Reference Chapter:1.2.17
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Question 115 of 673
115. Question
1 pointsQID220:Which of the following individuals may prescribe other arrangements to the CIS apart from the SFO?
Correct
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO).Incorrect
Powers are given to the Financial Secretary to prescribe, by notice in the Gazette:
(a) new financial products as being (or not being) securities or futures contracts, and new financial arrangements as CISs, thus capturing new products in the regulatory net as appropriate (ss. 392 and 393, SFO).Hint
Reference Chapter:1.2.18
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Question 116 of 673
116. Question
1 pointsQID616:Which of the following entities grants authorised status to a CIS?
Correct
Powers granted to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the public.
Incorrect
Powers granted to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the public.
Hint
Reference Chapter:1.2.18
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Question 117 of 673
117. Question
1 pointsQID619:Exclusions from the definition of CISs involve:
I. Arrangements where the participants and the operator of the arrangement belong to the same group of companies
II. Franchise arrangements
III. Arrangements where an auditor acting in his professional capacity holds money from clients during the course of his work
IV. Arrangements where a solicitor acting in his professional capacity holds money from clients during the course of his workCorrect
Exclusions from the definition of a CIS include:
(a) arrangements where the participants and the operator of the arrangement belong to the same group of companies;
(b) franchise arrangements; and
(c.)arrangements where a solicitor acting in his professional capacity holds money from clients during the course of his work.Incorrect
Exclusions from the definition of a CIS include:
(a) arrangements where the participants and the operator of the arrangement belong to the same group of companies;
(b) franchise arrangements; and
(c.)arrangements where a solicitor acting in his professional capacity holds money from clients during the course of his work.Hint
Reference Chapter:1.2.19
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Question 118 of 673
118. Question
1 pointsQID41:Which of the following are not broad activities of the SFC in respect of the regulation of CIS?
I. Authorizing CISs
II. Monitoring and supervising the intermediaries involved with CISs
III. Directly managing CIS
IV. Vetting Insurance Intermediaries who sell and market Investment Linked Insurance SchemesCorrect
There are only two circumstances in which a CIS may be offered or marketed to the public in Hong Kong: it must be either (i) structured as a company which is listed on the SEHK, or
(ii) authorised by the SFC. Notwithstanding the above, there are two classes of funds authorised by the SFC which do have certain linkage with the Insurance Authority: investment-linked assurance schemes and pooled retirement funds, both of which are marketed by the insurance industry. Authorisation of these has been delegated by the SFC to the Products Advisory Committee. The Insurance Authority is represented on this committee, as insurance companies wishing to promote these schemes will need to be authorised under the Insurance Ordinance.Incorrect
There are only two circumstances in which a CIS may be offered or marketed to the public in Hong Kong: it must be either (i) structured as a company which is listed on the SEHK, or
(ii) authorised by the SFC. Notwithstanding the above, there are two classes of funds authorised by the SFC which do have certain linkage with the Insurance Authority: investment-linked assurance schemes and pooled retirement funds, both of which are marketed by the insurance industry. Authorisation of these has been delegated by the SFC to the Products Advisory Committee. The Insurance Authority is represented on this committee, as insurance companies wishing to promote these schemes will need to be authorised under the Insurance Ordinance.Hint
Reference Chapter:1.2.2
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Question 119 of 673
119. Question
1 pointsQID629:Under the SFO, the SFC has which of the following regulatory responsibilities in relation to asset management ?
I. Licensing intermediaries
II. Authorizing MPF Schemes
III. Authorizing CISs
IV. Vetting recognized InvestorsCorrect
The functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, including, for example, unit trusts, managed funds and retirement schemes, and supervises the marketing of these CISs; and
(b) it licenses and supervises intermediaries engaged in asset management (Type 9 regulated activity) as well as others engaged in providing advisory services in the industry (Type 4 and Type 5 regulated activities); if they choose to be licensed as dealing in securities and/or futures contracts (Type 1 and/or Type 2 regulated activities), the respective regulatory regime will be applied to them.
The first of these functions is derived from Part IV, SFO and the second from Part V, SFO.Incorrect
The functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, including, for example, unit trusts, managed funds and retirement schemes, and supervises the marketing of these CISs; and
(b) it licenses and supervises intermediaries engaged in asset management (Type 9 regulated activity) as well as others engaged in providing advisory services in the industry (Type 4 and Type 5 regulated activities); if they choose to be licensed as dealing in securities and/or futures contracts (Type 1 and/or Type 2 regulated activities), the respective regulatory regime will be applied to them.
The first of these functions is derived from Part IV, SFO and the second from Part V, SFO.Hint
Reference Chapter:1.2.2
-
Question 120 of 673
120. Question
1 pointsQID617:Which of the following entities regulates CISs and supervises the persons’ operating and advising activities?
Correct
Powers granted to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the public.
Incorrect
Powers granted to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the public.
Hint
Reference Chapter:1.2.2
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Question 121 of 673
121. Question
1 pointsQID612:Which of the following entities authorizes CIS?
Correct
The powers assigned to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the
public.Incorrect
The powers assigned to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the
public.Hint
Reference Chapter:1.2.2
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Question 122 of 673
122. Question
1 pointsQID614:With regards to the asset management industry, duties of the SFC include which of the following?
I. Licensing Intermediaries
II. Authorizing Collective Investment Schemes.
III. Monitoring the conduct of intermediaries
IV. Avoiding investor’s participation in high risk Collectives Investment SchemesCorrect
The functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, including, for example, unit trusts, managed funds and retirement
schemes, and supervises the marketing of these CISs; and
(b) it licenses and supervises intermediaries engaged in asset management (Type 9 regulated activity) as well as others engaged in providing advisory services in the industry (Type 4 and Type 5 regulated activities); if they choose to be licensed as dealing in securities and/or futures contracts (Type 1 and/or Type 2 regulated activities), the respective regulatory regime will be applied to them.
The first of these functions is derived from Part IV, SFO and the second from Part V, SFO.Incorrect
The functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, including, for example, unit trusts, managed funds and retirement
schemes, and supervises the marketing of these CISs; and
(b) it licenses and supervises intermediaries engaged in asset management (Type 9 regulated activity) as well as others engaged in providing advisory services in the industry (Type 4 and Type 5 regulated activities); if they choose to be licensed as dealing in securities and/or futures contracts (Type 1 and/or Type 2 regulated activities), the respective regulatory regime will be applied to them.
The first of these functions is derived from Part IV, SFO and the second from Part V, SFO.Hint
Reference Chapter:1.2.2
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Question 123 of 673
123. Question
1 pointsQID107:Which of the following products is approved by the Securities and Futures Commission (SFC)?
Correct
The functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, for example, unit trusts, managed funds and retirement schemes, and supervises the marketing of these CISsIncorrect
The functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, for example, unit trusts, managed funds and retirement schemes, and supervises the marketing of these CISsHint
Reference Chapter:1.2.20
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Question 124 of 673
124. Question
1 pointsQID630:Why is the authorised status important to a CIS?
I. Without authorization, the CIS will not be able to licence representative and cannot operate in Hong Kong.
II. Authorization is a core requirement of being able to offer a CIS to the public in Hong Kong.
III. Authorization is a perquisite of being able to offer a CIS to professional investors in Hong Kong
IV. Without authorization, a CIS cannot conduct any regulated activities in Hong Kong.Correct
There are only two circumstances in which a CIS may be offered or marketed to the public in Hong Kong: it must be either (i) structured as a company which is listed on the SEHK, or (ii) authorised by the SFC. The authorisation route is by far the most common approach taken.
Incorrect
There are only two circumstances in which a CIS may be offered or marketed to the public in Hong Kong: it must be either (i) structured as a company which is listed on the SEHK, or (ii) authorised by the SFC. The authorisation route is by far the most common approach taken.
Hint
Reference Chapter:1.2.20
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Question 125 of 673
125. Question
1 pointsQID350:Which of the following organizations does the SFC need to regulate?
Correct
The functions of the SFC in relation to asset management are two-pronged: One of those functions is to authorise CISs, including, for example, unit trusts, managed funds and retirement
schemes, and supervises the marketing of these CISs.Incorrect
The functions of the SFC in relation to asset management are two-pronged: One of those functions is to authorise CISs, including, for example, unit trusts, managed funds and retirement
schemes, and supervises the marketing of these CISs.Hint
Reference Chapter:1.2.20
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Question 126 of 673
126. Question
1 pointsQID628:The biggest difference between authorised investment schemes and unauthorised collective investment schemes is
Correct
There are only two circumstances in which a CIS may be offered or marketed to the public in Hong Kong: it must be either (i) structured as a company which is listed on the SEHK, or (ii) authorised by the SFC. The authorisation route is by far the most common approach taken. So unauthorised CISs cannot be sold to the Hong Kong public.
Incorrect
There are only two circumstances in which a CIS may be offered or marketed to the public in Hong Kong: it must be either (i) structured as a company which is listed on the SEHK, or (ii) authorised by the SFC. The authorisation route is by far the most common approach taken. So unauthorised CISs cannot be sold to the Hong Kong public.
Hint
Reference Chapter:1.2.20
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Question 127 of 673
127. Question
1 pointsQID631:What are the sanctions that the SFC can impose on CISs?
I. Authorize CISs
II. Refuse to authorize
III. Withdraw CIS authorization
IV. Ban CIS from re-authorizationCorrect
The SFC may grant authorisation subject to “any other conditions it considers appropriate”. The SFC is also given the power to refuse to authorise applications and to withdraw authorisations.
Incorrect
The SFC may grant authorisation subject to “any other conditions it considers appropriate”. The SFC is also given the power to refuse to authorise applications and to withdraw authorisations.
Hint
Reference Chapter:1.2.23
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Question 128 of 673
128. Question
1 pointsQID633:With regards to authorizing a CIS, which of the following statements are true?
I. The SFC may grant authorization subject to “any other conditions it considers appropriate.”
II. The SFC is also given the power to refuse to authorize applications and to withdraw authorizations once given.
III. The SFO requires that there must be an individual approved by the SFC to receive notices and decisions served by the SFC relating to the CIS.
IV. If the CIS is approved by recognized overseas securities regulator, authorization of a CIS is on a voluntary basisCorrect
First, the SFC may grant authorisation subject to “any other conditions it considers appropriate”. The SFC is also given the power to refuse to authorise applications and to withdraw authorisations. Second, the SFO requires that there must be an individual approved by the SFC to receive notices and decisions served by the SFC relating to an authorised CIS.
Incorrect
First, the SFC may grant authorisation subject to “any other conditions it considers appropriate”. The SFC is also given the power to refuse to authorise applications and to withdraw authorisations. Second, the SFO requires that there must be an individual approved by the SFC to receive notices and decisions served by the SFC relating to an authorised CIS.
Hint
Reference Chapter:1.2.23
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Question 129 of 673
129. Question
1 pointsQID632:When the SFC authorizes a CIS, it requires the nomination of
Correct
The SFO requires that there must be an individual approved by the SFC to receive notices and decisions served by the SFC relating to an authorised CIS. Contact details relating to that person must be provided to the SFC. The SFC has powers to approve the contact person or to withdraw the approval.
Incorrect
The SFO requires that there must be an individual approved by the SFC to receive notices and decisions served by the SFC relating to an authorised CIS. Contact details relating to that person must be provided to the SFC. The SFC has powers to approve the contact person or to withdraw the approval.
Hint
Reference Chapter:1.2.24
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Question 130 of 673
130. Question
1 pointsQID1607:Mr. Liu, who is a financial journalist, often encourages retail investors to trade stocks on the newspaper, in which the comments are unfounded and often mislead the public. Is there any wrongdoing in this case?
Correct
Broadcasters like financial journalists and columnists who give investment advice to the public for references on subscription do not conduct the regulated activity of advising on securities. Thus, they are exempted from requiring a licence.
Incorrect
Broadcasters like financial journalists and columnists who give investment advice to the public for references on subscription do not conduct the regulated activity of advising on securities. Thus, they are exempted from requiring a licence.
Hint
Reference Chapter:1.2.28
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Question 131 of 673
131. Question
1 pointsQID988:Kanon Financial has recently issued a Collective Investment Scheme, it has assigned Kaohsiung Securities – a licensed corporation to be the distributor. If the CIS is not authorised by the SFC, can Kaohsiung Securities issue advertisements for it?
Correct
A licensed corporation can issue an advertisement for an unauthorised CIS as long as its states that its not available to the public in Hong Kong.
Incorrect
A licensed corporation can issue an advertisement for an unauthorised CIS as long as its states that its not available to the public in Hong Kong.
Hint
Reference Chapter:1.2.31
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Question 132 of 673
132. Question
1 pointsQID177:Advertisements, invitations and documents which contain an invitation to the public in respect of certain matters may only be issued if they are authorised by which of the following agencies?
Correct
There are four core aspects to Part IV:
(d) Section 105, SFO empowers the SFC to authorise the issue of (and to impose conditions on) advertisements and other documents that contain an offer to the public.Incorrect
There are four core aspects to Part IV:
(d) Section 105, SFO empowers the SFC to authorise the issue of (and to impose conditions on) advertisements and other documents that contain an offer to the public.Hint
Reference Chapter:1.2.31
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Question 133 of 673
133. Question
1 pointsQID2753:Which of the following statements about invitation documents to the public is true?
Correct
Invitation documents issued to the public require the approval of the SFC. Invitation documents issued only to professional investors do not require SFC’s approval.
Incorrect
Invitation documents issued to the public require the approval of the SFC. Invitation documents issued only to professional investors do not require SFC’s approval.
Hint
Reference Chapter:1.2.31
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Question 134 of 673
134. Question
1 pointsQID1574:Issuing advertisement to the public about authorised CIS is a
Correct
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or come under an appropriate exemption. A breach of this provision is an offence.
These provisions are set out in s. 103(1), SFO.Incorrect
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or come under an appropriate exemption. A breach of this provision is an offence.
These provisions are set out in s. 103(1), SFO.Hint
Reference Chapter:1.2.31
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Question 135 of 673
135. Question
1 pointsQID637:What are the possible consequences to advertise invitations to the public to deal in CISs without the SFC approval or exemption?
Correct
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or come under an appropriate exemption. A breach of this provision is an offence.
Incorrect
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or come under an appropriate exemption. A breach of this provision is an offence.
Hint
Reference Chapter:1.2.31
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Question 136 of 673
136. Question
1 pointsQID1572:Issuing an advertisement under which of the following circumstances is illegal?
Correct
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or come under an appropriate exemption. A breach of this provision is an offence.
Incorrect
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or come under an appropriate exemption. A breach of this provision is an offence.
Hint
Reference Chapter:1.2.31
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Question 137 of 673
137. Question
1 pointsQID615:With regards to Asset Management businesses, the SFO is
concerned with
I. Inviting the public to enter into or offer to enter into an
agreement to acquire, dispose of, subscribe for or underwrite
securities, or a regulated investment agreement
II. Inviting the public to acquire an interest in or participate in, or
offer to acquire an interest in or participate in, a CIS.
III. Inviting professional investors to enter into or offer to enter
into an agreement to acquire, dispose of, subscribe for or
underwrite securities, or a regulated investment agreement
IV. Inviting professional investors to acquire an interest in or
participate in, or offer to acquire an interest in or participate
in, a CIS.Correct
Powers granted to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the public.
Incorrect
Powers granted to the SFC include the power to authorise CISs and structured products for offer to the public as well as advertisements and other documents that contain an offer to the public.
Hint
Reference Chapter:1.2.31
-
Question 138 of 673
138. Question
1 pointsQID636:Advertisements, invitations and documents which contain an invitation to the public “Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or fall within an available exemption. A breach of this provision is an
Correct
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by
the SFC, or come under an appropriate exemption. A breach of this provision is an offence.Incorrect
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by
the SFC, or come under an appropriate exemption. A breach of this provision is an offence.Hint
Reference Chapter:1.2.31
-
Question 139 of 673
139. Question
1 pointsQID2654:Investment Advertisements issued for the public are required to have
Correct
Investment Advertisements issued for the public are required to have 1 Individual that is approved by the SFC to receive SFC notices and decisions relating to the advertisments in question and that the SFC has been notified of the person’s contact information.
Incorrect
Investment Advertisements issued for the public are required to have 1 Individual that is approved by the SFC to receive SFC notices and decisions relating to the advertisments in question and that the SFC has been notified of the person’s contact information.
Hint
Reference Chapter:1.2.33
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Question 140 of 673
140. Question
1 pointsQID641:Which of the following are exempted by the SFO to be classified as advertisement of CIS?
I. Prospectuses complying with the Companies Ordinance
II. Listing documents and certain other offer documents in relation to securities the listing of which on The Stock Exchange of Hong Kong Limited (“SEHK”) has been approved by HKEX
III. Advertisements, invitations and documents issued by certain licensed corporations (if in respect of securities they must hold a Type 1, 4 or 6 licence, and if in respect of futures contracts, they must hold a Type 2 or 5 licence)
IV. Advertisement etc. in respect of securities or interests in CISs intended to be disposed of only to PIs.Correct
There are several exemptions provided for in s. 103, SFO, which permit the issue of certain documents and the acts of special groups, including the following:
(a) prospectuses complying with the Companies (Winding Up and Miscellaneous Provisions) Ordinance;
(b) listing documents and certain other offer documents in relation to securities traded on a recognised stock market;
(c.) Advertisements issued by certain licensed corporations (see section 3.18 below for an example);
(d) Advertisements in respect of securities or interests in CISs intended to be disposed of only to professional investors.Incorrect
There are several exemptions provided for in s. 103, SFO, which permit the issue of certain documents and the acts of special groups, including the following:
(a) prospectuses complying with the Companies (Winding Up and Miscellaneous Provisions) Ordinance;
(b) listing documents and certain other offer documents in relation to securities traded on a recognised stock market;
(c.) Advertisements issued by certain licensed corporations (see section 3.18 below for an example);
(d) Advertisements in respect of securities or interests in CISs intended to be disposed of only to professional investors.Hint
Reference Chapter:1.2.34
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Question 141 of 673
141. Question
1 pointsQID640:Which of the following are exempted from the requirement to comply with the SFO requirements in Asset Management Advertising?
I. Publishers of newspapers
II. Live Broadcasters
III. Lawyers who promote CISs to his clients
IV. Accounts who promote CIS to his clientsCorrect
There are several exemptions provided for in s. 103, SFO, which permit the issue of certain documents and the acts of special groups, including the following:
– sellers or publishers of newspapers and other publications containing such advertisements; and
– conduits or live broadcasters issuing such prohibited material in the ordinary course of their business.Incorrect
There are several exemptions provided for in s. 103, SFO, which permit the issue of certain documents and the acts of special groups, including the following:
– sellers or publishers of newspapers and other publications containing such advertisements; and
– conduits or live broadcasters issuing such prohibited material in the ordinary course of their business.Hint
Reference Chapter:1.2.34
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Question 142 of 673
142. Question
1 pointsQID644:Advertisements are also subject to the provisions of the SFO concerning misrepresentation, which provide
Correct
Advertisements are also subject to the provisions of the SFO concerning misrepresentation, which provide for both civil remedies and criminal sanctions.
Incorrect
Advertisements are also subject to the provisions of the SFO concerning misrepresentation, which provide for both civil remedies and criminal sanctions.
Hint
Reference Chapter:1.2.36
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Question 143 of 673
143. Question
1 pointsQID646:A person to make any fraudulent or reckless misrepresentation for the purpose of inducing another person to investing in a CIS may result in
Correct
Under s. 107, SFO, it is a criminal offence punishable by fine and/or imprisonment for a person to make any fraudulent or reckless misrepresentation for the purpose of inducing another person to deal with securities, structured products or CISs.
Incorrect
Under s. 107, SFO, it is a criminal offence punishable by fine and/or imprisonment for a person to make any fraudulent or reckless misrepresentation for the purpose of inducing another person to deal with securities, structured products or CISs.
Hint
Reference Chapter:1.2.37
-
Question 144 of 673
144. Question
1 pointsQID645:What are the possible consequences to make fraudulent/reckless misrepresentations to induce a person to deal in securities and CISs?
Correct
Under s. 107, SFO, it is a criminal offence punishable by fine and/or imprisonment for a person to make any fraudulent or reckless misrepresentation for the purpose of inducing another person to deal with securities, structured products or CISs.
Incorrect
Under s. 107, SFO, it is a criminal offence punishable by fine and/or imprisonment for a person to make any fraudulent or reckless misrepresentation for the purpose of inducing another person to deal with securities, structured products or CISs.
Hint
Reference Chapter:1.2.37
-
Question 145 of 673
145. Question
1 pointsQID91:Which of the following entities may grant injunctions?
Correct
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(b) The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if it can make a case to show that it is in the public interest to issue such an order.Incorrect
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(b) The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if it can make a case to show that it is in the public interest to issue such an order.Hint
Reference Chapter:1.2.38
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Question 146 of 673
146. Question
1 pointsQID647:Which of the following conditions does the SFO provide for civil liability for compensatory damages?
I. Fraudulent Misrepresentation
II. Reckless Misrepresentation
III. Unintended Misrepresentation
IV. Negligent MisrepresentationCorrect
The civil remedies for misrepresentation are established under s. 108, SFO, which is similar to s. 107, SFO but in addition, covers negligent misrepresentation.
Incorrect
The civil remedies for misrepresentation are established under s. 108, SFO, which is similar to s. 107, SFO but in addition, covers negligent misrepresentation.
Hint
Reference Chapter:1.2.38
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Question 147 of 673
147. Question
1 pointsQID648:Mr Ko was induced by Yellow River Investment Limited Advertisement to invest in a CIS managed by Yellow River Investment. However, Mr Ko later discovered that the profit has been overstated. Upon investigation, it appeared that it was a misprint by the printer who printed advertisements for Yellow River Investment. Which type of misrepresentation is that?
Correct
A negligent misrepresentation is any statement which, at the time it is made, is false, misleading or deceptive, and is made without reasonable care having been taken to ensure its accuracy.
Incorrect
A negligent misrepresentation is any statement which, at the time it is made, is false, misleading or deceptive, and is made without reasonable care having been taken to ensure its accuracy.
Hint
Reference Chapter:1.2.39
-
Question 148 of 673
148. Question
1 pointsQID649:Mr Ko was induced by Yellow River Investment Limited
Advertisement to invest in a CIS managed by Yellow River
Investment. However, Mr Ko later discovered that the profit has been overstated. Upon investigation, it appeared that it was a misprint by the printer who printed advertisements for Yellow River Investment.
Who is responsible for the damages payable to Mr Ko?
I. Yellow River Investment Limited
II. The Directors of Yellow River Investment
III. Accounting staff of Yellow River Investment
IV. All staff of Yellow River InvestmentCorrect
This is a case of negligent misrepresentation, in which the data was released without reasonable care having been taken to ensure its accuracy. In this case, the liability to civil remedies is extended to every director of the company which has made a misrepresentation, except to the extent it is proved that a director did not authorise the making of that misrepresentation.
Incorrect
This is a case of negligent misrepresentation, in which the data was released without reasonable care having been taken to ensure its accuracy. In this case, the liability to civil remedies is extended to every director of the company which has made a misrepresentation, except to the extent it is proved that a director did not authorise the making of that misrepresentation.
Hint
Reference Chapter:1.2.39
-
Question 149 of 673
149. Question
1 pointsQID188:Which of the following description about the single licence regime is correct?
Correct
Although there are ten types of regulated activity, the SFC will grant to a person only one licence (or registration) which will enable the holder to undertake one or more of the ten regulated activities. This is normally referred to as the “single licence regime”.
Incorrect
Although there are ten types of regulated activity, the SFC will grant to a person only one licence (or registration) which will enable the holder to undertake one or more of the ten regulated activities. This is normally referred to as the “single licence regime”.
Hint
Reference Chapter:1.2.4
-
Question 150 of 673
150. Question
1 pointsQID187:Although there are ten types of regulated activity, the SFC will grant to a person only one licence (or registration) which will enable the holder to undertake one or more of the ten regulated activities. This is normally referred to as the
Correct
Although there are ten types of regulated activity, the SFC will grant to a person only one licence (or registration) which will enable the holder to undertake one or more of the ten regulated activities. This is normally referred to as the “single licence regime”.
Incorrect
Although there are ten types of regulated activity, the SFC will grant to a person only one licence (or registration) which will enable the holder to undertake one or more of the ten regulated activities. This is normally referred to as the “single licence regime”.
Hint
Reference Chapter:1.2.4
-
Question 151 of 673
151. Question
1 pointsQID1210:Part V of the SFO provides for the implementation of which of the following licensing regime?
Correct
Part V, SFO provides for the implementation of the licensing regime, including:
(a) the setting up of a single licensing system to cover the ten specified types of RA (see section 7.4 below) and the licensing of corporations (“licensed corporations”) to conduct one or more RAs subject to any conditions the SFC may wish to impose.Incorrect
Part V, SFO provides for the implementation of the licensing regime, including:
(a) the setting up of a single licensing system to cover the ten specified types of RA (see section 7.4 below) and the licensing of corporations (“licensed corporations”) to conduct one or more RAs subject to any conditions the SFC may wish to impose.Hint
Reference Chapter:1.2.4
-
Question 152 of 673
152. Question
1 pointsQID186:Which of the following descriptions about the single license regime is correct?
Correct
Although there are ten types of regulated activity, the SFC will grant to a person only one licence (or registration) which will enable the holder to undertake one or more of the ten regulated activities. This is normally referred to as the “single licence regime”.
Incorrect
Although there are ten types of regulated activity, the SFC will grant to a person only one licence (or registration) which will enable the holder to undertake one or more of the ten regulated activities. This is normally referred to as the “single licence regime”.
Hint
Reference Chapter:1.2.4
-
Question 153 of 673
153. Question
1 pointsQID1212:The system that covers the ten specified types of regulated activities and the licensing of corporations (“licensed corporations”) to conduct one or more regulated activities subject to any conditions the SFC may wish to impose is known as the:
Correct
The setting up of a single licensing system to cover the ten specified types of RA (see section 7.4 below) and the licensing of corporations (“licensed corporations”) to conduct one or more RAs subject to any conditions the SFC may wish to impose.
Incorrect
The setting up of a single licensing system to cover the ten specified types of RA (see section 7.4 below) and the licensing of corporations (“licensed corporations”) to conduct one or more RAs subject to any conditions the SFC may wish to impose.
Hint
Reference Chapter:1.2.4
-
Question 154 of 673
154. Question
1 pointsQID420:Which of the following codes specifies conduct requirements for SFC licensees involved in the discretionary management of CISs, and supplements the SFC’s codes and requirements for all licensees?
Correct
The FMCC applies to intermediaries conducting discretionary management of CISs (whether or not the CISs are authorised by the SFC) and their representatives (“Fund Managers”).
Incorrect
The FMCC applies to intermediaries conducting discretionary management of CISs (whether or not the CISs are authorised by the SFC) and their representatives (“Fund Managers”).
Hint
Reference Chapter:1.2.40
-
Question 155 of 673
155. Question
1 pointsQID415:Codes and guidelines issued by the SFC which apply to licensed or registered persons in the Asset Management Industries includes
I. The Conduct Guidelines of Intermediaries
II. The Code of Conduct
III. The Internal Control Guidelines (ICG)
IV. The Prevention of Money Laundering and Terrorist Financing Guidance Note (“MLGN”)Correct
Option I included in the question is not a real code, the other three do exist and apply to asset managers.
Incorrect
Option I included in the question is not a real code, the other three do exist and apply to asset managers.
Hint
Reference Chapter:1.2.40
-
Question 156 of 673
156. Question
1 pointsQID2403:Open-Ended Fund Company is
Correct
Open-Ended Fund Company is a type of CIS.
Incorrect
Open-Ended Fund Company is a type of CIS.
Hint
Reference Chapter:1.2.40
-
Question 157 of 673
157. Question
1 pointsQID652:Which of the following ordinances, codes of conduct and guidelines are specifically concerned with asset management, CIS and MPF products?
I. Fund Manager Code of Conduct (FMCC)
II. Code on Unit Trusts and Mutual Funds (CUTMF)
III. The SFC Code on MPF Product
IV. Securities and Futures Ordinance (SFO)Correct
All of these Codes and Guidelines regulate and establish the boundaries and standards of conduct for professionals and corporations conducting asset management activities.
Incorrect
All of these Codes and Guidelines regulate and establish the boundaries and standards of conduct for professionals and corporations conducting asset management activities.
Hint
Reference Chapter:1.2.40
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Question 158 of 673
158. Question
1 pointsQID2423:Which of the following statement is correct regarding open-ended fund companies?
Correct
Open-ended fund companies are not a kind of special unit trust, but of limited liability and their share capital is changeable. Only public open-ended fund companies can issue to the public after they are approved by the SFC. Open-ended fund companies are monitored by the SFC.
Incorrect
Open-ended fund companies are not a kind of special unit trust, but of limited liability and their share capital is changeable. Only public open-ended fund companies can issue to the public after they are approved by the SFC. Open-ended fund companies are monitored by the SFC.
Hint
Reference Chapter:1.2.41
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Question 159 of 673
159. Question
1 pointsQID2642:Can overseas corporate funds re-domicile to Hong Kong as an OFC?
Correct
Overseas corporate funds can re-domicile to Hong Kong as an OFC if they are able to meet all the requirements applicable to a newly established OFC.
Incorrect
Overseas corporate funds can re-domicile to Hong Kong as an OFC if they are able to meet all the requirements applicable to a newly established OFC.
Hint
Reference Chapter:1.2.41
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Question 160 of 673
160. Question
1 pointsQID87:Under the provisions of the Securities and Futures Ordinance (SFO), which of the following statements relating to rules and codes of conduct are correct?
I. Failure by a licensed person to comply with a material provision of a code of conduct will of itself make the person liable to judicial proceedings.
II. A code of conduct violation shall be admissible as evidence in court proceedings.
III. The Securities and Futures Commission (SFC) is empowered under the SFO to make rules or codes of conduct.
IV. A breach of a provision in a code of conduct by a licensed person may cast doubts on his fitness and properness to hold the licence.Correct
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(c) Persons prejudiced by the perpetration of market misconduct may take civil action against the wrongdoer through the courts to obtain redress. The SFO has provisions for the findings of the Market Misconduct Tribunal to be admissible in evidence in private civil actions.
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Incorrect
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(c) Persons prejudiced by the perpetration of market misconduct may take civil action against the wrongdoer through the courts to obtain redress. The SFO has provisions for the findings of the Market Misconduct Tribunal to be admissible in evidence in private civil actions.
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Hint
Reference Chapter:1.2.42
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Question 161 of 673
161. Question
1 pointsQID123:Which of the following descriptions about subsidiary legislations are correct?
I. Subsidiary legislations are enacted by the Chief Executive of Hong Kong after consulting the advice of the Legco
II. Subsidiary legislations are some laws made by a process of delegation from LegCo to other bodies.
III. Subsidiary legislations do not possess the force of law and are not enforceable.
IV. Subsidiary legislations possess the force of law and are enforceable.Correct
The laws passed by the Legislative Council of the Hong Kong Special Administrative Region (“LegCo”) are called ordinances. They are enacted by the Chief Executive of the
Hong Kong Special Administrative Region (“HKSAR”) with the advice of LegCo. Some laws are made by a process of delegation from LegCo to other bodies, such delegation usually being done under an ordinance. For example, the Securities and Futures Commission (“SFC”) has extensive powers to make rules under the Securities and Futures Ordinance (“SFO”). This process is, in the case of the SFC, generally required to be completed by a process of tabling in LegCo, which gives LegCo an opportunity to review the subsidiary legislation before it becomes law.Incorrect
The laws passed by the Legislative Council of the Hong Kong Special Administrative Region (“LegCo”) are called ordinances. They are enacted by the Chief Executive of the
Hong Kong Special Administrative Region (“HKSAR”) with the advice of LegCo. Some laws are made by a process of delegation from LegCo to other bodies, such delegation usually being done under an ordinance. For example, the Securities and Futures Commission (“SFC”) has extensive powers to make rules under the Securities and Futures Ordinance (“SFO”). This process is, in the case of the SFC, generally required to be completed by a process of tabling in LegCo, which gives LegCo an opportunity to review the subsidiary legislation before it becomes law.Hint
Reference Chapter:1.2.43
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Question 162 of 673
162. Question
1 pointsQID204:How does the court take into account the codes and guidelines issued by the SFC?
Correct
A failure on the part of an intermediary or its representative to comply with a code of conduct is not a breach of law and does not by itself constitute an offence under the law.
However, it should be noted that breaches of codes of conduct may be taken into account in two important respects:
(b) a court hearing legal proceedings under the SFO shall consider the provisions of the codes if the court considers it relevant to the determination of any question arising in
the proceedings. This gives the codes a degree of legal recognition.Incorrect
A failure on the part of an intermediary or its representative to comply with a code of conduct is not a breach of law and does not by itself constitute an offence under the law.
However, it should be noted that breaches of codes of conduct may be taken into account in two important respects:
(b) a court hearing legal proceedings under the SFO shall consider the provisions of the codes if the court considers it relevant to the determination of any question arising in
the proceedings. This gives the codes a degree of legal recognition.Hint
Reference Chapter:1.2.43
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Question 163 of 673
163. Question
1 pointsQID1038:The SFC-issued codes, guidelines and guidance notes are generally only subject to
Correct
Part XVI gathers together a number of provisions of common application as well as regulatory powers. It includes miscellaneous provisions that do not fit elsewhere and additional ones which relate to the increase in civil law applications.
Incorrect
Part XVI gathers together a number of provisions of common application as well as regulatory powers. It includes miscellaneous provisions that do not fit elsewhere and additional ones which relate to the increase in civil law applications.
Hint
Reference Chapter:1.2.43
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Question 164 of 673
164. Question
1 pointsQID773:The SFC-issued codes, guidelines and guidance notes
Correct
Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.
Incorrect
Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.
Hint
Reference Chapter:1.2.43
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Question 165 of 673
165. Question
1 pointsQID819:If an intermediary has been convicted of violation of the SFO. How can the SFC sanction such intermediary?
I. Revoke or suspend approval as a responsible officer
II. Fines
III. Reprimand, publicly or privately
IV. Jail sentenceCorrect
Section 194, SFO provides that if a “regulated person” is guilty of “misconduct”, or is not a fit and proper person, the SFC may:
(a) in the case of a licensed corporation or representative, revoke or suspend the licence in respect of all or part of the licensed regulated activity;
(b) in the case of a responsible officer (see section 1.3 of Topic 4 for the definition of this term), revoke or suspend approval as a responsible officer;
(c) publicly or privately reprimand the regulated person;
(d) prohibit the regulated person from applying for a licence, registration, approval as a responsible officer or entry in the HKMA register, or to act as an executive officer; and
(e) separately or in addition order the regulated person to pay a penalty up to the greater of HK$10 million or three times any profit gained or loss avoided as a result of his misconduct.Incorrect
Section 194, SFO provides that if a “regulated person” is guilty of “misconduct”, or is not a fit and proper person, the SFC may:
(a) in the case of a licensed corporation or representative, revoke or suspend the licence in respect of all or part of the licensed regulated activity;
(b) in the case of a responsible officer (see section 1.3 of Topic 4 for the definition of this term), revoke or suspend approval as a responsible officer;
(c) publicly or privately reprimand the regulated person;
(d) prohibit the regulated person from applying for a licence, registration, approval as a responsible officer or entry in the HKMA register, or to act as an executive officer; and
(e) separately or in addition order the regulated person to pay a penalty up to the greater of HK$10 million or three times any profit gained or loss avoided as a result of his misconduct.Hint
Reference Chapter:1.2.43
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Question 166 of 673
166. Question
1 pointsQID635:American Industrial and Commercial High Risk Investment Fund is a licensed corporation that engages in Type 9 regulated activity as defined by the Securities and Futures Commission and manages a collective investment scheme (CIS). It has advertised itself on a number of newspaper for the past few weeks and described itself as an authorised CIS. Later on, the management of American Industrial and Commercial High Risk Investment Fund discovered that American Industrial and Commercial High Risk Investment Fund was not authorised. The case is a violation of?
Correct
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or come under an appropriate exemption. A breach of this provision is an offence.
Incorrect
Advertisements, invitations and documents which contain an invitation to the public (“Advertisements”) in respect of certain matters may only be issued if they are authorised by the SFC, or come under an appropriate exemption. A breach of this provision is an offence.
Hint
Reference Chapter:1.2.43
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Question 167 of 673
167. Question
1 pointsQID86:Which of the following correctly describes the legal status of the Securities and Futures Commission’s codes and guidelines?
Correct
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines: (d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Incorrect
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines: (d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Hint
Reference Chapter:1.2.43
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Question 168 of 673
168. Question
1 pointsQID85:What is the legal status of codes and guidelines issued by the SFC?
I. Codes of conduct are subsidiary legislation and have the force of law.
II. Guidelines are subsidiary legislation and have the force of law.
III. Codes of conduct do not have the force of law, a breach does not by itself render a person liable to any judicial or other proceedings.
IV. Guidelines do not have the force of law, a breach does not by itself render a person liable to any judicial or other proceedings.Correct
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines: (d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Incorrect
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines: (d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Hint
Reference Chapter:1.2.43
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Question 169 of 673
169. Question
1 pointsQID83:Which of the following correctly describes the status of SFC’s code of conducts and guidelines?
Correct
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Incorrect
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable.
However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.Hint
Reference Chapter:1.2.43
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Question 170 of 673
170. Question
1 pointsQID82:Which of the following correctly describe the power of the SFC?
I. Breaches of the subsidiary legislations of the SFO are not criminal offences
II. Breaches of the subsidiary legislations of the SFO are criminal offences
III. The SFC may refer serious cases to law enforcement agencies such as the Commercial Crimes Bureau (“CCB”) of the Hong Kong Police Force or the Independent Commission Against Corruption (“ICAC”) for investigation and action.
IV. The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if the SFC can make a case to show that it is in the public interest to issue such an order.Correct
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(a) Breaches of the SFO and subsidiary legislation are legal offences and will be investigated by the SFC and enforcement action taken; the SFC may refer serious cases to law enforcement agencies such as the Commercial Crimes Bureau (“CCB”) of the Hong Kong Police Force or the Independent Commission Against Corruption (“ICAC”) for investigation and action.
(b) The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if it can make a case to show that it is in the public interest to issue such an order.Incorrect
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(a) Breaches of the SFO and subsidiary legislation are legal offences and will be investigated by the SFC and enforcement action taken; the SFC may refer serious cases to law enforcement agencies such as the Commercial Crimes Bureau (“CCB”) of the Hong Kong Police Force or the Independent Commission Against Corruption (“ICAC”) for investigation and action.
(b) The SFC may also apply to the courts for an injunction to restrain a person from dealing with his assets, or from carrying on all or a part of his business, if it can make a case to show that it is in the public interest to issue such an order.Hint
Reference Chapter:1.2.43
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Question 171 of 673
171. Question
1 pointsQID1330:What is the legal status of the code of conduct issued by the SFC?
Correct
A failure on the part of an intermediary or its representative to comply with the Code of Conduct is not a breach of law and does not by itself constitute an offence under the law.
Incorrect
A failure on the part of an intermediary or its representative to comply with the Code of Conduct is not a breach of law and does not by itself constitute an offence under the law.
Hint
Reference Chapter:1.2.43
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Question 172 of 673
172. Question
1 pointsQID1037:Failing to follow SFC-issued codes, guidelines and guidance notes may result in which of the following?
I. Reflect adversely on the fitness and properness of licensed or registered persons to continue to be so licensed or registered.
II. Imprisonment.
III. Civil consequences.
IV. A higher tax bracket.Correct
The SFO also empowers the SFC to issue codes, guidelines and guidance notes. These do not have the force of law and do not override the provisions of any applicable law. However, a
failure to follow the spirit of the codes, guidelines and guidance notes may reflect adversely on the fitness and properness of licensed or registered persons to continue to be so licensed or
registered.Incorrect
The SFO also empowers the SFC to issue codes, guidelines and guidance notes. These do not have the force of law and do not override the provisions of any applicable law. However, a
failure to follow the spirit of the codes, guidelines and guidance notes may reflect adversely on the fitness and properness of licensed or registered persons to continue to be so licensed or
registered.Hint
Reference Chapter:1.2.43
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Question 173 of 673
173. Question
1 pointsQID794:Please rank the importance of the following in descending order
Correct
Ordinances are statutory, rules and guidelines are enforced.
Codes do not have the force of law in Hong Kong but only in other countries.Incorrect
Ordinances are statutory, rules and guidelines are enforced.
Codes do not have the force of law in Hong Kong but only in other countries.Hint
Reference Chapter:1.2.46
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Question 174 of 673
174. Question
1 pointsQID181:Which of the followings is not a regulated activities as defined by the SFO?
Correct
There are ten distinct types of regulated activity (see Schedule 5, SFO):
Type 9: asset management. The correct number for this activity is 9.Incorrect
There are ten distinct types of regulated activity (see Schedule 5, SFO):
Type 9: asset management. The correct number for this activity is 9.Hint
Reference Chapter:1.2.5
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Question 175 of 673
175. Question
1 pointsQID1214:Asset management of CISs is which type of regulated activity as listed in Schedule 5, SFO?
Correct
Type 9: asset management
Incorrect
Type 9: asset management
Hint
Reference Chapter:1.2.5
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Question 176 of 673
176. Question
1 pointsQID180:“Asset Management” is a type of which of the following regulated activity?
Correct
There are ten distinct types of regulated activity (see Schedule 5, SFO):
Type 9: asset management.Incorrect
There are ten distinct types of regulated activity (see Schedule 5, SFO):
Type 9: asset management.Hint
Reference Chapter:1.2.5
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Question 177 of 673
177. Question
1 pointsQID116:Which of the following products can the SFO scope of Asset Management Business be applicable to ?
Correct
The functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, including, for example, unit trusts, managed funds and retirement schemes, and supervises the marketing of these CISs. These functions are derived from Part IV, SFO and the second from Part V, SFO.Incorrect
The functions of the SFC in relation to asset management are two-pronged:
(a) it authorises CISs, including, for example, unit trusts, managed funds and retirement schemes, and supervises the marketing of these CISs. These functions are derived from Part IV, SFO and the second from Part V, SFO.Hint
Reference Chapter:1.2.5
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Question 178 of 673
178. Question
1 pointsQID1218:Which of the following personnel or organizations should be licensed or registered when they are conducting regulated activities classified by the SFO?
I. Frontline staff of the intermediary
II. Responsible officers/ Executive officers of the intermediary
III. The major shareholders of the intermediary
IV. The intermediaryCorrect
All references to registration will generally apply to this category as the term “licensing” will be used for all businesses and persons directly supervised by the SFC.
Incorrect
All references to registration will generally apply to this category as the term “licensing” will be used for all businesses and persons directly supervised by the SFC.
Hint
Reference Chapter:1.2.6
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Question 179 of 673
179. Question
1 pointsQID341:A person engaging in any activity regulated by the SFO, which includes asset management, will need to be licensed by the
Correct
Any person that wish to conduct a regulated activity must be licensed by the SFC.
Incorrect
Any person that wish to conduct a regulated activity must be licensed by the SFC.
Hint
Reference Chapter:1.2.6
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Question 180 of 673
180. Question
1 pointsQID231:Conducting asset management activities without holding a valid SFC licence is a?
Correct
Market misconduct may result in proceedings before the MMT or a criminal action before the courts, and/or a civil action for compensation undertaken by a person who has suffered pecuniary loss as a result of the market misconduct.
Incorrect
Market misconduct may result in proceedings before the MMT or a criminal action before the courts, and/or a civil action for compensation undertaken by a person who has suffered pecuniary loss as a result of the market misconduct.
Hint
Reference Chapter:1.2.6
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Question 181 of 673
181. Question
1 pointsQID224:Yellow River Investment Limited is a company which conducts type 9 Regulated activity as defined by the SFO, which of the following entities should be licensed by the SFC?
I. Yellow River Investment Limited
II. The Executive Directors of Yellow River Trading
III. Staff that conducts type 9 activity
IV. All Staff of Yellow River Investment LimitedCorrect
Assets management is type 9 regulated activity; therefore, carrying out this kind of activity requires a licence. An Executive Director of a company must be a responsible officer, and responsible officer needs to be licensed; therefore, the Executive Directors of Yellow River Trading must carry a licence.
Incorrect
Assets management is type 9 regulated activity; therefore, carrying out this kind of activity requires a licence. An Executive Director of a company must be a responsible officer, and responsible officer needs to be licensed; therefore, the Executive Directors of Yellow River Trading must carry a licence.
Hint
Reference Chapter:1.2.6
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Question 182 of 673
182. Question
1 pointsQID228:If an AFI wishes to conduct regulated activities as defined by the SFO, which of the following entities should it approach for it to be licensed or registered?
Correct
AFIs (including banks) that are authorised and regulated by the HKMA and conduct the SFC regulated activities must be registered with the SFC as “Registered Institutions”, such status having been set up as a special category because of the special features of AFIs.
Incorrect
AFIs (including banks) that are authorised and regulated by the HKMA and conduct the SFC regulated activities must be registered with the SFC as “Registered Institutions”, such status having been set up as a special category because of the special features of AFIs.
Hint
Reference Chapter:1.2.7
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Question 183 of 673
183. Question
1 pointsQID1184:British Construction Bank is and AFI regulated by the HKMA, if it plans to conduct Type 9 Regulated Activity in the near future, how should it proceed?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.2.7
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Question 184 of 673
184. Question
1 pointsQID809:What is the difference between Licensed Corporations and Registered Institutions?
Correct
Registered institutions are regulated by the HKMA. They have to be registered with the SFC if they wish to carry out SFC regulated activities but the front line regulator will be the HKMA.
Incorrect
Registered institutions are regulated by the HKMA. They have to be registered with the SFC if they wish to carry out SFC regulated activities but the front line regulator will be the HKMA.
Hint
Reference Chapter:1.2.7
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Question 185 of 673
185. Question
1 pointsQID1570:Do AFI’s who are trying to conduct regulated activities need to be licensed or registered?
Correct
The position is slightly different for AFIs (such as banks) which are also regulated by the HKMA. Where an AFI wishes to engage in one or more regulated activities, it needs to be registered with the SFC.
Incorrect
The position is slightly different for AFIs (such as banks) which are also regulated by the HKMA. Where an AFI wishes to engage in one or more regulated activities, it needs to be registered with the SFC.
Hint
Reference Chapter:1.2.7
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Question 186 of 673
186. Question
1 pointsQID28:Which entity is the frontline regulator of registered institution that conducts regulated activity as defined by the SFO?
Correct
As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections.
Incorrect
As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections.
Hint
Reference Chapter:1.2.7
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Question 187 of 673
187. Question
1 pointsQID1158:Who is responsible for the supervision of registered institutions?
Correct
HKMA is the frontline regulator of registered institutions.
Incorrect
HKMA is the frontline regulator of registered institutions.
Hint
Reference Chapter:1.2.7
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Question 188 of 673
188. Question
1 pointsQID1185:Which entity is the frontline regulator(s) of registered institutions that conducts regulated activities?
Correct
The frontline regulator of AFIs is the HKMA.
Incorrect
The frontline regulator of AFIs is the HKMA.
Hint
Reference Chapter:1.2.7
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Question 189 of 673
189. Question
1 pointsQID226:Which of the following entities will require registration or licencing when conducting regulated activities as defined by the SFO?
I. Registered Institution
II. Licensed Corporation
III. Authorised Financial Institutions
IV. Trust CompaniesCorrect
Part V, SFO provides for the implementation of the licensing regime, including:
(a.) the setting up of a single licensing system to cover the ten specified types of regulated activity (see section 6.2 of Topic 3, and section 8 below) and the licensing of corporations (“licensed corporations”) to conduct one or more regulated activities subject to any conditions the SFC may wish to impose.
(c.) the registration of authorised financial institutions (“AFIs”) to engage in one or more of the ten types of regulated activity (“registered institutions”) (see section 1.7 below);
however, an AFI carrying out Type 3 or Type 8 regulated activity is exempted from the registration requirement.Incorrect
Part V, SFO provides for the implementation of the licensing regime, including:
(a.) the setting up of a single licensing system to cover the ten specified types of regulated activity (see section 6.2 of Topic 3, and section 8 below) and the licensing of corporations (“licensed corporations”) to conduct one or more regulated activities subject to any conditions the SFC may wish to impose.
(c.) the registration of authorised financial institutions (“AFIs”) to engage in one or more of the ten types of regulated activity (“registered institutions”) (see section 1.7 below);
however, an AFI carrying out Type 3 or Type 8 regulated activity is exempted from the registration requirement.Hint
Reference Chapter:1.2.7
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Question 190 of 673
190. Question
1 pointsQID114:Which of the following two intermediaries are regulated and licensed/registered by the SFC?
I. Independent Financial Advisor
II. Investment Bank
III. Trustee
IV. Insurance AgentCorrect
The provisions of the SFO have different applications to the following different classes of person:
(b) “registered institution”, which refers to authorised financial institutions (“AFIs”) directly supervised by the Hong Kong Monetary Authority (“HKMA”) and registered with the SFC.Incorrect
The provisions of the SFO have different applications to the following different classes of person:
(b) “registered institution”, which refers to authorised financial institutions (“AFIs”) directly supervised by the Hong Kong Monetary Authority (“HKMA”) and registered with the SFC.Hint
Reference Chapter:1.2.7
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Question 191 of 673
191. Question
1 pointsQID29:Which of the following descriptions about Authorised Financial
Institutions (AFI) are true?
I. All Registered Institutions are banks.
II. If the AFIs are conducting the regulated activities as defined by the SFO, the AFIs should register with the SFC.
III. SFC is responsible for licensing AFIs for all businesses
IV. The HKMA may refer cases of suspected malpractice by registered institutions in respect of the SFC-regulated activities to the SFCCorrect
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. The HKMA may refer cases of suspected malpractice by registered institutions in respect of the SFC-regulated activities to the SFC, which may directly review those institutions.
Incorrect
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. The HKMA may refer cases of suspected malpractice by registered institutions in respect of the SFC-regulated activities to the SFC, which may directly review those institutions.
Hint
Reference Chapter:1.2.7
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Question 192 of 673
192. Question
1 pointsQID23:British Construction Bank is an AFI regulated by the HKMA. If it plans to conduct Type 9 Regulated Activity (Asset Management) in the near future, how should it proceed?
Correct
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity.
Incorrect
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity.
Hint
Reference Chapter:1.2.7
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Question 193 of 673
193. Question
1 pointsQID24:If an AFI plans to conduct regulated activities as defined by the SFO, which of the following entities should it register with ?
Correct
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity.
Incorrect
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity.
Hint
Reference Chapter:1.2.7
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Question 194 of 673
194. Question
1 pointsQID31:Which of the following is the regulator of Authorised Financial
Institutions?Correct
As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.
Incorrect
As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.
Hint
Reference Chapter:1.2.7
-
Question 195 of 673
195. Question
1 pointsQID189:According to the SFO, an intermediary could mean
I. A Registered Institution
II. A Licensed Corporation
III. A Trust Company
IV. An Authorised Financial InstitutionCorrect
Only corporations may become intermediaries. A corporation that obtains a licence will be regarded as a “licensed corporation” unless it is an AFI, in which case it will be regarded as a “registered institution”. Together they are referred to as “intermediaries”. The distinction between the licensing of corporations and the registration of AFIs is reviewed in further detail in section 1 of Topic 4.
Incorrect
Only corporations may become intermediaries. A corporation that obtains a licence will be regarded as a “licensed corporation” unless it is an AFI, in which case it will be regarded as a “registered institution”. Together they are referred to as “intermediaries”. The distinction between the licensing of corporations and the registration of AFIs is reviewed in further detail in section 1 of Topic 4.
Hint
Reference Chapter:1.2.7
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Question 196 of 673
196. Question
1 pointsQID27:Which of the following descriptions about intermediaries are correct?
I. Licensed Corporations are licensed by and supervised by the SFC.
II. Authorised Financial Institutions must register with the SFC in order to conduct regulated activities.
III. Registered Institutions need to comply with some of the codes and guidelines issued by the SFC.
IV. Registered Institutions need to be registered with the company registry.Correct
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.Incorrect
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.Hint
Reference Chapter:1.2.7
-
Question 197 of 673
197. Question
1 pointsQID26:British Construction Bank is an authorised financial institution. Amid the downfall of the Hong Kong banking sector, it would like to sell fund products of other companies to clients to generate revenue. Where should British Construction Bank apply for a license?
Correct
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.Incorrect
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.Hint
Reference Chapter:1.2.7
-
Question 198 of 673
198. Question
1 pointsQID33:British Construction Bank is an AFI regulated by the HKMA. Which of the following entities is responsible for supervising the regulated activities it conducts under the SFO?
Correct
The HKMA and the SFC must work closely together in relation to any SFC-regulated activities that are carried out by registered
institutions. To this end, a memorandum of understanding (“MOU”) has been signed between the two regulators, setting out their roles and responsibilities so as to minimise overlaps under the regulatory regime.Incorrect
The HKMA and the SFC must work closely together in relation to any SFC-regulated activities that are carried out by registered
institutions. To this end, a memorandum of understanding (“MOU”) has been signed between the two regulators, setting out their roles and responsibilities so as to minimise overlaps under the regulatory regime.Hint
Reference Chapter:1.2.7
-
Question 199 of 673
199. Question
1 pointsQID25:British Construction Bank is an authorised financial institution (AFI). Due to the rapid development of the securities markets, the company plans to provide securities trading services to its customer. How should the company proceed?
Correct
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.Incorrect
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.Hint
Reference Chapter:1.2.7
-
Question 200 of 673
200. Question
1 pointsQID1156:The SFC supervises which of the following institutions?
I. Registered Institutions.
II. Licensed corporation.
III. Recognized exchanges.
IV. Recognized clearing houses.Correct
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) recognized exchange, recognized clearing houses, recognized exchange controllers and recognized investor compensation companies or persons carrying on RAs; and
(ii) registered institutions that are regulated or to be regulated by the SFC under any relevant provisions.
Registered institutions are regulated collaborate by the SFC and the HKMA.Incorrect
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) recognized exchange, recognized clearing houses, recognized exchange controllers and recognized investor compensation companies or persons carrying on RAs; and
(ii) registered institutions that are regulated or to be regulated by the SFC under any relevant provisions.
Registered institutions are regulated collaborate by the SFC and the HKMA.Hint
Reference Chapter:1.2.7
-
Question 201 of 673
201. Question
1 pointsQID32:Which of the following descriptions are correct?
I. All banks in Hong Kong are supervised by the SFC.
II. Some of the activities conducted by registered institutions are regulated by the SFO.
III. A memorandum of understanding (“MOU”) has been signed between the SFC and the HKMA to minimize regulatory overlaps.
IV. The Insurance Authority is the major regulator of the insurance industry in Hong Kong.Correct
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. Clearly, the HKMA and the SFC must work closely together in relation to any SFC-regulated activities that are carried out by registered institutions. To this end, a memorandum of understanding (“MOU”) has been signed between the two regulators, setting out their roles and responsibilities so as to minimise overlaps under the regulatory regime. The Insurance Authority is the major regulator of the insurance industry in Hong Kong.
Incorrect
Under the SFO and the Banking Ordinance, authorised financial institutions (“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-regulated activity. Clearly, the HKMA and the SFC must work closely together in relation to any SFC-regulated activities that are carried out by registered institutions. To this end, a memorandum of understanding (“MOU”) has been signed between the two regulators, setting out their roles and responsibilities so as to minimise overlaps under the regulatory regime. The Insurance Authority is the major regulator of the insurance industry in Hong Kong.
Hint
Reference Chapter:1.2.7
-
Question 202 of 673
202. Question
1 pointsQID2379:Which of the following activity belongs to asset management?
I. discretionary management of securities portfolios
II. discretionary management of futures portfolios
III. discretionary management of portfolios of only foreign futures or securities
IV. discretionary management of portfolios of only local real estate propertiesCorrect
Discretionary management of securities or futures portfolios belong to asset management, no matter it composes of foreign futures or securities or not. Real estate properties are not securities or futures. Therefore, discretionary management of this kind of portfolios is not asset management activity. Only specific real estate investment schemes approved by the SFC belongs to the era of asset management.
Incorrect
Discretionary management of securities or futures portfolios belong to asset management, no matter it composes of foreign futures or securities or not. Real estate properties are not securities or futures. Therefore, discretionary management of this kind of portfolios is not asset management activity. Only specific real estate investment schemes approved by the SFC belongs to the era of asset management.
Hint
Reference Chapter:1.2.8
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Question 203 of 673
203. Question
1 pointsQID1226:The definition of Asset Management under the SFO are?
I. Managing a portfolio of securities or futures contracts for another person
II. Managing a CIS that is managed for another person where
the property managed under the scheme consists primarily of immovable property
III. Managing a portfolio of securities or futures contracts for oneself
IV. Managing a CIS that is managed for oneself where the property managed under the scheme consists primarily of immovable propertyCorrect
Under Schedule 5, SFO, “asset management” means:
(a) real estate investment scheme management; or
(b) securities or futures contracts management.
“Real estate investment scheme management”, in relation to a person, means providing a service of operating a CIS for another person by the person.Incorrect
Under Schedule 5, SFO, “asset management” means:
(a) real estate investment scheme management; or
(b) securities or futures contracts management.
“Real estate investment scheme management”, in relation to a person, means providing a service of operating a CIS for another person by the person.Hint
Reference Chapter:1.2.8
-
Question 204 of 673
204. Question
1 pointsQID342:Asset management as defined in the SFO can include
I. Ownership of listed issuers
II. Real estate investment scheme management
III. Private companies management
IV. Securities or futures contracts management.Correct
Under Schedule 5, SFO, “asset management” means:
(a) real estate investment scheme management; or
(b) securities or futures contracts management.Incorrect
Under Schedule 5, SFO, “asset management” means:
(a) real estate investment scheme management; or
(b) securities or futures contracts management.Hint
Reference Chapter:1.2.8
-
Question 205 of 673
205. Question
1 pointsQID343:Which of the following are regarded as “assets” in “asset management” as defined by the SFO?
I. Securities Contract on a Portfolio basis
II. Securities Contract
III. Futures Contracts on a Portfolio basis
IV. Futures ContractCorrect
Under Schedule 5, SFO, “asset management” means: managing someone else’s securities or futures contracts. This means the securities and futures being held are the “assets” being managed.
Incorrect
Under Schedule 5, SFO, “asset management” means: managing someone else’s securities or futures contracts. This means the securities and futures being held are the “assets” being managed.
Hint
Reference Chapter:1.2.8
-
Question 206 of 673
206. Question
1 pointsQID349:Under the Securities and Futures Ordinance (SFO), which of the following persons will NOT be deemed to be engaged in the regulated activity of asset management if they provide asset management services wholly incidental to the specified activities?
I. A licensed corporation engaged in securities margin financing.
II. An authorised financial institution registered to deal in futures contracts.
III. A person licensed to deal in securities.
IV. An individual entered on the Hong Kong Monetary Authority (HKMA)’s register of persons as engaged in dealing in securities.Correct
Asset Management Activities wholly incidental to Type 1,2,4,5 Activities do not require a separate licence.
Incorrect
Asset Management Activities wholly incidental to Type 1,2,4,5 Activities do not require a separate licence.
Hint
Reference Chapter:1.2.9
-
Question 207 of 673
207. Question
1 pointsQID345:Which of the following persons are excluded from the definition of “securities or futures management”?
I. corporations that carry on securities or futures contracts management solely for their wholly owned subsidiaries, their holding companies which hold all their issued shares, or other wholly owned subsidiaries of the latter
II. persons licensed to deal in securities and/or futures contracts
(i.e. licensed for Type 1 and/or Type 2 regulated activity), who carry out securities or futures contracts management as an activity wholly incidental to the licensed activity
III. Solicitors, counsel (barristers), professional accountants and trustees who provide securities or futures contracts management services wholly incidental to their professional practices.
IV. Auditors and professionals who provide securities or futures contracts management services.Correct
Part V, SFO provides for the implementation of the licensing regime, including:
(a) allowing licensed persons conducting some regulated activities to conduct certain others, e.g. a Type 1 licence or registration covers Type 4, Type 6 and Type 9 regulated activities as well if the conducting of those activities is wholly incidental to the conducting of the Type 1 regulated activity;
(b) professional accountants, solicitors and counsel conducting Type 4, Type 5, Type 6 and Type 9 regulated activities that are wholly incidental to their professions and also;
(c.) corporations carrying out Type 4, Type 5, Type 6 and Type 9 regulated activities solely for their wholly owned subsidiaries, holding companies holding all their issued shares or other wholly owned subsidiaries of the holding company.Incorrect
Part V, SFO provides for the implementation of the licensing regime, including:
(a) allowing licensed persons conducting some regulated activities to conduct certain others, e.g. a Type 1 licence or registration covers Type 4, Type 6 and Type 9 regulated activities as well if the conducting of those activities is wholly incidental to the conducting of the Type 1 regulated activity;
(b) professional accountants, solicitors and counsel conducting Type 4, Type 5, Type 6 and Type 9 regulated activities that are wholly incidental to their professions and also;
(c.) corporations carrying out Type 4, Type 5, Type 6 and Type 9 regulated activities solely for their wholly owned subsidiaries, holding companies holding all their issued shares or other wholly owned subsidiaries of the holding company.Hint
Reference Chapter:1.2.9
-
Question 208 of 673
208. Question
1 pointsQID346:Which of the following are not examples of asset management?
I. corporations that carry out securities or futures contracts management solely for their wholly owned subsidiaries, their holding companies which hold all their issued shares, or other wholly owned subsidiaries of the latter
II. corporations that carry out securities or futures contracts management solely for professional investors or sovereign funds with extensive investment experience
III. persons licensed to deal in securities and/or futures contracts (i.e. licensed for Type 1 and/or Type 2 regulated activity), who carry out securities or futures contracts management as an activity wholly incidental to the licensed activity
IV. Solicitors, counsel (barristers), professional accountants and
trustees who provide securities or futures contracts
management services wholly incidental to their professional
practices.Correct
Part V, SFO provides for the implementation of the licensing regime, including:
(a) allowing licensed persons conducting some regulated activities to conduct certain others, e.g. a Type 1 licence or registration covers Type 4, Type 6 and Type 9 regulated activities as well if the conducting of those activities is wholly incidental to the conducting of the Type 1 regulated activity;
(b) professional accountants, solicitors and counsel conducting Type 4, Type 5, Type 6 and Type 9 regulated activities that are wholly incidental to their professions and also;
(c.) corporations carrying out Type 4, Type 5, Type 6 and Type 9 regulated activities solely for their wholly owned subsidiaries, holding companies holding all their issued shares or other wholly owned subsidiaries of the holding company.Incorrect
Part V, SFO provides for the implementation of the licensing regime, including:
(a) allowing licensed persons conducting some regulated activities to conduct certain others, e.g. a Type 1 licence or registration covers Type 4, Type 6 and Type 9 regulated activities as well if the conducting of those activities is wholly incidental to the conducting of the Type 1 regulated activity;
(b) professional accountants, solicitors and counsel conducting Type 4, Type 5, Type 6 and Type 9 regulated activities that are wholly incidental to their professions and also;
(c.) corporations carrying out Type 4, Type 5, Type 6 and Type 9 regulated activities solely for their wholly owned subsidiaries, holding companies holding all their issued shares or other wholly owned subsidiaries of the holding company.Hint
Reference Chapter:1.2.9
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Question 209 of 673
209. Question
1 pointsQID2738:The Securities and Futures Commission (SFC) is a/an
Correct
The SFC is an independent statutory body, not a government department.
Incorrect
The SFC is an independent statutory body, not a government department.
Hint
Reference Chapter:1.3.
-
Question 210 of 673
210. Question
1 pointsQID1151:Which of the following descriptions correctly describes the status of the SFC?
Correct
The SFC 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.Incorrect
The SFC 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.Hint
Reference Chapter:1.3.1
-
Question 211 of 673
211. Question
1 pointsQID779:Which of the following is NOT a regulatory objective of the SFC?
Correct
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(a) maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the market;
(b) promote public’s understanding of the industry including its operation and functioning;
© provide protection to the investing public;
(d) minimise crime and misconduct in the market;
€ reduce systemic risks in the industry; and
(f) assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the industry.
Providing protection for major shareholders is not one of these objectives.Incorrect
The objectives of the SFC in relation to the securities and futures industry, as stated in s. 4, SFO, are to:
(a) maintain and promote the fairness, efficiency, competitiveness, transparency and orderliness of the market;
(b) promote public’s understanding of the industry including its operation and functioning;
© provide protection to the investing public;
(d) minimise crime and misconduct in the market;
€ reduce systemic risks in the industry; and
(f) assist the Financial Secretary in maintaining the financial stability of Hong Kong by taking appropriate steps in relation to the industry.
Providing protection for major shareholders is not one of these objectives.Hint
Reference Chapter:1.3.1
-
Question 212 of 673
212. Question
1 pointsQID732:Which of the following descriptions about the SFC is correct?
Correct
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.Incorrect
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.Hint
Reference Chapter:1.3.1
-
Question 213 of 673
213. Question
1 pointsQID742:Which of the following is the objective of creating the SFO?
Correct
The objectives of the SFO are to provide a regulatory framework which:
(a) promotes a fair, orderly and transparent market;
(b) is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure;
(c) is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate
checks and balances; and
(d) is on a par with international standards and compatible with international practices, but tailored to meet local needs and circumstances.Incorrect
The objectives of the SFO are to provide a regulatory framework which:
(a) promotes a fair, orderly and transparent market;
(b) is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure;
(c) is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate
checks and balances; and
(d) is on a par with international standards and compatible with international practices, but tailored to meet local needs and circumstances.Hint
Reference Chapter:1.3.1
-
Question 214 of 673
214. Question
1 pointsQID1169:Mr. Wan would like to be licensed as a stock broker but was rejected by the SFC. Where can he file an appeal?
Correct
Securities and Futures Appeals Tribunal (“SFAT”) –established by the SFO as an independent statutory body. Chaired by a High Court judge, the SFAT comprises current and former judges appointed by the Chief Executive of the HKSAR and two other members drawn from a panel appointed by the Financial Secretary under delegated authority. The function of the SFAT is to hear appeals against the decisions made by the
SFC relating to the licensing or registration of intermediaries and certain other matters.Incorrect
Securities and Futures Appeals Tribunal (“SFAT”) –established by the SFO as an independent statutory body. Chaired by a High Court judge, the SFAT comprises current and former judges appointed by the Chief Executive of the HKSAR and two other members drawn from a panel appointed by the Financial Secretary under delegated authority. The function of the SFAT is to hear appeals against the decisions made by the
SFC relating to the licensing or registration of intermediaries and certain other matters.Hint
Reference Chapter:1.3.11
-
Question 215 of 673
215. Question
1 pointsQID1172:An independent statutory body with full-time members headed by a judge appointed by the Chief Executive of the Hong Kong SAR to hear appeals against the decisions made by the SFC relating to the licensing or registration of intermediaries and certain other matters” describes which of the following regulatory organizations?
Correct
Securities and Futures Appeals Tribunal (“SFAT”) – established by the SFO as an independent statutory body. Chaired by a High Court judge, the SFAT comprises current and former judges appointed by the Chief Executive of the HKSAR and two other members drawn from a panel appointed by the Financial Secretary under delegated authority. The function of the SFAT is to hear appeals against the decisions made by the SFC relating to the licensing or registration of intermediaries and certain other matters.
Incorrect
Securities and Futures Appeals Tribunal (“SFAT”) – established by the SFO as an independent statutory body. Chaired by a High Court judge, the SFAT comprises current and former judges appointed by the Chief Executive of the HKSAR and two other members drawn from a panel appointed by the Financial Secretary under delegated authority. The function of the SFAT is to hear appeals against the decisions made by the SFC relating to the licensing or registration of intermediaries and certain other matters.
Hint
Reference Chapter:1.3.11
-
Question 216 of 673
216. Question
1 pointsQID22:Which of the following are duties of the HKMA?
I. Protect the interest of insurance policies holder
II. Maintain currency stability
III. Enhance the efficiency and integrity of the financial system
IV. Ensure the safety and stability of the banking systemCorrect
The HKMA is required to maintain currency stability, ensure the safety and stability of the banking system, and promote the efficiency, integrity and development of the financial system.
Incorrect
The HKMA is required to maintain currency stability, ensure the safety and stability of the banking system, and promote the efficiency, integrity and development of the financial system.
Hint
Reference Chapter:1.3.12
-
Question 217 of 673
217. Question
1 pointsQID1180:Which of the following organizations are supervised, monitored and regulated by the HKMA?
I. The Banking Authority
II. Registered Institutions
III. Licensed Corporation
IV. Authorised Financial InstitutionsCorrect
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.
Incorrect
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.
Hint
Reference Chapter:1.3.12
-
Question 218 of 673
218. Question
1 pointsQID1179:Which of the following entities is responsible for maintaining the safety and stability of the banking system?
Correct
The HKMA is required to maintain currency stability, ensure the safety and stability of the banking system.
Incorrect
The HKMA is required to maintain currency stability, ensure the safety and stability of the banking system.
Hint
Reference Chapter:1.3.12
-
Question 219 of 673
219. Question
1 pointsQID1363:How many exchanges and clearing houses are there in Hong Kong?
Correct
There are currently two exchanges and four clearing houses in Hong Kong.
Incorrect
There are currently two exchanges and four clearing houses in Hong Kong.
Hint
Reference Chapter:1.3.14
-
Question 220 of 673
220. Question
1 pointsQID905:Which of the following correctly describes the HKEX?
Correct
HKEX is not the venue for buying and selling Hong Kong stocks. HKEX is an exchange controller. HKEX’s subsidiary SEHK is the venue for buying and selling Hong Kong stocks. The SFC is responsible for licensing and registration of intermediaries. Stamp duty is a source of income of the government of the HKSAR.
Incorrect
HKEX is not the venue for buying and selling Hong Kong stocks. HKEX is an exchange controller. HKEX’s subsidiary SEHK is the venue for buying and selling Hong Kong stocks. The SFC is responsible for licensing and registration of intermediaries. Stamp duty is a source of income of the government of the HKSAR.
Hint
Reference Chapter:1.3.14
-
Question 221 of 673
221. Question
1 pointsQID1203:How many securities exchanges are there in Hong Kong?
Correct
Only the SEHK is the securities exchange. HKFE is a futures exchange, not securities exchange.
Incorrect
Only the SEHK is the securities exchange. HKFE is a futures exchange, not securities exchange.
Hint
Reference Chapter:1.3.14
-
Question 222 of 673
222. Question
1 pointsQID1207:The duties of the HKEX, as the exchange controller, include which of the following?
I. Ensuring an orderly and fair market in securities and futures contracts traded on or through the SEHK and HKFE.
II. Ensuring that risks are managed prudently, to act in the interests of the public, having particular regard to the interests of the investing public.
III. Being responsible for front-line prudential and regulation of market participants.
IV. Not being responsible for front-line prudential and regulation of market participants.Correct
HKEX is responsible for ensuring an orderly and fair market in securities and futures contracts traded on or through the SEHK and HKFE, respectively. HKEX is required to ensure that risks are managed prudently, to act in the interests of the public, having particular regard to the interests of the investing public, and to ensure that where such interests conflict with any other interests the former shall prevail.
Incorrect
HKEX is responsible for ensuring an orderly and fair market in securities and futures contracts traded on or through the SEHK and HKFE, respectively. HKEX is required to ensure that risks are managed prudently, to act in the interests of the public, having particular regard to the interests of the investing public, and to ensure that where such interests conflict with any other interests the former shall prevail.
Hint
Reference Chapter:1.3.14
-
Question 223 of 673
223. Question
1 pointsQID1628:The Central Clearing and Settlement System (“CCASS”) is
Correct
The Central Clearing and Settlement System (“CCASS”) is operated by HKSCC for clearing and settlement of securities transactions on the SEHK.
Incorrect
The Central Clearing and Settlement System (“CCASS”) is operated by HKSCC for clearing and settlement of securities transactions on the SEHK.
Hint
Reference Chapter:1.3.14
-
Question 224 of 673
224. Question
1 pointsQID101:Which of the following is an exchange controller?
Correct
HKEX is an exchange controller recognised by the SFC under s. 59, SFO.
Incorrect
HKEX is an exchange controller recognised by the SFC under s. 59, SFO.
Hint
Reference Chapter:1.3.14
-
Question 225 of 673
225. Question
1 pointsQID108:Which of the following groups of people may directly use the facilities of the Hong Kong Futures Exchange (HKFE)?
I. Professional investors.
II. Institutional investors.
III. Person licensed by or registered with the SFC.
IV. Foreign futures dealer.Correct
Only the SFC’s licensed or registered persons may have access to the trading systems and facilities of HKFE, whether directly or indirectly, in order to carry out the Type 2 regulated activity of dealing in futures contracts.
Incorrect
Only the SFC’s licensed or registered persons may have access to the trading systems and facilities of HKFE, whether directly or indirectly, in order to carry out the Type 2 regulated activity of dealing in futures contracts.
Hint
Reference Chapter:1.3.14
-
Question 226 of 673
226. Question
1 pointsQID102:Which of the following clearing houses are currently in operation in Hong Kong?
I. Hong Kong Securities Clearing Company Limited.
II. The SEHK Options Clearing House Limited.
III. HKFE Clearing Corporation Limited.
IV. Hong Kong Options Clearing Limited.Correct
On 6 March 2000, the SEHK, HKFE and the three
associated clearing houses – Hong Kong Securities Clearing Company Limited, The SEHK Options Clearing House Limited and HKFE Clearing Corporation Limited – became wholly owned subsidiaries of HKEX.Incorrect
On 6 March 2000, the SEHK, HKFE and the three
associated clearing houses – Hong Kong Securities Clearing Company Limited, The SEHK Options Clearing House Limited and HKFE Clearing Corporation Limited – became wholly owned subsidiaries of HKEX.Hint
Reference Chapter:1.3.14
-
Question 227 of 673
227. Question
1 pointsQID1205:Which of the following is a recognized exchange controller under the SFO?
Correct
Hong Kong Securities Clearing Company Limited, The SEHK
Options Clearing House Limited and HKFE Clearing Corporation Limited obtain their recognition under s. 37, SFO. A recognized exchange controller may control a recognized
exchange company or clearing house.Incorrect
Hong Kong Securities Clearing Company Limited, The SEHK
Options Clearing House Limited and HKFE Clearing Corporation Limited obtain their recognition under s. 37, SFO. A recognized exchange controller may control a recognized
exchange company or clearing house.Hint
Reference Chapter:1.3.14
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Question 228 of 673
228. Question
1 pointsQID92:Which of the following description about the HKEX is correct?
I. The HKEX is a listed company on the SEHK.
II. The HKEX is an exchange controller recognized by the SFC
III. The SEHK, HKFE and the three associated clearing houses are subsidiaries of the HKEX.
IV. The HKEX is responsible for front-line prudential and conduct regulation of market participants.Correct
HKEX is a listed company on the SEHK. On 6 March 2000, the SEHK, HKFE and the three associated clearing houses – Hong Kong Securities Clearing Company Limited, The SEHK
Options Clearing House Limited and HKFE Clearing Corporation Limited – became wholly owned subsidiaries of HKEX. HKEX is an exchange controller recognised by the SFC under s. 59, SFO.Incorrect
HKEX is a listed company on the SEHK. On 6 March 2000, the SEHK, HKFE and the three associated clearing houses – Hong Kong Securities Clearing Company Limited, The SEHK
Options Clearing House Limited and HKFE Clearing Corporation Limited – became wholly owned subsidiaries of HKEX. HKEX is an exchange controller recognised by the SFC under s. 59, SFO.Hint
Reference Chapter:1.3.14
-
Question 229 of 673
229. Question
1 pointsQID99:Which of the following is an exchange controller in Hong Kong?
Correct
HKEX is an exchange controller recognised by the SFC under s. 59, SFO.
Incorrect
HKEX is an exchange controller recognised by the SFC under s. 59, SFO.
Hint
Reference Chapter:1.3.14
-
Question 230 of 673
230. Question
1 pointsQID106:Which of the following entity is responsible for the management of business risk, and the enforcement of their listing, trading, clearing and settlement rules?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.3.14
-
Question 231 of 673
231. Question
1 pointsQID1204:Which of the following organizations are recognized clearing houses under the SFO?
I. Hong Kong Securities Clearing Company Limited
II. The SEHK Options Clearing House Limited
III. HKFE Clearing Corporation Limited
IV. The HKEXCorrect
On 6 March 2000, the SEHK, HKFE and the three associated clearing houses Hong Kong Securities Clearing Company Limited, The SEHK Options Clearing House Limited and HKFE Clearing Corporation Limited became wholly owned subsidiaries of HKEX.
Incorrect
On 6 March 2000, the SEHK, HKFE and the three associated clearing houses Hong Kong Securities Clearing Company Limited, The SEHK Options Clearing House Limited and HKFE Clearing Corporation Limited became wholly owned subsidiaries of HKEX.
Hint
Reference Chapter:1.3.14
-
Question 232 of 673
232. Question
1 pointsQID1627:In Hong Kong, the one who clears the options business of the SEHK is
Correct
The SEHK Options Clearing House Limited (“SEOCH”), a wholly owned subsidiary of the SEHK, which clears the options business of the SEHK
Incorrect
The SEHK Options Clearing House Limited (“SEOCH”), a wholly owned subsidiary of the SEHK, which clears the options business of the SEHK
Hint
Reference Chapter:1.3.14
-
Question 233 of 673
233. Question
1 pointsQID733:The HKEX is responsible for regulating which of the following entities and matters?
I. Listed Companies
II. SEHK
III. HKFE
IV. Investors who participate in securities trading.Correct
HKEX is responsible for ensuring an orderly and fair market in securities and futures contracts traded on or through the SEHK and HKFE, respectively. HKEX is required to ensure that risks are managed prudently, to act in the interests of the public, having
particular regard to the interests of the investing public, and to ensure that where such interests conflict with any other interests the former shall prevail. The SEHK is also responsible for administering the Listing Rules.Incorrect
HKEX is responsible for ensuring an orderly and fair market in securities and futures contracts traded on or through the SEHK and HKFE, respectively. HKEX is required to ensure that risks are managed prudently, to act in the interests of the public, having
particular regard to the interests of the investing public, and to ensure that where such interests conflict with any other interests the former shall prevail. The SEHK is also responsible for administering the Listing Rules.Hint
Reference Chapter:1.3.14
-
Question 234 of 673
234. Question
1 pointsQID2751:Which of the following descriptions about the HKEX is incorrect?
Correct
HKEX is not responsible for front-line prudential regulation of market participants. Such task is the responsibility of the SFC.
Incorrect
HKEX is not responsible for front-line prudential regulation of market participants. Such task is the responsibility of the SFC.
Hint
Reference Chapter:1.3.14
-
Question 235 of 673
235. Question
1 pointsQID2353:Hong Kong Exchange is
Correct
Hong Kong Exchange is the exchange designated by Hong Kong and the controller of clearing company. The subsidiary of Hong Kong Exchange includes The Stock Exchange of Hong Kong Limited, which is responsible for the trading and clearing of securities and futures contract.
Incorrect
Hong Kong Exchange is the exchange designated by Hong Kong and the controller of clearing company. The subsidiary of Hong Kong Exchange includes The Stock Exchange of Hong Kong Limited, which is responsible for the trading and clearing of securities and futures contract.
Hint
Reference Chapter:1.3.14
-
Question 236 of 673
236. Question
1 pointsQID1643:Kaohsiung Futures should notify the HKFE in the occurrence of which of the following incidents?
I. The staff of Kaohsiung Futures has materially breached any laws.
II. The staff of Kaohsiung Futures has violated the rules, codes and guidelines issued by the SFC.
III. Kaohsiung Futures is failing to meet its liabilities and is about to wind-up.
IV. The directors of Kaohsiung Futures has committed an offence under the anti bribery ordinance.Correct
(g) notify HKFE in writing immediately if any one or more of the following occurs:
(i) the discovery of its non-compliance with any of the HKFE Rules, the SFO and its subsidiary legislation, and the conditions imposed on it by HKFE;
(ii) the passing of any resolution, the initiation of any proceedings which may result in the appointment of a receiver (or equivalent) or the winding-up (or equivalent) of an HKFE Participant or any of its shareholders, or the making of any receiving order or arrangement or composition with creditors;
(iv) its becoming aware of any breach of the HKFE Rules or of the SFO and its subsidiary legislation by any other HKFE ParticipantIncorrect
(g) notify HKFE in writing immediately if any one or more of the following occurs:
(i) the discovery of its non-compliance with any of the HKFE Rules, the SFO and its subsidiary legislation, and the conditions imposed on it by HKFE;
(ii) the passing of any resolution, the initiation of any proceedings which may result in the appointment of a receiver (or equivalent) or the winding-up (or equivalent) of an HKFE Participant or any of its shareholders, or the making of any receiving order or arrangement or composition with creditors;
(iv) its becoming aware of any breach of the HKFE Rules or of the SFO and its subsidiary legislation by any other HKFE ParticipantHint
Reference Chapter:1.3.14
-
Question 237 of 673
237. Question
1 pointsQID1206:Which of the following are recognized exchanges under the SFO?
I. HKEX
II. SEHK
III. FEHK
IV. HKSCCCorrect
HKEX is an exchange controller recognized by the SFC under s. 59, SFO. The SEHK and HKFE are recognized under s. 19, SFO as exchange companies that may operate a stock market and a futures market in Hong Kong respectively.
Incorrect
HKEX is an exchange controller recognized by the SFC under s. 59, SFO. The SEHK and HKFE are recognized under s. 19, SFO as exchange companies that may operate a stock market and a futures market in Hong Kong respectively.
Hint
Reference Chapter:1.3.14
-
Question 238 of 673
238. Question
1 pointsQID100:Which of the following securities and futures exchanges are currently in Hong Kong?
I. Stock Exchange of Hong Kong.
II. Hong Kong Futures Exchange Limited.
III. Hong Kong Options Exchange.
IV. Hong Kong Bonds Exchange.Correct
The SEHK and HKFE are recognised under s. 19, SFO as exchange companies that may operate a stock market and a futures market in Hong Kong respectively.
Incorrect
The SEHK and HKFE are recognised under s. 19, SFO as exchange companies that may operate a stock market and a futures market in Hong Kong respectively.
Hint
Reference Chapter:1.3.14
-
Question 239 of 673
239. Question
1 pointsQID1197:Which of the following are functions and structures of the Mandatory Provident Fund Schemes Authority (MPFA)?
I. It has a chairman.
II. It has a majority of non-executive directors.
III. It approves trustees of MPF schemes and regulates them.
IV. It grants MPF exemptions to Occupational Retirement Schemes (ORSO schemes).Correct
The MPFA has responsibility for:
(f) approving trustees and regulating the affairs and activities of such approved trustees.Incorrect
The MPFA has responsibility for:
(f) approving trustees and regulating the affairs and activities of such approved trustees.Hint
Reference Chapter:1.3.16
-
Question 240 of 673
240. Question
1 pointsQID50:Which of the following spheres of the MPF schemes has linkage with the SFC?
I. The SFC vets and authorizes investment products of MPF Schemes.
II. The SFC vets and authorizes marketing materials of investment products of MPF Schemes.
III. The SFC authorizes Pooled Investment Funds.
IV. The SFC approves trustees of MPF Schemes and regulates the affairs and activities of such approved trusteesCorrect
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).Incorrect
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).Hint
Reference Chapter:1.3.16
-
Question 241 of 673
241. Question
1 pointsQID46:Which of the following activities is Mandatory Provident Fund Schemes Authority (“MPFA”) responsible for ?
Correct
The MPFA has responsibility for: (f) approving trustees and regulating the affairs and activities of such approved trustees.
Incorrect
The MPFA has responsibility for: (f) approving trustees and regulating the affairs and activities of such approved trustees.
Hint
Reference Chapter:1.3.16
-
Question 242 of 673
242. Question
1 pointsQID2508:The regulator of the trustee of an MPF Scheme is?
Correct
The regulator of the trustee of an MPF Scheme is MPFA.
Incorrect
The regulator of the trustee of an MPF Scheme is MPFA.
Hint
Reference Chapter:1.3.16
-
Question 243 of 673
243. Question
1 pointsQID1505:Which of the following duties are performed by the Mandatory Provident Fund Authority (MPFA)?
I. Registering MPF Schemes
II. Approving Pooled Investment Funds.
III. Overseeing and making rules and guidelines for the administration and management of registered schemes and pooled investment funds
IV. Ongoing monitoring of compliance by MPF products with the Mandatory Provident Fund Schemes Ordinance (“MPFSO”)Correct
The functions of the MPFA include:
– registering MPF schemes
– the registration procedures of MPF schemes and approval processes of constituent funds and approved pooled investment
funds;
– ongoing monitoring of compliance of MPF products with the MPFSOIncorrect
The functions of the MPFA include:
– registering MPF schemes
– the registration procedures of MPF schemes and approval processes of constituent funds and approved pooled investment
funds;
– ongoing monitoring of compliance of MPF products with the MPFSOHint
Reference Chapter:1.3.16
-
Question 244 of 673
244. Question
1 pointsQID1198:The Mandatory Provident Fund Schemes Authority (MPFA) is responsible for which of the following matters relating to Mandatory Provident Fund (MPF) products?
I. Authorisation of the offering documents for the products.
II. Licensing of investment managers of MPF products.
III. Overall administration of MPF schemes.
IV. Registration of employer-sponsored MPF schemes.Correct
The MPFA has responsibility for:
(a) registering MPF schemes;
(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;
(g) dealing with complaints about MPF products and approved trustees, and referring them to the SFC and other regulators for action where necessary.Incorrect
The MPFA has responsibility for:
(a) registering MPF schemes;
(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;
(g) dealing with complaints about MPF products and approved trustees, and referring them to the SFC and other regulators for action where necessary.Hint
Reference Chapter:1.3.16
-
Question 245 of 673
245. Question
1 pointsQID39:Which of the following are duties and functions of the office of
Insurance Authority?
I. Maintain a product registry of all insurance products online
II. Regulate and supervise insurance intermediaries directly
III. The promotion of self-regulation by the industry
IV. Since all insurance products are not approved by the SFC, therefore, there are no linkages between the spheres of activity of the Insurance Authority and the SFCCorrect
The Insurance Authority directly supervises the insurance industry.
Incorrect
The Insurance Authority directly supervises the insurance industry.
Hint
Reference Chapter:1.3.21
-
Question 246 of 673
246. Question
1 pointsQID1189:Which of the following institutions’ principal functions are to ensure that the interests of policy holders are protected and to promote the general stability of the insurance industry in Hong Kong?
Correct
The principal functions of the Insurance Authority are to ensure that the interests of policy holders are protected and to promote the general stability of the insurance industry in Hong Kong.
Incorrect
The principal functions of the Insurance Authority are to ensure that the interests of policy holders are protected and to promote the general stability of the insurance industry in Hong Kong.
Hint
Reference Chapter:1.3.21
-
Question 247 of 673
247. Question
1 pointsQID34:The Insurance Authority (IA) directly regulates:
I. Insurers (insurance companies)
II. Auditors of insurers
III. Insurance agents
IV. Insurance related investment productsCorrect
The Insurance Authority (IA) directly regulates:
I. Insurers (insurance companies)
II. Insurance agents
III. Insurance related investment productsIncorrect
The Insurance Authority (IA) directly regulates:
I. Insurers (insurance companies)
II. Insurance agents
III. Insurance related investment productsHint
Reference Chapter:1.3.21
-
Question 248 of 673
248. Question
1 pointsQID1191:Insurance agents should register with which of the following organizations?
Correct
Insurance Agents should apply for a licence with the Insurance Authority.
Incorrect
Insurance Agents should apply for a licence with the Insurance Authority.
Hint
Reference Chapter:1.3.22
-
Question 249 of 673
249. Question
1 pointsQID1190:The Insurance Authority is responsible for:
I. Authorizing and regulating Insurance Companies (Insurer).
II. Regulating Insurance Agents.
III. Regulating Insurance Brokers.
IV. Handling complaints of insurance products.Correct
The Insurance Authority is responsible for:
I. Authorizing and regulating Insurance Companies (Insurer).
II. Regulating Insurance Agents.
III. Regulating Insurance Brokers.
IV. Handling complaints of insurance products.Incorrect
The Insurance Authority is responsible for:
I. Authorizing and regulating Insurance Companies (Insurer).
II. Regulating Insurance Agents.
III. Regulating Insurance Brokers.
IV. Handling complaints of insurance products.Hint
Reference Chapter:1.3.22
-
Question 250 of 673
250. Question
1 pointsQID1194:The major linkages between the spheres of activity of the Insurance Authority and the SFC are:
I. The authorization of general insurance schemes.
II. The authorization of independent retirement funds.
III. The authorization of investment-linked assurance schemes.
IV. The authorization of pooled retirement funds.Correct
There are two classes of funds authorised by the SFC which do
have certain linkage with the Insurance Authority: investment-linked assurance schemes and pooled retirement funds, both of which are marketed by the insurance industry. Authorization of these has been delegated by the SFC to the Committee on Investment-Linked Assurance Schemes and Pooled Retirement Funds. The Insurance Authority is represented on this committee, as insurance companies wishing to promote these schemes will need to be authorised under the Insurance Companies Ordinance.Incorrect
There are two classes of funds authorised by the SFC which do
have certain linkage with the Insurance Authority: investment-linked assurance schemes and pooled retirement funds, both of which are marketed by the insurance industry. Authorization of these has been delegated by the SFC to the Committee on Investment-Linked Assurance Schemes and Pooled Retirement Funds. The Insurance Authority is represented on this committee, as insurance companies wishing to promote these schemes will need to be authorised under the Insurance Companies Ordinance.Hint
Reference Chapter:1.3.23
-
Question 251 of 673
251. Question
1 pointsQID1573:MPF Intermediaries are regulated by?
Correct
The SFC, HKMA, MPFA and IA all regulate and supervise intermediaries operating within their respective jurisdictions, and there is considerable overlap in the regulatory regime for intermediaries engaged in the asset management industry.
Incorrect
The SFC, HKMA, MPFA and IA all regulate and supervise intermediaries operating within their respective jurisdictions, and there is considerable overlap in the regulatory regime for intermediaries engaged in the asset management industry.
Hint
Reference Chapter:1.3.25
-
Question 252 of 673
252. Question
1 pointsQID1183:If an authorised financial institution would like to conduct regulated actives under the SFO, which organization should it register with?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.3.26
-
Question 253 of 673
253. Question
1 pointsQID1182:The British Construction bank is a licensed bank under the HKMA and plans to provide securities trading services for its clients, it should:
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.3.26
-
Question 254 of 673
254. Question
1 pointsQID30:Which of the following is the regulator of Registered Institutions?
Correct
As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.Incorrect
As the frontline regulator of AFIs is the HKMA, the latter takes the leading role in vetting applications for such registration and in supervising their SFC-regulated activities, including carrying out
on-site inspections. The HKMA applies all SFC criteria, such as the “fit and proper” criteria, in supervising AFIs registered with the SFC.Hint
Reference Chapter:1.3.26
-
Question 255 of 673
255. Question
1 pointsQID1186:The HKMA may refer cases of suspected malpractices by registered institutions in respect of the SFC-regulated activities to the:
Correct
The HKMA may refer cases of suspected malpractice by registered institutions in respect of the SFC-RAs to the SFC, which may directly review those institutions.
Incorrect
The HKMA may refer cases of suspected malpractice by registered institutions in respect of the SFC-RAs to the SFC, which may directly review those institutions.
Hint
Reference Chapter:1.3.27
-
Question 256 of 673
256. Question
1 pointsQID1200:Which of the following are SFC’s duties towards the MPF Schemes?
I. 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).
II. Registering and approving investment managers and continued monitoring of their conduct in the investment management of MPF products.
III. Investigating alleged breaches of the provisions of the SFC Code on MPF Products and any relevant ordinances, and taking enforcement action.
IV. Supervising the selling process of the sales representatives selling MPF schemes.Correct
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC:
(a) vetting and authorizing 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;
(d) investigating alleged breaches of the provisions of the SFC Code on MPF Products and any relevant ordinances, and taking enforcement action.Incorrect
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC:
(a) vetting and authorizing 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;
(d) investigating alleged breaches of the provisions of the SFC Code on MPF Products and any relevant ordinances, and taking enforcement action.Hint
Reference Chapter:1.3.27
-
Question 257 of 673
257. Question
1 pointsQID1201:Which of the following responsibilities between the SFC and the MPF schemes are interlinked?
I. Vetting and authorising MPF products and related marketing materials.
II. Registering and approving investment managers.
III. Investigating alleged breaches of the provisions of the SFC Code on MPF Products and any relevant ordinances, and taking enforcement action.
IV. Regulate the sales process of sales representatives selling MPF schemes.Correct
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC:
(a) vetting and authorizing 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;
(d) investigating alleged breaches of the provisions of the SFC Code on MPF Products and any relevant ordinances, and taking enforcement action.Incorrect
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC:
(a) vetting and authorizing 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;
(d) investigating alleged breaches of the provisions of the SFC Code on MPF Products and any relevant ordinances, and taking enforcement action.Hint
Reference Chapter:1.3.27
-
Question 258 of 673
258. Question
1 pointsQID52:Which of the following institution is responsible for investigation into breaches of the SFC Code on MPF Products?
Correct
SFC is reposible for investigating alleged breaches of the provisions of the SFC Code on MPF Products and any relevant ordinances, and taking enforcement action
Incorrect
SFC is reposible for investigating alleged breaches of the provisions of the SFC Code on MPF Products and any relevant ordinances, and taking enforcement action
Hint
Reference Chapter:1.3.27
-
Question 259 of 673
259. Question
1 pointsQID1199:Mr. Ko is an investment manager; he wishes to manage a fund under the Kaohsiung Bank Group’s MPF schemes. He needs to be licensed by which of the following?
Correct
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC:
(b) registering and approving investment managers and continued monitoring of their conduct in the investment management of MPF products.Incorrect
Certain responsibilities of the MPFA interlink with the particular responsibilities of the SFC:
(b) registering and approving investment managers and continued monitoring of their conduct in the investment management of MPF products.Hint
Reference Chapter:1.3.27
-
Question 260 of 673
260. Question
1 pointsQID1196:The Mandatory Provident Fund Schemes Authority is responsible for:
I. registering provident fund schemes.
II. approving unit trust funds.
III. overseeing and making rules and guidelines for the administration and management of registered schemes and pooled investment funds.
IV. ongoing monitoring of MPF products’ compliance with the Mandatory Provident Fund Schemes Ordinance.Correct
The MPFA has responsibility for:
(a) registering MPF schemes;
(c.) overseeing and making rules and guidelines for the administration and management of registered schemes and pooled investment funds;
(d) ongoing monitoring of compliance by MPF products with the Mandatory Provident Fund Schemes Ordinance (“MPFSO”).Incorrect
The MPFA has responsibility for:
(a) registering MPF schemes;
(c.) overseeing and making rules and guidelines for the administration and management of registered schemes and pooled investment funds;
(d) ongoing monitoring of compliance by MPF products with the Mandatory Provident Fund Schemes Ordinance (“MPFSO”).Hint
Reference Chapter:1.3.27
-
Question 261 of 673
261. Question
1 pointsQID514:Which of the following agencies are the 3 major clearing houses in Hong Kong?
I. Hong Kong Securities Clearing Company Limited (HKSCC).
II. The SEHK Options Clearing House Limited (SEOCH).
III. HKFE Clearing Corporation Limited (HKCC).
IV. Hong Kong OTC Clear Limited.Correct
Upon merger and demutualisation, the two exchanges and three
clearing houses (HKSCC, SEOCH and HKCC) became the wholly owned subsidiaries of HKEX and “participantship” of the exchanges and clearing houses was introduced. They became the three major clearing houses in Hong Kong.Incorrect
Upon merger and demutualisation, the two exchanges and three
clearing houses (HKSCC, SEOCH and HKCC) became the wholly owned subsidiaries of HKEX and “participantship” of the exchanges and clearing houses was introduced. They became the three major clearing houses in Hong Kong.Hint
Reference Chapter:1.3.4
-
Question 262 of 673
262. Question
1 pointsQID2786:Which of the following is not a product/material approved by the SFC?
Correct
The counterparty of OTC derivatives must be institutional professional investors. The general principle of the SFC’s approval is that all products that are only allowed to be traded by professional investors do not need to be approved.
Incorrect
The counterparty of OTC derivatives must be institutional professional investors. The general principle of the SFC’s approval is that all products that are only allowed to be traded by professional investors do not need to be approved.
Hint
Reference Chapter:1.3.5
-
Question 263 of 673
263. Question
1 pointsQID1504:Which department/division deals with the authorization of CISs including the granting of waivers from the CUTMF?
Correct
The IP Division is of particular relevance to the asset management industry, as it regulates and approves investment products offered to the public and monitors disclosures and ongoing compliance of authorised investment products. It is also responsible for developing regulatory platforms to facilitate market growth and product innovation.
Incorrect
The IP Division is of particular relevance to the asset management industry, as it regulates and approves investment products offered to the public and monitors disclosures and ongoing compliance of authorised investment products. It is also responsible for developing regulatory platforms to facilitate market growth and product innovation.
Hint
Reference Chapter:1.3.5
-
Question 264 of 673
264. Question
1 pointsQID1173:What are the major duties of the Corporate Finance Division?
I. regulates takeovers and mergers of public companies and share repurchases.
II. administers securities and company legislation applicable to listed and unlisted companies.
III. supervises the listing-related activities of the SEHK.
IV. reviews and recommends changes to the listing rules.Correct
Corporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs to afford fair treatment of shareholders and to provide an orderly framework for takeovers and share buy-backs transactions in Hong Kong;
(b) supervises the listing-related activities of the SEHK;
(c.) reviews and recommends changes to the Rules Governing the Listing of Securities on the SEHK (“Listing Rules”);
(d) reviews and authorizes prospectuses and marketing materials for unlisted shares or debentures.Incorrect
Corporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs to afford fair treatment of shareholders and to provide an orderly framework for takeovers and share buy-backs transactions in Hong Kong;
(b) supervises the listing-related activities of the SEHK;
(c.) reviews and recommends changes to the Rules Governing the Listing of Securities on the SEHK (“Listing Rules”);
(d) reviews and authorizes prospectuses and marketing materials for unlisted shares or debentures.Hint
Reference Chapter:1.3.6
-
Question 265 of 673
265. Question
1 pointsQID104:Which of the following entity is responsible for monitoring the exchanges and clearing houses in Hong Kong?
Correct
The SFC supervises and monitors the activities of HKEX, the exchange companies and the clearing houses, approves their rules and amendments to the rules, approves the fees they charge, and administers and enforces the applicable legislation. It also carries out regular reviews of these activities.
Incorrect
The SFC supervises and monitors the activities of HKEX, the exchange companies and the clearing houses, approves their rules and amendments to the rules, approves the fees they charge, and administers and enforces the applicable legislation. It also carries out regular reviews of these activities.
Hint
Reference Chapter:1.3.6
-
Question 266 of 673
266. Question
1 pointsQID2834:Which department of the SFC is responsible for monitoring listed companies’ announcements and identifying misconduct or non-compliance?
Correct
The SFC’s Corporate Finance Division monitors listed companies’ announcements and identifies misconduct or non-compliance by listed companies.
Incorrect
The SFC’s Corporate Finance Division monitors listed companies’ announcements and identifies misconduct or non-compliance by listed companies.
Hint
Reference Chapter:1.3.6
-
Question 267 of 673
267. Question
1 pointsQID79:Which department/division of the SFC supervises licensed corporations and individual licensees on an ongoing basis?
Correct
Intermediaries Supervision Department:
(a) supervises the business conduct of licensed corporations and individual licensees on an ongoing basis, by conducting on-site inspection and off-site monitoring; and
(b) monitors the financial integrity of licensed corporations.Incorrect
Intermediaries Supervision Department:
(a) supervises the business conduct of licensed corporations and individual licensees on an ongoing basis, by conducting on-site inspection and off-site monitoring; and
(b) monitors the financial integrity of licensed corporations.Hint
Reference Chapter:1.3.6
-
Question 268 of 673
268. Question
1 pointsQID78:Which department/division of the SFC licenses asset management corporation and their staff and approves responsible officers?
Correct
Licensing Department:
(a) licenses corporations and individuals seeking to conduct business in Hong Kong in the regulated activities for which a licence is required under the SFO.Incorrect
Licensing Department:
(a) licenses corporations and individuals seeking to conduct business in Hong Kong in the regulated activities for which a licence is required under the SFO.Hint
Reference Chapter:1.3.6
-
Question 269 of 673
269. Question
1 pointsQID77:The SFC and the various codes it has issued place importance on the responsibility of which of the following entities to set
appropriate standards of conduct?Correct
Licensing Department:
(b) issues codes and guidelines concerning the competence and suitability of corporations and individuals to remain licensed.Incorrect
Licensing Department:
(b) issues codes and guidelines concerning the competence and suitability of corporations and individuals to remain licensed.Hint
Reference Chapter:1.3.6
-
Question 270 of 673
270. Question
1 pointsQID76:Which of the following division of the SFC authorizes CIS?
Correct
Investment Products Division:
(b) regulates and approves investment products that are offered to the public and subject to the SFO.Incorrect
Investment Products Division:
(b) regulates and approves investment products that are offered to the public and subject to the SFO.Hint
Reference Chapter:1.3.6
-
Question 271 of 673
271. Question
1 pointsQID73:Which of the following are functions of the Corporate Finance Division of the SFC?
I. Administer the Codes on Takeovers and Mergers and Share Buy-backs and regulates takeovers, mergers and share buy- backs of applicable companies
II. Provide advice on corporate restructuring to listed company in
Hong Kong
III. Supervise the listing-related activities of The Stock Exchange
of Hong Kong Limited (“SEHK”)
IV. Provide advice on takeover activities to minority shareholdersCorrect
Corporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs and regulates takeovers, mergers and share buy-backs of applicable companies;
(b) supervises the listing-related activities of The Stock Exchange of Hong Kong Limited (“SEHK”).Incorrect
Corporate Finance Division:
(a) administers The Codes on Takeovers and Mergers and Share Buy-backs and regulates takeovers, mergers and share buy-backs of applicable companies;
(b) supervises the listing-related activities of The Stock Exchange of Hong Kong Limited (“SEHK”).Hint
Reference Chapter:1.3.6
-
Question 272 of 673
272. Question
1 pointsQID2846:Which department of the SFC is responsible for monitoring transactions in the stock market?
Correct
The Enforcement Division is responsible for monitoring stock market transactions. The Supervision of Markets Division mainly monitors and regulates the exchange itself, not the transactions that take place in the market.
Incorrect
The Enforcement Division is responsible for monitoring stock market transactions. The Supervision of Markets Division mainly monitors and regulates the exchange itself, not the transactions that take place in the market.
Hint
Reference Chapter:1.3.6
-
Question 273 of 673
273. Question
1 pointsQID1155:Which of the following are the main functions of the SFC?
I. Responsible for front-line supervision.
II. Responsible for regulating the discipline of the exchanges.
III. Oversees other securities intermediaries.
IV. Monitor a variety of approved products.Correct
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) recognized exchange, recognized clearing houses, recognized exchange controllers and recognized investor compensation companies or persons carrying on RAs; and
(ii) registered institutions that are regulated or to be regulated by the SFC under any relevant provisions.Incorrect
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) recognized exchange, recognized clearing houses, recognized exchange controllers and recognized investor compensation companies or persons carrying on RAs; and
(ii) registered institutions that are regulated or to be regulated by the SFC under any relevant provisions.Hint
Reference Chapter:1.3.6
-
Question 274 of 673
274. Question
1 pointsQID2803:The objectives of the SFO are to provide a regulatory framework with which of the following characteristics?
I. Promotes a fair, orderly and transparent market.
II. Is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure.
III. Is administered by a regulator with sufficient powers and discretion whose operations are transparent and directly under the government.
IV. Is a system that can satisfy PRC mainland legal standards, being compatible with PRC mainland laws and practices and meet local needs.Correct
The objectives of the SFO are to provide a regulatory framework which:
(a) promotes a fair, orderly and transparent market;
(b) is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure;
(c) is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate
checks and balances.Incorrect
The objectives of the SFO are to provide a regulatory framework which:
(a) promotes a fair, orderly and transparent market;
(b) is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure;
(c) is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate
checks and balances.Hint
Reference Chapter:1.3.6
-
Question 275 of 673
275. Question
1 pointsQID1160:Which of the following are operating divisions of the SFC?
I. Corporate Finance Division
II. Enforcement Division
III. Investment Product Division
IV. Market and Intermediaries DivisionCorrect
Each of the 5 executive directors other than the CEO supervises an operating division. The divisions are Corporate Finance; Enforcement; Investment Products; Supervision of Markets
and Intermediaries.Incorrect
Each of the 5 executive directors other than the CEO supervises an operating division. The divisions are Corporate Finance; Enforcement; Investment Products; Supervision of Markets
and Intermediaries.Hint
Reference Chapter:1.3.6
-
Question 276 of 673
276. Question
1 pointsQID1176:Which of the following are duties of the SFC’s Licensing Department:
I. Licenses corporations and individuals seeking to conduct business in Hong Kong in the regulated activities for which a licence is required under the SFO.
II. Issues codes and guidelines concerning the competence and suitability of corporations and individuals to remain licensed.
III. Deals with issues relating to the continuing suitability of licensed corporations and individuals to be licensed.
IV. Monitors licensees by means of annual returns.Correct
Licensing Department:
(a) licenses corporations and individuals seeking to conduct RAs as defined under the SFO;
(b) issues codes and guidelines concerning the competence and suitability of corporations and individuals to remain licensed;
(c) monitors the on-going compliance of licensing requirements by licensees, substantial shareholders of listed corporations and directors of licensed corporations and substantial shareholdersIncorrect
Licensing Department:
(a) licenses corporations and individuals seeking to conduct RAs as defined under the SFO;
(b) issues codes and guidelines concerning the competence and suitability of corporations and individuals to remain licensed;
(c) monitors the on-going compliance of licensing requirements by licensees, substantial shareholders of listed corporations and directors of licensed corporations and substantial shareholdersHint
Reference Chapter:1.3.6
-
Question 277 of 673
277. Question
1 pointsQID2816:Which of the following is not a function of the SFC?
Correct
Enforcement of the Listing Rules is the job of the SEHK.
Incorrect
Enforcement of the Listing Rules is the job of the SEHK.
Hint
Reference Chapter:1.3.6
-
Question 278 of 673
278. Question
1 pointsQID1175:Which of the following departments of the SFC regulates exchanges and clearing houses?
Correct
Supervision of Markets Division:
(a) supervises the conduct, operation and internal systems of the exchanges and clearing houses.Incorrect
Supervision of Markets Division:
(a) supervises the conduct, operation and internal systems of the exchanges and clearing houses.Hint
Reference Chapter:1.3.6
-
Question 279 of 673
279. Question
1 pointsQID1177:SFC’s Intermediaries Supervision Department is responsible for:
Correct
Intermediaries Supervision Department:
(a) supervises the business conduct of licensed corporations and individual licensees on an ongoing basis, by conducting on-site inspection and off-site monitoring.Incorrect
Intermediaries Supervision Department:
(a) supervises the business conduct of licensed corporations and individual licensees on an ongoing basis, by conducting on-site inspection and off-site monitoring.Hint
Reference Chapter:1.3.6
-
Question 280 of 673
280. Question
1 pointsQID90:In which of the following circumstances will the Securities and
Futures Commission (SFC) investigate a licensed corporation?
I. When the licensed corporation’s operations go downhill and it
is unable to pay the license fee.
II. When clients lodge complaints against the licensed corporation for its failure to inform clients about the whereabouts of funds deposited by clients upon clients requests.
III. When an informant provides information that the licensed corporation is being mismanaged, the growth has slowed down and it is planning a sale.
IV. When an informant provides information that the licensed corporation is being mismanaged and it is suffering from losses.Correct
The SFC may (i) conduct supervisory inspections for the purposes of ascertaining whether an intermediary or an associated entity of an intermediary has complied with the SFO and
any related notices and requirements, any terms and condition of any licence or registration, or any other imposed condition; or (ii) require copies of documents or inquire into the affairs of a licensed corporation or its related corporations for the purpose of providing assistance, in relation to the licensed corporation, to an authority or regulatory organisation outside Hong Kong.Incorrect
The SFC may (i) conduct supervisory inspections for the purposes of ascertaining whether an intermediary or an associated entity of an intermediary has complied with the SFO and
any related notices and requirements, any terms and condition of any licence or registration, or any other imposed condition; or (ii) require copies of documents or inquire into the affairs of a licensed corporation or its related corporations for the purpose of providing assistance, in relation to the licensed corporation, to an authority or regulatory organisation outside Hong Kong.Hint
Reference Chapter:1.3.6
-
Question 281 of 673
281. Question
1 pointsQID1616:The Investor Compensation Fund (“ICF”) covers claims from clients of which of the following intermediaries?
I. Intermediaries conducting type 1 regulated activity
II. Intermediaries conducting type 2 regulated activity
III. Exchange participants
IV. Intermediaries conducting type 8 regulated activityCorrect
All intermediaries that handle client asset or client dealing maybe related, and to become an exchange participant, an intermediary must conduct type 1 regulated activity, hence all of the options must included.
Incorrect
All intermediaries that handle client asset or client dealing maybe related, and to become an exchange participant, an intermediary must conduct type 1 regulated activity, hence all of the options must included.
Hint
Reference Chapter:1.3.6
-
Question 282 of 673
282. Question
1 pointsQID2761:Which of the following statements about the SFC is correct?
Correct
The SFC is responsible for the regulation of all securities and futures activities, including the regulatory activities carried out by banks. It is also responsible for regulating the exchange controller.
Incorrect
The SFC is responsible for the regulation of all securities and futures activities, including the regulatory activities carried out by banks. It is also responsible for regulating the exchange controller.
Hint
Reference Chapter:1.3.6
-
Question 283 of 673
283. Question
1 pointsQID171:The objectives of the SFO are to provide a regulatory framework with which of the following characteristics?
I. Promotes a fair, orderly and transparent market.
II. Is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure.
III. Is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate checks and balance.
IV. Is a system that can satisfy PRC mainland legal standards, being compatible with PRC mainland laws and practices and meet local needs.Correct
The objectives of the SFO are to provide a regulatory framework which:
(a) promotes a fair, orderly and transparent market;
(b) is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure;
(c) is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate
checks and balances.Incorrect
The objectives of the SFO are to provide a regulatory framework which:
(a) promotes a fair, orderly and transparent market;
(b) is flexible enough to cope with new products and other innovations, and further advances in technological infrastructure;
(c) is administered by a regulator with sufficient powers and discretion whose operations are transparent and who is accountable to the stakeholders through a system of adequate
checks and balances.Hint
Reference Chapter:1.3.6
-
Question 284 of 673
284. Question
1 pointsQID1174:Which of the following is NOT a duty of the Enforcement Division?
Correct
Enforcement Division:
(b) monitors the trading of Hong Kong’s stock and derivative markets and inquires into irregularities;
(d) inspects the books and records of listed companies if impropriety is suspected, which may involve directors, officers or substantial shareholders etc.;
(e) reports suspected market misconduct to the Financial Secretary.Incorrect
Enforcement Division:
(b) monitors the trading of Hong Kong’s stock and derivative markets and inquires into irregularities;
(d) inspects the books and records of listed companies if impropriety is suspected, which may involve directors, officers or substantial shareholders etc.;
(e) reports suspected market misconduct to the Financial Secretary.Hint
Reference Chapter:1.3.6
-
Question 285 of 673
285. Question
1 pointsQID2721:The main functions of the SFC include:
I. Empowering self-regulatory bodies and professional bodies to form committees
II. Regulating and monitoring intermediaries who engage in regulated activities
III. Supervising and monitoring exchanges, clearing houses and exchange controllers
IV. Promoting investor education and encouraging investors to understand investment products and make informed decisions
Correct
Authorizing self-regulatory bodies and professional bodies to set up committees is not the main function of the SFC.
Incorrect
Authorizing self-regulatory bodies and professional bodies to set up committees is not the main function of the SFC.
Hint
Reference Chapter:1.3.6
-
Question 286 of 673
286. Question
1 pointsQID1168:Which of the following regulatory committees is in charge of giving advice on “matters relating to the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products”?
Correct
Products Advisory Committee – advises on matters relating to the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products, the SFC Code on MPF Products and the Code on Pooled Retirement Funds, including overall market environment, industry practices and novel product features.
Incorrect
Products Advisory Committee – advises on matters relating to the SFC Handbook for Unit Trusts and Mutual Funds, Investment-Linked Assurance Schemes and Unlisted Structured Investment Products, the SFC Code on MPF Products and the Code on Pooled Retirement Funds, including overall market environment, industry practices and novel product features.
Hint
Reference Chapter:1.3.8
-
Question 287 of 673
287. Question
1 pointsQID969:Does the Advisory Committee of the SFC have any executive powers?
Correct
The Advisory Committee of the SFC has no executive powers, it only advise the SFC on policy matters concerning its regulatory objectives and functions.
Incorrect
The Advisory Committee of the SFC has no executive powers, it only advise the SFC on policy matters concerning its regulatory objectives and functions.
Hint
Reference Chapter:1.3.8
-
Question 288 of 673
288. Question
1 pointsQID1162:The Advisory Committee is responsible for which of the following matters?
Correct
The Advisory Committee is responsible for advising the SFC on policy matters concerning its regulatory objectives and functions. It has no executive powers and does not police the SFC in any way.
Incorrect
The Advisory Committee is responsible for advising the SFC on policy matters concerning its regulatory objectives and functions. It has no executive powers and does not police the SFC in any way.
Hint
Reference Chapter:1.3.8
-
Question 289 of 673
289. Question
1 pointsQID1506:Which of the following Intermediaries are included in the asset management industry?
I. Asset managers
II. Distributors
III. Trustees
IV. CustodiansCorrect
For the purpose of understanding how the SFO’s licensing and registration requirements affect intermediaries directly involved in the asset management industry, we may consider three groups of people: asset managers (i.e. persons engaged in the regulated activity of asset management), distributors and others.
Incorrect
For the purpose of understanding how the SFO’s licensing and registration requirements affect intermediaries directly involved in the asset management industry, we may consider three groups of people: asset managers (i.e. persons engaged in the regulated activity of asset management), distributors and others.
Hint
Reference Chapter:1.4.1
-
Question 290 of 673
290. Question
1 pointsQID851:Which of the following activities are exempted from licensing for Type 2 licence?
Correct
For example, given that Lee is employed by ABC restaurant, and ABC restaurant hoped to enter into a future contract with a licensed corporation, as a hedge against the risk of rise in price of soybeans. Lee, on behalf of his employer ABC restaurant, signed the contract, in which both the beneficiary and the executor of the contract are ABC restaurant. In this situation, Lee is not a financial intermediary; hence, he needs not be licensed.
Incorrect
For example, given that Lee is employed by ABC restaurant, and ABC restaurant hoped to enter into a future contract with a licensed corporation, as a hedge against the risk of rise in price of soybeans. Lee, on behalf of his employer ABC restaurant, signed the contract, in which both the beneficiary and the executor of the contract are ABC restaurant. In this situation, Lee is not a financial intermediary; hence, he needs not be licensed.
Hint
Reference Chapter:1.4.1
-
Question 291 of 673
291. Question
1 pointsQID2526:Is there any license or registration required to sell the collective investment schemes of virtual currency?
Correct
since the collective investment scheme of virtual currency investment is a kind of security and selling securities is a type 1 activity
Incorrect
since the collective investment scheme of virtual currency investment is a kind of security and selling securities is a type 1 activity
Hint
Reference Chapter:1.4.10
-
Question 292 of 673
292. Question
1 pointsQID2525:Is there any license or registration required to sell virtual currency?
Correct
since the collective investment scheme of virtual currency investment is a kind of security and selling securities is a type 1 activity
Incorrect
since the collective investment scheme of virtual currency investment is a kind of security and selling securities is a type 1 activity
Hint
Reference Chapter:1.4.10
-
Question 293 of 673
293. Question
1 pointsQID185:Which of the following entities should apply for a licence or registering with the SFC for Asset Management Services?
I. A Licensed Corporation managing an unauthorised CISII. A Registered Institution managing an authorised CIS
III. A trustee safe keeping asset for a CIS
IV. A Licensed Corporation managing an authorised CIS
Correct
Regardless of the CIS is being authorised by the SFC or not, as long as the licenced corporation is managing it, the corporation who manage the CIS should be licensed by the SFC. Activities that require an asset management licence by the SFC include:
1. Discretionary management of Securities and/or Futures Portfolio
2. Management of CIS (Regardless of being authorised by the SFC or not)
Incorrect
Regardless of the CIS is being authorised by the SFC or not, as long as the licenced corporation is managing it, the corporation who manage the CIS should be licensed by the SFC. Activities that require an asset management licence by the SFC include:
1. Discretionary management of Securities and/or Futures Portfolio
2. Management of CIS (Regardless of being authorised by the SFC or not)
Hint
Reference Chapter:1.4.2
-
Question 294 of 673
294. Question
1 pointsQID103:Which of the following entities are classified as Asset managers?
I. Fund Houses
II. Fund Distributors
III. Fund Managers
IV. Portfolio ManagersCorrect
Under Schedule 5, SFO, “asset management” means:
(a) real estate investment scheme management; or
(b) securities or futures contracts management.
“Securities or futures contracts management” in relation to a person means providing a service of managing a portfolio of securities or futures contracts for another person by the person otherwise than certain excluded persons.Incorrect
Under Schedule 5, SFO, “asset management” means:
(a) real estate investment scheme management; or
(b) securities or futures contracts management.
“Securities or futures contracts management” in relation to a person means providing a service of managing a portfolio of securities or futures contracts for another person by the person otherwise than certain excluded persons.Hint
Reference Chapter:1.4.2
-
Question 295 of 673
295. Question
1 pointsQID233:Individuals engaged in asset management require
Correct
Part V, SFO provides for the implementation of the licensing regime, including:
(h) requiring an individual engaging in a regulated activity for a licensed corporation (as his principal) to be licensed (licensed representative). A licensed representative will usually be accredited to one principal, but the SFC may approve his accreditation to more than one licensed corporation within the same group of companies.Incorrect
Part V, SFO provides for the implementation of the licensing regime, including:
(h) requiring an individual engaging in a regulated activity for a licensed corporation (as his principal) to be licensed (licensed representative). A licensed representative will usually be accredited to one principal, but the SFC may approve his accreditation to more than one licensed corporation within the same group of companies.Hint
Reference Chapter:1.4.2
-
Question 296 of 673
296. Question
1 pointsQID225:Registered Institutions should ensure that their employees who conduct regulated activities are
Correct
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines.
Incorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines.
Hint
Reference Chapter:1.4.20
-
Question 297 of 673
297. Question
1 pointsQID2361:In the Securities and Futures Ordinance (SFO), chapters related to licensing and registration may apply to?
I. Staffs of licensed corporations
II. Staffs of registered agents
III. Banks conducting regulated activities
IV. Professional investorsCorrect
In the Securities and Futures Ordinance (SFO), chapters related to licensing and registration may apply to?
I. Licensed corporations
II. staffs of licensed corporations
III. Banks conducting regulated activities (registered institutions)
IV. Staffs of banks conducting regulated activities (registered institutions)Incorrect
In the Securities and Futures Ordinance (SFO), chapters related to licensing and registration may apply to?
I. Licensed corporations
II. staffs of licensed corporations
III. Banks conducting regulated activities (registered institutions)
IV. Staffs of banks conducting regulated activities (registered institutions)Hint
Reference Chapter:1.4.20
-
Question 298 of 673
298. Question
1 pointsQID1416:Persons exempted from needing a licence for advising on securities contracts generally do NOT include:
Correct
Persons exempted from requiring a licence to advise on securities generally include:
(a) solicitors, counsel, professional accountants, trust companies and persons licensed to carry out asset management who give such advice wholly incidental to their professions;
(b) financial journalists and broadcasters who give investment advice or issue analyses or reports on investments to the public on subscription or otherwise;
(c.) corporations giving such advice or issuing such analyses or reports solely to their wholly owned subsidiaries or holding companies holding all their issued shares or other wholly owned subsidiaries of the holding companyIncorrect
Persons exempted from requiring a licence to advise on securities generally include:
(a) solicitors, counsel, professional accountants, trust companies and persons licensed to carry out asset management who give such advice wholly incidental to their professions;
(b) financial journalists and broadcasters who give investment advice or issue analyses or reports on investments to the public on subscription or otherwise;
(c.) corporations giving such advice or issuing such analyses or reports solely to their wholly owned subsidiaries or holding companies holding all their issued shares or other wholly owned subsidiaries of the holding companyHint
Reference Chapter:1.4.21
-
Question 299 of 673
299. Question
1 pointsQID2473:Kaohsiung Securities holds a license for Type 2 regulated activities. In which of the following condition should they obtain a license for Type 5 regulated activities when delivering advice?
Correct
Providing advice regarding futures trading with friends and charging a fee independently proves that it’s not solely associated with Type 2 regulated activities. Therefore, it is needed to obtain an additional license for Type 5 regulated activities.
Incorrect
Providing advice regarding futures trading with friends and charging a fee independently proves that it’s not solely associated with Type 2 regulated activities. Therefore, it is needed to obtain an additional license for Type 5 regulated activities.
Hint
Reference Chapter:1.4.21
-
Question 300 of 673
300. Question
1 pointsQID2472:Which of the following institution has to apply for an additional license or registration with respect to the Type 2 regulated activity?
Correct
Institutions which provide their fully owned subsidiaries with futures trading advice don’t need any license.
For institutions holding a license for Type 9 regulated activities to engage in futures trading as a result of discretionary investment for their clients, they don’t need any additional license or registration as well since futures trading activities is fully accompanied by discretionary activities.
For institutions holding a license for Type 1 regulated activities to trade an ETF which is listed on the SEHK and only trades futures on behalf of their clients, since the target traded is listed ETFs rather than futures, naturally, there is no need to obtain a license or registration with respect to Type 2 regulated activities.
For institutions holding a license for Type 1 regulated activities to engage in futures trading as a result of discretionary investment for their clients, they need an additional license or registration since futures trading activities is not fully accompanied by Type 1 regulated activities.Incorrect
Institutions which provide their fully owned subsidiaries with futures trading advice don’t need any license.
For institutions holding a license for Type 9 regulated activities to engage in futures trading as a result of discretionary investment for their clients, they don’t need any additional license or registration as well since futures trading activities is fully accompanied by discretionary activities.
For institutions holding a license for Type 1 regulated activities to trade an ETF which is listed on the SEHK and only trades futures on behalf of their clients, since the target traded is listed ETFs rather than futures, naturally, there is no need to obtain a license or registration with respect to Type 2 regulated activities.
For institutions holding a license for Type 1 regulated activities to engage in futures trading as a result of discretionary investment for their clients, they need an additional license or registration since futures trading activities is not fully accompanied by Type 1 regulated activities.Hint
Reference Chapter:1.4.21
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Question 301 of 673
301. Question
1 pointsQID1216:Kaohsiung Trust Company is not required to obtain a license to carry out regulated activities for which of the following?
Correct
Such persons will not need licensing in respect of those activities. They include: trust companies conducting Type 4, Type 5, Type 6 or Type 9 Ras wholly incidental to the discharge of their trustee duties. Real estate are not securities and futures and not regulated by the SFO>
Incorrect
Such persons will not need licensing in respect of those activities. They include: trust companies conducting Type 4, Type 5, Type 6 or Type 9 Ras wholly incidental to the discharge of their trustee duties. Real estate are not securities and futures and not regulated by the SFO>
Hint
Reference Chapter:1.4.21
-
Question 302 of 673
302. Question
1 pointsQID913:Under which of the circumstances is additional licenses not required?
Correct
The key words here is “wholly incidental”, you won’t get any exemption if it is not wholly incidental.
Incorrect
The key words here is “wholly incidental”, you won’t get any exemption if it is not wholly incidental.
Hint
Reference Chapter:1.4.21
-
Question 303 of 673
303. Question
1 pointsQID353:Mr Wan is a registered representative of type 1 regulated activity of British Construction Bank, a registered institution. Mr Wan is constantly looking out for the portfolios of his retired customers and advises them on stock trading and other asset management activities, these activities are wholly incidental to his type 1 activity. In this case, should Mr Wan apply for a registration or license for the type 9 activities he conducts?
Correct
Part V SFO allows licensed persons conducting some regulated activities to conduct certain others, e.g. a Type 1 licence or registration covers Type 4, Type 6 and Type 9 regulated
activities as well if the conducting of those activities is wholly incidental to the conducting of the Type 1 regulated activity.Incorrect
Part V SFO allows licensed persons conducting some regulated activities to conduct certain others, e.g. a Type 1 licence or registration covers Type 4, Type 6 and Type 9 regulated
activities as well if the conducting of those activities is wholly incidental to the conducting of the Type 1 regulated activity.Hint
Reference Chapter:1.4.21
-
Question 304 of 673
304. Question
1 pointsQID1608:Kaohsiung Securities trades Hong Kong stocks for clients. It carries a type 1 licence and is also an exchange participant. It recently wishes to providing financing to clients for their purchase of stocks in return for clients’ stocks as collaterals, does it need an extra licence?
Correct
There are certain persons some of whose activities might otherwise fit the descriptions of Ras listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the definitions of RAs given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
(e.) persons licensed or registered to conduct Type 1 RA who may provide financial accommodation (Type 8 RA) to facilitate acquisitions or holdings of securities by those persons for clientsIncorrect
There are certain persons some of whose activities might otherwise fit the descriptions of Ras listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the definitions of RAs given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
(e.) persons licensed or registered to conduct Type 1 RA who may provide financial accommodation (Type 8 RA) to facilitate acquisitions or holdings of securities by those persons for clientsHint
Reference Chapter:1.4.21
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Question 305 of 673
305. Question
1 pointsQID246:Company A is a wholly own subsidiary of British Construction Bank and Company B is a wholly own subsidiary of Company A. Under which of the following condition company B has to register for a separate licence for regulated activities?
Correct
There are certain persons some of whose activities might otherwise fit the descriptions of regulated activities listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the definitions of regulated activities given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
(d) corporations carrying out Type 4, Type 5, Type 6 and Type 9 regulated activities solely for their wholly owned subsidiaries, holding companies holding all their issued shares or other wholly owned subsidiaries of the holding company.
In this case, Type 1 regulated activities are not excluded, so a license must be obtained for such dealings.Incorrect
There are certain persons some of whose activities might otherwise fit the descriptions of regulated activities listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the definitions of regulated activities given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
(d) corporations carrying out Type 4, Type 5, Type 6 and Type 9 regulated activities solely for their wholly owned subsidiaries, holding companies holding all their issued shares or other wholly owned subsidiaries of the holding company.
In this case, Type 1 regulated activities are not excluded, so a license must be obtained for such dealings.Hint
Reference Chapter:1.4.21
-
Question 306 of 673
306. Question
1 pointsQID909:Which of the following individuals are more likely to be affected by the Licensing and registration part of the SFO?
I. Licensed Corporation
II. AFIs that is preparing to conduct regulated activities in the near future
III. Executive officers of a Registered Institution
IV. Professional InvestorsCorrect
Professional Investors do not need to be licensed. AFIs will need to be registered in order to conduct regulated activities.
Incorrect
Professional Investors do not need to be licensed. AFIs will need to be registered in order to conduct regulated activities.
Hint
Reference Chapter:1.4.21
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Question 307 of 673
307. Question
1 pointsQID799:Trust companies can be exempted from licensing if they conduct which of the following regulated activities wholly incidental to their trustee duties?
I. Dealing in securities
II. Advising on securities
III. Advising on futures contracts
IV. Asset managementCorrect
There are certain persons some of whose activities might otherwise fit the descriptions of regulated activities listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the definitions of regulated activities given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
– trust companies conducting Type 4, Type 5, Type 6 and Type 9 regulated activities wholly incidental to the discharge of their trustee duties.Incorrect
There are certain persons some of whose activities might otherwise fit the descriptions of regulated activities listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the definitions of regulated activities given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
– trust companies conducting Type 4, Type 5, Type 6 and Type 9 regulated activities wholly incidental to the discharge of their trustee duties.Hint
Reference Chapter:1.4.21
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Question 308 of 673
308. Question
1 pointsQID1417:Which of the following entities are NOT exempted from acquiring a license when giving advice on securities?
Correct
Persons exempted from requiring a licence to advise on securities generally include:
(a) solicitors, counsel, professional accountants, trust companies and persons licensed to carry out asset management who give such advice wholly incidental to their professions;
(b) financial journalists and broadcasters who give investment advice or issue analyses or reports on investments to the public on subscription or otherwise;
(c.) corporations giving such advice or issuing such analyses or reports solely to their wholly owned subsidiaries or holding companies holding all their issued shares or other wholly owned subsidiaries of the holding companyIncorrect
Persons exempted from requiring a licence to advise on securities generally include:
(a) solicitors, counsel, professional accountants, trust companies and persons licensed to carry out asset management who give such advice wholly incidental to their professions;
(b) financial journalists and broadcasters who give investment advice or issue analyses or reports on investments to the public on subscription or otherwise;
(c.) corporations giving such advice or issuing such analyses or reports solely to their wholly owned subsidiaries or holding companies holding all their issued shares or other wholly owned subsidiaries of the holding companyHint
Reference Chapter:1.4.21
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Question 309 of 673
309. Question
1 pointsQID1223:In terms of Type 4 regulated activities, which of the following persons may NOT be exempted and must apply for a license or register to carry out regulated activities?
Correct
There are certain persons some of whose activities might otherwise fit the descriptions of Ras listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the
definitions of RAs given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
(a) professional accountants, solicitors and counsel conducting Type 4, Type 5, Type 6 or Type 9 Ras that are wholly incidental to their professions;
(d) persons licensed or registered to conduct Type 1 RA who carry out Type 4, Type 6 or Type 9 Ras solely for the purposes of their Type 1 RA (the “wholly incidental” exemption).Incorrect
There are certain persons some of whose activities might otherwise fit the descriptions of Ras listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the
definitions of RAs given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
(a) professional accountants, solicitors and counsel conducting Type 4, Type 5, Type 6 or Type 9 Ras that are wholly incidental to their professions;
(d) persons licensed or registered to conduct Type 1 RA who carry out Type 4, Type 6 or Type 9 Ras solely for the purposes of their Type 1 RA (the “wholly incidental” exemption).Hint
Reference Chapter:1.4.21
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Question 310 of 673
310. Question
1 pointsQID244:According to the exemption provisions of the SFO, Professional Accountants can conduct regulated activates under which of the following circumstances?
Correct
There are certain persons, some of whose activities might otherwise fit the descriptions of regulated activities listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the definitions of regulated activities given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
(a) professional accountants, solicitors and counsel conducting Type 4, Type 5, Type 6 and Type 9 regulated activities that are wholly incidental to their professions (see section 1.9 below).Incorrect
There are certain persons, some of whose activities might otherwise fit the descriptions of regulated activities listed in Part 1, Schedule 5, SFO, but for the fact that these are specifically excluded from the definitions of regulated activities given in Part 2 of the Schedule. Such persons will not need licensing in respect of those activities. They include:
(a) professional accountants, solicitors and counsel conducting Type 4, Type 5, Type 6 and Type 9 regulated activities that are wholly incidental to their professions (see section 1.9 below).Hint
Reference Chapter:1.4.21
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Question 311 of 673
311. Question
1 pointsQID2362:Kaohsiung Securities holds type 1 license which can conduct regulated activities wholly incidental to type 1 activities including:
I. Type 4 – advising on securities
II. Type 5 – advising on futures contract
III. Type 6 – advising on institutional financing
IV. Type 9 – providing asset management servicesCorrect
Kaohsiung Securities holds type 1 license which can conduct regulated activities wholly incidental to type 1 activities including:
I. Type 4 – advising on securities
II. Type 6 – advising on institutional financing
III. Type 8 – providing securities margin financing
IV. Type 9 – providing asset management servicesIncorrect
Kaohsiung Securities holds type 1 license which can conduct regulated activities wholly incidental to type 1 activities including:
I. Type 4 – advising on securities
II. Type 6 – advising on institutional financing
III. Type 8 – providing securities margin financing
IV. Type 9 – providing asset management servicesHint
Reference Chapter:1.4.21
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Question 312 of 673
312. Question
1 pointsQID2735:In addition to buying and selling securities for clients, Monopoly Securities also provides discretionary account management services and securities margin financing services for clients’ securities accounts. Monopoly Securities can meet regulatory requirements through which of the following combinations of licenses?
I. Type 1 RA Licence
II. Type 9 RA Licence
III. Type 1 RA Licence + Type 9 RA Licence
IV. Type 1 RA Licence + Type 8 RA Licence + Type 9 RA Licence
Correct
As securities discretionary management services and securities margin financing services are wholly incidental to securities trading services. Therefore, Monopoly Securities does not need to have a license for type 9 regulated activities (asset management) and type 8 regulated activities (securities margin financing). But it’s perfectly okay to have them as well.
However, a licensed corporation holding a Type 9 regulated activity license only is not permitted to conduct securities trading activities, so this is a wrong answer.
Incorrect
As securities discretionary management services and securities margin financing services are wholly incidental to securities trading services. Therefore, Monopoly Securities does not need to have a license for type 9 regulated activities (asset management) and type 8 regulated activities (securities margin financing). But it’s perfectly okay to have them as well.
However, a licensed corporation holding a Type 9 regulated activity license only is not permitted to conduct securities trading activities, so this is a wrong answer.
Hint
Reference Chapter:1.4.25
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Question 313 of 673
313. Question
1 pointsQID234:If a licensed representative ceased to be employed with his accredited licensed corporation, which of the following statements CORRECTLY describes the transfer of representative’s accreditation?
I. Both the representative and the corporation must notify the
SFC within 7 days after the cessation.
II. The licensed representative is allowed to transfer his accreditation to another licensed corporation within 180 days upon cessation.
III. If the licensed representative fails to transfer his accreditation to another licensed corporation after 180 days, his license is deemed to have been revoked upon cessation.
IV. The licensed representative may appeal against the termination
of his appointment and have his license restored.Correct
If a licensed representative ceases to be employed with his accredited licensed corporation, both the representative and the corporation must notify the SFC within seven business days
after the cessation. The licensed representative is allowed 180 days for transfer of his accreditation to another licensed corporation, failing which his licence is deemed to have
been revoked upon such cessation.Incorrect
If a licensed representative ceases to be employed with his accredited licensed corporation, both the representative and the corporation must notify the SFC within seven business days
after the cessation. The licensed representative is allowed 180 days for transfer of his accreditation to another licensed corporation, failing which his licence is deemed to have
been revoked upon such cessation.Hint
Reference Chapter:1.4.27
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Question 314 of 673
314. Question
1 pointsQID227:Which of the following are classified as distributors?
I. Registered Institutions
II. Insurers
III. Securities Dealers
IV. Independent Financial AdvisersCorrect
These are entities classified as distributors of financial services to the general public.
Incorrect
These are entities classified as distributors of financial services to the general public.
Hint
Reference Chapter:1.4.3
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Question 315 of 673
315. Question
1 pointsQID1220:A responsible officer of regulated activities carried out by a licensed corporation needs to be:
I. nominated by the licensed corporation.
II. approved by the SFC.
III. approved by the HKMA.
IV. approved by the HKEX.Correct
A responsible officer is a licensed representative who:
(a) actively participates in or supervises a RA;
(b) is nominated by the licensed corporation as a responsible officer; and
(c.) is approved by the SFC as a responsible officer.Incorrect
A responsible officer is a licensed representative who:
(a) actively participates in or supervises a RA;
(b) is nominated by the licensed corporation as a responsible officer; and
(c.) is approved by the SFC as a responsible officer.Hint
Reference Chapter:1.4.31
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Question 316 of 673
316. Question
1 pointsQID1219:A responsible officer is a licensed representative; his duties include:
I. being nominated by the licensed corporation as a responsible officer.
II. being approved by the SFC as a responsible officer.
III. being approved by the HKMA as a responsible officer.
IV. actively participating in or supervising a regulated activity.Correct
A responsible officer is a licensed representative who:
(a) actively participates in or supervises a RA;
(b) is nominated by the licensed corporation as a responsible officer; and
(c.) is approved by the SFC as a responsible officer.Incorrect
A responsible officer is a licensed representative who:
(a) actively participates in or supervises a RA;
(b) is nominated by the licensed corporation as a responsible officer; and
(c.) is approved by the SFC as a responsible officer.Hint
Reference Chapter:1.4.31
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Question 317 of 673
317. Question
1 pointsQID2769:If the licensed representative’s employment is terminated, within how many business days should the licensed corporation notify the SFC?
Correct
If the licensed representative ceases to be employed, the licensed corporation shall notify the SFC within 7 business days.
Incorrect
If the licensed representative ceases to be employed, the licensed corporation shall notify the SFC within 7 business days.
Hint
Reference Chapter:1.4.31
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Question 318 of 673
318. Question
1 pointsQID235:Which of the following individuals are Responsible Officers?
Correct
A responsible officer is a licensed representative who
(i) actively participates in or supervises a regulated activity,
(ii) is nominated by the licensed corporation as a responsible officer, and
(iii) is approved by the SFC as a responsible officer.Incorrect
A responsible officer is a licensed representative who
(i) actively participates in or supervises a regulated activity,
(ii) is nominated by the licensed corporation as a responsible officer, and
(iii) is approved by the SFC as a responsible officer.Hint
Reference Chapter:1.4.31
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Question 319 of 673
319. Question
1 pointsQID229:If a registered representative wishes to become a responsible officer, it should
I. Obtain nomination from the SFC to become a RO
II. Obtain nomination from his principal to become an RO
III. Obtain approval of the SFC to become an RO
IV. Obtain approval of his principal to become an ROCorrect
A responsible officer is a licensed representative who
(ii) is nominated by the licensed corporation as a responsible officer, and
(iii) is approved by the SFC as a responsible officer.Incorrect
A responsible officer is a licensed representative who
(ii) is nominated by the licensed corporation as a responsible officer, and
(iii) is approved by the SFC as a responsible officer.Hint
Reference Chapter:1.4.31
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Question 320 of 673
320. Question
1 pointsQID862:Which of the following statements correctly describes responsible officers?
Correct
A responsible officer is a licensed representative who (i) actively participates in or supervises a regulated activity, (ii) is nominated by the licensed corporation as a responsible officer, and (iii) is approved by the SFC as a responsible officer. The definition of
responsible officer as given here is not stated in the SFO but has been provided by the SFC.Incorrect
A responsible officer is a licensed representative who (i) actively participates in or supervises a regulated activity, (ii) is nominated by the licensed corporation as a responsible officer, and (iii) is approved by the SFC as a responsible officer. The definition of
responsible officer as given here is not stated in the SFO but has been provided by the SFC.Hint
Reference Chapter:1.4.31
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Question 321 of 673
321. Question
1 pointsQID1329:Which of the following are duties of the responsible officers of a licensed corporation?
I. Ensuring that the intermediary is financially sound.
II. Ensuring that the intermediary is resourceful in staff and system to effectively, honestly and fairly conduct regulated activities.
III. Ensuring that the intermediary can profit continuously.
IV. Establishing appropriate standards of business conduct and procedures, and ensuring proper compliance by staff at all times.Correct
In general, the duties of responsible officers and executive officers who actively participate in, or supervise, the intermediary’s business may include:
(d) employing only staff who meet the licensing requirements of the SFC, and ensuring that they are sufficiently competent and experienced to perform their work;
(e.) ensuring the intermediary complies with the capital and financial reporting requirements of the SFC, exchange and clearing house;
(f) ensuring the intermediary and its staff comply at all times with the applicable laws, the rules, regulations, guidelines and codes of the SFC, the exchange and clearing house, and the professional bodies of which it is a memberIncorrect
In general, the duties of responsible officers and executive officers who actively participate in, or supervise, the intermediary’s business may include:
(d) employing only staff who meet the licensing requirements of the SFC, and ensuring that they are sufficiently competent and experienced to perform their work;
(e.) ensuring the intermediary complies with the capital and financial reporting requirements of the SFC, exchange and clearing house;
(f) ensuring the intermediary and its staff comply at all times with the applicable laws, the rules, regulations, guidelines and codes of the SFC, the exchange and clearing house, and the professional bodies of which it is a memberHint
Reference Chapter:1.4.31
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Question 322 of 673
322. Question
1 pointsQID2770:If a licensed representative ceases to be employed, within how many days can the licensed representative be transferred to another licensed corporation?
Correct
If the licensed representative’s employment is terminated, the licensed representative may transfer to another licensed corporation within 180 days.
Incorrect
If the licensed representative’s employment is terminated, the licensed representative may transfer to another licensed corporation within 180 days.
Hint
Reference Chapter:1.4.31
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Question 323 of 673
323. Question
1 pointsQID1617:Kaohsiung Securities is a licensed corporation that violated the Securities and Futures Ordinance. Are the responsible officers liable for breaches by the corporation of certain fundamental regulatory requirements?
Correct
There is a defence available to such an officer in this regard. The defence is expressly provided for under Part XVI, SFO and essentially discharges a member of management from liability if he can show that he honestly and reasonably believed the failure would not occur. Also if, upon becoming aware of the breach, he acted promptly in notifying the SFC and, until then, had honestly and reasonably believed that the failure would not occur.
Incorrect
There is a defence available to such an officer in this regard. The defence is expressly provided for under Part XVI, SFO and essentially discharges a member of management from liability if he can show that he honestly and reasonably believed the failure would not occur. Also if, upon becoming aware of the breach, he acted promptly in notifying the SFC and, until then, had honestly and reasonably believed that the failure would not occur.
Hint
Reference Chapter:1.4.32
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Question 324 of 673
324. Question
1 pointsQID238:Which of the following descriptions about a registered institution’s
executive office are is/are CORRECT?
I. A registered institution shall appoint at least 2 executive
officers in respect of each type of regulated activity, and there must be at least 1 executive officer available to supervise the business of the regulated activity at all times.
II. A registered institution shall appoint at least 1 executive officer in respect of each type of regulated activity, and there must be at least 1 executive officer available to supervise the business of the regulated activity at all times.
III. All executive officers of a registered institution must be the directors of the registered institution and must be approved by the SFC as responsible officers.
IV. If a registered institution is licensed to carry out many types of regulated activities, the executive officer for each regulated activity must not overlap.Correct
There must be at least two executive officers appointed by a registered institution in respect of each type of regulated activity, and at all times there must be at least one executive officer available to supervise the business of the regulated activity.
Incorrect
There must be at least two executive officers appointed by a registered institution in respect of each type of regulated activity, and at all times there must be at least one executive officer available to supervise the business of the regulated activity.
Hint
Reference Chapter:1.4.32
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Question 325 of 673
325. Question
1 pointsQID1221:Which of the following restrictions about responsible officers are correct?
I. A licensed corporation should appoint not less than two responsible officers.
II. At least one of the responsible officers should be the executive director of the licensed corporation.
III. All executive directors should be responsible officers.
IV. For each regulated activity, at least one responsible officer available at all times to supervise the business of the regulated activity for which it is licensed, and who is based in Hong Kong (s. 118(1)(a)(ii), SFO).Correct
Each licensed corporation is required to:
(a) appoint not less than two responsible officers, at least one of whom must be an executive director (see Note 1 below) (s. 125, SFO);
(b) ensure that every individual executive director of the licensed corporation is approved as a responsible officer (s. 125, SFO); and
(c.) ensure that it has, for each RA, at least one responsible officer available at all times to supervise the business of the RA for which it is licensed, and who is based in Hong Kong (s. 118(1)(a)(ii), SFO) (see Note 2 below).Incorrect
Each licensed corporation is required to:
(a) appoint not less than two responsible officers, at least one of whom must be an executive director (see Note 1 below) (s. 125, SFO);
(b) ensure that every individual executive director of the licensed corporation is approved as a responsible officer (s. 125, SFO); and
(c.) ensure that it has, for each RA, at least one responsible officer available at all times to supervise the business of the RA for which it is licensed, and who is based in Hong Kong (s. 118(1)(a)(ii), SFO) (see Note 2 below).Hint
Reference Chapter:1.4.32
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Question 326 of 673
326. Question
1 pointsQID1222:How many executive officers should a registered institution have to monitor its regulated activities?
Correct
At all times, there must be at least one executive officer available to supervise the RA concerned.
Incorrect
At all times, there must be at least one executive officer available to supervise the RA concerned.
Hint
Reference Chapter:1.4.32
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Question 327 of 673
327. Question
1 pointsQID239:Under the Securities and Futures Ordinance (SFO), which of the following conditions apply to responsible officers of a licensed corporation?
I. Every responsible officer other than a designated compliance officer must be an executive director.
II. There must be at least two responsible officers for every regulated activity engaged in by a licensed corporation.
III. There must be at least one responsible officer present at all times to supervise the regulated activity of a licensed corporation.
IV. The designated compliance officer must be a responsible officer.Correct
The definition of responsible officer as given here is not stated in the SFO (see Note 1 below) but has been provided by the SFC:
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.Incorrect
The definition of responsible officer as given here is not stated in the SFO (see Note 1 below) but has been provided by the SFC:
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.Hint
Reference Chapter:1.4.32
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Question 328 of 673
328. Question
1 pointsQID236:Which of the following descriptions about the responsible officer of a licensed corporation are CORRECT?
I. Every executive director of a licensed corporation must be
approved by the SFC as a responsible officer.
II. Every licensed corporation must have, for each of the regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.
III. Any licensed corporation must carry out various regulated activities according to the license it was issued with; at least one person must be approved by the SFC as a responsible officer for the regulated activity the licensed corporation was issued a license to carry out, and at least one responsible officer must be established as the executive director of the licensed corporation.
IV. If a licensed corporation is licensed to carry out a number of various types of regulated activities, the responsible officer for each activity may not overlap.Correct
A responsible officer is a licensed representative who
(i) actively participates in or supervises a regulated activity,
(ii) is nominated by the licensed corporation as a responsible officer, and
(iii) is approved by the SFC as a responsible officer.
The definition of responsible officer as given here is not stated in the SFO (see Note 1 below) but has been provided by the SFC:
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.Incorrect
A responsible officer is a licensed representative who
(i) actively participates in or supervises a regulated activity,
(ii) is nominated by the licensed corporation as a responsible officer, and
(iii) is approved by the SFC as a responsible officer.
The definition of responsible officer as given here is not stated in the SFO (see Note 1 below) but has been provided by the SFC:
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.Hint
Reference Chapter:1.4.32
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Question 329 of 673
329. Question
1 pointsQID237:A licensed corporation or registered institution should have
I. at least 2 RO and 1 Executive Director as RO
II. at all times there must be at least 1 executive officer available to supervise the business of the regulated activity
III. at least 1 RO, including 1 an Executive Director as RO
IV. at all times there must be at least 2 executive officer available to supervise the business of the regulated activityCorrect
The definition of responsible officer as given here is not stated in the SFO (see Note 1 below) but has been provided by the SFC:
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.Incorrect
The definition of responsible officer as given here is not stated in the SFO (see Note 1 below) but has been provided by the SFC:
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.Hint
Reference Chapter:1.4.32
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Question 330 of 673
330. Question
1 pointsQID1323:A licensed corporation should have at least how many SFC-approved responsible officer(s)?
Correct
Every licensed corporation must have at least two responsible officers approved by the Securities and Futures Commission (“SFC”).
Incorrect
Every licensed corporation must have at least two responsible officers approved by the Securities and Futures Commission (“SFC”).
Hint
Reference Chapter:1.4.32
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Question 331 of 673
331. Question
1 pointsQID242: A licensed corporation must have
Correct
The definition of responsible officer as given here is not stated in the SFO (see Note 1 below) but has been provided by the SFC:
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.Incorrect
The definition of responsible officer as given here is not stated in the SFO (see Note 1 below) but has been provided by the SFC:
(b) every licensed corporation must have, for each regulated activity for which it is licensed, at least two responsible officers approved by the SFC as such; and at least one of them shall be an executive director of the licensed corporation.Hint
Reference Chapter:1.4.32
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Question 332 of 673
332. Question
1 pointsQID1324:Every executive director of a licensed corporation should be approved by the SFC before he can become a responsible officer for the licensed corporation. In the case of a licensed corporation, at least how many responsible officer(s) must be an executive director?
Correct
Every executive director of a licensed corporation is required to obtain the approval of the SFC as a responsible officer. At least one of the responsible officers must be an executive director.
Incorrect
Every executive director of a licensed corporation is required to obtain the approval of the SFC as a responsible officer. At least one of the responsible officers must be an executive director.
Hint
Reference Chapter:1.4.32
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Question 333 of 673
333. Question
1 pointsQID1003:Which of the following descriptions about RO is correct?
Correct
Licensed corporations should have at least 1 responsible officer at all times to perform the regulated function.
Incorrect
Licensed corporations should have at least 1 responsible officer at all times to perform the regulated function.
Hint
Reference Chapter:1.4.32
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Question 334 of 673
334. Question
1 pointsQID2847:Which of the following is less likely to be the senior management of a licensed corporation?
Correct
The management of a licensed corporation includes
1. Directors
2. Responsible Officers
3. Managers-in-charge (MIC)Incorrect
The management of a licensed corporation includes
1. Directors
2. Responsible Officers
3. Managers-in-charge (MIC)Hint
Reference Chapter:1.4.33
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Question 335 of 673
335. Question
1 pointsQID299:British Construction Bank is an authorised financial institution. Amid the downfall of the Hong Kong banking sector, it has recently took part as manager in a few collective investment schemes. British Construction Bank did not register with the SFC, what are the probable consequences for such arrangements?
I. Daily Fines
II. Fines
III. Disbandment of the funds being managed
IV. ImprisonmentCorrect
In terms of dealing with CISs, under s. 107, SFO, it is a criminal offence punishable by fine and/or imprisonment for a person to make any fraudulent or reckless misrepresentation for the purpose of inducing another person to:
(a) enter into or offer to enter into (i) an agreement to acquire, dispose of, subscribe for or underwrite securities, or (ii) a regulated investment agreement or an agreement to
acquire, dispose of, subscribe for or underwrite any other structured product; or
(b) acquire an interest in or participate in, or offer to acquire an interest in or participate in, a CIS.
See s. 107, SFO for definitions of fraudulent and reckless misrepresentation and also section 3.24 below.Incorrect
In terms of dealing with CISs, under s. 107, SFO, it is a criminal offence punishable by fine and/or imprisonment for a person to make any fraudulent or reckless misrepresentation for the purpose of inducing another person to:
(a) enter into or offer to enter into (i) an agreement to acquire, dispose of, subscribe for or underwrite securities, or (ii) a regulated investment agreement or an agreement to
acquire, dispose of, subscribe for or underwrite any other structured product; or
(b) acquire an interest in or participate in, or offer to acquire an interest in or participate in, a CIS.
See s. 107, SFO for definitions of fraudulent and reckless misrepresentation and also section 3.24 below.Hint
Reference Chapter:1.4.34
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Question 336 of 673
336. Question
1 pointsQID232:If an Authorised Financial Institution wishes to conduct regulated activities as defined by the SFO, which of the following entities should oversee its operation?
Correct
AFIs (including banks) that are authorised and regulated by the HKMA and conduct the SFC regulated activities must be registered with the SFC as “Registered Institutions”, such status having been set up as a special category because of the special features of AFIs. They are jointly regulated by the HKMA and the SFC, with the HKMA being the front-line regulator that will apply all SFC regulatory criteria, including fitness and properness and business conduct, other than capital adequacy, the handling of client money and the audit requirements in supervising them.
Incorrect
AFIs (including banks) that are authorised and regulated by the HKMA and conduct the SFC regulated activities must be registered with the SFC as “Registered Institutions”, such status having been set up as a special category because of the special features of AFIs. They are jointly regulated by the HKMA and the SFC, with the HKMA being the front-line regulator that will apply all SFC regulatory criteria, including fitness and properness and business conduct, other than capital adequacy, the handling of client money and the audit requirements in supervising them.
Hint
Reference Chapter:1.4.35
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Question 337 of 673
337. Question
1 pointsQID176:Which of the following institutions is required to become a “registered institution”?
Correct
The provisions of the SFO have different applications to the following different classes of person:
(b) “registered institution”, which refers to authorised financial institutions (“AFIs”) directly supervised by the Hong Kong Monetary Authority (“HKMA”) and registered with the SFC.Incorrect
The provisions of the SFO have different applications to the following different classes of person:
(b) “registered institution”, which refers to authorised financial institutions (“AFIs”) directly supervised by the Hong Kong Monetary Authority (“HKMA”) and registered with the SFC.Hint
Reference Chapter:1.4.35
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Question 338 of 673
338. Question
1 pointsQID2677:With regards to responsible officers of a licensed corporation, which of the following is correct?
Correct
Responsible Officers of a Lincened Corporation may or may not be directors. Its not required that only INED can become a responsible officer of a Licenced Corporation. Only Registered Institutions are required to employ Executive Officers. Each Licenced Corporation must have at least two Responsible Officers.
Incorrect
Responsible Officers of a Lincened Corporation may or may not be directors. Its not required that only INED can become a responsible officer of a Licenced Corporation. Only Registered Institutions are required to employ Executive Officers. Each Licenced Corporation must have at least two Responsible Officers.
Hint
Reference Chapter:1.4.36
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Question 339 of 673
339. Question
1 pointsQID2651:Persons responsible for the overall management oversight function and key business line function should
Correct
Persons responsible for the overall management oversight function and key business line function should become both MIC or RO.
Incorrect
Persons responsible for the overall management oversight function and key business line function should become both MIC or RO.
Hint
Reference Chapter:1.4.38
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Question 340 of 673
340. Question
1 pointsQID2689:To solicit others into buying securities is a?
Correct
To solicit others into buying securities is considered as Dealing in Securities. Dealing in Securities is a Type 1 Regulated Activity.
Incorrect
To solicit others into buying securities is considered as Dealing in Securities. Dealing in Securities is a Type 1 Regulated Activity.
Hint
Reference Chapter:1.4.4
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Question 341 of 673
341. Question
1 pointsQID241:Why do licensed corporations need to determine the identity of substantial shareholder?
Correct
The status of substantial shareholder has special relevance to the application of the licensing regime. A person may not become or continue to be a substantial shareholder of a licensed corporation without first being approved by the SFC as such (s. 131 and s. 6, Schedule 1, SFO).
Incorrect
The status of substantial shareholder has special relevance to the application of the licensing regime. A person may not become or continue to be a substantial shareholder of a licensed corporation without first being approved by the SFC as such (s. 131 and s. 6, Schedule 1, SFO).
Hint
Reference Chapter:1.4.40
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Question 342 of 673
342. Question
1 pointsQID240:A substantial shareholder of a licensed corporation needs to be approved by the
Correct
The status of substantial shareholder has special relevance to the application of the licensing regime. A person may not become or continue to be a substantial shareholder of a licensed corporation without first being approved by the SFC as such (s. 131 and s. 6, Schedule 1, SFO).
Incorrect
The status of substantial shareholder has special relevance to the application of the licensing regime. A person may not become or continue to be a substantial shareholder of a licensed corporation without first being approved by the SFC as such (s. 131 and s. 6, Schedule 1, SFO).
Hint
Reference Chapter:1.4.40
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Question 343 of 673
343. Question
1 pointsQID1004:Black Flower Oil has acquired 15% of shares of a licenced corporation, Millionaire Securities, in the past month. Until now, Black Flower Oil and Millionaire Securities have made no notification to the SFC about such acquisition. Is there anything wrong?
Correct
One must be approved by the SFC prior to becoming a substantial shareholder of a licenced corporation. Otherwise, it is against the SFO. Anyone with 10% of more of shares in a Licenced Corporation will be considered as a substantial shareholder.
Incorrect
One must be approved by the SFC prior to becoming a substantial shareholder of a licenced corporation. Otherwise, it is against the SFO. Anyone with 10% of more of shares in a Licenced Corporation will be considered as a substantial shareholder.
Hint
Reference Chapter:1.4.41
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Question 344 of 673
344. Question
1 pointsQID243:Which of the following is/are substantial shareholders of, Millionaire Securities, a licensed corporation?
I. Mr. Ip, who has a 10% stake of Millionaire Securities.
II. Ms. Chan, who has 20% of the voting power of Millionaire
Securities.
III. Mr. Mok, who was granted the authority to manage the investments of his seriously-ill spouse, Ms. Eu. Ms. Eu has a
30% stake of Millionaire Securities.
IV. Ms. Lau, who inherited her family business, Black Flower Oil. She has a 35% stake of Black Flower Oil and the company holds a 10% stake of Millionaire Securities.Correct
A substantial shareholder of a corporation is formally defined in s. 6, Schedule 1, SFO. In simple terms for the purposes of this manual, it may be taken to refer to a person who alone or together with his associates:
(a) has an interest of more than 10% of the total number of issued shares of the corporation;
(b) directly or indirectly has more than 10% of the voting power of the corporation at a general meeting; or
(c) is able to exercise 35% or more of the voting power of another corporation at a general meeting which in turn has more than 10% of the voting power of the corporation at a general meeting.
All of the individuals mentioned in this question comply with one or more of the criteria set for someone to become a substantial shareholder.Incorrect
A substantial shareholder of a corporation is formally defined in s. 6, Schedule 1, SFO. In simple terms for the purposes of this manual, it may be taken to refer to a person who alone or together with his associates:
(a) has an interest of more than 10% of the total number of issued shares of the corporation;
(b) directly or indirectly has more than 10% of the voting power of the corporation at a general meeting; or
(c) is able to exercise 35% or more of the voting power of another corporation at a general meeting which in turn has more than 10% of the voting power of the corporation at a general meeting.
All of the individuals mentioned in this question comply with one or more of the criteria set for someone to become a substantial shareholder.Hint
Reference Chapter:1.4.41
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Question 345 of 673
345. Question
1 pointsQID2783:Mr. Ko owns 45% of the voting rights of Kaohsiung Enterprises. Recently Mr. Ko intends to increase his holding of shares of Kaohsiung Enterprises by 10% while Kaohsiung Enterprise holds 15% shares of Kaohsiung Securities, a licensed corporation. Should Mr. Ko obtain SFC’s approval before increasing his Kaohsiung shares holdings?
Correct
Since Kaohsiung Enterprises controls more than 10% of Kaohsiung Securities, Kaohsiung Enterprises is the substantial shareholder of Kaohsiung Securities. Mr. Ko controls more than 35% shares of Kaohsiung Enterprises, so he indirectly becomes a substantial shareholder of Kaohsiung Securities.
SFC’s approval is only required if a non-substantial shareholder becomes a substantial shareholder. As Mr. Ko has been a substantial shareholder of Kaohsiung Securities, there is no need for the approval of the SFC.
Incorrect
Since Kaohsiung Enterprises controls more than 10% of Kaohsiung Securities, Kaohsiung Enterprises is the substantial shareholder of Kaohsiung Securities. Mr. Ko controls more than 35% shares of Kaohsiung Enterprises, so he indirectly becomes a substantial shareholder of Kaohsiung Securities.
SFC’s approval is only required if a non-substantial shareholder becomes a substantial shareholder. As Mr. Ko has been a substantial shareholder of Kaohsiung Securities, there is no need for the approval of the SFC.
Hint
Reference Chapter:1.4.45
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Question 346 of 673
346. Question
1 pointsQID1576:While the SFC is evaluating the directors of a fund manager, which of the following factors will not be taken into consideration?
Correct
An individual applicant should not, in Hong Kong or elsewhere, be an undischarged bankrupt or a recently discharged bankrupt, be currently involved in bankruptcy or similar proceedings or have failed to meet any judgement debt.
Incorrect
An individual applicant should not, in Hong Kong or elsewhere, be an undischarged bankrupt or a recently discharged bankrupt, be currently involved in bankruptcy or similar proceedings or have failed to meet any judgement debt.
Hint
Reference Chapter:1.4.46
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Question 347 of 673
347. Question
1 pointsQID250:The fit and proper guidelines will judge a persons fit and properness by his/her,
I. financial status or solvency
II. historic investment profitability
III. academic attainment and competencies
IV. reputation and integrityCorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience;
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Incorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience;
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Hint
Reference Chapter:1.4.46
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Question 348 of 673
348. Question
1 pointsQID149:Which of the following are potential barriers of becoming a director of a company?
I. Anyone aged 21 or below
II. Undischarged bankrupts
III. Persistent default in relation to the NCO
IV. A finding of being unfit during directorship of an insolvent companyCorrect
Persons to be appointed directors must meet the following requirements:
© They must not be disqualified by court order; the four principal grounds for such an order being:
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 2.5, Topic 9, which describes disqualification orders made by the MMT preventing persons committing market misconduct from being directors of companies).Incorrect
Persons to be appointed directors must meet the following requirements:
© They must not be disqualified by court order; the four principal grounds for such an order being:
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 2.5, Topic 9, which describes disqualification orders made by the MMT preventing persons committing market misconduct from being directors of companies).Hint
Reference Chapter:1.4.46
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Question 349 of 673
349. Question
1 pointsQID153:Miss Ko, an employee of Hai Nei Company, who commits an act of market misconduct while handling the company’s business, is being charged. In which of the following situation would Mr. Wan, the director of Hoi Nei Company be liable and accountable?
Correct
Directors are additionally subject to other, more specific duties
imposed upon them by particular statutory provisions. For example, Twelfth Schedule, the CWUMPO provides for a fine and/or imprisonment for a director that authorises the issue of
a prospectus containing an untrue statement. Where a director breaches strict requirements of the NCO, such as failing to prepare financial statements when required to do so, liability
will also arise. It is therefore important that directors understand both the general and the specific responsibilities imposed upon them, and how to properly discharge them, in order to fulfil their roles as directors and to address their exposure to directors’ liabilities.Incorrect
Directors are additionally subject to other, more specific duties
imposed upon them by particular statutory provisions. For example, Twelfth Schedule, the CWUMPO provides for a fine and/or imprisonment for a director that authorises the issue of
a prospectus containing an untrue statement. Where a director breaches strict requirements of the NCO, such as failing to prepare financial statements when required to do so, liability
will also arise. It is therefore important that directors understand both the general and the specific responsibilities imposed upon them, and how to properly discharge them, in order to fulfil their roles as directors and to address their exposure to directors’ liabilities.Hint
Reference Chapter:1.4.46
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Question 350 of 673
350. Question
1 pointsQID2664:Miss Mok is a shareholder of a licensed corporation. Since the licesed corporation is buying back its shares, Miss Mok holdings in the company has increased to over 10% which in turn makes her a substantial shareholder. Miss Mok is only aware of this after two weeks, what can she do?
Correct
She should notify the SFC in writing within 3 days of becoming aware of such incident.
Incorrect
She should notify the SFC in writing within 3 days of becoming aware of such incident.
Hint
Reference Chapter:1.4.47
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Question 351 of 673
351. Question
1 pointsQID861:The SFC will not take which of the following into consideration when measuring an applicants’ competence and integrity?
Correct
An individual applicant should meet age requirements (i.e. 18 years for representatives or equivalents) and competence qualifications as listed in the Fit and Proper Guidelines and amplified in the Guidelines on Competence. The competence tests involve experience and educational qualifications. They don’t include investment track records.
Incorrect
An individual applicant should meet age requirements (i.e. 18 years for representatives or equivalents) and competence qualifications as listed in the Fit and Proper Guidelines and amplified in the Guidelines on Competence. The competence tests involve experience and educational qualifications. They don’t include investment track records.
Hint
Reference Chapter:1.4.47
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Question 352 of 673
352. Question
1 pointsQID1231:An individual applicant should meet age requirements (i.e. 18 years for representatives or equivalents) and competence qualifications as listed in the Fit and Proper Guidelines and amplified in the Guidelines on Competence. The competence tests include which of the following?
I. A relevant person’s experience.
II. A relevant person’s educational qualifications.
III. A relevant person’s past performance in the industry.
IV. A relevant person has not breached any codes or guidelines promulgated by the SFC or other regulators.Correct
An individual applicant should meet age requirements (i.e. 18 years for representatives or equivalents) and competence qualifications as listed in the Fit and Proper Guidelines and amplified in the Guidelines on Competence. The competence tests involve experience and educational qualifications.
Incorrect
An individual applicant should meet age requirements (i.e. 18 years for representatives or equivalents) and competence qualifications as listed in the Fit and Proper Guidelines and amplified in the Guidelines on Competence. The competence tests involve experience and educational qualifications.
Hint
Reference Chapter:1.4.48
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Question 353 of 673
353. Question
1 pointsQID249:The fit and proper criteria for SFC licensing of corporations and individuals include matters relating to
I. Financial status or solvency
II. Competence
III. Capability
IV. Character.Correct
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience;
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Incorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience;
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Hint
Reference Chapter:1.4.48
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Question 354 of 673
354. Question
1 pointsQID1229:Applicants for licences or registration have to satisfy fitness and properness requirements. The main categories of the fit and proper requirements as stated in the SFO include:
I. the net worth and financial status of the applicant.
II. The educational or other qualifications or experience (having regard to the nature of the functions to be performed).
III. The ability to carry on the regulated activity competently, honestly and fairly.
IV. The reputation, character, reliability and financial integrity.Correct
Both corporate (including officers e.g. directors, managers etc.) and individual applicants for licences or registration have to satisfy fitness and properness requirements. There are four main categories of these fit and proper requirements (s. 129, SFO):
(a) financial status or solvency;
(b) educational or other qualifications or experience (having regard to the nature of the functions to be performed);
(c.) ability to carry on the RA competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Incorrect
Both corporate (including officers e.g. directors, managers etc.) and individual applicants for licences or registration have to satisfy fitness and properness requirements. There are four main categories of these fit and proper requirements (s. 129, SFO):
(a) financial status or solvency;
(b) educational or other qualifications or experience (having regard to the nature of the functions to be performed);
(c.) ability to carry on the RA competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Hint
Reference Chapter:1.4.48
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Question 355 of 673
355. Question
1 pointsQID1230:Which of the following are categories of the fitness and properness requirements set by the SFO?
I. Net worth
II. Educational or other qualifications or experience
III. Ability to carry on the regulated activity competently, honestly and fairly
IV. Reputation, character, reliability and financial integrityCorrect
Both corporate (including officers e.g. directors, managers etc.) and individual applicants for licences or registration have to satisfy fitness and properness requirements. There are four main categories of these fit and proper requirements (s. 129, SFO):
(a) financial status or solvency;
(b) educational or other qualifications or experience (having regard to the nature of the functions to be performed);
(c.) ability to carry on the RA competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Incorrect
Both corporate (including officers e.g. directors, managers etc.) and individual applicants for licences or registration have to satisfy fitness and properness requirements. There are four main categories of these fit and proper requirements (s. 129, SFO):
(a) financial status or solvency;
(b) educational or other qualifications or experience (having regard to the nature of the functions to be performed);
(c.) ability to carry on the RA competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Hint
Reference Chapter:1.4.48
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Question 356 of 673
356. Question
1 pointsQID1232:Which of the following are part of the competence and capability tests of the SFC and HKMA?
I. Experience.
II. Educational qualifications.
III. Performance in the Industry.
IV. An undischarged or recently discharged bankrupt, be currently involved in bankruptcy or similar proceedings or have failed to meet any judgment debt.Correct
The competence tests involve experience and educational qualifications.
Incorrect
The competence tests involve experience and educational qualifications.
Hint
Reference Chapter:1.4.48
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Question 357 of 673
357. Question
1 pointsQID1233:Which of the following criteria does the SFC NOT taken into account of when considering an applicant’s character and integrity?
Correct
An individual applicant should satisfy the SFC (or the HKMA as appropriate) that he:
(b) has not breached any codes or guidelines promulgated by the SFC or other regulators;
(c) has not been subject to disciplinary action by professional associations;
(d) has not been disqualified by the court from acting as a director, as detailed in the Fit and Proper Guidelines; and
(e) has not been a director or substantial shareholder of, or been involved in managing, an insolvent corporation.Incorrect
An individual applicant should satisfy the SFC (or the HKMA as appropriate) that he:
(b) has not breached any codes or guidelines promulgated by the SFC or other regulators;
(c) has not been subject to disciplinary action by professional associations;
(d) has not been disqualified by the court from acting as a director, as detailed in the Fit and Proper Guidelines; and
(e) has not been a director or substantial shareholder of, or been involved in managing, an insolvent corporation.Hint
Reference Chapter:1.4.49
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Question 358 of 673
358. Question
1 pointsQID330:Mr Ko is an asset manager working for Kaohsiung Securities, A licensed corporation. Mr Ko has managed a number of CIS, mostly bond funds. Mr Wan is a seasoned investor who has invested in funds that were managed by Mr Ko for a long time. He trusted Mr Ko and ask if Mr Ko can handle his personal investment which includes securities and futures. Mr Ko does not have enough time to manage Mr Wan’s portfolio and thus refer Stock broker from another company Mr Ip to handle Mr Wan’s request. Mr Wan then invests heavily with Mr Ip and has generated a substantial amount of commission for Mr Ip. Mr Ip thus promised to pay Mr Ko some introductory fee and Mr Ko agreed to it. Should Mr Ko apply for a licence for Type 1 regulated activity in this case?
Correct
One of the categories of persons conducting Type 1 regulated activity according to the SFC includes:
(f) a securities introducing agent.Incorrect
One of the categories of persons conducting Type 1 regulated activity according to the SFC includes:
(f) a securities introducing agent.Hint
Reference Chapter:1.4.5
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Question 359 of 673
359. Question
1 pointsQID230:British Construction Bank is an authorised financial institution. Amid the downfall of the Hong Kong banking sector, it would like start an asset management business and sell CIS fund products it manages to clients to generate revenue. Which type license of regulated activity should British Construction Bank apply for to conduct such activities?
Correct
Part V, SFO provides for the implementation of the licensing regime, including:
(b) the ten distinct types of regulated activity (see Schedule 5, SFO). In this case the bank should apply to a Type 9 license for asset management.Incorrect
Part V, SFO provides for the implementation of the licensing regime, including:
(b) the ten distinct types of regulated activity (see Schedule 5, SFO). In this case the bank should apply to a Type 9 license for asset management.Hint
Reference Chapter:1.4.5
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Question 360 of 673
360. Question
1 pointsQID811:Are Registered Institutions required to adhere to the FRR?
Correct
Licensed corporations (but not registered institutions) must meet the FRR set by the SFC.
Incorrect
Licensed corporations (but not registered institutions) must meet the FRR set by the SFC.
Hint
Reference Chapter:1.4.50
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Question 361 of 673
361. Question
1 pointsQID253:Kaohsiung Securities is a licensed corporation that conduct asset management businesses. Recently Kaohsiung Securities is having civil litigations overseas which might adversely affects its financial well being. Should Kaohsiung contact the SFC regarding such events?
Correct
An intermediary should:
(a) be able to comply with the capital requirements: for licensed corporations, the FRR; for registered institutions, the HKMA’s capital adequacy requirements; and
(b) not be subject to bankruptcy proceedings or have failed to meet a judgment debt.
In this case, the issuer will be negatively affected financially by an adverse outcome.Incorrect
An intermediary should:
(a) be able to comply with the capital requirements: for licensed corporations, the FRR; for registered institutions, the HKMA’s capital adequacy requirements; and
(b) not be subject to bankruptcy proceedings or have failed to meet a judgment debt.
In this case, the issuer will be negatively affected financially by an adverse outcome.Hint
Reference Chapter:1.4.50
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Question 362 of 673
362. Question
1 pointsQID259:The regulator must ensure that a licensed corporation has enough capital within the corporation (or available to it from external sources):
I. to support the level of its business activities
II. to meet its liabilities as they fall due
III. to compensate its clients for their losses due to market volatility
IV. to provide a buffer in the event of a sudden market changes, disruptions or loss of confidenceCorrect
The regulator must ensure that a licensed corporation has enough capital within the corporation (or available to it from
external sources):
(a) to support the level of its business activities;
(b) to meet its liabilities as they fall due; and
(c) to provide a buffer in the event of sudden market changes, disruptions or loss of confidence.Incorrect
The regulator must ensure that a licensed corporation has enough capital within the corporation (or available to it from
external sources):
(a) to support the level of its business activities;
(b) to meet its liabilities as they fall due; and
(c) to provide a buffer in the event of sudden market changes, disruptions or loss of confidence.Hint
Reference Chapter:1.4.50
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Question 363 of 673
363. Question
1 pointsQID1234:Which of the following descriptions about an intermediary’s ability to comply with the capital requirements are accurate?
I. Registered institutions should comply with HKMA’s capital adequacy requirements.
II. Licensed corporation should comply with SFC’s FRR.
III. Licensed corporation should comply with HKMA’s capital adequacy requirements.
IV. Registered Institutions should comply with SFC’s FRR.Correct
An intermediary should:
(a) be able to comply with the capital requirements: for licensed corporations the FRR, and for registered institutions the HKMA’s capital adequacy requirements.Incorrect
An intermediary should:
(a) be able to comply with the capital requirements: for licensed corporations the FRR, and for registered institutions the HKMA’s capital adequacy requirements.Hint
Reference Chapter:1.4.50
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Question 364 of 673
364. Question
1 pointsQID1606:Do licensed corporations need to have an independent committee?
Correct
Under the licensing regime, any business carrying on RAs must be a company incorporated in Hong Kong or an overseas company registered with the Company Registry of Hong Kong. Individuals, sole proprietorships and partnerships cannot be licensed for this purpose. The SFC must be satisfied that the corporation meets the fit and proper criteria in respect of the activities it applies to conduct.
Incorrect
Under the licensing regime, any business carrying on RAs must be a company incorporated in Hong Kong or an overseas company registered with the Company Registry of Hong Kong. Individuals, sole proprietorships and partnerships cannot be licensed for this purpose. The SFC must be satisfied that the corporation meets the fit and proper criteria in respect of the activities it applies to conduct.
Hint
Reference Chapter:1.4.51
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Question 365 of 673
365. Question
1 pointsQID252:Mr Wan would like to become a licenced representative and conduct securities dealing business. He has already acquired a pass in the Paper 1, Paper 7 and Paper 8 of the Licencing Exam. Which of the following experience of Mr Wan may not have an adverse effect
Correct
Option 1, 3 and 4 will adversely affect Mr. Wan to become a licensed representative given the following:
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the
Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience;
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Incorrect
Option 1, 3 and 4 will adversely affect Mr. Wan to become a licensed representative given the following:
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the
Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience;
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Hint
Reference Chapter:1.4.53
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Question 366 of 673
366. Question
1 pointsQID251:The fit and proper guidelines will judge a person’s fitness and properness by his/her,
I. financial status or solvency
II. Historic investment performance
III. Educational or other qualifications or experience, ability to carry on the regulated activity competently, honestly and fairly; and
IV. Reputation, character, reliability and financial integrityCorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience;
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Incorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience;
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Hint
Reference Chapter:1.4.53
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Question 367 of 673
367. Question
1 pointsQID2819:The fit and proper guidelines are less considered when processing applications for licences or registrations
Correct
Factors to be considered in the Fit and Proper Guidelines:
1. The applicant’s financial situation
2. Whether the applicant has the ability to carry out the regulated activity competently and fairly
3. The character of the applicant
4. Applicant’s academic qualificationsHowever, applicants do not necessarily need a bachelor’s degree or above to meet the requirements, so it is the best out of the 4 options.
Incorrect
Factors to be considered in the Fit and Proper Guidelines:
1. The applicant’s financial situation
2. Whether the applicant has the ability to carry out the regulated activity competently and fairly
3. The character of the applicant
4. Applicant’s academic qualificationsHowever, applicants do not necessarily need a bachelor’s degree or above to meet the requirements, so it is the best out of the 4 options.
Hint
Reference Chapter:1.4.53
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Question 368 of 673
368. Question
1 pointsQID1005:In considering the licence application or registration of Type 2 applicants, the SFC will consider which of the following?
I. The academic qualification of the applicants
II. The applicants’ character
III. The applicant’s experience in the industry
IV. The applicants’ financial statusCorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience (having regard to the nature of the functions to be performed);
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Incorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These relate to:
(a) financial status or solvency;
(b) educational or other qualifications or experience (having regard to the nature of the functions to be performed);
© ability to carry on the regulated activity competently, honestly and fairly; and
(d) reputation, character, reliability and financial integrity.Hint
Reference Chapter:1.4.53
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Question 369 of 673
369. Question
1 pointsQID758:The Fit and proper guidelines of the SFO are more likely to apply to which of the following individuals or entities?
I. Company that’s applying for a license or registration.
II. Representative of company that’s applying for a license or registration.
III. Executive Director of company that’s applying for a license or registration.
IV. Professional InvestorCorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These requirements apply to applicants and to licensed and registered persons on an ongoing basis. Compliance with the requirements will be monitored by the HKMA in the case of AFIs and their executive officers and staff, and by the SFC in the case of others.
Incorrect
The corporate (including its officers e.g. directors, managers, etc.) and individual applicants for licensing or registration have to satisfy fitness and properness requirements stated in the Fit and Proper Guidelines. These requirements apply to applicants and to licensed and registered persons on an ongoing basis. Compliance with the requirements will be monitored by the HKMA in the case of AFIs and their executive officers and staff, and by the SFC in the case of others.
Hint
Reference Chapter:1.4.53
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Question 370 of 673
370. Question
1 pointsQID1665:SFC will not considered which of the following traits of an applicant’s when assessing the fit and properness of the applicant?
Correct
SFC will not considered an applicant’s profitability while assessing its fit and properness.
Incorrect
SFC will not considered an applicant’s profitability while assessing its fit and properness.
Hint
Reference Chapter:1.4.53
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Question 371 of 673
371. Question
1 pointsQID2687:In order to become a Type 1 representative, which of the following incident will not impact an individuals fit and properness?
Correct
Fit and properness do not take into account a person’s age. It only consideres academic records, financial standing, character and experience. Courts disallowing the invidual to practice law and criminal record are evidence of poor character.
Incorrect
Fit and properness do not take into account a person’s age. It only consideres academic records, financial standing, character and experience. Courts disallowing the invidual to practice law and criminal record are evidence of poor character.
Hint
Reference Chapter:1.4.53
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Question 372 of 673
372. Question
1 pointsQID2367:Mr. Wan got fined because of a public fight in Singapore last month. Mr. Wan is registering for a license now. He didn’t report this crime to avoid the hassle. Is there any wrong doing with Mr. Wan?
Correct
Mr. Wan, provided false information with the SFC, this obviously violates the Securities and Futures Ordinance. Except for light traffic offences, all offences should be reported when registering a license.
Incorrect
Mr. Wan, provided false information with the SFC, this obviously violates the Securities and Futures Ordinance. Except for light traffic offences, all offences should be reported when registering a license.
Hint
Reference Chapter:1.4.53
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Question 373 of 673
373. Question
1 pointsQID1236:The SFC requires every individual licensee to undertake a minimum of how many CPT hours?
Correct
The SFC requires every individual licensee to undertake a minimum of five CPT hours every calendar year for each RA, with proportional hours for those who obtained their licences
during the year.Incorrect
The SFC requires every individual licensee to undertake a minimum of five CPT hours every calendar year for each RA, with proportional hours for those who obtained their licences
during the year.Hint
Reference Chapter:1.4.55
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Question 374 of 673
374. Question
1 pointsQID2583:Which of the following will the SFC consider in the case of licensing a Type 1 representative?
i. Industry experience and/or educational level
ii. Must have 3 years of work experience in a Type 1 intermediary
iii. Whether or not he/she has been the management of an insolvent corporation
iv. Investment experienceCorrect
Normally, passes in the subjects of [Chinese subject and Mathematics] or [English subject and Mathematics] in the High School Examination is the minimum educational level requirement for become a licensed representative, may or may not with the aid of a certain years of work experience in the industry. Also, if one has been the management of an insolvent corporation recently, it may hold him/her back from obtaining the license. However, you do not need the experience of participating in a type 1 firm as a staff member nor the experience in investment.
Incorrect
Normally, passes in the subjects of [Chinese subject and Mathematics] or [English subject and Mathematics] in the High School Examination is the minimum educational level requirement for become a licensed representative, may or may not with the aid of a certain years of work experience in the industry. Also, if one has been the management of an insolvent corporation recently, it may hold him/her back from obtaining the license. However, you do not need the experience of participating in a type 1 firm as a staff member nor the experience in investment.
Hint
Reference Chapter:1.4.55
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Question 375 of 673
375. Question
1 pointsQID1235:The Guidelines on CPT set out the SFC’s requirements that the conduct and arrangements of CPT programmes are responsibilities of which of the following organizations or persons?
Correct
The Guidelines on CPT set out the SFC’s requirements that, among other things,:
(a) corporations should conduct or arrange CPT programmes best suited for their staff to enhance their industry knowledge, skills and professionalismIncorrect
The Guidelines on CPT set out the SFC’s requirements that, among other things,:
(a) corporations should conduct or arrange CPT programmes best suited for their staff to enhance their industry knowledge, skills and professionalismHint
Reference Chapter:1.4.55
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Question 376 of 673
376. Question
1 pointsQID257:Mr Ko is a licensed representative of a licensed corporation -Kaohsiung Securities and conduct type 9 activities as a representative. According to the CPT requirement of the SFC, what kind of requirements should Mr Ko satisfy to be fit and proper?
Correct
The SFC expects every individual licensee to undertake a minimum of 5 CPT hours every calendar year for each regulated activity, with proportional hours for those who obtained their licences during the year.
Incorrect
The SFC expects every individual licensee to undertake a minimum of 5 CPT hours every calendar year for each regulated activity, with proportional hours for those who obtained their licences during the year.
Hint
Reference Chapter:1.4.55
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Question 377 of 673
377. Question
1 pointsQID1577:Which of the following form of activity is not a prescribed method of attaining CPT hours under the Guidelines on Continuous Professional Training?
Correct
CPT may be achieved through attending courses, workshops, lectures and seminars; distance learning; self-study with submission of assignments to recognised institutions; research; publications; speeches and so on.
Incorrect
CPT may be achieved through attending courses, workshops, lectures and seminars; distance learning; self-study with submission of assignments to recognised institutions; research; publications; speeches and so on.
Hint
Reference Chapter:1.4.56
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Question 378 of 673
378. Question
1 pointsQID1666:Which of the following are not an acceptable method of CPT?
Correct
Reading Financial Publications is not an acceptable form of acquiring CPT hours.
Incorrect
Reading Financial Publications is not an acceptable form of acquiring CPT hours.
Hint
Reference Chapter:1.4.56
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Question 379 of 673
379. Question
1 pointsQID256:In which of the following cases can the required number of training hours for Continuous Professional Training (CPT) Guidelines be met?
I. When attending CPT for similar “competence groups”; those who carry on more than one regulated activity are credited with CPT hours for all regulated activities within the same competence group.
II. CPT may be achieved through attending courses, workshops, lectures and seminars; distance-learning; self-study with submission of assignments to recognized institutions; research; publications; speeches and so on.
III. The hours that exceed the prescribed number of hours for CPT can be used to fulfil the requirements for the next year; with no more than 5 hours as the limit.
IV. If the licensee has not engaged in related activities in the year, there is no need to meet the licensing requirements.Correct
The SFC has introduced the concept of licensees falling into
different “competence groups”, enabling those who carry on more than one regulated activity to be credited with CPT hours for all regulated activities within the same competence group. CPT may also be achieved through attending courses, workshops, lectures and seminars; distance learning; self-study with submission of assignments to recognised institutions; research; publications; speeches and so on.Incorrect
The SFC has introduced the concept of licensees falling into
different “competence groups”, enabling those who carry on more than one regulated activity to be credited with CPT hours for all regulated activities within the same competence group. CPT may also be achieved through attending courses, workshops, lectures and seminars; distance learning; self-study with submission of assignments to recognised institutions; research; publications; speeches and so on.Hint
Reference Chapter:1.4.56
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Question 380 of 673
380. Question
1 pointsQID148:Which of the following actions may result in disqualification as director by court order?
I. Ms. Chung was found to be in persistent default in relation to the New Companies Ordinance or in acting as a liquidator or receiver.
II. Mr. Tse had committed fraud in relation to minor company matters including the preparation of false accounts.
III. Ms. Wang served as a director of an insolvent company last year. The company was liquidated due to poor management of other directors.
IV. Mr. Ng was convicted of an indictable offence for fraud or dishonesty or relating to forming or operating companies.Correct
Persons to be appointed directors must meet the following requirements:
(c) They must not be disqualified by court order; the four principal grounds for such an order being:
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 2.5, Topic 9, which describes disqualification orders made by the MMT preventing persons committing market misconduct from being directors of companies).Incorrect
Persons to be appointed directors must meet the following requirements:
(c) They must not be disqualified by court order; the four principal grounds for such an order being:
(i) conviction of an indictable offence for fraud or dishonesty or relating to forming or operating companies;
(ii) persistent default in relation to the NCO or in acting as a liquidator or receiver;
(iii) fraud in relation to company matters or fraudulent trading; or
(iv) a finding of being unfit during directorship of an insolvent company.
Fraud and the other disqualifications apply to directors and shadow directors (e.g. see section 2.5, Topic 9, which describes disqualification orders made by the MMT preventing persons committing market misconduct from being directors of companies).Hint
Reference Chapter:1.4.56
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Question 381 of 673
381. Question
1 pointsQID247:British Construction Securities is a securities broker of the UK. It wishes to conduct a series of bond dealing in Hong Kong on behalf of a client for a period of less than 3 months. Should British Construction Securities register or apply for a licence?
Correct
The SFC may grant a temporary licence for a period not exceeding three months, subject to conditions, to a corporation which principally carries on its business overseas, allowing it to
conduct one or more than one regulated activity (other than Type 3 and Type 7 to Type 9 regulated activities) in Hong Kong.Incorrect
The SFC may grant a temporary licence for a period not exceeding three months, subject to conditions, to a corporation which principally carries on its business overseas, allowing it to
conduct one or more than one regulated activity (other than Type 3 and Type 7 to Type 9 regulated activities) in Hong Kong.Hint
Reference Chapter:1.4.58
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Question 382 of 673
382. Question
1 pointsQID1217:Are registered institutions required to comply with the SFC’s regulatory criteria, including Fitness and Properness and Business Conduct?
Correct
AFIs (including banks) are jointly regulated by the
HKMA and the SFC, with the HKMA being the front-line regulator that will apply all SFC regulatory criteria, including fitness and properness and business conduct, other than capital
adequacy, the handling of client money and the audit requirements in supervising them.Incorrect
AFIs (including banks) are jointly regulated by the
HKMA and the SFC, with the HKMA being the front-line regulator that will apply all SFC regulatory criteria, including fitness and properness and business conduct, other than capital
adequacy, the handling of client money and the audit requirements in supervising them.Hint
Reference Chapter:1.4.58
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Question 383 of 673
383. Question
1 pointsQID2806:What is the minimum age for a licensed representative?
Correct
The minimum age to become a licensed representative is 18.
Incorrect
The minimum age to become a licensed representative is 18.
Hint
Reference Chapter:1.4.58
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Question 384 of 673
384. Question
1 pointsQID810:M.D. Yu is a seasoned and successful investor. She always brags about her investment track record to her friends. Her friends have provided M.D. Yu with “Tea Money” (Cash for sundry expenses) and have asked M.D. Yu to refer her stock broker to them, allowing them to replicate M.D. Yu’s success. If M.D. Yu agrees to this practice, should M.D. Yu apply for a licence for these activities?
Correct
M.D. Yu should apply for a Type 1 License to conduct activities as a securities introducing agent.
Incorrect
M.D. Yu should apply for a Type 1 License to conduct activities as a securities introducing agent.
Hint
Reference Chapter:1.4.6
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Question 385 of 673
385. Question
1 pointsQID2527:Due to its characteristics, the virtual currency can be defined as:
I. shares
II. debt securities
III. collective investment schemes
IV. futuresCorrect
Due to its characteristics, the virtual currency can be defined as:
I. shares
II. debt securities
III. collective investment schemesIncorrect
Due to its characteristics, the virtual currency can be defined as:
I. shares
II. debt securities
III. collective investment schemesHint
Reference Chapter:1.4.8
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Question 386 of 673
386. Question
1 pointsQID1575:Do trust companies that act as trustee for CIS need to apply for license?
Correct
When acting strictly in their core capacity as mentioned (e.g. a custodian taking custody of fund assets, or a lawyer advising on fund structure), Other intermediaries involved in the asset management industry include trustees, custodians and professionals such as lawyers, accountants and investment advisers are not engaging in any activity regulated by the SFO.
Incorrect
When acting strictly in their core capacity as mentioned (e.g. a custodian taking custody of fund assets, or a lawyer advising on fund structure), Other intermediaries involved in the asset management industry include trustees, custodians and professionals such as lawyers, accountants and investment advisers are not engaging in any activity regulated by the SFO.
Hint
Reference Chapter:1.4.9
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Question 387 of 673
387. Question
1 pointsQID2530:Is the license required to trade futures contracts of virtual assets on behalf of clients?
Correct
Since the futures contracts of virtual assets are futures, type 2 license is required.
Incorrect
Since the futures contracts of virtual assets are futures, type 2 license is required.
Hint
Reference Chapter:1.4.9
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Question 388 of 673
388. Question
1 pointsQID2524:Are virtual assets regualted by the Securities and Futures Ordinance?
Correct
Some of the virtual assets are considered securities since they have the characteristics of securities. The collective investment schemes of virtual assets are considered securities.
Incorrect
Some of the virtual assets are considered securities since they have the characteristics of securities. The collective investment schemes of virtual assets are considered securities.
Hint
Reference Chapter:1.4.9
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Question 389 of 673
389. Question
1 pointsQID1680:Should an intermediary impose a trading limit on staff members trading based on the staff member’s salary?
Correct
There are no relevant requirements.
Incorrect
There are no relevant requirements.
Hint
Reference Chapter:1.5.
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Question 390 of 673
390. Question
1 pointsQID1209:Which of the following organizations is responsible for front line conduct of market participants in the securities and futures business?
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.5.1
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Question 391 of 673
391. Question
1 pointsQID1663:Are Registered Institutions bound by the code of conduct?
Correct
Registered Institutions need to adhere to the Code of Conduct.
Incorrect
Registered Institutions need to adhere to the Code of Conduct.
Hint
Reference Chapter:1.5.1
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Question 392 of 673
392. Question
1 pointsQID874:Do Keeping of Records Rules include telephone recordings?
Correct
Keeping of Records Rules exclude telephone recordings, which are covered in the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (“Code of Conduct”).
Incorrect
Keeping of Records Rules exclude telephone recordings, which are covered in the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission (“Code of Conduct”).
Hint
Reference Chapter:1.5.10
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Question 393 of 673
393. Question
1 pointsQID2545:Should the same standards apply when the licensed corporations trade OTC derivatives with an independent third party or group affiliate?
Correct
The same standards should apply when the licensed corporations trade OTC derivatives with an independent third party or group affiliate in any circumstances.
Incorrect
The same standards should apply when the licensed corporations trade OTC derivatives with an independent third party or group affiliate in any circumstances.
Hint
Reference Chapter:1.5.110
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Question 394 of 673
394. Question
1 pointsQID2634:What is the purpose of the IM and VM margin requirements in OTCD trades?
Correct
The purpose of the IM and VM margin requirements in OTCD tradesto protect both the buyer and sellers from the possibility of the other party defaulting on its obligations.
Incorrect
The purpose of the IM and VM margin requirements in OTCD tradesto protect both the buyer and sellers from the possibility of the other party defaulting on its obligations.
Hint
Reference Chapter:1.5.116
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Question 395 of 673
395. Question
1 pointsQID2636:Are the Initial Margin and Variation Margin rqeuirements of OTCD transactions are applicable to registered institutions?
Correct
OTCD transactions of registered institutions are not subjected to Initial Margin and Variation Margin Requirements.
Incorrect
OTCD transactions of registered institutions are not subjected to Initial Margin and Variation Margin Requirements.
Hint
Reference Chapter:1.5.117
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Question 396 of 673
396. Question
1 pointsQID365:A licensed or registered person “should have and employ effectively the resources and procedures which are needed for the proper performance of its business activities”. It should have:
I. Staff with good track record and are well known in Hong Kong
II. Staff who are fit and proper to carry out their designated responsibilities
III. Adequate and diligent supervision of the staff appointed to conduct its business
IV. Satisfactory internal control procedures, financial resources and operational systems, procedures and technology which can reasonably be expected to protect from loss of both its own operations and any third parties it transacts with.Correct
A licensed or registered person “should have and employ effectively the resources and procedures which are needed for the proper performance of its business activities”. It should
have:
(a) staff who are fit and proper to carry out their designated responsibilities;
(b) adequate and diligent supervision of the staff appointed to conduct its business; and
© satisfactory internal control procedures, financial resources and operational systems, procedures and technology which can reasonably be expected to protect from loss of both its own operations and any third parties it transacts with.Incorrect
A licensed or registered person “should have and employ effectively the resources and procedures which are needed for the proper performance of its business activities”. It should
have:
(a) staff who are fit and proper to carry out their designated responsibilities;
(b) adequate and diligent supervision of the staff appointed to conduct its business; and
© satisfactory internal control procedures, financial resources and operational systems, procedures and technology which can reasonably be expected to protect from loss of both its own operations and any third parties it transacts with.Hint
Reference Chapter:1.5.12
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Question 397 of 673
397. Question
1 pointsQID2635:OTCD are not subjected to IM and VM requirements if?
I. where there is reasonable doubt (properly founded and supported by a written legal
opinion) about the enforceability of a netting agreement in respect of IM or VM, or collateral protection arrangements in respect of IM
II. in relation to intragroup transactions accounted for, and risk is managed, on a consolidated basis
III. where the licensed person has notified the SFC it will perform “substituted compliance”.
IV. where the licensed person are not subjected to counter-party risk.Correct
OTCD are not subjected to IM and VM requirements if:
I. Where there is reasonable doubt (properly founded and supported by a written legal
opinion) about the enforceability of a netting agreement in respect of IM or VM, or collateral protection arrangements in respect of IM
II. in relation to intragroup transactions accounted for, and risk is managed, on a consolidated basis
III. where the licensed person has notified the SFC it will perform “substituted compliance”.
IV. where the licensed person are not subjected to counter-party risk.Incorrect
OTCD are not subjected to IM and VM requirements if:
I. Where there is reasonable doubt (properly founded and supported by a written legal
opinion) about the enforceability of a netting agreement in respect of IM or VM, or collateral protection arrangements in respect of IM
II. in relation to intragroup transactions accounted for, and risk is managed, on a consolidated basis
III. where the licensed person has notified the SFC it will perform “substituted compliance”.
IV. where the licensed person are not subjected to counter-party risk.Hint
Reference Chapter:1.5.120
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Question 398 of 673
398. Question
1 pointsQID367:According to the know your client principle, it is important that in order to provide the best service to its client and to minimize risk to its client and itself, a licensed or registered person should take all reasonable steps to establish the client’s
I. True and full identity
II. Financial situation or strength
III. Past investment track record
IV. Investment objectivesCorrect
It is important that in order to provide the best service to its client and to minimise risk to its client and itself, a licensed or registered person should take all reasonable steps to establish
the client’s:
(a) true and full identity;
(b) financial situation or strength;
(c.) investment experience; and
(d) investment objectives.Incorrect
It is important that in order to provide the best service to its client and to minimise risk to its client and itself, a licensed or registered person should take all reasonable steps to establish
the client’s:
(a) true and full identity;
(b) financial situation or strength;
(c.) investment experience; and
(d) investment objectives.Hint
Reference Chapter:1.5.14
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Question 399 of 673
399. Question
1 pointsQID1335:An intermediary should establish which of the following details about the client?
I. Financial Status.
II. Investment Experience.
III. Investment Objectives.
IV. Past Investment Performance.Correct
A licensed or registered person should take all reasonable steps to establish the client’s:
(b) financial situation or strength;
(c.) investment experience; and
(d) investment objectives.Incorrect
A licensed or registered person should take all reasonable steps to establish the client’s:
(b) financial situation or strength;
(c.) investment experience; and
(d) investment objectives.Hint
Reference Chapter:1.5.14
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Question 400 of 673
400. Question
1 pointsQID366:According to the Code of Conduct, an intermediary should know:
I. A client’s investment objectives
II. A client’s investment experience
III. All investment intermediaries used by the client
IV. A client’s financial situationCorrect
It is important that in order to provide the best service to its client and to minimise risk to its client and itself, a licensed or registered person should take all reasonable steps to establish
the client’s:
(a) true and full identity;
(b) financial situation or strength;
(c.) investment experience; and
(d) investment objectives.Incorrect
It is important that in order to provide the best service to its client and to minimise risk to its client and itself, a licensed or registered person should take all reasonable steps to establish
the client’s:
(a) true and full identity;
(b) financial situation or strength;
(c.) investment experience; and
(d) investment objectives.Hint
Reference Chapter:1.5.14
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Question 401 of 673
401. Question
1 pointsQID1336:According to the general principle of information about clients, an intermediary should understand a client’s:
I. Financial situation.
II. Investment experience.
III. Investment objectives.
IV. Tax history.Correct
A licensed or registered person should take all reasonable steps to establish the client’s:
(b) financial situation or strength;
(c.) investment experience; and
(d) investment objectives.Incorrect
A licensed or registered person should take all reasonable steps to establish the client’s:
(b) financial situation or strength;
(c.) investment experience; and
(d) investment objectives.Hint
Reference Chapter:1.5.14
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Question 402 of 673
402. Question
1 pointsQID2589:The primary purpose of the Know Your Client process is:
Correct
Know Your Client is one of the 9 general principles under the Code of Conduct with the SFC. The primary aim is to minimise risks the client faces in investments and risks the intermediary itself will face.
Incorrect
Know Your Client is one of the 9 general principles under the Code of Conduct with the SFC. The primary aim is to minimise risks the client faces in investments and risks the intermediary itself will face.
Hint
Reference Chapter:1.5.14
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Question 403 of 673
403. Question
1 pointsQID1337:According to the Client Identity Rule Policy, an intermediary should:
I. Know the true identity of the client and its power of attorney
II. For company accounts, understand and identify its business nature.
III. Verify the identity of the clients, address and contract details.
IV. The intermediary should not conduct business with a client who fails to provide sufficient information to satisfy the Client Identity Rule.Correct
The SFC has also issued the Client Identity Rule Policy, which explains the approach the SFC will take in enforcing the client identity requirements. Where the SFC requests information on the identity of ultimate clients, it will consider the requirements to have been complied with if the licensed or registered person provides the necessary information in relation to ultimate clients within two business days of the request.
Incorrect
The SFC has also issued the Client Identity Rule Policy, which explains the approach the SFC will take in enforcing the client identity requirements. Where the SFC requests information on the identity of ultimate clients, it will consider the requirements to have been complied with if the licensed or registered person provides the necessary information in relation to ultimate clients within two business days of the request.
Hint
Reference Chapter:1.5.14
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Question 404 of 673
404. Question
1 pointsQID1677:The KYC principles do not require the intermediary to assess the client’s
Correct
The KYC principles do not require the intermediary to assess the client’s gift preferences.
Incorrect
The KYC principles do not require the intermediary to assess the client’s gift preferences.
Hint
Reference Chapter:1.5.14
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Question 405 of 673
405. Question
1 pointsQID368:Why is the Know Your Client (KYC) section particularly important in the code of conduct?
Correct
It is important that in order to provide the best service to its client and to minimise risk to its client and itself, a licensed or registered person should take all reasonable steps to know the client better.
Incorrect
It is important that in order to provide the best service to its client and to minimise risk to its client and itself, a licensed or registered person should take all reasonable steps to know the client better.
Hint
Reference Chapter:1.5.14
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Question 406 of 673
406. Question
1 pointsQID1014:Mr Liu is a seasoned securities investor. He wishes to invest in the futures market recently and thus tries to open a futures trading account with millionaire securities. Millionaires Securities should
Correct
Millionaires Securities should assess Mr Liu’s knowledge about derivatives and explain risk associated with trading derivatives.
Incorrect
Millionaires Securities should assess Mr Liu’s knowledge about derivatives and explain risk associated with trading derivatives.
Hint
Reference Chapter:1.5.18
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Question 407 of 673
407. Question
1 pointsQID823:Mr Ko is a loyal and long-term customer of Kaohsiung Securities. He has been trading micro cap stocks in the past. Under the influence of advertisement, he wishes to invest in structural products listed on the SEHK. How should Kaohsiung Securities handle the situation?
Correct
As part of the know-your-client procedures, a licensed or registered person should assess the client’s knowledge of derivatives and characterise the client based on his knowledge of derivatives. Where a client without knowledge of derivatives wishes to invest in a derivative product that the licensed or registered person has not recommended, the risks should be
explained.Incorrect
As part of the know-your-client procedures, a licensed or registered person should assess the client’s knowledge of derivatives and characterise the client based on his knowledge of derivatives. Where a client without knowledge of derivatives wishes to invest in a derivative product that the licensed or registered person has not recommended, the risks should be
explained.Hint
Reference Chapter:1.5.18
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Question 408 of 673
408. Question
1 pointsQID835:Which of the following is not a derivative/ structural product of company A?
Correct
Answer A is not an structured product since the return of none of them is tied to the other in any way.
Incorrect
Answer A is not an structured product since the return of none of them is tied to the other in any way.
Hint
Reference Chapter:1.5.18
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Question 409 of 673
409. Question
1 pointsQID1619:The Code of Conduct applies to
Correct
The Code of Conduct applies to all licensed and registered persons.
Incorrect
The Code of Conduct applies to all licensed and registered persons.
Hint
Reference Chapter:1.5.2
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Question 410 of 673
410. Question
1 pointsQID371:According to the Code of Conduct, an intermediary should establish the identify of the client including the identity of:
Correct
Prior to executing any transaction for a client, a licensed or registered person is required to satisfy itself on reasonable grounds of the identity, address and contact details of the ultimate
originator and the ultimate beneficiary of a transaction and keep a record of the information used to establish the same.Incorrect
Prior to executing any transaction for a client, a licensed or registered person is required to satisfy itself on reasonable grounds of the identity, address and contact details of the ultimate
originator and the ultimate beneficiary of a transaction and keep a record of the information used to establish the same.Hint
Reference Chapter:1.5.23
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Question 411 of 673
411. Question
1 pointsQID370:At which stages of the investment process should intermediaries confirm the identities of the customers?
I. Prior to executing any transaction.
II. Prior to opening an account.
III. After the transaction is completed.
IV. When the account is frozen.Correct
Prior to executing any transaction for a client, a licensed or registered person is required to satisfy itself on reasonable grounds of the identity, address and contact details of the ultimate
originator and the ultimate beneficiary of a transaction and keep a record of the information used to establish the same.Incorrect
Prior to executing any transaction for a client, a licensed or registered person is required to satisfy itself on reasonable grounds of the identity, address and contact details of the ultimate
originator and the ultimate beneficiary of a transaction and keep a record of the information used to establish the same.Hint
Reference Chapter:1.5.23
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Question 412 of 673
412. Question
1 pointsQID369:The Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission suggests that the identity of which of the following persons should be checked?
I. Persons ultimately responsible for originating transactions.
II. Persons who are the ultimate beneficiaries of the transactions.
III. The identity of the fund manager alone in the case of an investment fund unless an ultimate beneficiary gives the instructions.
IV. The identity of the individuals in the group in the case of an individual investor known to be operating an account for a group of persons.Correct
Prior to executing any transaction for a client, a licensed or registered person is required to satisfy itself on reasonable grounds of the identity, address and contact details of the ultimate
originator and the ultimate beneficiary of a transaction and keep a record of the information used to establish the same. In the case of a CIS or discretionary account, this will require the licensed or registered person to establish the identity of the CIS or account and its manager –the identities of the ultimate beneficiaries only need to be established where they are in fact giving the instructions.Incorrect
Prior to executing any transaction for a client, a licensed or registered person is required to satisfy itself on reasonable grounds of the identity, address and contact details of the ultimate
originator and the ultimate beneficiary of a transaction and keep a record of the information used to establish the same. In the case of a CIS or discretionary account, this will require the licensed or registered person to establish the identity of the CIS or account and its manager –the identities of the ultimate beneficiaries only need to be established where they are in fact giving the instructions.Hint
Reference Chapter:1.5.23
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Question 413 of 673
413. Question
1 pointsQID424:A Fund Manager should take all reasonable steps to establish client’s information including
I. The identity of the actual beneficiary
II. Client’s full and true identity
III. The beneficiary after the client’s death
IV. A fund manager is not allowed to access and attain the clients’ identityCorrect
A Fund Manager should take all reasonable steps to identify the client as in the Code of Conduct (paragraph 6.3).
Prior to executing any transaction for a client, a licensed or registered person is required to satisfy itself on reasonable grounds of the identity, address and contact details of the ultimate
originator and the ultimate beneficiary of a transaction and keep a record of the information used to establish the same.Incorrect
A Fund Manager should take all reasonable steps to identify the client as in the Code of Conduct (paragraph 6.3).
Prior to executing any transaction for a client, a licensed or registered person is required to satisfy itself on reasonable grounds of the identity, address and contact details of the ultimate
originator and the ultimate beneficiary of a transaction and keep a record of the information used to establish the same.Hint
Reference Chapter:1.5.25
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Question 414 of 673
414. Question
1 pointsQID1338:Which of the following descriptions of client agreement are correct?
I. Client agreement can be verbal or written.
II. The client agreement should be entered before the intermediary provides any services to the client.
III. The intermediary should provide the client with a copy of the client agreement.
IV. Professional investors do not need to enter into a client agreement with any intermediary.Correct
Clients Agreement may not be required for Professional Investors. A written client agreement should be entered into with a client before a licensed or registered person provides services to the client. The relevant risks drawn to his attention. A copy is to be provided to the client if the agreement is not entered into in a face-to-face meeting between staff of the licensed or registered person and the client.
Incorrect
Clients Agreement may not be required for Professional Investors. A written client agreement should be entered into with a client before a licensed or registered person provides services to the client. The relevant risks drawn to his attention. A copy is to be provided to the client if the agreement is not entered into in a face-to-face meeting between staff of the licensed or registered person and the client.
Hint
Reference Chapter:1.5.25
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Question 415 of 673
415. Question
1 pointsQID374:Should the intermediary enter a client agreement with the client?
Correct
A written client agreement should be entered into with a client before a licensed or registered person provides services to the client.
Incorrect
A written client agreement should be entered into with a client before a licensed or registered person provides services to the client.
Hint
Reference Chapter:1.5.25
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Question 416 of 673
416. Question
1 pointsQID377:According to the Code of Conduct, a written client agreement should be entered into with a client before a licensed or registered person provides services to the client; the agreement should be written in:
Correct
A written client agreement should be entered into with a client before a licensed or registered person provides services to the client. The agreement should be in Chinese or English at the option of the client, and the relevant risks drawn to the attention of the client.
Incorrect
A written client agreement should be entered into with a client before a licensed or registered person provides services to the client. The agreement should be in Chinese or English at the option of the client, and the relevant risks drawn to the attention of the client.
Hint
Reference Chapter:1.5.25
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Question 417 of 673
417. Question
1 pointsQID1339:According to the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, can intermediaries open an account for clients via a non-face-to-face approach?
Correct
If the account opening documents cannot be executed in the presence of an employee of the licensed or registered person, the signing of the client agreement and sighting of related identity documents should be certified by another licensed person or registered person, a Justice of the Peace or a professional person such as a bank branch manager, certified public accountant, lawyer or notary public. Certification services recognized by the Electronic Transactions Ordinance may also be employed.
Incorrect
If the account opening documents cannot be executed in the presence of an employee of the licensed or registered person, the signing of the client agreement and sighting of related identity documents should be certified by another licensed person or registered person, a Justice of the Peace or a professional person such as a bank branch manager, certified public accountant, lawyer or notary public. Certification services recognized by the Electronic Transactions Ordinance may also be employed.
Hint
Reference Chapter:1.5.25
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Question 418 of 673
418. Question
1 pointsQID1340:Which of the following requirements about account opening is NOT correct?
Correct
If the account opening documents cannot be executed in the presence of an employee of the licensed or registered person, the signing of the client agreement and sighting of related identity documents should be certified by another licensed person or registered person, a Justice of the Peace or a professional person such as a bank branch manager, certified public accountant, lawyer or notary public. Certification services recognized by the Electronic Transactions Ordinance may also be employed.
Incorrect
If the account opening documents cannot be executed in the presence of an employee of the licensed or registered person, the signing of the client agreement and sighting of related identity documents should be certified by another licensed person or registered person, a Justice of the Peace or a professional person such as a bank branch manager, certified public accountant, lawyer or notary public. Certification services recognized by the Electronic Transactions Ordinance may also be employed.
Hint
Reference Chapter:1.5.25
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Question 419 of 673
419. Question
1 pointsQID376:Which of the following documents are required for client identification during non face-to-face account opening under the SFC?
I. Copies of client ID
II. Signed client agreement
III. Asset Proof
IV. A cheque received by the licensed corporation for over $10,000 which has not bounced.Correct
The Code of Conduct specifies the provisions which all client agreements are required to contain, including:
(a) full names and addresses of the client (verified by reliable proof) and the licensed or registered person;
(b) undertakings by the parties to notify material changes of information to each other;
(c.) full description of the services to be provided and the charges to be paid by the client, with details of any special services (e.g. margin financing or short-selling facilities and derivatives trading); and
(d) the appropriate risk disclosure statements as specified in Schedule 1, Code of Conduct.Incorrect
The Code of Conduct specifies the provisions which all client agreements are required to contain, including:
(a) full names and addresses of the client (verified by reliable proof) and the licensed or registered person;
(b) undertakings by the parties to notify material changes of information to each other;
(c.) full description of the services to be provided and the charges to be paid by the client, with details of any special services (e.g. margin financing or short-selling facilities and derivatives trading); and
(d) the appropriate risk disclosure statements as specified in Schedule 1, Code of Conduct.Hint
Reference Chapter:1.5.26
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Question 420 of 673
420. Question
1 pointsQID378:Which of the following provisions are included in client agreements as required by the Code of Conduct?
I. Full names and addresses of the client (verified by reliable
proof) and the licensed or registered person
II. Undertakings by the parties to notify material changes of information to each other
III. Full description of the services to be provided and the charges to be paid by the client with details of any special services
(e.g. margin financing or short-selling facilities and derivatives trading)
IV. The appropriate risk disclosure statementsCorrect
The Code of Conduct specifies the provisions which all client agreements are required to contain, including:
(a) full names and addresses of the client (verified by reliable proof) and the licensed or registered person;
(b) undertakings by the parties to notify material changes of information to each other;
(c.) full description of the services to be provided and the charges to be paid by the client, with details of any special services (e.g. margin financing or short-selling facilities and derivatives trading); and
(d) the appropriate risk disclosure statements as specified in Schedule 1, Code of Conduct.Incorrect
The Code of Conduct specifies the provisions which all client agreements are required to contain, including:
(a) full names and addresses of the client (verified by reliable proof) and the licensed or registered person;
(b) undertakings by the parties to notify material changes of information to each other;
(c.) full description of the services to be provided and the charges to be paid by the client, with details of any special services (e.g. margin financing or short-selling facilities and derivatives trading); and
(d) the appropriate risk disclosure statements as specified in Schedule 1, Code of Conduct.Hint
Reference Chapter:1.5.27
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Question 421 of 673
421. Question
1 pointsQID921:Intermediaries need not provide information on which of the following to clients during the signing of client agreement?
Correct
Unless there’s material conflict of interest, otherwise intermediaries need not provide information of the stocks and securities held by its staff members to the clients.
Incorrect
Unless there’s material conflict of interest, otherwise intermediaries need not provide information of the stocks and securities held by its staff members to the clients.
Hint
Reference Chapter:1.5.27
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Question 422 of 673
422. Question
1 pointsQID840:Kaohsiung Securities has conducted a series of securities transactions to reduce losses for a client while the client was not in Hong Kong. When the client returns to Hong Kong and discovers such trades, has Kaohsiung Securities done anything wrong in such circumstances?
Correct
Unauthorised trades may have one or more of the following features:
(a) the client has not provided written authorisation to a third party or account executive to conduct trades on his (discretionary) account.Incorrect
Unauthorised trades may have one or more of the following features:
(a) the client has not provided written authorisation to a third party or account executive to conduct trades on his (discretionary) account.Hint
Reference Chapter:1.5.28
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Question 423 of 673
423. Question
1 pointsQID379:Which of the following requirements on the establishment and operation of discretionary account are imposed by the Code of Conduct?
I. The client’s authority must be in writing
II. The authority should specify name of the person who is authorised to operate the account
III. The authority should be confirmed annually by the licensed or registered person with the client
IV. The setting up of discretionary accounts are subjected to the approval of the SFCCorrect
The Code of Conduct imposes the following requirements on the establishment and operation of discretionary accounts:
(a) the client’s authority must be in writing;
(b) the authority should specify the person who is authorised to operate the account, stating that the person is an employee or agent of the licensed or registered person, if the authority is granted to such person;
(d) the authority should be confirmed annually by the licensed or registered person with the client – for this purpose, it is permissible for the licensed or registered person to notify
the client before the expiry date that it will be automatically renewed unless the client specifically revokes it in writing before the expiry date.Incorrect
The Code of Conduct imposes the following requirements on the establishment and operation of discretionary accounts:
(a) the client’s authority must be in writing;
(b) the authority should specify the person who is authorised to operate the account, stating that the person is an employee or agent of the licensed or registered person, if the authority is granted to such person;
(d) the authority should be confirmed annually by the licensed or registered person with the client – for this purpose, it is permissible for the licensed or registered person to notify
the client before the expiry date that it will be automatically renewed unless the client specifically revokes it in writing before the expiry date.Hint
Reference Chapter:1.5.28
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Question 424 of 673
424. Question
1 pointsQID2739:If the client does not complete the account opening process in person with the intermediary’s staff, which of the following persons can verify the client’s signature and relevant identity documents?
I. Another licensee or registered person
II. Justice of the Peace
III. Professionals (Bank Managers, Lawyers, Accountants, Notaries, Chartered Secretaries)
IV. Dependents of ClientsCorrect
If the client does not complete the account opening process in person in the presence of the intermediary staff, the following persons can verify the client’s signature and relevant identity documents
I. Another licensee or registered person
II. Justice of the Peace
III. Professionals (Bank Managers, Lawyers, Accountants, Notaries, Chartered Secretaries)Incorrect
If the client does not complete the account opening process in person in the presence of the intermediary staff, the following persons can verify the client’s signature and relevant identity documents
I. Another licensee or registered person
II. Justice of the Peace
III. Professionals (Bank Managers, Lawyers, Accountants, Notaries, Chartered Secretaries)Hint
Reference Chapter:1.5.28
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Question 425 of 673
425. Question
1 pointsQID760:Which of the following arrangements will require a discretionary agreement?
Correct
A discretionary account is a client account in respect of which the client has authorised the licensed or registered person or any person employed by it (who must in turn be a licensed or registered person) to effect transactions on behalf of the account without the client’s prior approval for each transaction. The discretion may be absolute or subject to conditions (for example, that transactions be carried out by the licensed or registered person only under specified restrictions). Answer D is an example of a situation in which a discretionary account is set up.
Incorrect
A discretionary account is a client account in respect of which the client has authorised the licensed or registered person or any person employed by it (who must in turn be a licensed or registered person) to effect transactions on behalf of the account without the client’s prior approval for each transaction. The discretion may be absolute or subject to conditions (for example, that transactions be carried out by the licensed or registered person only under specified restrictions). Answer D is an example of a situation in which a discretionary account is set up.
Hint
Reference Chapter:1.5.28
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Question 426 of 673
426. Question
1 pointsQID2559:Miss Sie is a manager of Kaohsiung Securities. Miss Peng, a friend of Miss Sie, is a secretary of company A. Company A is planning to open an account at Kaohsiung Securities. Since Miss Sie is familiar with Miss Peng, they accept that company A opens an account by email, and then provides the original document afterward without a face-to-face meeting through the whole process. Is this kind of arrangement acceptable?
Correct
Online registration should follow the certification service recognized by the Electronic Transactions Ordinance. There is no such thing as “original document” when the account is opened through online registration.
Incorrect
Online registration should follow the certification service recognized by the Electronic Transactions Ordinance. There is no such thing as “original document” when the account is opened through online registration.
Hint
Reference Chapter:1.5.29
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Question 427 of 673
427. Question
1 pointsQID1341:Which of the following descriptions about discretionary accounts are correct?
I. The client has authorised the licensed or registered person or any person employed by it (who must in turn be a licensed or registered person) to effect transactions on behalf of the account with the client’s prior approval for each transaction.
II. Discretionary account can be authorised verbally or in writing.
III. The authority should be confirmed annually by the licensed or registered person with the client.
IV. Senior management should approve the opening of the account.Correct
The Code of Conduct imposes the following requirements on the establishment and operation of discretionary accounts:
(d) the authority should be confirmed annually by the licensed or registered person with the client – for this purpose, it is permissible for the licensed or registered person to notify the client before the expiry date that it will be automatically renewed unless the client specifically revokes it in writing before the expiry date;
(f) senior management should approve the opening of the accountIncorrect
The Code of Conduct imposes the following requirements on the establishment and operation of discretionary accounts:
(d) the authority should be confirmed annually by the licensed or registered person with the client – for this purpose, it is permissible for the licensed or registered person to notify the client before the expiry date that it will be automatically renewed unless the client specifically revokes it in writing before the expiry date;
(f) senior management should approve the opening of the accountHint
Reference Chapter:1.5.29
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Question 428 of 673
428. Question
1 pointsQID1621:Mr. Ko appreciates the capability of the fund manager Mr. Liu in Kaohsiung Securities, and hoped to authorize him to effect transactions on behalf of Mr. Ko himself for his stock account. Therefore, Kaohsiung executed a discretionary account agreement. Which term of the authority has a high possibility of violation of the Codes of Conduct?
Correct
The authority should specify which person is to be authorised to operate the account, the terms of the authority should be explained by the licensed or registered person or a person employed by it to the client.
Incorrect
The authority should specify which person is to be authorised to operate the account, the terms of the authority should be explained by the licensed or registered person or a person employed by it to the client.
Hint
Reference Chapter:1.5.29
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Question 429 of 673
429. Question
1 pointsQID1624:A discretionary account should
I. Separate the investment decision-making process from the dealing process
II. Regularly review the performance of the account
III. Record client’s and other’s orders
IV. Executing a discretionary account agreementCorrect
The SFC’s ICG include the following suggested operational control techniques and procedures:
(a) executing a discretionary account agreement which includes the investment objectives and strategies of the client and the terms under which such discretion will be exercised;
(b) regularly reviewing the performance of the account;
(c.) providing the client with regular statements and timely ad hoc reports on account balance and transaction details; and
(d) clearly separating the investment decision-making process from the dealing process.Incorrect
The SFC’s ICG include the following suggested operational control techniques and procedures:
(a) executing a discretionary account agreement which includes the investment objectives and strategies of the client and the terms under which such discretion will be exercised;
(b) regularly reviewing the performance of the account;
(c.) providing the client with regular statements and timely ad hoc reports on account balance and transaction details; and
(d) clearly separating the investment decision-making process from the dealing process.Hint
Reference Chapter:1.5.29
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Question 430 of 673
430. Question
1 pointsQID373:Mr Wan is a professional investor and holds a securities investment account with standing authority with Millionaire Securities. One day, the stock market has crashed and Mr Was has suffered heavy losses. Since Mr Wan is busy with work, he asked his wife Mrs Wan to place orders with Millionaire Securities to sell all his stocks. Can Millionaire Securities accept orders issued by Mrs Wan?
Correct
The Code of Conduct requires the licensed or registered person and its staff to take reasonable steps to establish the true and full identity of the third party and keep a record of the third party’s identity information. A written authorisation from the client for the third party to operate the client’s account should be obtained.
Incorrect
The Code of Conduct requires the licensed or registered person and its staff to take reasonable steps to establish the true and full identity of the third party and keep a record of the third party’s identity information. A written authorisation from the client for the third party to operate the client’s account should be obtained.
Hint
Reference Chapter:1.5.29
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Question 431 of 673
431. Question
1 pointsQID372:Mr Ko has high praises for his friend Mr Wan’s abilities in investment. Mr Wan has promised to managed Mr Ko’s futures portfolio under discretion for free. He suggested Mr Ko to open an account for futures investment with Millionaire Securities. What kind of documents should Mr Ko offer to Millionaire Securities?
Correct
Mr Wan should get a signed client’s agreement from Mr Ko to ensure there is a client-licensee relationship established and he must also take into account that before a licensed or registered person accepts orders from a third party in respect of a client
account, the Code of Conduct requires the licensed or registered person and its staff to take reasonable steps to establish the true and full identity of the third party and keep a record of the third party’s identity information. A written authorisation from the client for the third party to operate the client’s account should be obtained.Incorrect
Mr Wan should get a signed client’s agreement from Mr Ko to ensure there is a client-licensee relationship established and he must also take into account that before a licensed or registered person accepts orders from a third party in respect of a client
account, the Code of Conduct requires the licensed or registered person and its staff to take reasonable steps to establish the true and full identity of the third party and keep a record of the third party’s identity information. A written authorisation from the client for the third party to operate the client’s account should be obtained.Hint
Reference Chapter:1.5.29
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Question 432 of 673
432. Question
1 pointsQID357:The Code of Conduct applies to all persons licensed by or registered with the SFC,
Correct
The Code of Conduct is generally applicable to all licensed and registered persons。
Incorrect
The Code of Conduct is generally applicable to all licensed and registered persons。
Hint
Reference Chapter:1.5.3
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Question 433 of 673
433. Question
1 pointsQID2792:Regarding the establishment of business relationships with overseas individual clients in a remote manner, which one of the intermediaries’ practices is not appropriate?
Correct
Processes and technologies should be assessed every 1 year by a qualified, competent assessor.
Incorrect
Processes and technologies should be assessed every 1 year by a qualified, competent assessor.
Hint
Reference Chapter:1.5.32
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Question 434 of 673
434. Question
1 pointsQID2801:The client agreement needs to contain:
I. Full names and addresses of clients and licensed and registered persons
II. Undertakings of both parties to notify each other of material changes in information
III. Details of charges to be charged and services available
IV. Risk Disclosure StatementCorrect
The client agreement needs to contain:
I. Full names and addresses of clients and licensed and registered persons
II. Undertakings of both parties to notify each other of material changes in information
III. Details of charges to be charged and services available
IV. Risk Disclosure StatementIncorrect
The client agreement needs to contain:
I. Full names and addresses of clients and licensed and registered persons
II. Undertakings of both parties to notify each other of material changes in information
III. Details of charges to be charged and services available
IV. Risk Disclosure StatementHint
Reference Chapter:1.5.33
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Question 435 of 673
435. Question
1 pointsQID2382:Which of the following is not discretionary transactions?
Correct
Discretionary transactions are ones that are not required to inform clients before trading and are already approved.
Incorrect
Discretionary transactions are ones that are not required to inform clients before trading and are already approved.
Hint
Reference Chapter:1.5.35
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Question 436 of 673
436. Question
1 pointsQID2426:Which of the following is incorrect regarding discretionary authorities?
Correct
The discretionary authorities can only be used by people designated on the authority.
Incorrect
The discretionary authorities can only be used by people designated on the authority.
Hint
Reference Chapter:1.5.36
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Question 437 of 673
437. Question
1 pointsQID759:To an intermediary, which of the following is market risk?
Correct
Market risk in this context is the risk that an intermediary may suffer loss due to adverse movements in the market value of its assets or liabilities.
Incorrect
Market risk in this context is the risk that an intermediary may suffer loss due to adverse movements in the market value of its assets or liabilities.
Hint
Reference Chapter:1.5.4
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Question 438 of 673
438. Question
1 pointsQID109:Which of the following are characteristics of retail investors?
I. A larger sum of investment
II. Requires more protection
III. Retail investors are proprietary and do not invest on behalf of others as a business
IV. Requires less protectionCorrect
Retail investors are usually defined to be individuals or small businesses and companies who invest in relatively small amounts of money for themselves rather than on behalf anyone else.
From a regulatory point of view, these investors need the most protection under the regulatory regime, as they are less sophisticated.Incorrect
Retail investors are usually defined to be individuals or small businesses and companies who invest in relatively small amounts of money for themselves rather than on behalf anyone else.
From a regulatory point of view, these investors need the most protection under the regulatory regime, as they are less sophisticated.Hint
Reference Chapter:1.5.4
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Question 439 of 673
439. Question
1 pointsQID337:Leslie Cheung is a professional investor and has amassed great fortunes by futures speculation in the past few decades. Recently Leslie suffered huge losses in his speculation in futures; therefore, he had to secure a loan to maintain his unsettled futures position and meet his margin call. Therefore, Leslie had secured a loan through Ponzi Credit, a money lender that is not registered or licensed by the SFC. By using the loan, Leslie had satisfied the margin requirement and settled the positions at a profit about a month later. All the loan has been settled and repaid. Is the practice of Ponzi Credit acceptable and legal?
Correct
As stated in the Schedule 5, SFO, securities margin financing means the provision of accommodation to acquire or hold securities. In this case, Ponzi Credit is providing accommodation to hold A futures contract, not a security.
Incorrect
As stated in the Schedule 5, SFO, securities margin financing means the provision of accommodation to acquire or hold securities. In this case, Ponzi Credit is providing accommodation to hold A futures contract, not a security.
Hint
Reference Chapter:1.5.4
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Question 440 of 673
440. Question
1 pointsQID2602:Kaohsiung securities is distributing the collective investment schemes of Kaohsiung Capital, their fellow company. What factors will be considered in judging the independency of the Kaohsiung securities?
I. monetary benefits received from distributing products to customers
II. non-monetary benefits received from distributing products to customers
III. the economic relationship with Kaohsiung Asset Management
IV. The controlling relationship with Kaohsiung Asset ManagementCorrect
Factors that will be considered in judging the independence include:
I. monetary benefits received from distributing products to customers
II. non-monetary benefits received from distributing products to customers
III. the economic relationship with Kaohsiung Asset Management
IV. The controlling relationship with Kaohsiung Asset ManagementIncorrect
Factors that will be considered in judging the independence include:
I. monetary benefits received from distributing products to customers
II. non-monetary benefits received from distributing products to customers
III. the economic relationship with Kaohsiung Asset Management
IV. The controlling relationship with Kaohsiung Asset ManagementHint
Reference Chapter:1.5.44
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Question 441 of 673
441. Question
1 pointsQID890:Which of the following sales related information needs to be disclosed to a client by a licensed or registered person prior to or at the point of entering into the transaction?
I. The capacity (principal or agent) in which a licensed or registered person is acting.
II. Any affiliation of the licensed or registered person with the product issuer
III. Disclosure of monetary and non-monetary benefits received by the intermediary
IV. Any terms and conditions in generic terms under which the client may receive a discount of fees and charges from a licensed or registered personCorrect
The following sales related information needs to be disclosed to a client by a licensed or registered person by the intermediary prior to or at the point of entering into the transaction
I. The capacity (principal or agent) in which a licensed or registered person is acting.
II. Any affiliation of the licensed or registered person with the product issuer
III. Disclosure of monetary and non-monetary benefits received by the intermediary
IV. Any terms and conditions in generic terms under which the client may receive a discount of fees and charges from a licensed or registered personIncorrect
The following sales related information needs to be disclosed to a client by a licensed or registered person by the intermediary prior to or at the point of entering into the transaction
I. The capacity (principal or agent) in which a licensed or registered person is acting.
II. Any affiliation of the licensed or registered person with the product issuer
III. Disclosure of monetary and non-monetary benefits received by the intermediary
IV. Any terms and conditions in generic terms under which the client may receive a discount of fees and charges from a licensed or registered personHint
Reference Chapter:1.5.44
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Question 442 of 673
442. Question
1 pointsQID390:According to conflicts of interest principle, the intermediary should
I. Avoid front running
II. Avoid conflicts in connection with the handling of client orders
III. If the conflict of interest is unavoidable, the intermediary should disclose the conflict of interest to the client and adopt all reasonable measures to ensure the client can receive fair and proper treatment.
IV. Should not hold any non-public information which is likely to affect the price of the instruments when it is publicly released.Correct
When handling client orders, a licensed or registered person will also acquire client information of a non-public nature. This information should not be used for the benefit of the licensed or registered person or its staff, and the Code of Conduct requires a licensed or registered person to ensure that neither it nor its employees deal (whether for the benefit of the licensed or registered person, its employee or a client):
(a) ahead of transactions pending for other clients (“front running”); or
Where conflicts cannot be avoided, paragraph 10 requires the licensed or registered person not to advise or deal in relation to the transaction unless it has disclosed the conflict of interest to the client and has taken all reasonable steps to ensure fair treatment for the client.Incorrect
When handling client orders, a licensed or registered person will also acquire client information of a non-public nature. This information should not be used for the benefit of the licensed or registered person or its staff, and the Code of Conduct requires a licensed or registered person to ensure that neither it nor its employees deal (whether for the benefit of the licensed or registered person, its employee or a client):
(a) ahead of transactions pending for other clients (“front running”); or
Where conflicts cannot be avoided, paragraph 10 requires the licensed or registered person not to advise or deal in relation to the transaction unless it has disclosed the conflict of interest to the client and has taken all reasonable steps to ensure fair treatment for the client.Hint
Reference Chapter:1.5.46
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Question 443 of 673
443. Question
1 pointsQID386:A licensed or registered person should try to avoid conflict of interest between:
I. Two clients
II. A client and an issuer
III. A client and the intermediary
IV. A client and a staff memberCorrect
A licensed or registered person should try to avoid conflicts of interest, which may arise between:
(a) one client and another client; and/or
(b) a client and the licensed or registered person or its staff.Incorrect
A licensed or registered person should try to avoid conflicts of interest, which may arise between:
(a) one client and another client; and/or
(b) a client and the licensed or registered person or its staff.Hint
Reference Chapter:1.5.46
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Question 444 of 673
444. Question
1 pointsQID1579:Among client trades, staff trades and house trades, which trades should be given highest priority?
Correct
Licensed and registered persons should fairly process cllients’ trading requests in the order in which they receive the trading instructions. Executions of trading requests of clients should have higher priority than the account of licensed or registered persons themselves, or any employees of licensed or registered persons or trading requests from the account of agents themselves.
Incorrect
Licensed and registered persons should fairly process cllients’ trading requests in the order in which they receive the trading instructions. Executions of trading requests of clients should have higher priority than the account of licensed or registered persons themselves, or any employees of licensed or registered persons or trading requests from the account of agents themselves.
Hint
Reference Chapter:1.5.48
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Question 445 of 673
445. Question
1 pointsQID389:According to the code of conduct, should client order has a higher priority over house order?
I. House accounts should have priority over client accounts
II. Client accounts should have priority over house accounts
III. Orders priorities should be based on when they are received.
IV. Staff accounts should have priority over client accountsCorrect
The Code of Conduct requires a licensed or registered person to handle client orders fairly and in the order in which they are received. They should have priority over orders for the account of the licensed or registered person, or for the account of any employee or agent of the licensed or registered person.
Incorrect
The Code of Conduct requires a licensed or registered person to handle client orders fairly and in the order in which they are received. They should have priority over orders for the account of the licensed or registered person, or for the account of any employee or agent of the licensed or registered person.
Hint
Reference Chapter:1.5.48
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Question 446 of 673
446. Question
1 pointsQID1344:Which of the following orders should have the highest priority in Kaohsiung Securities’ dealing room (assuming the orders arrive at the same time)?
Correct
The Code of Conduct requires a licensed or registered person to handle client orders fairly and in which they are received. They should have priority over orders for the account of the licensed or registered person or for that of any employee or agent of the licensed or registered person.
Incorrect
The Code of Conduct requires a licensed or registered person to handle client orders fairly and in which they are received. They should have priority over orders for the account of the licensed or registered person or for that of any employee or agent of the licensed or registered person.
Hint
Reference Chapter:1.5.48
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Question 447 of 673
447. Question
1 pointsQID2840:According to the Fund Manager Code of Conduct, can the orders of intermediaries and clients be consolidated?
Correct
Under the Fund Manager Code of Conduct, orders from intermediaries and clients may be consolidated, but only in the best interests of clients.
Incorrect
Under the Fund Manager Code of Conduct, orders from intermediaries and clients may be consolidated, but only in the best interests of clients.
Hint
Reference Chapter:1.5.49
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Question 448 of 673
448. Question
1 pointsQID1620:Clients of Kaohsiung Securities’ and Kaohsiung itself intended to purchase the stocks of Vitamilk. Kaohsiung aggregated those orders, but not all the orders could be filled, only part of the stocks were bought. Was there any wrongdoing in Kaohsiung?
Correct
Where a licensed or registered person has aggregated orders for several clients or orders for a client with orders for its own account, it must give priority to the orders of clients in any subsequent allocation if all the orders cannot be filled. In practice, the SFC would expect that, in allocating orders to several clients which cannot be fully satisfied, the licensed or registered person will avoid giving unfair preference to any one client.
Incorrect
Where a licensed or registered person has aggregated orders for several clients or orders for a client with orders for its own account, it must give priority to the orders of clients in any subsequent allocation if all the orders cannot be filled. In practice, the SFC would expect that, in allocating orders to several clients which cannot be fully satisfied, the licensed or registered person will avoid giving unfair preference to any one client.
Hint
Reference Chapter:1.5.49
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Question 449 of 673
449. Question
1 pointsQID2713:Which of the following statements about processing client orders is incorrect?
Correct
The best principles for trading:
1. Process in order first
2. If instructions are received at the same time, the client will take priority
3. If it is necessary to combine processing for clients, it should be divided equally on a pro-rata basis
4. If it is necessary to combine processing for the client with the company’s trades, the client should be satisfied firstIf the company’s own transactions and employee transaction instructions are received before the clients’ instructions, the time of receipt shall prevail and the transactions shall be processed in order.
Incorrect
The best principles for trading:
1. Process in order first
2. If instructions are received at the same time, the client will take priority
3. If it is necessary to combine processing for clients, it should be divided equally on a pro-rata basis
4. If it is necessary to combine processing for the client with the company’s trades, the client should be satisfied firstIf the company’s own transactions and employee transaction instructions are received before the clients’ instructions, the time of receipt shall prevail and the transactions shall be processed in order.
Hint
Reference Chapter:1.5.49
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Question 450 of 673
450. Question
1 pointsQID1578:If the staff of a licensed corporation has violated the SFO, the responsible officer of that licensed corporation is likely to have which of the following consequences?
Correct
The Code of Conduct applies to all licensed or registered persons conducting the regulated activities for which they are licensed or registered (subject to the qualification mentioned above concerning the discretionary management of CISs). However, the SFC recognises that it may not be within the control of representatives to ensure compliance with some requirements of the Code of Conduct by the intermediary and their own subordinates. Accordingly, in applying the provisions of the Code of Conduct to such persons, the SFC will pay attention to:
(a) their level of responsibility;
(b) their supervisory duties; and
(c.) their levels of control/knowledge.Incorrect
The Code of Conduct applies to all licensed or registered persons conducting the regulated activities for which they are licensed or registered (subject to the qualification mentioned above concerning the discretionary management of CISs). However, the SFC recognises that it may not be within the control of representatives to ensure compliance with some requirements of the Code of Conduct by the intermediary and their own subordinates. Accordingly, in applying the provisions of the Code of Conduct to such persons, the SFC will pay attention to:
(a) their level of responsibility;
(b) their supervisory duties; and
(c.) their levels of control/knowledge.Hint
Reference Chapter:1.5.5
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Question 451 of 673
451. Question
1 pointsQID1675:The document that governs the relationship between the client and the intermediary is
Correct
The document that governs the relationship between the client and the intermediary is Code of Conduct.
Incorrect
The document that governs the relationship between the client and the intermediary is Code of Conduct.
Hint
Reference Chapter:1.5.5
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Question 452 of 673
452. Question
1 pointsQID391:According to the Code of Conduct why did the SFC place great emphasis on rebate, soft dollar and connected transactions?
Correct
A licensed or registered person that acts for a client in the exercise of investment discretion may arrange to receive money (rebates) or goods or services (soft dollars) from a broker in consideration of directing transactions effected on behalf of the client to that broker, subject to the requirements set down by the Code of Conduct. A central concern behind the SFC’s requirements is reducing the risk of conflicts arising from these financial arrangements, which could result in a licensed or registered person not giving the client proper services.
Incorrect
A licensed or registered person that acts for a client in the exercise of investment discretion may arrange to receive money (rebates) or goods or services (soft dollars) from a broker in consideration of directing transactions effected on behalf of the client to that broker, subject to the requirements set down by the Code of Conduct. A central concern behind the SFC’s requirements is reducing the risk of conflicts arising from these financial arrangements, which could result in a licensed or registered person not giving the client proper services.
Hint
Reference Chapter:1.5.51
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Question 453 of 673
453. Question
1 pointsQID2433:Why intermediaries who manage on behalf of their clients can only receive non-monetary benefits according to the rules designated in the Code of Conduct?
Correct
Intermediaries who manage on behalf of their clients can only receive non-monetary benefits according to the rules designated in the Code of Conduct in order to avoid the possible conflicts of interests.
Incorrect
Intermediaries who manage on behalf of their clients can only receive non-monetary benefits according to the rules designated in the Code of Conduct in order to avoid the possible conflicts of interests.
Hint
Reference Chapter:1.5.52
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Question 454 of 673
454. Question
1 pointsQID2483:If intermediaries found conflicts of interests with clients in a transaction, they should:
Correct
No matter whether the clients are professional investors, when there is conflicts of interests, they should disclose to their clients first, and engage in the transaction only if their clients agree.
Incorrect
No matter whether the clients are professional investors, when there is conflicts of interests, they should disclose to their clients first, and engage in the transaction only if their clients agree.
Hint
Reference Chapter:1.5.52
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Question 455 of 673
455. Question
1 pointsQID763:Which of the following can be classified as operational risk?
Correct
This can be understood for our purposes as the risk of loss to the intermediary as a result of errors, omissions, inefficiencies and negligence in operations or in compliance with applicable laws and regulations, excluding the three other risks already covered. Fraud has been included as an operational risk, but it is arguable that it cannot be avoided altogether by installing internal controls. Answer A fulfils this description.
Incorrect
This can be understood for our purposes as the risk of loss to the intermediary as a result of errors, omissions, inefficiencies and negligence in operations or in compliance with applicable laws and regulations, excluding the three other risks already covered. Fraud has been included as an operational risk, but it is arguable that it cannot be avoided altogether by installing internal controls. Answer A fulfils this description.
Hint
Reference Chapter:1.5.52
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Question 456 of 673
456. Question
1 pointsQID1346:Intermediaries can receive rebates and soft dollars. However, the rebate and soft dollars must satisfy which of the following conditions?
I. The client has acknowledged and agree to the rebate in writing.
II. Brokerage rates are not in excess of customary full-service brokerage rates.
III. The intermediaries should disclose the rebate and their approximate value to its clients.
IV. Such transaction must be conducted in the SEHK or the instruments of the transaction must be listed on the SEHK.Correct
The requirements in relation to the receipt of soft dollars are:
(c.) brokerage rates are not in excess of customary full-service brokerage rates;
(d) the client has consented in writing to the receipt of the goods or services; this may be provided for in the client agreement or other investment management agreement; and
(e.) disclosure is made to the client of the licensed or registered person’s soft-dollar practices and must include a description of the goods and services received; this must be provided to the client on at least an annual basis.Incorrect
The requirements in relation to the receipt of soft dollars are:
(c.) brokerage rates are not in excess of customary full-service brokerage rates;
(d) the client has consented in writing to the receipt of the goods or services; this may be provided for in the client agreement or other investment management agreement; and
(e.) disclosure is made to the client of the licensed or registered person’s soft-dollar practices and must include a description of the goods and services received; this must be provided to the client on at least an annual basis.Hint
Reference Chapter:1.5.52
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Question 457 of 673
457. Question
1 pointsQID1679:Kaoxiong Securities are looking for an execution broker to handle client orders to buy and sell US stocks. Multiple brokers have offer goods and services to attract Kaoxiong to entice Kaoxiong Securities, Kaoxiong Securities can accept which of the following soft dollar goods and services?
I. Clearing and custodial services.
II. Data and quotation services.
III. Travelling
IV. Office StationeryCorrect
Goods and services permitted by the SFC are:
(a) research and advisory services;
(b) economic and political analysis
(c) portfolio analysis, including valuations and performance measurement
(d) market analysis
(e) data and quotation services
(f) computer hardware and software incidental to the above goods and services
(g) clearing and custodial services
(h) investment-related publicationsIncorrect
Goods and services permitted by the SFC are:
(a) research and advisory services;
(b) economic and political analysis
(c) portfolio analysis, including valuations and performance measurement
(d) market analysis
(e) data and quotation services
(f) computer hardware and software incidental to the above goods and services
(g) clearing and custodial services
(h) investment-related publicationsHint
Reference Chapter:1.5.52
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Question 458 of 673
458. Question
1 pointsQID399:According to the Code of Conduct, licensees and registered representatives can accept rebates and soft-dollar benefits from broker in exchange for directing a client’s business. In most cases, broker might offer benefits to the asset management company, under which of the following circumstances such practice are allowed under the Code of Conduct?
Correct
The brokerage charges of the giver are not in excess of customary full-service brokerage rates and execute clients order on the best available terms.
Incorrect
The brokerage charges of the giver are not in excess of customary full-service brokerage rates and execute clients order on the best available terms.
Hint
Reference Chapter:1.5.52
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Question 459 of 673
459. Question
1 pointsQID923:According to the Fund Manager Code of Conduct (FMCC), can fund managers accept gifts and soft dollars?
Correct
Fund Managers can accept certain gifts and soft dollars as long as there is no conflict of interest and its clients agree to such receptions in writing.
Incorrect
Fund Managers can accept certain gifts and soft dollars as long as there is no conflict of interest and its clients agree to such receptions in writing.
Hint
Reference Chapter:1.5.55
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Question 460 of 673
460. Question
1 pointsQID2603:When the asset managers manage portfolios for their customers, can they receive benefits from introducing brokerage business?
Correct
When managing portfolios for their customers, asset managers can receive rebates and non-monetary benefits under certain limits, and they should have written approval from their customers before they open the accounts.
Incorrect
When managing portfolios for their customers, asset managers can receive rebates and non-monetary benefits under certain limits, and they should have written approval from their customers before they open the accounts.
Hint
Reference Chapter:1.5.55
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Question 461 of 673
461. Question
1 pointsQID2605:The intermediaries should report the monetary and non-monetary benefits when opening the account or upon signing the investment management agreement?
Correct
The intermediaries should report the monetary and non-monetary benefits when opening the account or upon signing the investment management agreement.
Incorrect
The intermediaries should report the monetary and non-monetary benefits when opening the account or upon signing the investment management agreement.
Hint
Reference Chapter:1.5.56
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Question 462 of 673
462. Question
1 pointsQID2829:Which of the following is not included in the general principles of compliance in the Code of Conduct?
Correct
The general principles of compliance with regulations contained in the Code of Conduct include:
1. Obligations under the Financial Dispute Resolution Scheme
2. Complaints
3. Responsibility for acts of employees
4. Notification to the SFC
5. Cooperation under the Financial Dispute Resolution Scheme
6. Expert witnesses
7. Employee dealingsIncorrect
The general principles of compliance with regulations contained in the Code of Conduct include:
1. Obligations under the Financial Dispute Resolution Scheme
2. Complaints
3. Responsibility for acts of employees
4. Notification to the SFC
5. Cooperation under the Financial Dispute Resolution Scheme
6. Expert witnesses
7. Employee dealingsHint
Reference Chapter:1.5.59
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Question 463 of 673
463. Question
1 pointsQID1325:Which of the following is NOT the legal responsibility of a licenced corporation’s senior management?
Correct
Responsible officers, together with the senior management of a licensed corporation (and, in the case of a registered institution, the executive officers), assume primary responsibility for ensuring that the intermediary complies at all times with the SFC’s fit and proper guidelines in order to remain licensed or registered.
The SFO expressly introduces liability for responsible officers or persons involved in the management of the business of a licensed corporation, or executive officers of a registered institution, or persons involved in the management of the business constituting a RA of the registered institution, where they have consented to, connived at or been neglectful of misconduct by the licensed corporation or registered institution.Incorrect
Responsible officers, together with the senior management of a licensed corporation (and, in the case of a registered institution, the executive officers), assume primary responsibility for ensuring that the intermediary complies at all times with the SFC’s fit and proper guidelines in order to remain licensed or registered.
The SFO expressly introduces liability for responsible officers or persons involved in the management of the business of a licensed corporation, or executive officers of a registered institution, or persons involved in the management of the business constituting a RA of the registered institution, where they have consented to, connived at or been neglectful of misconduct by the licensed corporation or registered institution.Hint
Reference Chapter:1.5.59
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Question 464 of 673
464. Question
1 pointsQID209:Mr Wan is a staff member of British Construction Bank, a registered institution. Mr Wan has violated the code of conduct in a series of securities dealing. Can the SFC take any action towards Mr Wan?
Correct
Section 194, SFO provides that if a “regulated person” is guilty of “misconduct”, or is not a fit and proper person, the SFC may:
(a) in the case of a licensed corporation or representative, revoke or suspend the licence in respect of all or part of the licensed regulated activity;
(b) in the case of a responsible officer (see section 1.3 of Topic 4 for the definition of this term), revoke or suspend approval as a responsible officer;
(d) prohibit the regulated person from applying for a licence, registration, approval as a responsible officer or entry in the HKMA register, or to act as an executive officer.Incorrect
Section 194, SFO provides that if a “regulated person” is guilty of “misconduct”, or is not a fit and proper person, the SFC may:
(a) in the case of a licensed corporation or representative, revoke or suspend the licence in respect of all or part of the licensed regulated activity;
(b) in the case of a responsible officer (see section 1.3 of Topic 4 for the definition of this term), revoke or suspend approval as a responsible officer;
(d) prohibit the regulated person from applying for a licence, registration, approval as a responsible officer or entry in the HKMA register, or to act as an executive officer.Hint
Reference Chapter:1.5.6
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Question 465 of 673
465. Question
1 pointsQID2708:Which of the following statements are true about the licensed corporation’s written policy on employee transactions?
I. Employees may trade for their own accounts subject to policy restrictions established by the intermediary
II. Transactions by employees and related accounts should be reported to senior management
III. Employee transaction limits should only be based on rank
IV. Employees who trade through other intermediaries must provide the senior management of the employer with a copy of the transaction confirmation and account statementCorrect
Employee transaction limits should not be based on rank.
Incorrect
Employee transaction limits should not be based on rank.
Hint
Reference Chapter:1.5.61
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Question 466 of 673
466. Question
1 pointsQID868:Kaohsiung Futures is a licenced corporation. Mr Ko is a licenced representative of Kaohsiung Futures. Since Kaohsiung Futures does not provide global futures broking service. Mr Ko wishes to trade global futures with another licenced corporation Millionaire Securities. Can Millionaire Securities open an account for Mr Ko?
Correct
A licensed or registered person must have a written policy issued to employees specifying whether or not they can deal or trade for their own accounts in securities or futures contracts. If employees are permitted to deal or trade, the policy should specify the following matters:
(g) that a licensed or registered person should not knowingly have another licensed or registered person’s employee as a client without the written consent of that employee’s principal.Incorrect
A licensed or registered person must have a written policy issued to employees specifying whether or not they can deal or trade for their own accounts in securities or futures contracts. If employees are permitted to deal or trade, the policy should specify the following matters:
(g) that a licensed or registered person should not knowingly have another licensed or registered person’s employee as a client without the written consent of that employee’s principal.Hint
Reference Chapter:1.5.61
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Question 467 of 673
467. Question
1 pointsQID2736:Which of the following is not a recommendation of the Code of Conduct and Internal Control Guidelines?
Correct
Staff transactions in their own accounts must be reported to senior management.
Incorrect
Staff transactions in their own accounts must be reported to senior management.
Hint
Reference Chapter:1.5.61
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Question 468 of 673
468. Question
1 pointsQID1347:To address staff dealing, an intermediary should:
I. Issue a written policy to employees specifying whether they can deal or trade with their own accounts.
II. Specify that transactions on employees’ and related accounts should be reported to and actively monitored by the senior management.
III. Specify that employees are allowed to deal in securities through other licensed or registered persons only with the approval of the management.
IV. The intermediary should not knowingly accept staff of other intermediaries as its clients without the consent of the principal of the client.Correct
A licensed or registered person must have a written policy issued to employees specifying whether or not they can deal or trade for their own accounts in securities or futures contracts. If employees are permitted to deal or trade, the policy should specify the following matters:
(a) the conditions on which employees may do so;
(b) that employees should identify all related accounts and report them to the senior management (“related accounts” refers to accounts of minor children and accounts in which employees have a beneficial interest.);
(d) that if employees are allowed to deal in securities through other licensed or registered persons, the licensed or registered person (principal) and the employees should arrange for duplicate trade confirmations and statements of account to be provided to the senior management of the licensed or registered person (principal);
(g) that a licensed or registered person should not knowingly have another licensed or registered person’s employee as a client without the written consent of that employee’s principal.Incorrect
A licensed or registered person must have a written policy issued to employees specifying whether or not they can deal or trade for their own accounts in securities or futures contracts. If employees are permitted to deal or trade, the policy should specify the following matters:
(a) the conditions on which employees may do so;
(b) that employees should identify all related accounts and report them to the senior management (“related accounts” refers to accounts of minor children and accounts in which employees have a beneficial interest.);
(d) that if employees are allowed to deal in securities through other licensed or registered persons, the licensed or registered person (principal) and the employees should arrange for duplicate trade confirmations and statements of account to be provided to the senior management of the licensed or registered person (principal);
(g) that a licensed or registered person should not knowingly have another licensed or registered person’s employee as a client without the written consent of that employee’s principal.Hint
Reference Chapter:1.5.61
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Question 469 of 673
469. Question
1 pointsQID401:How should an intermediary deal with employees’ dealings?
I. Employees must be given a directive in speaking to specify whether or not they can deal or trade for their accounts in securities and futures contracts.
II. Specify that the employees should identify all related accounts and report them to senior management.
III. Specify that employees should generally be required to deal through the licensed or registered person and its affiliates.
IV. Record employees dealings separately and identify these dealings in the licensed and registered person’s records.Correct
A licensed or registered person must have a written policy issued to employees specifying whether or not they can deal or trade for their own accounts in securities or futures contracts. If employees are permitted to deal or trade, the policy should specify the following matters:
(b) that employees should identify all related accounts and report them to senior management (“related accounts” refers to accounts of minor children and accounts in which employees have a beneficial interest.);
© that employees should generally be required to deal through the licensed or registered person or its affiliates;
(e.) that any transactions covered by this section should be separately recorded and identified in the licensed or registered person’s records.Incorrect
A licensed or registered person must have a written policy issued to employees specifying whether or not they can deal or trade for their own accounts in securities or futures contracts. If employees are permitted to deal or trade, the policy should specify the following matters:
(b) that employees should identify all related accounts and report them to senior management (“related accounts” refers to accounts of minor children and accounts in which employees have a beneficial interest.);
© that employees should generally be required to deal through the licensed or registered person or its affiliates;
(e.) that any transactions covered by this section should be separately recorded and identified in the licensed or registered person’s records.Hint
Reference Chapter:1.5.61
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Question 470 of 673
470. Question
1 pointsQID522:Products of Hong Kong Futures Exchange (HKFE) are traded through which of the following systems?
Correct
The Hong Kong Futures Automated Trading System (“HKATS”) is an electronic screen-based trading system used for trading in HKFE products as well as Traded Options which are products of the SEHK.
Incorrect
The Hong Kong Futures Automated Trading System (“HKATS”) is an electronic screen-based trading system used for trading in HKFE products as well as Traded Options which are products of the SEHK.
Hint
Reference Chapter:1.5.62
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Question 471 of 673
471. Question
1 pointsQID402:How should an intermediary handle complaint?
I. Nothing has to be done if the intermediary has not violated any code of conduct or ordinance.
II. The intermediary should investigate and respond promptly.
III. If the intermediary is unable to respond promptly, the intermediary should advise the client of any further steps available to him under the regulatory system including the right to refer the dispute to the FDR.
IV. The intermediary should review the subject matter of a complaint properly upon receipt. If the subject matter relates to other clients, or raises issues of broader concern, the licensed or registered person should take steps to investigate and remedy the matter, even if such other clients have not filed any complaint with the licensed or registered person and/or the FDRCCorrect
A licensed or registered person is required to:
(a) handle complaints from clients in a timely and appropriate manner;
(b) investigate them and respond promptly;
(c.) if it is unable to do so, advise the client of any further steps available to him under the regulatory system including the right to refer the dispute to the FDRC; and
(d) review the subject matter of a complaint properly upon receipt. If the subject matter relates to other clients, or raises issues of broader concern, the licensed or registered person should take steps to investigate and remedy the matter, even if such other clients.Incorrect
A licensed or registered person is required to:
(a) handle complaints from clients in a timely and appropriate manner;
(b) investigate them and respond promptly;
(c.) if it is unable to do so, advise the client of any further steps available to him under the regulatory system including the right to refer the dispute to the FDRC; and
(d) review the subject matter of a complaint properly upon receipt. If the subject matter relates to other clients, or raises issues of broader concern, the licensed or registered person should take steps to investigate and remedy the matter, even if such other clients.Hint
Reference Chapter:1.5.62
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Question 472 of 673
472. Question
1 pointsQID403:How should an intermediary handle complaints from clients about the company’s frontline trading staff?
I. Handle complaints from clients in a timely and appropriate manner.
II. Investigate them and respond promptly.
III. If it is unable to investigate them and respond promptly, the intermediary should advise the client of any further steps available to him under the regulatory system including the right to refer the dispute to the FDRC.
IV. Review the subject matter of a complaint properly upon receipt.Correct
Options I, II, III and IV reflect the requirements stated in paragraph 12.3 of the Code of Conduct for licensed individuals and corporations regarding the issue of handling customer complaints.
Incorrect
Options I, II, III and IV reflect the requirements stated in paragraph 12.3 of the Code of Conduct for licensed individuals and corporations regarding the issue of handling customer complaints.
Hint
Reference Chapter:1.5.62
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Question 473 of 673
473. Question
1 pointsQID1328:Miss Chan is a responsible officer of Chang Jiang Securities. The staff of Chang Jiang Securities has violated the law and that has resulted in clients’ losses. Miss Chan has tried her best in preventing such incident from happening and was not aware of the misbehaviour of Chang Jiang Securities’ staff. What consequences will Miss Chan face?
Correct
There is a defence available to such an officer in this regard. The defence is expressly provided for under Part XVI, SFO and essentially discharges a member of management from liability if he can show that he honestly and reasonably believed the failure would not occur. Also if, upon becoming aware of the breach, he acted promptly in notifying the SFC and, until then, had honestly and reasonably believed that the failure would not occur.
Incorrect
There is a defence available to such an officer in this regard. The defence is expressly provided for under Part XVI, SFO and essentially discharges a member of management from liability if he can show that he honestly and reasonably believed the failure would not occur. Also if, upon becoming aware of the breach, he acted promptly in notifying the SFC and, until then, had honestly and reasonably believed that the failure would not occur.
Hint
Reference Chapter:1.5.63
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Question 474 of 673
474. Question
1 pointsQID907:Is the principal liable for the acts of wrongdoing of his/her/its agent?
Correct
The principal liable for the acts of wrongdoing of his/her/its agent.
Incorrect
The principal liable for the acts of wrongdoing of his/her/its agent.
Hint
Reference Chapter:1.5.63
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Question 475 of 673
475. Question
1 pointsQID1327:Mr. Ko is the responsible officer of Chang Jiang Securities. The staff of Chang Jiang Securities has violated the law and that has resulted in clients’ losses. Mr. Ko was fully aware of the incident but had allowed the misbehaviour of Chang Jiang Securities’ staff to occur. What consequences will Mr. Ko face?
I. Criminal Prosecution.
II. Fines.
III. Imprisonment.
IV. No Criminal Prosecution.Correct
There are a number of provisions in the SFO which mean that both the responsible officers of a licensed corporation and the executive officers of a registered institution and the corporation itself are liable for breaches by the corporation of certain fundamental regulatory requirements:
(v) separately or in addition, order the regulated person to pay a penalty of up to HK$10 million or three times any profit gained or loss avoided as a result of his misconduct, whichever is the greater.Incorrect
There are a number of provisions in the SFO which mean that both the responsible officers of a licensed corporation and the executive officers of a registered institution and the corporation itself are liable for breaches by the corporation of certain fundamental regulatory requirements:
(v) separately or in addition, order the regulated person to pay a penalty of up to HK$10 million or three times any profit gained or loss avoided as a result of his misconduct, whichever is the greater.Hint
Reference Chapter:1.5.63
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Question 476 of 673
476. Question
1 pointsQID1326:Mr. Ko is a responsible officer of Chang Jiang Securities and Chang Jiang Securities has failed to meet the requirements of the SFO. Mr. Ko was fully aware of the fact but he kept silent and allowed the operations of Chang Jiang to continue. What consequences will Mr. Ko face?
I. Being suspended or having his status as a Responsible Officer of Chang Jiang revoked.
II. Being suspended or having his authority to act as a Representative revoked.
III. Being publicly or privately reprimanded by the SFC.
IV. Prohibited from applying for licences, registrations, approvals and entry in the HKMA’s register.Correct
There are a number of provisions in the SFO which mean that both the responsible officers of a licensed corporation and the executive officers of a registered institution and the corporation itself are liable for breaches by the corporation of certain fundamental regulatory requirements:
(a) Section 194 provides that if a regulated person is guilty of misconduct or is not a fit and proper person, the SFC may:
(i) in the case of a responsible officer, revoke or suspend approval as a responsible officer;
(ii) in the case of a licensed person, revoke or suspend his licence in respect of all or part of the licensed RA;
(iii) publicly or privately reprimand the regulated person;
(iv) prohibit the regulated person from applying for licences, registrations, approvals and entry in the Hong Kong Monetary Authority (“HKMA”) register, or from acting as an executive officerIncorrect
There are a number of provisions in the SFO which mean that both the responsible officers of a licensed corporation and the executive officers of a registered institution and the corporation itself are liable for breaches by the corporation of certain fundamental regulatory requirements:
(a) Section 194 provides that if a regulated person is guilty of misconduct or is not a fit and proper person, the SFC may:
(i) in the case of a responsible officer, revoke or suspend approval as a responsible officer;
(ii) in the case of a licensed person, revoke or suspend his licence in respect of all or part of the licensed RA;
(iii) publicly or privately reprimand the regulated person;
(iv) prohibit the regulated person from applying for licences, registrations, approvals and entry in the Hong Kong Monetary Authority (“HKMA”) register, or from acting as an executive officerHint
Reference Chapter:1.5.63
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Question 477 of 673
477. Question
1 pointsQID2807:Which of the following events is not required for a licensed corporation to report to the SFC?
Correct
Traffic accidents are not serious breaches or suspected serious breaches of the law and therefore do not need to be reported to the SFC.
Incorrect
Traffic accidents are not serious breaches or suspected serious breaches of the law and therefore do not need to be reported to the SFC.
Hint
Reference Chapter:1.5.64
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Question 478 of 673
478. Question
1 pointsQID852:Kaohsiung Futures should notify the SFC in the occurrences of which of the following incidents?
I. A staff member of Kaohsiung Futures has materially breached any laws.
II. A staff member of Kaohsiung Futures has violated the rules, codes and guidelines issued by the SFC.
III. Kaohsiung Futures is failing to meet its liabilities and is about to wind-up.
IV. The directors of Kaohsiung Futures has committed an offence under the anti-bribery ordinance.Correct
All these occurrences must be notified to the SFC according to many of the specific rules established by it, like FRR, Client rules, etc.
Incorrect
All these occurrences must be notified to the SFC according to many of the specific rules established by it, like FRR, Client rules, etc.
Hint
Reference Chapter:1.5.64
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Question 479 of 673
479. Question
1 pointsQID352:Licensee should notify the SFC under which of the following events?
I. Staff violating the Code of Conduct
II. Staff violating the FMCC
III. Staff violating the SFO
IV. Systemic failure of operation systems and toolsCorrect
All licensees are responsible to disclose any breach in any of the Codes enforced by the SFC.
Incorrect
All licensees are responsible to disclose any breach in any of the Codes enforced by the SFC.
Hint
Reference Chapter:1.5.64
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Question 480 of 673
480. Question
1 pointsQID1348:In the event of which of the following situations is the Responsible officer of the Licensed Corporation required to make reports to the SFC?
I. Any material problems with its business systems or equipment.
II. Material breaches or suspected material breaches of any law; or rules, regulations and codes administered or issued by the SFC; or the rules of the exchanges and clearing houses.
III. Any staff member facing criminal prosecutions.
IV. When the intermediary, its major shareholder or director is insolvent.Correct
The Code of Conduct specifies that a licensed or registered person is required to make reports to the SFC immediately upon discovery of:
(a) material breaches or suspected material breaches (by the licensed or registered person or its employees or agents) of any law; or rules, regulations and codes administered or issued by the SFC; or the rules of the exchanges and clearing houses of which the licensed or registered person is a participant, or any other authorities which apply to it;
(b) any insolvency situations affecting it, its substantial shareholders or its directors;
(d) any material problems with its business systems or equipmentIncorrect
The Code of Conduct specifies that a licensed or registered person is required to make reports to the SFC immediately upon discovery of:
(a) material breaches or suspected material breaches (by the licensed or registered person or its employees or agents) of any law; or rules, regulations and codes administered or issued by the SFC; or the rules of the exchanges and clearing houses of which the licensed or registered person is a participant, or any other authorities which apply to it;
(b) any insolvency situations affecting it, its substantial shareholders or its directors;
(d) any material problems with its business systems or equipmentHint
Reference Chapter:1.5.64
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Question 481 of 673
481. Question
1 pointsQID2606:The intermediaries or their staff should notify the SFC when seriously violating which of the following items?
I. any rules
II. rules of the SFC
III. code of the SFC
IV. guidelines of the SFCCorrect
The intermediaries or their staff should notify the SFC when seriously violating the following items:
I. any rules
II. rules of the SFC
III. code of the SFC
IV. guidelines of the SFCIncorrect
The intermediaries or their staff should notify the SFC when seriously violating the following items:
I. any rules
II. rules of the SFC
III. code of the SFC
IV. guidelines of the SFCHint
Reference Chapter:1.5.64
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Question 482 of 673
482. Question
1 pointsQID1580:Under which of the following circumstances should the licensed corporation notify the SFC?
I. Staff breaching the law
II. Responsible officer breaching the law
III. Material errors in the computer system resulting in dysfunctional operation
IV. Staff severely violating the Code of ConductCorrect
The Code of Conduct specifies situations that require a licensed or registered person to make reports to the SFC. These requirements reflect similar requirements in the SFO and subsidiary legislation. They include the reporting of:
(a) material breaches or suspected material breaches of any law, or of the rules, regulations, codes and guidelines administered or issued by the SFC or the exchanges and clearing houses of which the licensed or registered person is a participant, or any other regulatory authorities which apply to it, by itself or its employees;
(d) any material problems with its business systems or equipmentIncorrect
The Code of Conduct specifies situations that require a licensed or registered person to make reports to the SFC. These requirements reflect similar requirements in the SFO and subsidiary legislation. They include the reporting of:
(a) material breaches or suspected material breaches of any law, or of the rules, regulations, codes and guidelines administered or issued by the SFC or the exchanges and clearing houses of which the licensed or registered person is a participant, or any other regulatory authorities which apply to it, by itself or its employees;
(d) any material problems with its business systems or equipmentHint
Reference Chapter:1.5.64
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Question 483 of 673
483. Question
1 pointsQID2510:Mr Ko is a fund manager, he found out that there are some front running activities, how should he handle it?
Correct
Any material violation of the Code of Conduct shoul d be reported to the SFC immediately.
Incorrect
Any material violation of the Code of Conduct shoul d be reported to the SFC immediately.
Hint
Reference Chapter:1.5.64
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Question 484 of 673
484. Question
1 pointsQID404:The Code of Conduct specifies that a licensed or registered person is required to make reports to the SFC immediately upon discovery of:
I. Material breaches or suspected material breaches (by the licensed or registered person or its employees or agents) of any law; or rules, regulations and codes administered or issued by the SFC; or the rules of the exchanges and clearing houses of which the licensed or registered person is a participant, or any other authorities which apply to it
II. Any disciplinary actions taken against it by regulators or other professional or trade bodies
III. Any material problems with its business systems or equipment
IV. Any determination or settlement of a complaint with the FDRSCorrect
The Code of Conduct specifies that a licensed or registered person is required to make reports to the SFC immediately upon discovery of:
(a) material breaches or suspected material breaches (by the licensed or registered person or its employees or agents) of any law;
© any disciplinary actions taken against it by regulators or other professional or trade bodies;
(d) any material problems with its business systems or equipment;
(f) any determination or settlement of a complaint with the FDRS.Incorrect
The Code of Conduct specifies that a licensed or registered person is required to make reports to the SFC immediately upon discovery of:
(a) material breaches or suspected material breaches (by the licensed or registered person or its employees or agents) of any law;
© any disciplinary actions taken against it by regulators or other professional or trade bodies;
(d) any material problems with its business systems or equipment;
(f) any determination or settlement of a complaint with the FDRS.Hint
Reference Chapter:1.5.64
-
Question 485 of 673
485. Question
1 pointsQID2555:Miss. Sie is a manager at Kaohsiung Securities. The SFC is planning to invite Miss Sie as an expert witness. Should Miss Sie attend or not?
Correct
Invitees can decide at their own will whether to attend, and the employers cannot prohibit their employees from attending.
Incorrect
Invitees can decide at their own will whether to attend, and the employers cannot prohibit their employees from attending.
Hint
Reference Chapter:1.5.66
-
Question 486 of 673
486. Question
1 pointsQID358:Which of the following are the nine General Principles of the Code of Conduct?
I. Honesty and fairness
II. Diligence
III. Capabilities
IV. Information about clientsCorrect
All of these Options are 4 of the 9 principles stated in the Code of Conduct.
Incorrect
All of these Options are 4 of the 9 principles stated in the Code of Conduct.
Hint
Reference Chapter:1.5.7
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Question 487 of 673
487. Question
1 pointsQID2600:Which of the following description is correct regarding managers-in-charge of core functions?
Correct
As long as the work is related to core functions, the SFC may consider some employees not reported as managers-in-charge of core functions.
Incorrect
As long as the work is related to core functions, the SFC may consider some employees not reported as managers-in-charge of core functions.
Hint
Reference Chapter:1.5.73
-
Question 488 of 673
488. Question
1 pointsQID506:Mr. Yu is a senior stockbroker and has in-depth understanding of investments. He hopes to establish a securities company to enable customers to trade via the Internet. What measures should he take to facilitate this?
I. Ensure that there is at least one responsible officer or executive officer responsible for the overall management and supervision of the system.
II. Ensure that electronic records of all transactions are kept.
III. Ensure that the electronic trading system used and provided
for customers’ use is stable.
IV. Written internal policies and procedures on the operation of the electronic trading system is established and implemented by technical staff.Correct
Senior management must provide the leadership and drive to promote, encourage and enforce, if necessary, good compliance practices. Options I, II, III, IV are part of the roles of a Senior Manager in this kind of cases. Internal policies should be defined by the management not technical staff.
Incorrect
Senior management must provide the leadership and drive to promote, encourage and enforce, if necessary, good compliance practices. Options I, II, III, IV are part of the roles of a Senior Manager in this kind of cases. Internal policies should be defined by the management not technical staff.
Hint
Reference Chapter:1.5.79
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Question 489 of 673
489. Question
1 pointsQID500:Which of the following statements are CORRECT in explaining the relationship between the intermediary and electronic trading?
I. Responsible for the settlement and financial obligations of
orders sent to the market through its electronic trading system.
II. Responsible for the implementation of policies, procedures and controls to supervise the orders.
IV. Effectively manage and adequately supervise the design and operation of the system used to ensure that the system’s integrity.
V. IV. Monitor the capacity and the usage of the electronic trading system to ensure optimal efficiency.Correct
A licensed or registered person is responsible for:
(a) the settlement and financial obligations of orders sent to the market through its electronic trading system; and
(b) the implementation of policies, procedures and controls to supervise the orders in compliance with applicable regulatory requirements.
Also, a licensed or registered person should effectively manage and adequately supervise the design and operation of the electronic trading system it uses or provides to clients for use.Incorrect
A licensed or registered person is responsible for:
(a) the settlement and financial obligations of orders sent to the market through its electronic trading system; and
(b) the implementation of policies, procedures and controls to supervise the orders in compliance with applicable regulatory requirements.
Also, a licensed or registered person should effectively manage and adequately supervise the design and operation of the electronic trading system it uses or provides to clients for use.Hint
Reference Chapter:1.5.79
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Question 490 of 673
490. Question
1 pointsQID1331:Representations to clients, invitations and advertisements should be
I. Accurate
II. Without false, misleading or deceptive information
III. Timely
IV. Objective-DrivenCorrect
Invitations and advertisements should not contain information that is false, misleading or deceptive; and they should not contain derogatory comments about products or services provided by others.
Incorrect
Invitations and advertisements should not contain information that is false, misleading or deceptive; and they should not contain derogatory comments about products or services provided by others.
Hint
Reference Chapter:1.5.8
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Question 491 of 673
491. Question
1 pointsQID1333:Which of the following areas are covered by the Honesty and Fairness principle of the Code of Conduct?
I. Representations and information to clients should be accurate and not misleading.
II. The intermediary should be aware of and comply with the provisions of the Prevention of Bribery Ordinance.
III. Charges to clients should be fair and reasonable.
IV. Invitations and advertisements should not contain information that is false, misleading or deceptive.Correct
In conducting its business activities, a licensed or registered person should “act honestly, fairly, and in the best interests of its clients and the integrity of the market”. This principle is
expanded in the Code of Conduct to the following situations:
(a) Representations and information to clients should be accurate and not misleading.
(b) Charges to clients should be fair and reasonable.
(c) Invitations and advertisements should not contain information that is false, misleading or deceptive; and they should not contain derogatory comments about products or services provided by others.
(d) It should be aware of and comply with the provisions of the Prevention of Bribery Ordinance (“PBO”) and any related guidelines issued by the Independent Commission Against Corruption.Incorrect
In conducting its business activities, a licensed or registered person should “act honestly, fairly, and in the best interests of its clients and the integrity of the market”. This principle is
expanded in the Code of Conduct to the following situations:
(a) Representations and information to clients should be accurate and not misleading.
(b) Charges to clients should be fair and reasonable.
(c) Invitations and advertisements should not contain information that is false, misleading or deceptive; and they should not contain derogatory comments about products or services provided by others.
(d) It should be aware of and comply with the provisions of the Prevention of Bribery Ordinance (“PBO”) and any related guidelines issued by the Independent Commission Against Corruption.Hint
Reference Chapter:1.5.8
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Question 492 of 673
492. Question
1 pointsQID1332:According to the general principles of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission, when conducting its business, the licensed or registered person should act according to which of the following standards?
Correct
Section 9, PBO makes it an offence for an agent such as a licensed or registered person to solicit or accept unfair advantages which might induce him not to act in the best interests of his client. It also makes it an offence to offer an advantage to an agent.
Incorrect
Section 9, PBO makes it an offence for an agent such as a licensed or registered person to solicit or accept unfair advantages which might induce him not to act in the best interests of his client. It also makes it an offence to offer an advantage to an agent.
Hint
Reference Chapter:1.5.8
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Question 493 of 673
493. Question
1 pointsQID359:What are the provisions of the Prevention of Bribery
Ordinance (PBO) that are applicable to Intermediaries?
I. Intermediaries that solicit or accept unfair advantages which might induce him not to act in the best interests of his client is made an offence by the PBO.
II. As defined the PBO, intermediaries that accept non-monetary benefits are not illegal.
III. Anyone who offer an advantage to an agent is also a criminal offence under the PBO.
IV. Anyone who offer non-monetary benefits to an agent is not a criminal offence under the PBO.Correct
A licensed or registered person “should act honestly, fairly and in the best interests of its clients and the integrity of the market”. This principle is expanded in the Code of Conduct to the following:
(d) The licensee should be aware of and comply with the provisions of the Prevention of Bribery Ordinance (“PBO”) and any related guidelines issued by the ICAC. Section 9, PBO makes it an offence for an agent such as a licensed or registered person to solicit or accept unfair advantages which might induce him not to act in the best interests of his client. It also makes it an offence to offer an advantage to an agent.Incorrect
A licensed or registered person “should act honestly, fairly and in the best interests of its clients and the integrity of the market”. This principle is expanded in the Code of Conduct to the following:
(d) The licensee should be aware of and comply with the provisions of the Prevention of Bribery Ordinance (“PBO”) and any related guidelines issued by the ICAC. Section 9, PBO makes it an offence for an agent such as a licensed or registered person to solicit or accept unfair advantages which might induce him not to act in the best interests of his client. It also makes it an offence to offer an advantage to an agent.Hint
Reference Chapter:1.5.8
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Question 494 of 673
494. Question
1 pointsQID2464:The fee of Rich Securities is higher than other securities, though the service is more versatile. Mr. Liao, a client, thinks that the fee of Rich Securities is too high and unfair. So he made a complaint towards the securities. Does Rich Securities need to re-examine its fee structure?
Correct
It’s reasonable and fair for intermediaries to charge fees. However, it doesn’t propose an objective number. Therefore, there is no violation of the Code of Conduct as long as the fee can be justified.
Incorrect
It’s reasonable and fair for intermediaries to charge fees. However, it doesn’t propose an objective number. Therefore, there is no violation of the Code of Conduct as long as the fee can be justified.
Hint
Reference Chapter:1.5.8
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Question 495 of 673
495. Question
1 pointsQID362:Professional Investors David Wan is a client of Pharaoh Brokerage. On a Friday morning, David Wan called his broker Mr. Ko to inquire about Mr. Ko’s opinion on trading the stock of Highland Bean Curd. Mr. Ko was very busy; therefore, he decided to provide information of another comparable stock, Delta Bean Curd to David Wan for reference. David Wan then purchased Delta Bean Curd based on the information provided by Mr. Ko. It was later discovered by Mr. Ko that the information provided to Mr. Wan was not accurate. Did Mr. Ko have any wrongdoing in the case?
Correct
A licensed or registered person “should act honestly, fairly and in the best interests of its clients and the integrity of the market”. This principle is expanded in the Code of Conduct to the following:
(a) Representations and information to clients should be accurate and not misleading. In this case, Mr. Ko provided misleading information to his client that led his client to make an uninformed decision.Incorrect
A licensed or registered person “should act honestly, fairly and in the best interests of its clients and the integrity of the market”. This principle is expanded in the Code of Conduct to the following:
(a) Representations and information to clients should be accurate and not misleading. In this case, Mr. Ko provided misleading information to his client that led his client to make an uninformed decision.Hint
Reference Chapter:1.5.8
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Question 496 of 673
496. Question
1 pointsQID361:The principle of honesty and fairness in the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission is expressed in which of the following statements?
I. Representations should be accurate and not misleading.
II. Confirmation of transactions may be provided if clients ask for it.
III. Intermediaries and their staff should not receive advantages if they feel these would interfere with their proper conduct to their clients.
IV. Transactions may be carried out for discretionary clients without prior reference to clientsCorrect
A licensed or registered person “should act honestly, fairly and in the best interests of its clients and the integrity of the market”. This principle is expanded in the Code of Conduct to the following:
(a) Representations and information to clients should be accurate and not misleading; also, a representative acting as an agent should not, without the permission of his principal, solicit or receive an advantage such as money, gift, employment, service or favour.Incorrect
A licensed or registered person “should act honestly, fairly and in the best interests of its clients and the integrity of the market”. This principle is expanded in the Code of Conduct to the following:
(a) Representations and information to clients should be accurate and not misleading; also, a representative acting as an agent should not, without the permission of his principal, solicit or receive an advantage such as money, gift, employment, service or favour.Hint
Reference Chapter:1.5.8
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Question 497 of 673
497. Question
1 pointsQID360:Ms. Tsang is a professional investor who is enthusiastic about speculation. She is also a client of Kaohsiung Securities. Ms. Tsang provided additional remuneration to Kaohsiung Securities and requested the company to give priority in processing her orders. Kaohsiung Securities agrees to her request. Have Ms. Tsang and Kaohsiung Securities breached the Prevention of Bribery Ordinance and the Code of Conduct?
Correct
Yes, in this situation there is a breach of the PBO given that the company is accepting unfair advantages to give a client a priority or an advantage over any other clients.
Incorrect
Yes, in this situation there is a breach of the PBO given that the company is accepting unfair advantages to give a client a priority or an advantage over any other clients.
Hint
Reference Chapter:1.5.8
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Question 498 of 673
498. Question
1 pointsQID2432:”The information and statement provided to clients should be accurate and not misleading” belongs to which of the following general rule?
Correct
“The information and statement provided to clients should be accurate and not misleading” belongs to the honesty and fairness rule?
Incorrect
“The information and statement provided to clients should be accurate and not misleading” belongs to the honesty and fairness rule?
Hint
Reference Chapter:1.5.8
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Question 499 of 673
499. Question
1 pointsQID2671:Miss Wong is an Asset Manager, Miss Wong would like to execute orders through another broker Ming Ming Electronic Trading through Direct Market Access. According to the Code of Conduct, which of the following is correct?
Correct
Both the order initiator (client or asset manager) and the broker are required to be familiar with the conduct requirements of electronic trading in Code of Conduct.
Incorrect
Both the order initiator (client or asset manager) and the broker are required to be familiar with the conduct requirements of electronic trading in Code of Conduct.
Hint
Reference Chapter:1.5.81
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Question 500 of 673
500. Question
1 pointsQID2482:Which of the following is not a professional investor for sure?
Correct
An individual professional investor should have a portfolio of no less than 8 million HKD. A couple who holds a portfolio of 10 million mutually without agreement can be considered as an individual professional investor. For two brothers who own a portfolio of 10 million HKD mutually without written agreement, since either one holds at most 5 million HKD of portfolio on average, they are not professional investors.
Incorrect
An individual professional investor should have a portfolio of no less than 8 million HKD. A couple who holds a portfolio of 10 million mutually without agreement can be considered as an individual professional investor. For two brothers who own a portfolio of 10 million HKD mutually without written agreement, since either one holds at most 5 million HKD of portfolio on average, they are not professional investors.
Hint
Reference Chapter:1.5.82
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Question 501 of 673
501. Question
1 pointsQID111:Which of the following should be taken into consideration in classifying whether an investor is a professional investor or not?
I. Net worth
II. Investment Experience
III. Areas of business
IV. Historical investment performanceCorrect
The SFO provides for the concept of a PI, being a person in respect of whom different legal and regulatory requirements will apply in view of his knowledge, experience and financial
resources. While the SFO sets out a list of persons who are to be regarded as PIs, it also empowers the SFC to make rules that define additional persons as PIs, and the SFC has for this purpose made the Securities and Futures (Professional Investor) Rules (“PI Rules”).Incorrect
The SFO provides for the concept of a PI, being a person in respect of whom different legal and regulatory requirements will apply in view of his knowledge, experience and financial
resources. While the SFO sets out a list of persons who are to be regarded as PIs, it also empowers the SFC to make rules that define additional persons as PIs, and the SFC has for this purpose made the Securities and Futures (Professional Investor) Rules (“PI Rules”).Hint
Reference Chapter:1.5.83
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Question 502 of 673
502. Question
1 pointsQID410:Which of the following are the differences between PIs that are defined in Schedule 1, SFO and PIs defined in the PI Rules?
I. PIs that are defined in Schedule 1, SFO must be a corporation and not a person. Professional Investors (PIs) defined in PI Rules can be a corporation or a person.
II. PIs that are defined in Schedule 1, SFO are classified by nature of business while Professional Investors (PIs) defined in PI Rules are classified by net worth.
III. PIs that are defined in Schedule 1, SFO must have a higher level of net worth than PIs defined in the PI Rules.
IV. Since Professional Investors (PIs) defined in PI Rules may be individuals or main businesses and not investments, the intermediary should assess and be reasonably satisfied that the client is knowledgeable and has sufficient expertise and relevant investment experience in relevant products and markets.Correct
Option I, II and IV are the main differences between the definition of a PI according to Schedule 1, SFO and the classification of PIs stated in the Code of Conduct for licensed individuals and corporations.
Incorrect
Option I, II and IV are the main differences between the definition of a PI according to Schedule 1, SFO and the classification of PIs stated in the Code of Conduct for licensed individuals and corporations.
Hint
Reference Chapter:1.5.83
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Question 503 of 673
503. Question
1 pointsQID110:Which of the following correctly describes the level of regulatory protection required by Professional Investors?
Correct
PIs are generally persons who are highly experienced in making investments and investment decisions. They would include the class of persons described above as institutional investors.
Details of the definitions of PIs will be discussed in section 2 of Topic 5. Under the SFC’s regulations, PIs are not automatically provided with the same level of regulatory protection as retail investors.Incorrect
PIs are generally persons who are highly experienced in making investments and investment decisions. They would include the class of persons described above as institutional investors.
Details of the definitions of PIs will be discussed in section 2 of Topic 5. Under the SFC’s regulations, PIs are not automatically provided with the same level of regulatory protection as retail investors.Hint
Reference Chapter:1.5.83
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Question 504 of 673
504. Question
1 pointsQID405:The SFO recognized that professional investors
I. do not need the same degree of protection that the ordinary retail investor might need
II. need a higher degree of protection than the ordinary retail investors because of the amount invested.
III. Are a class of investor covers persons who have investment experience, skills and knowledge, or the financial resources to command the advice of such experience and knowledge
IV. Should have a higher priority over ordinary retail investors because of the amount invested.Correct
The SFO provides for the concept of a PI, being a person in respect of whom different legal and regulatory requirements will apply in view of his knowledge, experience and financial
resources.
The Code of Conduct operates by specifying for a set of requirements that apply to all customers and then specifying which of them may be exempted in respect of the different
classes of PI.Incorrect
The SFO provides for the concept of a PI, being a person in respect of whom different legal and regulatory requirements will apply in view of his knowledge, experience and financial
resources.
The Code of Conduct operates by specifying for a set of requirements that apply to all customers and then specifying which of them may be exempted in respect of the different
classes of PI.Hint
Reference Chapter:1.5.83
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Question 505 of 673
505. Question
1 pointsQID409:Are there material difference between Professional Investors defined by the SFO (Type 1) and the Professional Investors defined by the Securities and Futures (Professional Investor) Rules (Type 2)?
Correct
While the SFO sets out a list of persons who are to be regarded as PIs, it also empowers the SFC to make rules that define additional persons as PIs, and the SFC has for this purpose made the Securities and Futures (Professional Investor) Rules (“PI Rules”). The SFO classifies PI s as professionals involved in dealing with securities, the Code classifies them by their nature.
Incorrect
While the SFO sets out a list of persons who are to be regarded as PIs, it also empowers the SFC to make rules that define additional persons as PIs, and the SFC has for this purpose made the Securities and Futures (Professional Investor) Rules (“PI Rules”). The SFO classifies PI s as professionals involved in dealing with securities, the Code classifies them by their nature.
Hint
Reference Chapter:1.5.83
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Question 506 of 673
506. Question
1 pointsQID407:The main difference between Professional Investors (PIs) defined in Schedule 1, SFO and Professional Investors (PIs) defined in PI Rules is?
Correct
While the SFO sets out a list of persons who are to be regarded as PIs, it also empowers the SFC to make rules that define additional persons as PIs, and the SFC has for this purpose made the Securities and Futures (Professional Investor) Rules (“PI Rules”).
Incorrect
While the SFO sets out a list of persons who are to be regarded as PIs, it also empowers the SFC to make rules that define additional persons as PIs, and the SFC has for this purpose made the Securities and Futures (Professional Investor) Rules (“PI Rules”).
Hint
Reference Chapter:1.5.83
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Question 507 of 673
507. Question
1 pointsQID2850:Which of the following are categories of professional investors defined by the SFC’s Professional Investor Rules?
Correct
Only corporate professional investors and individual professional investors are categorization defined by the SFC’s Professional Investor Rules. Institutional Professional Investors are definition set out by the SFO.
Incorrect
Only corporate professional investors and individual professional investors are categorization defined by the SFC’s Professional Investor Rules. Institutional Professional Investors are definition set out by the SFO.
Hint
Reference Chapter:1.5.84
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Question 508 of 673
508. Question
1 pointsQID2669:The asset manager of a CIS should be
Correct
The manager of a CIS must be a registered institution or licensed corporation, therefore it must be an instituional PI.
Incorrect
The manager of a CIS must be a registered institution or licensed corporation, therefore it must be an instituional PI.
Hint
Reference Chapter:1.5.85
-
Question 509 of 673
509. Question
1 pointsQID413:Which of the following entities should not be included in PIs defined in the PI Rules?
Correct
Sovereign funds are not included in any of the categories established for Institutional, Corporate or Individual PIs under the Professional Investors rules.
Incorrect
Sovereign funds are not included in any of the categories established for Institutional, Corporate or Individual PIs under the Professional Investors rules.
Hint
Reference Chapter:1.5.85
-
Question 510 of 673
510. Question
1 pointsQID1349:Which of the following is NOT a professional investor?
Correct
Institutional PIs include:
(b) licensed corporations or registered institutions and similar investment service providers regulated overseas; also their wholly owned subsidiaries, holding companies (100% holding) and wholly owned subsidiaries of the holding companies;
(d) insurers authorised and regulated under the Insurance Companies Ordinance and their regulated overseas counterparts;
(g) governments, central banks and multilateral agencies.Incorrect
Institutional PIs include:
(b) licensed corporations or registered institutions and similar investment service providers regulated overseas; also their wholly owned subsidiaries, holding companies (100% holding) and wholly owned subsidiaries of the holding companies;
(d) insurers authorised and regulated under the Insurance Companies Ordinance and their regulated overseas counterparts;
(g) governments, central banks and multilateral agencies.Hint
Reference Chapter:1.5.85
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Question 511 of 673
511. Question
1 pointsQID411:Which of the following company may not be a professional investor?
Correct
To be considered Institutional PIs the subsidiary should be wholly owned by the AFI.
Incorrect
To be considered Institutional PIs the subsidiary should be wholly owned by the AFI.
Hint
Reference Chapter:1.5.85
-
Question 512 of 673
512. Question
1 pointsQID735:Which of the following entities are professional investors?
I. Insurance Companies
II. Trustee of CIS
III. Fund Manager of CIS
IV. Professional Bodies and Charity (Example: HKSI)Correct
Pension funds, unit trusts and mutual funds, insurance companies, AFIs, private banks, fund managers and similar corporations and individuals are considered professional investors.
Incorrect
Pension funds, unit trusts and mutual funds, insurance companies, AFIs, private banks, fund managers and similar corporations and individuals are considered professional investors.
Hint
Reference Chapter:1.5.85
-
Question 513 of 673
513. Question
1 pointsQID406:According to the Securities and Futures Ordinance, which of the following is defined as professional investors?
Correct
It doesn’t matter how many billions. An insurance company is always a professional investor. Insurers authorised and regulated under the Insurance Ordinance and their regulated overseas counterparts are considered Institutional PIs.
Incorrect
It doesn’t matter how many billions. An insurance company is always a professional investor. Insurers authorised and regulated under the Insurance Ordinance and their regulated overseas counterparts are considered Institutional PIs.
Hint
Reference Chapter:1.5.85
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Question 514 of 673
514. Question
1 pointsQID2668:Licenced Corporation is a
Correct
Licenced Corporation is an Institutional PI.
Incorrect
Licenced Corporation is an Institutional PI.
Hint
Reference Chapter:1.5.85
-
Question 515 of 673
515. Question
1 pointsQID2704:Which of the following is an institutional professional investor within the meaning of the Securities and Futures Ordinance?
I. An MPF Scheme
II. Insurance companies
III. World Bank and International Monetary Fund
IV. Trust CompaniesCorrect
A trust company can also be an institutional professional investor but only if it serves a registered scheme, including MPF schemes and occupational retirement schemes or other similar overseas counterparts. Since the question did not elaborate, we cannot regard it as an institutional professional investor.
The World Bank and the International Monetary Fund are multilateral institutions.
Incorrect
A trust company can also be an institutional professional investor but only if it serves a registered scheme, including MPF schemes and occupational retirement schemes or other similar overseas counterparts. Since the question did not elaborate, we cannot regard it as an institutional professional investor.
The World Bank and the International Monetary Fund are multilateral institutions.
Hint
Reference Chapter:1.5.85
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Question 516 of 673
516. Question
1 pointsQID1350:Which of the following entities is a professional investor?
I. Miss Chan, owning a portfolio of HKD 12 Million asset.
II. Yellow River Company, a trust company with HKD 20 Million Asset.
III. Chang Jiang Company, an investment company with HKD 50 Million Asset.
IV. New Prosper Company, a licensed corporation and in the business of asset management.Correct
Individual PIs are those who have a portfolio of not less than HK$8 million (or its equivalent).
Corporate PIs include:
(b) corporations or partnerships having either a portfolio of not less than HK$8 million or total assets of not less than HK$40 million (or their equivalents)
Institutional PIs include:
(b) licensed corporations or registered institutions and similar investment service providers regulated overseas; also their wholly owned subsidiaries, holding companies (100% holding) and wholly owned subsidiaries of the holding companiesIncorrect
Individual PIs are those who have a portfolio of not less than HK$8 million (or its equivalent).
Corporate PIs include:
(b) corporations or partnerships having either a portfolio of not less than HK$8 million or total assets of not less than HK$40 million (or their equivalents)
Institutional PIs include:
(b) licensed corporations or registered institutions and similar investment service providers regulated overseas; also their wholly owned subsidiaries, holding companies (100% holding) and wholly owned subsidiaries of the holding companiesHint
Reference Chapter:1.5.86
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Question 517 of 673
517. Question
1 pointsQID891:Professional Investors can be classified as?
I. Individual PI
II. High Net Worth PI
III. Corporate PI
IV. Institutional PICorrect
Professional Investors can be classified as
I. Individual PI
II. Corporate PI
III. Institutional PI
Individual PI and Corporate PI are subjected to additional net worth and investment experience assessment to be treated as PI. Institutional PI s are entities which have investment as their primary business, they are not required to conduct any assessment before being treated as PI.Incorrect
Professional Investors can be classified as
I. Individual PI
II. Corporate PI
III. Institutional PI
Individual PI and Corporate PI are subjected to additional net worth and investment experience assessment to be treated as PI. Institutional PI s are entities which have investment as their primary business, they are not required to conduct any assessment before being treated as PI.Hint
Reference Chapter:1.5.86
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Question 518 of 673
518. Question
1 pointsQID412:Which of the following entities should be not be included in PIs that are defined in Schedule 1, SFO?
Correct
The SFO establishes that a trustee company that holds more than HK$40 million should be considered a Corporate PI under Paragraph 15 of the Code of Conduct.
Incorrect
The SFO establishes that a trustee company that holds more than HK$40 million should be considered a Corporate PI under Paragraph 15 of the Code of Conduct.
Hint
Reference Chapter:1.5.86
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Question 519 of 673
519. Question
1 pointsQID2727:According to the Code of Conduct, intermediaries are not required to disclose or provide which of the following information to clients in the process of dealing with clients?
Correct
Intermediaries are not obliged to provide clients with financial information of the intermediaries themselves.
Incorrect
Intermediaries are not obliged to provide clients with financial information of the intermediaries themselves.
Hint
Reference Chapter:1.5.89
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Question 520 of 673
520. Question
1 pointsQID375:According to the Code of Conduct, is a licensed or registered person required to enter into a written agreement with the client before providing services to the client?
Correct
A written client agreement should be entered into with a client before a licensed or registered person provides services to the client. In the case of PIs written agreements are not necessary because the person is qualified to understand the risks involved on the transactions he will undertake.
Incorrect
A written client agreement should be entered into with a client before a licensed or registered person provides services to the client. In the case of PIs written agreements are not necessary because the person is qualified to understand the risks involved on the transactions he will undertake.
Hint
Reference Chapter:1.5.89
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Question 521 of 673
521. Question
1 pointsQID414:Both PIs that are defined in Schedule 1, SFO and PIs defined in PI Rules are excluded from some of the provisions of the SFO and the Code of Conduct, intermediaries do not need to know which of the following pieces of information for PI clients?
I. Clients’ identity
II. Clients’ financial situation
III. Investment objectives
IV. Investment experienceCorrect
The Code of Conduct operates by specifying for a set of requirements that apply to all customers and then specifying which of them may be exempted in respect of the different
classes of PI. Subject to assessment and compliance arrangements usually undertaken in connection with the client on-boarding process, the requirements that may be waived are:
(b) information about clients:
(i) the need to establish the client’s financial situation, investment experience and investment objectives (except in relation to providing advice on corporate finance).Incorrect
The Code of Conduct operates by specifying for a set of requirements that apply to all customers and then specifying which of them may be exempted in respect of the different
classes of PI. Subject to assessment and compliance arrangements usually undertaken in connection with the client on-boarding process, the requirements that may be waived are:
(b) information about clients:
(i) the need to establish the client’s financial situation, investment experience and investment objectives (except in relation to providing advice on corporate finance).Hint
Reference Chapter:1.5.89
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Question 522 of 673
522. Question
1 pointsQID821:When should the intermediary time-stamp records of orders?
Correct
Order handling procedures should cover:
(a) the recording and immediate time stamping of records of orders for clients and other orders (such as house or staff orders).Incorrect
Order handling procedures should cover:
(a) the recording and immediate time stamping of records of orders for clients and other orders (such as house or staff orders).Hint
Reference Chapter:1.5.9
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Question 523 of 673
523. Question
1 pointsQID351:Ms. Yu is a medical doctor and a professional investor. She calls her futures broker and issues a short selling order, short selling Hang Seng Index futures. Mr. Ko, after in-depth analysis, feels that the index is rather volatile and driven by favourable news, and he estimates that the Hang Seng Futures Index will rise, leading to a loss and even the loss of Ms. Yu’s deposit. How should Mr. Ko handle Ms. Yu’s order?
Correct
A licensed or registered person “should act with due skill, care and diligence, in the best interests of its clients and the integrity of the market”. This means that in this case the licensee should disclose all these risks and facts to the client to ensure he’s making an informed decision.
Incorrect
A licensed or registered person “should act with due skill, care and diligence, in the best interests of its clients and the integrity of the market”. This means that in this case the licensee should disclose all these risks and facts to the client to ensure he’s making an informed decision.
Hint
Reference Chapter:1.5.9
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Question 524 of 673
524. Question
1 pointsQID820:According to the Code of Conduct, the definition of “best execution” is to?
Correct
“best execution” – a licensed or registered person should execute client orders on the best available terms.
Incorrect
“best execution” – a licensed or registered person should execute client orders on the best available terms.
Hint
Reference Chapter:1.5.9
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Question 525 of 673
525. Question
1 pointsQID1334:The statement “A licensed or registered person should take reasonable steps to execute client orders promptly and in accordance with clients’ instructions. Client orders should not be held up or withdrawn for the convenience of the licensed or registered person or persons other than the client placing the order” describes which principle of the Code of Conduct guidelines?
Correct
Some of the specified practical situations of diligence are:
(a) “prompt execution” – a licensed or registered person should take reasonable steps to execute client orders promptly and in accordance with clients’ instructions. Client orders should not be held up or withdrawn for the convenience of the licensed or registered person or persons other than the client placing the orderIncorrect
Some of the specified practical situations of diligence are:
(a) “prompt execution” – a licensed or registered person should take reasonable steps to execute client orders promptly and in accordance with clients’ instructions. Client orders should not be held up or withdrawn for the convenience of the licensed or registered person or persons other than the client placing the orderHint
Reference Chapter:1.5.9
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Question 526 of 673
526. Question
1 pointsQID363:“Prompt Execution”, “Best Execution”, “Prompt and Fair Allocation “are practical situation of which of the following principle?
Correct
These are practical situations stated in General Principle 2, diligence (paragraph 3).
Incorrect
These are practical situations stated in General Principle 2, diligence (paragraph 3).
Hint
Reference Chapter:1.5.9
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Question 527 of 673
527. Question
1 pointsQID364:“The application of best execution, prompt execution and fair allocation” is a description of which general principles of the code of conduct?
Correct
These are practical situations stated in General Principle 2, diligence (paragraph 3).
Incorrect
These are practical situations stated in General Principle 2, diligence (paragraph 3).
Hint
Reference Chapter:1.5.9
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Question 528 of 673
528. Question
1 pointsQID2381:Ms. Huang is a client of Kaohsiung Securities. She is very dissatisfied with the speed at which Kaohsiung Securities execute orders. Therefore, she proactively offers a commission higher than the current standard to Kaohsiung Securities to request priority in processing her orders. Can Kaohsiung Securities accept this offer?
Correct
No, there is serious conflicts of interest because prioritizing on the orders of Ms. Huang for excess commissions may incur losses of other clients. Kaohsiung Securities violates the code of conduct and the Prevention of Bribery Ordinance since they, as the agents of other clients, damage their interests as a result of receiving benefits.
Incorrect
No, there is serious conflicts of interest because prioritizing on the orders of Ms. Huang for excess commissions may incur losses of other clients. Kaohsiung Securities violates the code of conduct and the Prevention of Bribery Ordinance since they, as the agents of other clients, damage their interests as a result of receiving benefits.
Hint
Reference Chapter:1.5.9
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Question 529 of 673
529. Question
1 pointsQID388:The Code of Conduct requires a licensed or registered person to handle trading instructions according to what principle?
Correct
The Code of Conduct requires a licensed or registered person to handle client orders fairly and in the order in which they are received. They should have priority over orders for the account of the licensed or registered person, or for the account of any employee or agent of the licensed or registered person.
Incorrect
The Code of Conduct requires a licensed or registered person to handle client orders fairly and in the order in which they are received. They should have priority over orders for the account of the licensed or registered person, or for the account of any employee or agent of the licensed or registered person.
Hint
Reference Chapter:1.5.9
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Question 530 of 673
530. Question
1 pointsQID887:Are High net worth individuals (HNWI) identical to Professional Investors (PI)?
Correct
Certain HNWIs are Professional Investors (PI) subject to specific conditions. Both natural persons and legal persons can be a Professional Investors (PI).
Incorrect
Certain HNWIs are Professional Investors (PI) subject to specific conditions. Both natural persons and legal persons can be a Professional Investors (PI).
Hint
Reference Chapter:1.5.91
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Question 531 of 673
531. Question
1 pointsQID2481:Recently, because Mr. Huang was in the last stage of a cancer, he married Mr. Tsai. Mr. Huang works at Kaohsiung Securities as a professional investor. He recently opened a futures account for Mr. Tsai. Should Kaohsiung Securities ask Mr. Tasi to sign a risk disclosure statement?
Correct
Signing a risk disclosure statement is needed except for a professional investor client.
Incorrect
Signing a risk disclosure statement is needed except for a professional investor client.
Hint
Reference Chapter:1.5.93
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Question 532 of 673
532. Question
1 pointsQID408:Mrs. Ko is a seasoned investor and has held a joint account with her spouse Mr. Ko at Hanoi Securities for bond speculation purposes. Mrs. Ko has ample investment experience (being classified as professional investor) and Mr. Ko is not knowledgeable in the field. On a Monday morning, broker Mr. Ip called Mr. Ko and suggested Mr. Ko to invest in some low risk bond investments that are only available to professional investors. Did Mr. Ip had any wrong doing?
Correct
The Code of Conduct operates by specifying for a set of requirements that apply to all customers and then specifying which of them may be exempted in respect of the different
classes of PI. One of those requirements is to assess the actual investment experience of the client, which is not taken into account in this scenario.Incorrect
The Code of Conduct operates by specifying for a set of requirements that apply to all customers and then specifying which of them may be exempted in respect of the different
classes of PI. One of those requirements is to assess the actual investment experience of the client, which is not taken into account in this scenario.Hint
Reference Chapter:1.5.93
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Question 533 of 673
533. Question
1 pointsQID2607:Vitasoy is a beverage producer, and a client of Kaohsiung securities as well. Kaohsiung securities considered Vitasoy as a Corporate Professional Investor several years ago when opening the account. In recent years, Vitasoy doesn’t participate in tradings of derivatives. Lately, Vitasoy wants to trade derivatives only available to professional investors. Should Kaohsiung securities re-assess for Vitasoy?
Correct
Only institutional professional investors don’t require any assessment. since Vitasoy has been two years without trading derivatives, assessment is needed to examine Vitasoy’s knowledge about derivatives in order to trade them.
Incorrect
Only institutional professional investors don’t require any assessment. since Vitasoy has been two years without trading derivatives, assessment is needed to examine Vitasoy’s knowledge about derivatives in order to trade them.
Hint
Reference Chapter:1.5.95
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Question 534 of 673
534. Question
1 pointsQID381:Which of the following is the reason for the need to issue risk disclosure statements?
Correct
A client agreement should contain risk disclosure statements, and declarations by a member of the staff of the licensed or registered persons that he has provided the client with the appropriate risk disclosure statements in a language of the client’s choice (English or Chinese) and invited the client to read the risk disclosure statements, ask questions and take independent advice if the client wishes. The client is required to sign and date his acknowledgement of these matters.
Incorrect
A client agreement should contain risk disclosure statements, and declarations by a member of the staff of the licensed or registered persons that he has provided the client with the appropriate risk disclosure statements in a language of the client’s choice (English or Chinese) and invited the client to read the risk disclosure statements, ask questions and take independent advice if the client wishes. The client is required to sign and date his acknowledgement of these matters.
Hint
Reference Chapter:1.5.97
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Question 535 of 673
535. Question
1 pointsQID384:The client agreement should contain a risk disclosure statement and the purpose of the disclosure statement is to ensure that:
Correct
A client agreement should contain risk disclosure statements, and declarations by a member of the staff of the licensed or registered persons that he has provided the client with the appropriate risk disclosure statements in a language of the client’s choice (English or Chinese) and invited the client to read the risk disclosure statements, ask questions and take independent advice if the client wishes. The purpose of this is to ensure the client understands the risk being undertaken when trading on a stock exchange.
Incorrect
A client agreement should contain risk disclosure statements, and declarations by a member of the staff of the licensed or registered persons that he has provided the client with the appropriate risk disclosure statements in a language of the client’s choice (English or Chinese) and invited the client to read the risk disclosure statements, ask questions and take independent advice if the client wishes. The purpose of this is to ensure the client understands the risk being undertaken when trading on a stock exchange.
Hint
Reference Chapter:1.5.97
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Question 536 of 673
536. Question
1 pointsQID380:With regard to the risk disclosure statements, an intermediary should satisfy which of the following requirements?
Correct
A client agreement should contain risk disclosure statements, and declarations by a member of the staff of the licensed or registered persons that he has provided the client with the appropriate risk disclosure statements in a language of the client’s choice (English or Chinese) and invited the client to read the risk disclosure statements, ask questions and take independent advice if the client wishes. The client is required to sign and date his acknowledgement of these matters.
Incorrect
A client agreement should contain risk disclosure statements, and declarations by a member of the staff of the licensed or registered persons that he has provided the client with the appropriate risk disclosure statements in a language of the client’s choice (English or Chinese) and invited the client to read the risk disclosure statements, ask questions and take independent advice if the client wishes. The client is required to sign and date his acknowledgement of these matters.
Hint
Reference Chapter:1.5.97
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Question 537 of 673
537. Question
1 pointsQID1678:How should an intermediary satisfy the provisions of Risk Disclosure statements in the Code of Conduct?
Correct
Intermediaries are required to issue risk disclosure statements to the client and acquire acknowledgement from client.
Incorrect
Intermediaries are required to issue risk disclosure statements to the client and acquire acknowledgement from client.
Hint
Reference Chapter:1.5.97
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Question 538 of 673
538. Question
1 pointsQID2480:If the client didn’t open their account in person, attention should be given to whether the client understands:
Correct
If the client didn’t open their account in person, attention should be given to whether the client understands the risk disclosure statement.
Incorrect
If the client didn’t open their account in person, attention should be given to whether the client understands the risk disclosure statement.
Hint
Reference Chapter:1.5.97
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Question 539 of 673
539. Question
1 pointsQID1342:Which of the following should be included in the risk disclosure statements?
I. Risk of securities trading.
II. Risk of trading GEM stocks.
III. Risk of margin trading.
IV. Risk of trading Nasdaq stocks on the SEHK.Correct
The risk disclosure statements deal with the particular risks of carrying out the respective activities, the need for obtaining professional advice and the degree of protection given by limits the client may put on trades:
(a) Risk of securities trading
(c.) Risk of trading Growth Enterprise Market (“GEM”) stocks
(g) Risk of margin tradingIncorrect
The risk disclosure statements deal with the particular risks of carrying out the respective activities, the need for obtaining professional advice and the degree of protection given by limits the client may put on trades:
(a) Risk of securities trading
(c.) Risk of trading Growth Enterprise Market (“GEM”) stocks
(g) Risk of margin tradingHint
Reference Chapter:1.5.98
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Question 540 of 673
540. Question
1 pointsQID1343:“This refers to extra exposure due to trading in small amounts (on margin) where the underlying risk may be for large amounts; the risk that a client may lose his initial margin very quickly and will have to meet extra margin calls at short notice, failing which the position may be liquidated at a loss, leaving the client liable for the deficit. The placement of ‘stop-loss’ orders may not be effective in limiting a loss due to market conditions. The statement asks the client to consider the suitability of investing in these instruments” describes which risk?
Correct
(b) Risk of trading futures and options (in addition to a short statement, a more detailed model statement is provided for use at the option of the licensed or registered person; refer to the Code of Conduct for details).
This refers to extra exposure due to trading in small amounts (on margin) where the underlying risk may be for large amounts; the risk that a client may lose his initial margin very quickly and will have to meet extra margin calls at short notice, failing which the position may be liquidated at a loss, leaving the client liable for the deficit. The placement of “stop-loss” orders may not be effective in limiting a loss due to market conditions. The statement asks the client to consider the suitability of investing in these instruments.Incorrect
(b) Risk of trading futures and options (in addition to a short statement, a more detailed model statement is provided for use at the option of the licensed or registered person; refer to the Code of Conduct for details).
This refers to extra exposure due to trading in small amounts (on margin) where the underlying risk may be for large amounts; the risk that a client may lose his initial margin very quickly and will have to meet extra margin calls at short notice, failing which the position may be liquidated at a loss, leaving the client liable for the deficit. The placement of “stop-loss” orders may not be effective in limiting a loss due to market conditions. The statement asks the client to consider the suitability of investing in these instruments.Hint
Reference Chapter:1.5.98
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Question 541 of 673
541. Question
1 pointsQID865:Kaohsiung Futures is a licenced corporation and primarily deals with overseas futures contracts. Kaohsiung Futures has an associated entity that is a trustee in Japan. Clients must deposit his/her securities collateral with the trustee before dealing in futures contracts. Should Kaohsiung Futures notify the client of such arrangements?
Correct
This is called a Risk of attaching to client assets received or held outside Hong Kong. This refers to the possible differences between overseas laws and those of Hong Kong, where assets received or held overseas may not have protection under Hong Kong law. This information must be disclosed to the clients and the risk must be explained.
Incorrect
This is called a Risk of attaching to client assets received or held outside Hong Kong. This refers to the possible differences between overseas laws and those of Hong Kong, where assets received or held overseas may not have protection under Hong Kong law. This information must be disclosed to the clients and the risk must be explained.
Hint
Reference Chapter:1.5.98
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Question 542 of 673
542. Question
1 pointsQID1015:Risk disclosure statements about futures and options trading should include:
I. The risk of loss in trading futures contracts or options is substantial, losses might be in excess of the initial margin funds.
II. Stop loss order may not necessarily avoid loss.
III. If the required funds are not provided within the prescribed time, your position may be liquidated.
IV. Futures and options are only suitable for professional investors.Correct
Risk disclosure statement about futures and options trading should include:
I. The risk of loss in trading futures contracts or options is substantial, losses might be in excess of the initial margin funds.
II. Stop loss order may not necessarily avoid loss.
III. If the required funds are not provided within the prescribed time, your position may be liquidated.Incorrect
Risk disclosure statement about futures and options trading should include:
I. The risk of loss in trading futures contracts or options is substantial, losses might be in excess of the initial margin funds.
II. Stop loss order may not necessarily avoid loss.
III. If the required funds are not provided within the prescribed time, your position may be liquidated.Hint
Reference Chapter:1.5.98
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Question 543 of 673
543. Question
1 pointsQID2845:The specific risks in a Risk Disclosure Statement do not include?
Correct
The risks specified in the Risk Disclosure Statement do not include the risks of trading in OTC derivatives.
Incorrect
The risks specified in the Risk Disclosure Statement do not include the risks of trading in OTC derivatives.
Hint
Reference Chapter:1.5.98
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Question 544 of 673
544. Question
1 pointsQID826:The material difference between the Main Board and GEM is?
Correct
GEM has been positioned as a “buyers beware” market designed to accommodate companies to which a higher investment risk may be attached. Given the nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to market volatility than those on the Main Board. The higher risk profile and other characteristics of GEM mean that it is a market more suited to professional and sophisticated investors who are prepared to accept a greater risk.
Incorrect
GEM has been positioned as a “buyers beware” market designed to accommodate companies to which a higher investment risk may be attached. Given the nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to market volatility than those on the Main Board. The higher risk profile and other characteristics of GEM mean that it is a market more suited to professional and sophisticated investors who are prepared to accept a greater risk.
Hint
Reference Chapter:1.5.98
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Question 545 of 673
545. Question
1 pointsQID1507:Some of the essential features of good regulatory practices in the asset management industry include which of the following?
I. A strong culture of providing proper disclosure of information to clients and staff.
II. Promotion of a high level of self-monitoring and ethical practices.
III. Identification of objectives for clients which will enhance their returns and those of the business in the short term.
IV. Promotion of close cooperation and exchanges of information and consultation with the regulators with the objective of enhancing the effectiveness of regulation and the efficiency of
the business operations.Correct
– to ensure that whenever the intermediary or its staff have a material interest in a transaction with a client, the fact is disclosed to the client prior to executing the transaction
– its assumption of full responsibility for the operations including the development, implementation and ongoing effectiveness of the internal controls, and adherence to them
– Effective record retention policies are operated to ensure that all relevant legal and regulatory requirements are complied with, and that information likely to be required by the intermediary, auditors, the SFC and other authorised parties is held in the records.Incorrect
– to ensure that whenever the intermediary or its staff have a material interest in a transaction with a client, the fact is disclosed to the client prior to executing the transaction
– its assumption of full responsibility for the operations including the development, implementation and ongoing effectiveness of the internal controls, and adherence to them
– Effective record retention policies are operated to ensure that all relevant legal and regulatory requirements are complied with, and that information likely to be required by the intermediary, auditors, the SFC and other authorised parties is held in the records.Hint
Reference Chapter:1.6.
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Question 546 of 673
546. Question
1 pointsQID478:According to the Internal Control Guidelines,
I. An intermediary should establish a risk management function consisting of suitably qualified and experienced professionals.
II. An intermediary should establish procedures to limit the exposure of the intermediary to risk of suffering loss, as a result of client default or changing market conditions, to acceptable levels.
III. An intermediary should establish comprehensive risk-focused review at suitable intervals, and wherever there are significant changes in the business operations or staff.
IV. An intermediary should establish a system of regular reporting of exposures and significant variances to senior management.Correct
The control guidelines for risk management, according to the ICG, provide for the establishment of:
(a) a risk management function consisting of suitably qualified and experienced professionals;
(b) procedures to limit the exposure of the intermediary to risk of suffering loss, as a result of client default or changing market conditions, to acceptable levels;
© comprehensive risk-focused reviews at suitable intervals, and whenever there are significant changes in the business, operations or staff, to limit the exposure of the intermediary to loss as a result of fraud, other dishonest acts, errors, omissions, interruptions or other operational or control failures;
(d) regular reporting of exposures and significant variances to senior management.Incorrect
The control guidelines for risk management, according to the ICG, provide for the establishment of:
(a) a risk management function consisting of suitably qualified and experienced professionals;
(b) procedures to limit the exposure of the intermediary to risk of suffering loss, as a result of client default or changing market conditions, to acceptable levels;
© comprehensive risk-focused reviews at suitable intervals, and whenever there are significant changes in the business, operations or staff, to limit the exposure of the intermediary to loss as a result of fraud, other dishonest acts, errors, omissions, interruptions or other operational or control failures;
(d) regular reporting of exposures and significant variances to senior management.Hint
Reference Chapter:1.6.
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Question 547 of 673
547. Question
1 pointsQID769:Which of the following is not an objective of implementing Internal Control Guidelines by the intermediary?
Correct
Internal controls refer to the entire system of policies, procedures, checks, controls and division of responsibilities which a licensed or registered person has installed to run the business. Internal controls are used by a licensed or registered person to provide itself with reasonable assurance that it is able to:
(a) operate its business in an orderly and efficient manner;
(b) safeguard the assets of its clients and its own;
(c.) maintain proper records, and reliable financial and other information that it produces; and
(d) comply with all applicable laws and regulatory requirements. Answer C is not included on this list.Incorrect
Internal controls refer to the entire system of policies, procedures, checks, controls and division of responsibilities which a licensed or registered person has installed to run the business. Internal controls are used by a licensed or registered person to provide itself with reasonable assurance that it is able to:
(a) operate its business in an orderly and efficient manner;
(b) safeguard the assets of its clients and its own;
(c.) maintain proper records, and reliable financial and other information that it produces; and
(d) comply with all applicable laws and regulatory requirements. Answer C is not included on this list.Hint
Reference Chapter:1.6.1
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Question 548 of 673
548. Question
1 pointsQID1016:Internal Control Guidelines are applicable to
Correct
Internal Control Guidelines are applicable to Licensed Corporations and Registered Institutions.
Incorrect
Internal Control Guidelines are applicable to Licensed Corporations and Registered Institutions.
Hint
Reference Chapter:1.6.1
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Question 549 of 673
549. Question
1 pointsQID768:What is the requirement of the Internal Control Guidelines towards small businesses?
Correct
The SFC has indicated that, in applying the ICG or other related guidelines, it will use a pragmatic approach, which means it will look at the reality and the substance of a situation and not apply the ICG in a rigid or bureaucratic way. The usual illustration of this approach is of a small business. In such a case, the SFC will not expect to see a complicated system of segregation of functions, and compliance and internal audit departments with many people employed in them. It will be satisfied if other controls are in place to compensate for the reduced size and staff.
Incorrect
The SFC has indicated that, in applying the ICG or other related guidelines, it will use a pragmatic approach, which means it will look at the reality and the substance of a situation and not apply the ICG in a rigid or bureaucratic way. The usual illustration of this approach is of a small business. In such a case, the SFC will not expect to see a complicated system of segregation of functions, and compliance and internal audit departments with many people employed in them. It will be satisfied if other controls are in place to compensate for the reduced size and staff.
Hint
Reference Chapter:1.6.1
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Question 550 of 673
550. Question
1 pointsQID1351:Normally, the Internal Control Guideless is concerned with the establishment of satisfactory internal control and management systems (together referred to as “internal controls” hereafter) so as to provide reasonable assurance of:
I. its ability to carry on the business in an orderly and efficient manner.
II. the safeguarding of the assets of its clients and its own.
III. the maintenance of proper records and the reliability of financial and other information used within and published by the business.
IV . the compliance with all applicable laws and regulatory requirements.Correct
In particular, the ICG is concerned with the establishment of satisfactory internal control and management systems (together referred to as “internal controls” hereafter) so as to provide reasonable assurance of:
(a) its ability to carry on the business in an orderly and efficient manner;
(b) safeguarding the assets of its clients and its own;
(c.) the maintenance of proper records and the reliability of financial and other information used within and published by the business; and
(d) compliance with all applicable laws and regulatory requirements.Incorrect
In particular, the ICG is concerned with the establishment of satisfactory internal control and management systems (together referred to as “internal controls” hereafter) so as to provide reasonable assurance of:
(a) its ability to carry on the business in an orderly and efficient manner;
(b) safeguarding the assets of its clients and its own;
(c.) the maintenance of proper records and the reliability of financial and other information used within and published by the business; and
(d) compliance with all applicable laws and regulatory requirements.Hint
Reference Chapter:1.6.1
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Question 551 of 673
551. Question
1 pointsQID920:Which of the following descriptions about the Code of Conduct and Internal Control Guidelines is incorrect?
Correct
Code of Conduct- External Relationship.
Internal Control Guidelines- Internal Operations.
Please note, some provisions of the ICG focus on the external relationship of the intermediaries. Yet some provisions of the COC focus on internal operations of the intermediaries.Incorrect
Code of Conduct- External Relationship.
Internal Control Guidelines- Internal Operations.
Please note, some provisions of the ICG focus on the external relationship of the intermediaries. Yet some provisions of the COC focus on internal operations of the intermediaries.Hint
Reference Chapter:1.6.1
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Question 552 of 673
552. Question
1 pointsQID1676:The document that governs an intermediary internal control and governance is
Correct
The document that governs an intermediary internal control and governance is Internal Control Guidelines
Incorrect
The document that governs an intermediary internal control and governance is Internal Control Guidelines
Hint
Reference Chapter:1.6.1
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Question 553 of 673
553. Question
1 pointsQID459:Which of the following are the main objectives for intermediaries in adopting internal controls?
I. To reasonably guarantee orderly and efficient operations
II. To ensure that clients’ assets are protected
III To save complete and reliable records
IV. To comply with all applicable laws and regulationsCorrect
The four options state the four primary objectives targeted by an internal control system as defined by the ICG.
Incorrect
The four options state the four primary objectives targeted by an internal control system as defined by the ICG.
Hint
Reference Chapter:1.6.1
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Question 554 of 673
554. Question
1 pointsQID468:Which of the following are key points of proper information management?
I. Operating information management system in a confidential and monitored environment
II. Preventing errors, omissions or unauthorised data processing
III. Eradicating unauthorised data insertion, amendments and deletion
IV. Printing clients’ statements and transaction records in paperCorrect
Some of the features of good information management are as follows:
(a) The firm’s operating and information management systems (including electronic data processing systems) should be adequate and operated in a secure and controlled environment.
(b) Adequate and effective electronic data processing and data security policies and procedures are implemented to prevent or detect:
(i) errors, omissions or unauthorised insertions, alterations or deletions of information.Incorrect
Some of the features of good information management are as follows:
(a) The firm’s operating and information management systems (including electronic data processing systems) should be adequate and operated in a secure and controlled environment.
(b) Adequate and effective electronic data processing and data security policies and procedures are implemented to prevent or detect:
(i) errors, omissions or unauthorised insertions, alterations or deletions of information.Hint
Reference Chapter:1.6.12
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Question 555 of 673
555. Question
1 pointsQID470:The licensed corporation’s information management system including electronic data processing, should be
I. Adequate
II. Matching International Standards
III. Operated in a secure and controlled environment
IV. Restrict access only to restricted personnel.Correct
These are features that a good information management system should include:
(a) Adequate and effective electronic data processing and data security policies and procedures are implemented.
(b) Information, whether in physical or electronic form, should be managed by qualified and experienced staff.
(c.) The firm’s operating and information management systems (including electronic data processing systems) should be adequate and operated in a secure and controlled environment.Incorrect
These are features that a good information management system should include:
(a) Adequate and effective electronic data processing and data security policies and procedures are implemented.
(b) Information, whether in physical or electronic form, should be managed by qualified and experienced staff.
(c.) The firm’s operating and information management systems (including electronic data processing systems) should be adequate and operated in a secure and controlled environment.Hint
Reference Chapter:1.6.12
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Question 556 of 673
556. Question
1 pointsQID469:According to the Internal Control Guidelines, with regards to the use of computer systems, intermediaries should ensure that:
Correct
Some features of good information management include the following:
The information management system’s design specifications and implementation programme are sufficiently documented and regularly reviewed for adequacy and effectiveness.Incorrect
Some features of good information management include the following:
The information management system’s design specifications and implementation programme are sufficiently documented and regularly reviewed for adequacy and effectiveness.Hint
Reference Chapter:1.6.12
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Question 557 of 673
557. Question
1 pointsQID928:A staff member tried to correct an error by accessing the company’s computer system. It was later discovered that the staff member did not have the authorization required to access those files. Under these circumstances, what should the responsible officer do?
Correct
In the case above, there are no illegal activities. Unauthorised access demonstrated the weaknesses of the computer system. Therefore, the responsible officer should review and repair the computer system in conjunction to reviewing the company’s authorisation policy.
Incorrect
In the case above, there are no illegal activities. Unauthorised access demonstrated the weaknesses of the computer system. Therefore, the responsible officer should review and repair the computer system in conjunction to reviewing the company’s authorisation policy.
Hint
Reference Chapter:1.6.12
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Question 558 of 673
558. Question
1 pointsQID472:Mr. Ko is an employee at Bangkok Investment Company. He altered some information in the client’s records without authorization. According to the Internal Control Guidelines (ICG) and the Keeping of Records Rule, how should the company deal with Mr. Ko?
Correct
The information management system’s design specifications and implementation programme should be sufficiently documented and regularly reviewed for adequacy and
effectiveness.
Also, adequate and effective electronic data processing and data security policies and procedures are implemented to prevent or detect:
(i) errors, omissions or unauthorised insertions, alterations or deletions of information;
(ii) intrusion into the data processing system and into the database; or
(iii) unauthorised access to and/or extraction of confidential information such as that belonging to clients or which is price-sensitive.Incorrect
The information management system’s design specifications and implementation programme should be sufficiently documented and regularly reviewed for adequacy and
effectiveness.
Also, adequate and effective electronic data processing and data security policies and procedures are implemented to prevent or detect:
(i) errors, omissions or unauthorised insertions, alterations or deletions of information;
(ii) intrusion into the data processing system and into the database; or
(iii) unauthorised access to and/or extraction of confidential information such as that belonging to clients or which is price-sensitive.Hint
Reference Chapter:1.6.14
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Question 559 of 673
559. Question
1 pointsQID507:Which of the following functions are related to the compliance function of a licensed corporation?
I. The review of record keeping
II. The review of prevention of money laundering
III. The review of client, proprietary and staff dealings
IV. The review of Compliance with all legal and regulator requirementsCorrect
All of these functions are essential as stated in different regulations and guidelines such as the Code of Conduct, the FMCC, AMLO, PDPO, and others.
Incorrect
All of these functions are essential as stated in different regulations and guidelines such as the Code of Conduct, the FMCC, AMLO, PDPO, and others.
Hint
Reference Chapter:1.6.14
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Question 560 of 673
560. Question
1 pointsQID473:Which of the following aspects is NOT included when senior management requires and assists the compliance staff members in establishing effective and comprehensive compliance?
Correct
Senior management should:
Require and assist the compliance staff to establish effective and comprehensive compliance procedures covering:
(i) legal and regulatory requirements including licensing, registration and financial resources requirements;
(ii) record keeping (see the Securities and Futures (Keeping of Records) Rules in Topic 4);
(iii) business practices;
(iv) prevention of money laundering (see section 3 of this Topic);
(v) internal controls; and
(vi) client, proprietary and staff dealings; which will provide it with assurance that the intermediary complies with all requirements at all times.
The review of investment performance is not included on these rules.Incorrect
Senior management should:
Require and assist the compliance staff to establish effective and comprehensive compliance procedures covering:
(i) legal and regulatory requirements including licensing, registration and financial resources requirements;
(ii) record keeping (see the Securities and Futures (Keeping of Records) Rules in Topic 4);
(iii) business practices;
(iv) prevention of money laundering (see section 3 of this Topic);
(v) internal controls; and
(vi) client, proprietary and staff dealings; which will provide it with assurance that the intermediary complies with all requirements at all times.
The review of investment performance is not included on these rules.Hint
Reference Chapter:1.6.14
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Question 561 of 673
561. Question
1 pointsQID1017:Compliance functions of intermediaries should
Correct
Compliance functions of intermediaries should be independent of other functions and report directly to senior management.
Incorrect
Compliance functions of intermediaries should be independent of other functions and report directly to senior management.
Hint
Reference Chapter:1.6.14
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Question 562 of 673
562. Question
1 pointsQID2707:A good internal audit function according to the Internal Control Guidelines does not include
Correct
A good audit must include external auditors and must be independent of the internal audit. Internal audits should coordinate with external auditors. Internal audit should make recommendations and conclusions on deficiencies in the audit process for senior management’s reference and take follow up actions in person.
Incorrect
A good audit must include external auditors and must be independent of the internal audit. Internal audits should coordinate with external auditors. Internal audit should make recommendations and conclusions on deficiencies in the audit process for senior management’s reference and take follow up actions in person.
Hint
Reference Chapter:1.6.16
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Question 563 of 673
563. Question
1 pointsQID474:Which of the following descriptions of the “Internal Operations
Guideline” regarding audit is correct?
I. Independently audit and assess management, internal control, adequacy of operations, effectiveness and efficiency
II. Work together with internal accounting personnel to audit and assess management, internal controls, adequacy of operations, effectiveness and efficiency.
III. Report audit findings directly to senior management or the
Audit Committee
IV. Prepare report which will be disclosed to shareholders during an Annual General MeetingCorrect
The objective of the audit area of the ICG is to establish and operate an audit policy and review function which independently examines, evaluates and reports on the adequacy, effectiveness and efficiency of the intermediary’s management, internal controls and operations.
Senior management should ensure that there is adequate planning, control and recording of the audit and review work performed, and provide for timely reporting of findings, conclusions and recommendations to senior management, including follow-up action relating to any weaknesses found.Incorrect
The objective of the audit area of the ICG is to establish and operate an audit policy and review function which independently examines, evaluates and reports on the adequacy, effectiveness and efficiency of the intermediary’s management, internal controls and operations.
Senior management should ensure that there is adequate planning, control and recording of the audit and review work performed, and provide for timely reporting of findings, conclusions and recommendations to senior management, including follow-up action relating to any weaknesses found.Hint
Reference Chapter:1.6.16
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Question 564 of 673
564. Question
1 pointsQID2439:According to the internal control guidelines, the ideal auditor should:
Correct
According to the internal control guidelines, the ideal auditor should perform independently and be hired by staffs or outside consultants.
Incorrect
According to the internal control guidelines, the ideal auditor should perform independently and be hired by staffs or outside consultants.
Hint
Reference Chapter:1.6.16
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Question 565 of 673
565. Question
1 pointsQID870:The effective and proper procedures for handling house asset and client assets include:
I. The introduction of non-executive directors to review and approve procedures.
II. Securely storing cheque books
III. Maintain reliable and adequate audit trails
IV. Clearly identifying the persons with authority to acquire, dispose of, lend, pledge assetsCorrect
Senior management is required to establish policies and procedures in order: to protect the assets of clients and the intermediary from theft, fraud and other acts of misappropriation, particularly to ensure that:
(i) the authority of the intermediary and its staff to handle assets of clients and the intermediary are clearly defined and adhered to; and
(ii) all assets are properly safeguarded when under the control of the intermediary and that client assets are treated according to the Securities and Futures (Client Securities) Rules and Securities and Futures (Client Money) Rules; and to ensure the creation of audit trails which enable the intermediary to detect and investigate
improprieties; and
(j) to ensure that regular reconciliations of the intermediary’s records with external records and reports are carried out so that:
(i) errors, omissions, and discrepancies are followed up; and
(ii) the reconciliations are reviewed by independent senior staff.Incorrect
Senior management is required to establish policies and procedures in order: to protect the assets of clients and the intermediary from theft, fraud and other acts of misappropriation, particularly to ensure that:
(i) the authority of the intermediary and its staff to handle assets of clients and the intermediary are clearly defined and adhered to; and
(ii) all assets are properly safeguarded when under the control of the intermediary and that client assets are treated according to the Securities and Futures (Client Securities) Rules and Securities and Futures (Client Money) Rules; and to ensure the creation of audit trails which enable the intermediary to detect and investigate
improprieties; and
(j) to ensure that regular reconciliations of the intermediary’s records with external records and reports are carried out so that:
(i) errors, omissions, and discrepancies are followed up; and
(ii) the reconciliations are reviewed by independent senior staff.Hint
Reference Chapter:1.6.18
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Question 566 of 673
566. Question
1 pointsQID476:Operational controls should ensure that
I. All investment advice are based on contractual advisory agreements.
II. Remuneration for any investment advice given is supported by a contractual advisory agreement.
III. Ensure investment recommendations are made after thorough analysis and are suitable for the client.
IV. Properly record related information; ensure that
reconciliations of records with external records and reports are carried out, errors, omissions and discrepancies are followed-up and that the reconciliations are reviewed by an independent senior staff.Correct
As stated on the ICG, in terms of Operational Controls, the Senior management is required to establish policies and procedures in order to:
(a) Ensure that any investment advice given for remuneration is supported by a contractual advisory agreement, and investment recommendations are made after thorough analysis, are suitable for the client and are properly documented.
(b) Ensure that regular reconciliations of the intermediary’s records with external records and reports are carried out so that:
(i) errors, omissions, and discrepancies are followed up; and
(ii) the reconciliations are reviewed by independent senior staff.Incorrect
As stated on the ICG, in terms of Operational Controls, the Senior management is required to establish policies and procedures in order to:
(a) Ensure that any investment advice given for remuneration is supported by a contractual advisory agreement, and investment recommendations are made after thorough analysis, are suitable for the client and are properly documented.
(b) Ensure that regular reconciliations of the intermediary’s records with external records and reports are carried out so that:
(i) errors, omissions, and discrepancies are followed up; and
(ii) the reconciliations are reviewed by independent senior staff.Hint
Reference Chapter:1.6.18
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Question 567 of 673
567. Question
1 pointsQID471:According to the ICG, how should an intermediary handle records
I. all assets are properly safeguarded when under the control of the intermediary and that client assets are treated according to the Client Securities Rules and Client Money Rules; and to ensure the creation of audit trails which enable the intermediary to detect and investigate improprieties
II. Prevent or detect errors, omissions, fraud, and other unauthorised or improper activities
III. Ensure that any investment advice given for remuneration is supported by a contractual advisory agreement, and investment recommendations are made after thorough analysis, are suitable for the client and are properly documented
IV. Establish precise terms and conditions for operating discretionary accounts (which should be communicated to the client) and to ensure that transactions are consistent with the information relating to the clientCorrect
An adequate and effective electronic data processing and data security policies and procedures should be implemented to prevent or detect:
(i) errors, omissions or unauthorised insertions, alterations or deletions of information;
(ii) intrusion into the data processing system and into the database; or
(iii) unauthorised access to and/or extraction of confidential information such as that belonging to clients or which is price-sensitive.
Effective record retention policies are operated to ensure that all relevant legal and regulatory requirements are complied with, and that information likely to be required by the intermediary, auditors, the SFC and other authorised parties is held in the records.Incorrect
An adequate and effective electronic data processing and data security policies and procedures should be implemented to prevent or detect:
(i) errors, omissions or unauthorised insertions, alterations or deletions of information;
(ii) intrusion into the data processing system and into the database; or
(iii) unauthorised access to and/or extraction of confidential information such as that belonging to clients or which is price-sensitive.
Effective record retention policies are operated to ensure that all relevant legal and regulatory requirements are complied with, and that information likely to be required by the intermediary, auditors, the SFC and other authorised parties is held in the records.Hint
Reference Chapter:1.6.18
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Question 568 of 673
568. Question
1 pointsQID1605:Mr. Liu is the only shareholder of Vitamilk and the director of Millionaire Financial Investment. Another director of Millionaire Financial Investment suggested to acquire some of Vitamilk real estates at the board of directors meeting. Does Mr. Liu have to declare to other directors the nature and extent of that interest?
Correct
If a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.Incorrect
If a director (or his connected entity) is directly or indirectly interested in a transaction, arrangement or contract, or a proposed transaction, arrangement or contract with the company that is significant in relation to the company’s business, he must declare to other directors the nature and extent of that interest (if it is material):
(b) before the company enters into the transaction or arrangement for a proposed transaction or arrangement.Hint
Reference Chapter:1.6.18
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Question 569 of 673
569. Question
1 pointsQID1018:How should an intermediary handle house trades and client trades?
Correct
House trades and client trades should be handled separately to avoid leakage of confidential data.
Incorrect
House trades and client trades should be handled separately to avoid leakage of confidential data.
Hint
Reference Chapter:1.6.18
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Question 570 of 673
570. Question
1 pointsQID475:Effective policies, procedures and operational controls should be put in place in the asset management business for internal control purposes, which of the following are examples of such policies?
I. The establishment of precise terms and conditions for operating discretionary client accounts
II. The making of investment recommendations after thorough analysis as regards suitability for the clients, the use of comprehensive contractual advisory agreements with advisory clients, and protection of client and firm’s assets.
III. The delegation of work from compliance staff members to other operational staff members for enhanced compliance efficiency
IV. Disclosure to the client of a material conflict of interests existed in a deal after the deal has been finalized and executed.Correct
As stated on the ICG, in terms of Operational Controls, the Senior management is required to establish policies and procedures in order to:
(a) Establish precise terms and conditions for operating discretionary accounts.
(b) Ensure that any investment advice given for remuneration is supported by a contractual advisory agreement, and investment recommendations are made after thorough analysis, are suitable for the client and are properly documented.Incorrect
As stated on the ICG, in terms of Operational Controls, the Senior management is required to establish policies and procedures in order to:
(a) Establish precise terms and conditions for operating discretionary accounts.
(b) Ensure that any investment advice given for remuneration is supported by a contractual advisory agreement, and investment recommendations are made after thorough analysis, are suitable for the client and are properly documented.Hint
Reference Chapter:1.6.18
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Question 571 of 673
571. Question
1 pointsQID479:Intermediaries advising on investments for remuneration should:
Correct
According to the ICG, intermediaries advising on investments for remuneration should implement special procedures, including the following measures:
(a) They should document the rationale underlying the investment advice given and provide copies to the client. The recommendations made must be suitable, taking into account the clients’ particular investment experience, objectives and financial position.Incorrect
According to the ICG, intermediaries advising on investments for remuneration should implement special procedures, including the following measures:
(a) They should document the rationale underlying the investment advice given and provide copies to the client. The recommendations made must be suitable, taking into account the clients’ particular investment experience, objectives and financial position.Hint
Reference Chapter:1.6.18
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Question 572 of 673
572. Question
1 pointsQID980:Licensed corporation should ensure that investment advice given to clients is
Correct
Licensed corporation should ensure that investment advice given to clients is suitable for clients.
Incorrect
Licensed corporation should ensure that investment advice given to clients is suitable for clients.
Hint
Reference Chapter:1.6.18
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Question 573 of 673
573. Question
1 pointsQID2440:The purpose of risk management doesn’t include:
Correct
Risks is not able to be fully removed.
Incorrect
Risks is not able to be fully removed.
Hint
Reference Chapter:1.6.19
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Question 574 of 673
574. Question
1 pointsQID463:According to the Internal Control Guidelines, good internal corporate governance should include:
I. The ability of all employees to communicate directly with the management.
II. The assumption of full responsibilities for the operations by senior management.
III. The assignment of management and supervisory functions to suitably qualified and experienced persons.
IV. The identification of clear reporting lines with assignment of supervisory and reporting responsibilities.Correct
According to the ICG, an ideal management system should include:
(a) assumption of full responsibility for the operations including the development, implementation and ongoing effectiveness of the internal controls, and adherence to them;
(b) assignment of management and supervisory functions to suitably qualified and experienced persons;
(c.) identification of clear reporting lines with assignment of supervisory and reporting responsibilities.Incorrect
According to the ICG, an ideal management system should include:
(a) assumption of full responsibility for the operations including the development, implementation and ongoing effectiveness of the internal controls, and adherence to them;
(b) assignment of management and supervisory functions to suitably qualified and experienced persons;
(c.) identification of clear reporting lines with assignment of supervisory and reporting responsibilities.Hint
Reference Chapter:1.6.20
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Question 575 of 673
575. Question
1 pointsQID484:Which of the following risks occurs when “a product may not be realizable in the short term without material loss, or that a market is illiquid and it is not possible to sell, or that a person is unable to meet his liabilities in the short term” ?”
Correct
Liquidity risk is the risk that a product may not be realisable in the short term without material loss, or that a market is illiquid and it is not possible to sell, or that a person is unable to meet his liabilities in the short term.
Incorrect
Liquidity risk is the risk that a product may not be realisable in the short term without material loss, or that a market is illiquid and it is not possible to sell, or that a person is unable to meet his liabilities in the short term.
Hint
Reference Chapter:1.6.20
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Question 576 of 673
576. Question
1 pointsQID477:Risk management procedures should limit the exposure of intermediary to risk of suffering loss to acceptable levels a result of?
I. Propriety trading
II. Client default
III. Changing market conditions
IV. Management defaultCorrect
In terms of risk management, the ICG establishes that:
(a) there should be procedures to limit the exposure of the intermediary to risk of suffering loss, as a result of client default or changing market conditions, to acceptable levels;
(b) there should be trading and position limits for proprietary trading and their monitoring at the end of the trading day, the limits to be reviewed on a timely basis for effectiveness.Incorrect
In terms of risk management, the ICG establishes that:
(a) there should be procedures to limit the exposure of the intermediary to risk of suffering loss, as a result of client default or changing market conditions, to acceptable levels;
(b) there should be trading and position limits for proprietary trading and their monitoring at the end of the trading day, the limits to be reviewed on a timely basis for effectiveness.Hint
Reference Chapter:1.6.20
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Question 577 of 673
577. Question
1 pointsQID483:The definition of credit risk is?
Correct
According to the ICG, credit risk is the danger that a client or counterparty may default on his obligations to the intermediary or be unable to perform his part of a contract.
Incorrect
According to the ICG, credit risk is the danger that a client or counterparty may default on his obligations to the intermediary or be unable to perform his part of a contract.
Hint
Reference Chapter:1.6.20
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Question 578 of 673
578. Question
1 pointsQID485:Which of the following is considered an operational risk for a licensed corporation?
I. Losses suffered due to improper proprietary trading by the
licensed corporation.
II. Losses suffered by clients due to poor maintenance of the
license corporation’s computer system.
III. Inability of the license corporation’s accounting department to
receive deposits owed by clients.
IV. Inability of the licensed corporation’s sales network to deal
with large volumes of bonds trading.Correct
This can be understood for our purposes as the risk of loss to the intermediary as a result of errors, omissions, inefficiencies and negligence in operations or in compliance with applicable laws and regulations, excluding the three other risks already covered. This include limitations that come from an insufficiently large business structure to deal with a given business transaction.
Incorrect
This can be understood for our purposes as the risk of loss to the intermediary as a result of errors, omissions, inefficiencies and negligence in operations or in compliance with applicable laws and regulations, excluding the three other risks already covered. This include limitations that come from an insufficiently large business structure to deal with a given business transaction.
Hint
Reference Chapter:1.6.20
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Question 579 of 673
579. Question
1 pointsQID2592:Which of the following are elements of a good risk management system?
I. Hiring experienced and well-qualified staff as the risk management role
II. Take as reference the risk management system of an institution in the industry with the similar business model
III. set up a direct reporting mechanism for the risk management roles to report to senior management
IV. Hire more than one accountantCorrect
The control guidelines proposes thata risk management role should be taken by an experienced and suitably qualified professional. Reporting mechanism should be set up so the management can directly learn the problems from the risk management department. II and IV are not on the guidelines.
Incorrect
The control guidelines proposes thata risk management role should be taken by an experienced and suitably qualified professional. Reporting mechanism should be set up so the management can directly learn the problems from the risk management department. II and IV are not on the guidelines.
Hint
Reference Chapter:1.6.20
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Question 580 of 673
580. Question
1 pointsQID1356:According to the Internal Control Guidelines, which of the following are methods of managing risks?
I. A risk management function consisting of suitably qualified and experienced professionals
II. Procedures to limit the exposure of the intermediary to risk of suffering loss, as a result of client default or changing market conditions, to an acceptable level
III. Trading and position limits for proprietary trading and their monitoring at the end of the trading day, the limits to be reviewed on a timely basis for their effectiveness
IV. A risk policy defined by the senior management, including the maintenance of risk measurement and reporting methodologies appropriate to the business strategy, size, complexity of operations and the risk profile of the intermediary’s business.Correct
The control guidelines provide for the establishment of:
(a) a risk management function consisting of suitably qualified and experienced professionals;
(b) procedures to limit the exposure of the intermediary to risk of suffering loss, as a result of client default or changing market conditions, to acceptable levels;
(c.) trading and position limits for proprietary trading and their monitoring at the end of the trading day, the limits to be reviewed on a timely basis for their effectiveness;
(f) a risk policy defined by senior management, including maintenance of risk measurement and reporting methodologies appropriate to the business strategy, size, complexity of operations and the risk profile of the intermediary’s business.Incorrect
The control guidelines provide for the establishment of:
(a) a risk management function consisting of suitably qualified and experienced professionals;
(b) procedures to limit the exposure of the intermediary to risk of suffering loss, as a result of client default or changing market conditions, to acceptable levels;
(c.) trading and position limits for proprietary trading and their monitoring at the end of the trading day, the limits to be reviewed on a timely basis for their effectiveness;
(f) a risk policy defined by senior management, including maintenance of risk measurement and reporting methodologies appropriate to the business strategy, size, complexity of operations and the risk profile of the intermediary’s business.Hint
Reference Chapter:1.6.20
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Question 581 of 673
581. Question
1 pointsQID482:Common risk categories does NOT include:
Correct
Customer risk is not a risk category defined by the ICG.
Incorrect
Customer risk is not a risk category defined by the ICG.
Hint
Reference Chapter:1.6.20
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Question 582 of 673
582. Question
1 pointsQID1682:Mr Ip is the responsible officer of Millionaire Securities, he believed that the requirements of the Internal Control Guidelines are too strict therefore decided not to comply with it. Has Mr Ip done anything wrong?
Correct
Non compliance with the Internal Control Guidelines are not identical to the violation of the SFO, it cannot be punished by imprisonment. However, it may negatively impact Mr Ip’s fit and properness.
Incorrect
Non compliance with the Internal Control Guidelines are not identical to the violation of the SFO, it cannot be punished by imprisonment. However, it may negatively impact Mr Ip’s fit and properness.
Hint
Reference Chapter:1.6.3
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Question 583 of 673
583. Question
1 pointsQID1352:What is the legal status of the Internal Control Guidelines?
Correct
As with other codes issued by the SFC, the ICG does not have the force of law, but breaches of the ICG may be relevant to a person’s ongoing fitness and properness and may also be taken into account by a court in connection with any proceedings under the SFO.
Incorrect
As with other codes issued by the SFC, the ICG does not have the force of law, but breaches of the ICG may be relevant to a person’s ongoing fitness and properness and may also be taken into account by a court in connection with any proceedings under the SFO.
Hint
Reference Chapter:1.6.3
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Question 584 of 673
584. Question
1 pointsQID2390:According to Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission, the SFC requests small companies?
Correct
According to Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission, the SFC has no rule about the number of compliance staffs. Just maintain effective supervision and compliance policies. Therefore, the SFC requests small companies to rely on policies and supervisions to compensate for their lack of scale and the number of employees.
Incorrect
According to Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission, the SFC has no rule about the number of compliance staffs. Just maintain effective supervision and compliance policies. Therefore, the SFC requests small companies to rely on policies and supervisions to compensate for their lack of scale and the number of employees.
Hint
Reference Chapter:1.6.3
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Question 585 of 673
585. Question
1 pointsQID2737:Which of the following is not a recommendation of the Internal Control Guidelines?
Correct
Internal control guidelines must take into account the size of the intermediary and the scope of its business. Small businesses are not likely to have as complex a system of functional segregation as large corporations.
Incorrect
Internal control guidelines must take into account the size of the intermediary and the scope of its business. Small businesses are not likely to have as complex a system of functional segregation as large corporations.
Hint
Reference Chapter:1.6.3
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Question 586 of 673
586. Question
1 pointsQID1491: “The SFC takes a practical and objective view in applying regulation to the industry.” is describing which principle of the SFC
Correct
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.
Incorrect
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.
Hint
Reference Chapter:1.6.3
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Question 587 of 673
587. Question
1 pointsQID455:According to the Internal Control Guidelines, which of the following is NOT included in the 8 key areas?
Correct
Sales and marketing is not an area covered by the ICG.
Incorrect
Sales and marketing is not an area covered by the ICG.
Hint
Reference Chapter:1.6.4
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Question 588 of 673
588. Question
1 pointsQID453:Which of the following are not the eight key areas of the Internal Control Guidelines:
Correct
The key areas are management and supervision, segregation of duties and functions, personnel and training, information management, compliance, audit, operational controls and risk management. Operations is not the name of an area covered by the ICG.
Incorrect
The key areas are management and supervision, segregation of duties and functions, personnel and training, information management, compliance, audit, operational controls and risk management. Operations is not the name of an area covered by the ICG.
Hint
Reference Chapter:1.6.4
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Question 589 of 673
589. Question
1 pointsQID454:The Internal Control Guidelines contains which areas of Internal Control?
I. Segregation of objectives and functions
II. Personnel and training
III. Information management
IV. ComplianceCorrect
Option I is incorrect. The correct name for that area is segregation of duties and functions.
Incorrect
Option I is incorrect. The correct name for that area is segregation of duties and functions.
Hint
Reference Chapter:1.6.4
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Question 590 of 673
590. Question
1 pointsQID456:The Internal Control Guidelines do not contain which areas of Internal Control?
Correct
While Audit is an area covered by the ICG, Profitability Audit is not.
Incorrect
While Audit is an area covered by the ICG, Profitability Audit is not.
Hint
Reference Chapter:1.6.4
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Question 591 of 673
591. Question
1 pointsQID457:Which of the following is not the eight key areas of the Internal Control Guidelines:
Correct
Capabilities is not one of the eight key areas covered by the ICG.
Incorrect
Capabilities is not one of the eight key areas covered by the ICG.
Hint
Reference Chapter:1.6.4
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Question 592 of 673
592. Question
1 pointsQID2388:What’s the purpose of the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission?
Correct
The objective of the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission is to establish and operate an effective
management and organisational structure which ensures that the business is conducted in a sound, efficient and effective manner.Incorrect
The objective of the Management, Supervision and Internal Control Guidelines for Persons Licensed by or Registered with the Securities and Futures Commission is to establish and operate an effective
management and organisational structure which ensures that the business is conducted in a sound, efficient and effective manner.Hint
Reference Chapter:1.6.5
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Question 593 of 673
593. Question
1 pointsQID462:The management is responsible for
I. implementing sound internal controls
II. Enhancing workplace efficiency through division of labour
III. Maintaining adequate human, technical and financial resources
IV. Designing an internal management system to capture, monitor and control all aspects of risks to which the business is exposed toCorrect
Some of the features of the senior management’s role in a management and supervision system are:
(a) Assuming full responsibility for the operations including the development, implementation and ongoing effectiveness of the internal controls, and adherence to them;
(b) establishing regular communication of control information to various levels of senior management as it relates to:
(i) the firm’s policies, procedures, operations and financial position;
(ii) qualitative and quantitative risks and detected weaknesses;
(iii) any non-compliance with laws and regulations; and
(iv) any deviations from the business objectives.Incorrect
Some of the features of the senior management’s role in a management and supervision system are:
(a) Assuming full responsibility for the operations including the development, implementation and ongoing effectiveness of the internal controls, and adherence to them;
(b) establishing regular communication of control information to various levels of senior management as it relates to:
(i) the firm’s policies, procedures, operations and financial position;
(ii) qualitative and quantitative risks and detected weaknesses;
(iii) any non-compliance with laws and regulations; and
(iv) any deviations from the business objectives.Hint
Reference Chapter:1.6.5
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Question 594 of 673
594. Question
1 pointsQID2825:Which of the following is a characteristic described within the scope of the Internal Control Guidelines’ key area “Management and Supervision”?
I. Internal control systems should be developed by senior management
II. The company should clearly define reporting lines and assign supervisory and reporting responsibilities
III. Management and supervisory functions should be performed by experienced and qualified persons
IV. Compensation for management and staff should be fair and competitiveCorrect
Characteristics described in the Internal Control Guidelines’ “Management and Supervision” key area include
I. Internal control systems should be developed by senior management
II. The company should clearly define reporting lines and assign supervisory and reporting responsibilities
III. Management and supervisory functions should be performed by experienced and qualified persons
IV. The company should regularly communicate with other senior management at all levels regarding the monitoring data
V: Management should properly delegate the work to the necessary authorityIncorrect
Characteristics described in the Internal Control Guidelines’ “Management and Supervision” key area include
I. Internal control systems should be developed by senior management
II. The company should clearly define reporting lines and assign supervisory and reporting responsibilities
III. Management and supervisory functions should be performed by experienced and qualified persons
IV. The company should regularly communicate with other senior management at all levels regarding the monitoring data
V: Management should properly delegate the work to the necessary authorityHint
Reference Chapter:1.6.6
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Question 595 of 673
595. Question
1 pointsQID460:Senior Management must ensure which of the following measures are in place to comply with the ICG?
I. Clear lines of management and authority and levels of authorization.
II. Assign key function to suitably qualified experienced and capable staff members
III. Ensure key functions are personally managed and executed
IV. Ensure all compliance staff report to the responsible officer
directly.Correct
From the standpoint of the management and supervision area of the ICG, Senior Management should ensure that:
(a) there are clear reporting lines with assignment of supervisory and reporting responsibilities.
(b) the assignment of management and supervisory functions to suitably qualified and experienced persons.Incorrect
From the standpoint of the management and supervision area of the ICG, Senior Management should ensure that:
(a) there are clear reporting lines with assignment of supervisory and reporting responsibilities.
(b) the assignment of management and supervisory functions to suitably qualified and experienced persons.Hint
Reference Chapter:1.6.6
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Question 596 of 673
596. Question
1 pointsQID154:Millionaire Securities has recently been convicted of market misconduct. Millionaire Securities’ director – Mr. Ip, was unaware of the illegal acts and had tried to monitor and regulate the company’s operations to the best of his abilities. Is Mr. Ip guilty under such circumstance?
Correct
The court may give relief to a director or directors if they have, in causing the breach, been shown to have acted honestly and reasonably.
Incorrect
The court may give relief to a director or directors if they have, in causing the breach, been shown to have acted honestly and reasonably.
Hint
Reference Chapter:1.6.6
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Question 597 of 673
597. Question
1 pointsQID461:Which of the following points are included in the ideal management system of intermediaries?
I. Assume full responsibility in the implementation of efficient and effective use of internal control systems, and to ensure compliance with the relevant institutions
II. Communicate monitored data to all levels of senior management on a regular basis
III. Clear reporting lines and delegation of responsibilities, clearly- defined and communicate licensing restrictions.
IV. Ensure that staff members responsible for sales are suitably qualified and experiencedCorrect
From the standpoint of the management and supervision area of the ICG, an ideal management system should ensure:
(a) assumption of full responsibility for the operations including the development, implementation and ongoing effectiveness of the internal controls, and adherence to them;
(b) establishing regular communication of control information to various levels of senior management;
(c.) identification of clear reporting lines with assignment of supervisory and reporting responsibilities.Incorrect
From the standpoint of the management and supervision area of the ICG, an ideal management system should ensure:
(a) assumption of full responsibility for the operations including the development, implementation and ongoing effectiveness of the internal controls, and adherence to them;
(b) establishing regular communication of control information to various levels of senior management;
(c.) identification of clear reporting lines with assignment of supervisory and reporting responsibilities.Hint
Reference Chapter:1.6.6
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Question 598 of 673
598. Question
1 pointsQID2435:Is it correct that if there is a problem in licensed corporations, the manager of the compliance department should take the most responsibility?
Correct
If there is a problem in licensed corporations, the senior management should take full responsibility. The Responsible Officer may bear partial responsibility, however the director is ultimately responsible.
Incorrect
If there is a problem in licensed corporations, the senior management should take full responsibility. The Responsible Officer may bear partial responsibility, however the director is ultimately responsible.
Hint
Reference Chapter:1.6.6
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Question 599 of 673
599. Question
1 pointsQID1353:According to the Internal Control Guidelines, good functioning and effective supervision should include the following features:
I. Senior management’s assumption of full responsibility for all operations, including the development, implementation and ongoing effectiveness of internal controls, and adherence to them.
II. Senior management establishing clear reporting lines and assignment of supervisory and reporting responsibilities.
III. Senior management setting up detailed definitions of authorities for key positions, policies and procedures for necessary authorisations, and their communication throughout the business.
IV. Senior management ensuring the assignment of management and supervisory functions to suitably qualified and experienced persons.Correct
The main features of senior management’s role in such a structure are:
(a) its assumption of full responsibility for all operations, including the development, implementation and ongoing effectiveness of internal controls, and adherence to them;
(c.) identification of clear reporting lines and assignment of supervisory and reporting responsibilities;
(d) setting up detailed definitions of authorities for key positions, policies and procedures for necessary authorisations, and their communication throughout the business;
(e.) assignment of management and supervisory functions to suitably qualified and experienced persons.Incorrect
The main features of senior management’s role in such a structure are:
(a) its assumption of full responsibility for all operations, including the development, implementation and ongoing effectiveness of internal controls, and adherence to them;
(c.) identification of clear reporting lines and assignment of supervisory and reporting responsibilities;
(d) setting up detailed definitions of authorities for key positions, policies and procedures for necessary authorisations, and their communication throughout the business;
(e.) assignment of management and supervisory functions to suitably qualified and experienced persons.Hint
Reference Chapter:1.6.6
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Question 600 of 673
600. Question
1 pointsQID979:Who should assume full responsibility for all operations of a licensed corporation?
Correct
Senior management including responsible officers should assume full responsibility for all operations of a licensed corporation.
Incorrect
Senior management including responsible officers should assume full responsibility for all operations of a licensed corporation.
Hint
Reference Chapter:1.6.6
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Question 601 of 673
601. Question
1 pointsQID1355:Which of the following are indicated as features of good management in the Management, Supervision and Internal Control Guidelines (ICG) issued by the Securities and Futures Commission (SFC)?
I. The development of a sound and effective internal control system for efficiently operating the business.
II. The encouragement of good senior management by a system of rewards including incentivisation through executive share option schemes, etc.
III. Setting of detailed written definitions of authorities for key positions as well as clear line, functional and reporting responsibilities for managerial positions.
IV. Establishing a system of committees for different areas of operations which will meet at least weekly and be directly supervised by board members including non-executive directors.Correct
The principal features of good information management are as follows:
(b) the firm’s operating and information management systems (including electronic data processing systems) should be adequate and operated in a secure and controlled environment;
(c.) there are clear definitions of information management reporting requirements to ensure that internal and external reports are produced in time and contain the necessary informationIncorrect
The principal features of good information management are as follows:
(b) the firm’s operating and information management systems (including electronic data processing systems) should be adequate and operated in a secure and controlled environment;
(c.) there are clear definitions of information management reporting requirements to ensure that internal and external reports are produced in time and contain the necessary informationHint
Reference Chapter:1.6.6
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Question 602 of 673
602. Question
1 pointsQID1622:Which of the following is not an advantage of segregation of duties?
Correct
There are a lot of advantages for segregation of duties, however, it may lead increase of cost.
Incorrect
There are a lot of advantages for segregation of duties, however, it may lead increase of cost.
Hint
Reference Chapter:1.6.7
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Question 603 of 673
603. Question
1 pointsQID464:What are the objectives behind the segregation of important duties and functions?
I. To enhance workplace efficiency through division of labour
II. To minimize errors
III. To improve overall profitability of the business
IV. To prevent opportunities for abuseCorrect
Incompatible duties and functions should be segregated, particularly those which, when performed by the same person, may provide opportunities for abuse or result in the overlooking of errors, thereby exposing the intermediary and its clients to risks.
Incorrect
Incompatible duties and functions should be segregated, particularly those which, when performed by the same person, may provide opportunities for abuse or result in the overlooking of errors, thereby exposing the intermediary and its clients to risks.
Hint
Reference Chapter:1.6.7
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Question 604 of 673
604. Question
1 pointsQID465:What is the primary objective of segregation of duties and functions?
I. Avoid overlooking of errors
II. Avoid opportunities for abuse
III. Avoid manipulation
IV. Avoid being investigated by the SFCCorrect
Incompatible duties and functions should be segregated, particularly those which, when performed by the same person, may provide opportunities for abuse or result in the overlooking of errors, thereby exposing the intermediary and its clients to risks.
Incorrect
Incompatible duties and functions should be segregated, particularly those which, when performed by the same person, may provide opportunities for abuse or result in the overlooking of errors, thereby exposing the intermediary and its clients to risks.
Hint
Reference Chapter:1.6.7
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Question 605 of 673
605. Question
1 pointsQID458:Kaohsiung Capital is a boutique firm that offers advice to local listed companies, which includes advice on Listing Rules and the Takeover and Mergers Codes. It is a boutique firm with only a few employees. Should Kaohsiung Capital adhere to the same segregation of duties requirements as bigger and more well established firms do?
Correct
The SFC has indicated that, in applying the ICG or other related guidelines, it will use a pragmatic approach, which means it will look at the reality and the substance of a situation and not apply the ICG in a rigid or bureaucratic way. The usual illustration of this approach is of a small business. In such a case, the SFC will not expect to see a complicated system of segregation of functions, and compliance and internal audit departments with many people employed in them. It will be satisfied if other controls are in place to compensate for the reduced size and staff.
Incorrect
The SFC has indicated that, in applying the ICG or other related guidelines, it will use a pragmatic approach, which means it will look at the reality and the substance of a situation and not apply the ICG in a rigid or bureaucratic way. The usual illustration of this approach is of a small business. In such a case, the SFC will not expect to see a complicated system of segregation of functions, and compliance and internal audit departments with many people employed in them. It will be satisfied if other controls are in place to compensate for the reduced size and staff.
Hint
Reference Chapter:1.6.7
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Question 606 of 673
606. Question
1 pointsQID2447:Why is there segregation of functions?
Correct
The main purpose of the segregation of functions is to avoid the overuse of power such that staffs affect the interests of companies in favour of their individual interests.
Incorrect
The main purpose of the segregation of functions is to avoid the overuse of power such that staffs affect the interests of companies in favour of their individual interests.
Hint
Reference Chapter:1.6.7
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Question 607 of 673
607. Question
1 pointsQID1354:According to the Internal Control Guidelines, a satisfactory segregation of duties should include which of the following features?
I. Policy making, supervisory, advisory, compliance and internal audit functions should not, where practicable, be performed by staff with line operational duties.
II. Functions such as sales, dealing, accounting and settlement should be segregated from each other.
III. Research and corporate finance functions should also be segregated from each other.
IV. Compliance and internal audit should be separated from and independent of operational functions, and reports are made directly to the SFC.Correct
The main features of satisfactory segregation of duties (and functional separation) are as follows:
(a) policy making, supervisory, advisory, compliance and internal audit functions should not, where practicable, be performed by staff with line operational duties;
(b) wherever practical, functions such as sales, dealing, accounting and settlement should be segregated from each other;
(c.) research functions should also be segregated from sales and dealing to avoid conflicts of interest. Where practical, research and corporate finance functions should also be segregated from each otherIncorrect
The main features of satisfactory segregation of duties (and functional separation) are as follows:
(a) policy making, supervisory, advisory, compliance and internal audit functions should not, where practicable, be performed by staff with line operational duties;
(b) wherever practical, functions such as sales, dealing, accounting and settlement should be segregated from each other;
(c.) research functions should also be segregated from sales and dealing to avoid conflicts of interest. Where practical, research and corporate finance functions should also be segregated from each otherHint
Reference Chapter:1.6.8
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Question 608 of 673
608. Question
1 pointsQID467:According to the ICG, incompatible duties and functions should be segregated, which of the following duties should not be carried out by front line staff?
I. Policy Making
II. Compliance and Audit
III. Risk Management
IV. SalesCorrect
Features of satisfactory segregation of duties (and functional separation) are as follows:
Policy making, supervisory, advisory, compliance and internal audit functions should, where practicable, not be performed by staff with line operational duties.
Also, where possible, compliance and internal audit should be separate from and independent of the operational functions, and report directly to senior management.Incorrect
Features of satisfactory segregation of duties (and functional separation) are as follows:
Policy making, supervisory, advisory, compliance and internal audit functions should, where practicable, not be performed by staff with line operational duties.
Also, where possible, compliance and internal audit should be separate from and independent of the operational functions, and report directly to senior management.Hint
Reference Chapter:1.6.8
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Question 609 of 673
609. Question
1 pointsQID466:Staff members with line operational duties should not perform which of the following duties simultaneously if practicable
I. Internal Audit
II. Supervisory
III. Compliance
IV. Risk managementCorrect
Features of satisfactory segregation of duties (and functional separation) are as follows:
Policy making, supervisory, advisory, compliance and internal audit functions should, where practicable, not be performed by staff with line operational duties.
Also, where possible, compliance and internal audit should be separate from and independent of the operational functions, and report directly to senior management.Incorrect
Features of satisfactory segregation of duties (and functional separation) are as follows:
Policy making, supervisory, advisory, compliance and internal audit functions should, where practicable, not be performed by staff with line operational duties.
Also, where possible, compliance and internal audit should be separate from and independent of the operational functions, and report directly to senior management.Hint
Reference Chapter:1.6.8
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Question 610 of 673
610. Question
1 pointsQID481:When dealing with confidential information that is price-sensitive, what should be done to ensure that such information is not leaked to operating staff?
Correct
Chinese walls should be established to ensure that price-sensitive information is not leaked to operating staff who may be able to misuse the information; for example, corporate finance
advisory staff may have advance information on a potential takeover which can be used by other staff to deal for profit in the market.Incorrect
Chinese walls should be established to ensure that price-sensitive information is not leaked to operating staff who may be able to misuse the information; for example, corporate finance
advisory staff may have advance information on a potential takeover which can be used by other staff to deal for profit in the market.Hint
Reference Chapter:1.6.8
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Question 611 of 673
611. Question
1 pointsQID2747:Which of the following departments need to report directly to senior management?
Correct
Internal audit and compliance functions need to report directly to senior management.
Incorrect
Internal audit and compliance functions need to report directly to senior management.
Hint
Reference Chapter:1.6.8
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Question 612 of 673
612. Question
1 pointsQID446:Kaohsiung Finance is a corporate finance adviser. In which of the following situations is it required to implement a system of functional barriers (Chinese walls)?
Correct
When a corporate finance adviser is part of a group conducting other activities, it should ensure that there is an effective system of functional barriers (Chinese walls) to prevent leakage of confidential or price-sensitive information between its activities as a corporate finance adviser and its other business activities. The system should include physical separation between, and different staff employed for, the various business activities.
Incorrect
When a corporate finance adviser is part of a group conducting other activities, it should ensure that there is an effective system of functional barriers (Chinese walls) to prevent leakage of confidential or price-sensitive information between its activities as a corporate finance adviser and its other business activities. The system should include physical separation between, and different staff employed for, the various business activities.
Hint
Reference Chapter:1.6.8
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Question 613 of 673
613. Question
1 pointsQID505:British Construction Bank is an authorised financial institution. Amid the downfall of the Hong Kong banking sector, it has decided to promote its personal loan service by acquiring a list of clients and contacts from its wholly owned subsidiary British Construction Securities, a licensed corporation. Should British Construction Securities provide such information to British Construction Bank?
Correct
Where the data is collected from the data subject, he should be informed, at the prescribed times, of the purpose for which the data is to be used, the classes of persons to whom the data may be transferred and of his rights to access and to request the correction of the data. Also, personal data should not, without the consent of the data subject, be used for a new purpose.
Incorrect
Where the data is collected from the data subject, he should be informed, at the prescribed times, of the purpose for which the data is to be used, the classes of persons to whom the data may be transferred and of his rights to access and to request the correction of the data. Also, personal data should not, without the consent of the data subject, be used for a new purpose.
Hint
Reference Chapter:1.7.
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Question 614 of 673
614. Question
1 pointsQID502:According to the Personal Data (Privacy) Ordinance, personal data refers to:
Correct
“Personal data” means any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained (and are in a form in which access or processing is practicable).
Incorrect
“Personal data” means any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained (and are in a form in which access or processing is practicable).
Hint
Reference Chapter:1.7.1
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Question 615 of 673
615. Question
1 pointsQID808:The PDPO is applicable to which of the following individuals?
I. The user of personal data
II. The collector of personal data
III. The holder of personal data
IV. The processor of personal dataCorrect
The Personal Data (Privacy) Ordinance (“PDPO”) was established to protect the privacy of individuals in relation to personal data. It applies to any data user who, in relation to personal data, means a person who alone or jointly, or in common with other persons, controls the collection, holding, processing or use of the data.
Incorrect
The Personal Data (Privacy) Ordinance (“PDPO”) was established to protect the privacy of individuals in relation to personal data. It applies to any data user who, in relation to personal data, means a person who alone or jointly, or in common with other persons, controls the collection, holding, processing or use of the data.
Hint
Reference Chapter:1.7.1
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Question 616 of 673
616. Question
1 pointsQID805:Which of the following are classified as personal data under the PDPO?
I. Data relating directly to a living individual, from which it is practicable for the identity of the individual to be directly ascertained.
II. Data relating indirectly to a living individual, from which it is practicable for the identity of the individual to be directly ascertained.
III. Data relating directly to a living individual, from which it is practicable for the identity of the individual to be indirectly ascertained.
IV. Data relating indirectly to a living individual, from which it is practicable for the identity of the individual to be indirectly ascertained.Correct
“Personal data” means any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained (and are in a form in which access or processing is practicable).
Incorrect
“Personal data” means any data relating directly or indirectly to a living individual, from which it is practicable for the identity of the individual to be directly or indirectly ascertained (and are in a form in which access or processing is practicable).
Hint
Reference Chapter:1.7.1
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Question 617 of 673
617. Question
1 pointsQID501:Which of the follow ordinance/codes/rules protect the privacy of individuals in relation to their personal data?
Correct
The Personal Data (Privacy) Ordinance (“PDPO”) was established to protect the privacy of individuals in relation to personal data.
Incorrect
The Personal Data (Privacy) Ordinance (“PDPO”) was established to protect the privacy of individuals in relation to personal data.
Hint
Reference Chapter:1.7.1
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Question 618 of 673
618. Question
1 pointsQID2838:The data protection principles set out in the Personal Data (Privacy) Ordinance (PDPO) do not include
Correct
The data protection principles set out in the PDPO include:
I. Purpose and manner of collection of personal data
II. Accuracy of Personal Data and Retention Period
III. Use of Personal Data
IV. Security of personal data
V. Information to be available in general
VI. Access to personal dataIncorrect
The data protection principles set out in the PDPO include:
I. Purpose and manner of collection of personal data
II. Accuracy of Personal Data and Retention Period
III. Use of Personal Data
IV. Security of personal data
V. Information to be available in general
VI. Access to personal dataHint
Reference Chapter:1.7.2
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Question 619 of 673
619. Question
1 pointsQID504:What of the following is not a principle of the PDPO?
Correct
Option C, Functionality, is not a principle stated in the Schedule 1 of the PDPO.
Incorrect
Option C, Functionality, is not a principle stated in the Schedule 1 of the PDPO.
Hint
Reference Chapter:1.7.2
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Question 620 of 673
620. Question
1 pointsQID1149:The data protection principles include:
I. information to be generally available to the public.
II. use of personal data.
III. purpose and manner of collection of personal data.
IV. accuracy and duration of retention of personal data.Correct
Principle 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 3 – use of personal data
Principle 5 is “information to be generally available”, but not ” information to be generally available to the public”.Incorrect
Principle 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 3 – use of personal data
Principle 5 is “information to be generally available”, but not ” information to be generally available to the public”.Hint
Reference Chapter:1.7.2
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Question 621 of 673
621. Question
1 pointsQID2827:Registration and Electoral Office lost a notebook computer containing voters’ information. This is more likely to violate
Correct
The data protection principles set out in the PDPO include:
I. Purpose and manner of collection of personal data
II. Accuracy of Personal Data and Retention Period
III. Use of Personal Data
IV. Security of personal data
V. Information to be available in general
VI. Access to personal dataIncorrect
The data protection principles set out in the PDPO include:
I. Purpose and manner of collection of personal data
II. Accuracy of Personal Data and Retention Period
III. Use of Personal Data
IV. Security of personal data
V. Information to be available in general
VI. Access to personal dataHint
Reference Chapter:1.7.2
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Question 622 of 673
622. Question
1 pointsQID2395:Which of the following statement is incorrect regarding the Privacy Ordinance?
Correct
Securities companies have the responsibilities to provide clients with copies of their personal information, but not necessarily for free. The SFC can have access to the personal information of anyone in the period of investigation. The Stock Exchange of Hong Kong Limited has the right to ask for information with regard to senior management and part of shareholders from listed issuers. For these are reasonable uses. Clients can ask the company to delete their personal information, though it’s another issue that whether there are capabilities to continue to provide services.
Incorrect
Securities companies have the responsibilities to provide clients with copies of their personal information, but not necessarily for free. The SFC can have access to the personal information of anyone in the period of investigation. The Stock Exchange of Hong Kong Limited has the right to ask for information with regard to senior management and part of shareholders from listed issuers. For these are reasonable uses. Clients can ask the company to delete their personal information, though it’s another issue that whether there are capabilities to continue to provide services.
Hint
Reference Chapter:1.7.2
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Question 623 of 673
623. Question
1 pointsQID1148:Which of the following is NOT a data protection principle according to the PDPO?
Correct
Principle 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 5 – information to be generally availableIncorrect
Principle 1 – purpose and manner of collection of personal data
Principle 2 – accuracy and duration of retention of personal data
Principle 5 – information to be generally availableHint
Reference Chapter:1.7.2
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Question 624 of 673
624. Question
1 pointsQID1146:Under the Personal Data (Privacy) Ordinance, the subject is entitled to which of the following rights?
I. The subject shall be notified about the purpose of collection of personal data.
II. The subject’s personal data should not, without the consent of the data subject, be used for any purpose other than that for which it was collected or a directly related purpose
III. The data subject shall be entitled to ascertain whether data of which he is the subject are held, request and receive access to his personal data within a reasonable time at a reasonable fee and in an intelligible form, and to request corrections to the data and to be given reasons for any refusals in relation to the above and to object.
IV. The subject’s personal data shall not be collected unless lawfully and fairly collected for a lawful purpose directly related to a function or activity of the data user, the collection is necessary for or directly related to that purpose and the data is not excessive for the purpose.Correct
(a) Principle 1 – purpose and manner of collection of personal data
(i) Personal data shall not be collected unless for a lawful purpose directly related to a function or activity of the data user, and unless the collection is necessary for or directly related to that purpose and the data is not excessive for the purpose.
(ii) Where the data is collected from the data subject, he should be informed, at the prescribed times, of the purpose for which the data is to be used, the classes of persons to whom the data may be transferred and of his rights to access and to request the correction of the data.
(c) Principle 3 – use of personal data
Personal data should not, without the consent of the data subject, be used for a new purpose.
(f) Principle 6 – access to personal data
A data subject shall be entitled to ascertain whether data of which he is the subject is held, request and receive access to his personal data within a reasonable time at a reasonable fee and in an intelligible form, and to request corrections to the data, and to be given reasons for any refusals in relation to the above and to object to the Privacy Commissioner for Personal Data.Incorrect
(a) Principle 1 – purpose and manner of collection of personal data
(i) Personal data shall not be collected unless for a lawful purpose directly related to a function or activity of the data user, and unless the collection is necessary for or directly related to that purpose and the data is not excessive for the purpose.
(ii) Where the data is collected from the data subject, he should be informed, at the prescribed times, of the purpose for which the data is to be used, the classes of persons to whom the data may be transferred and of his rights to access and to request the correction of the data.
(c) Principle 3 – use of personal data
Personal data should not, without the consent of the data subject, be used for a new purpose.
(f) Principle 6 – access to personal data
A data subject shall be entitled to ascertain whether data of which he is the subject is held, request and receive access to his personal data within a reasonable time at a reasonable fee and in an intelligible form, and to request corrections to the data, and to be given reasons for any refusals in relation to the above and to object to the Privacy Commissioner for Personal Data.Hint
Reference Chapter:1.7.2
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Question 625 of 673
625. Question
1 pointsQID2748:The data protection principles set out in the Personal Data (Privacy) Ordinance (PDPO) do not include
Correct
The data protection principles set out in the PDPO include:
I. Purpose and manner of collection of personal data
II. Accuracy and duration of retention
III. Use of Personal Data
IV. Security of personal data
V. Information to be available in general
VI. Access to personal dataIncorrect
The data protection principles set out in the PDPO include:
I. Purpose and manner of collection of personal data
II. Accuracy and duration of retention
III. Use of Personal Data
IV. Security of personal data
V. Information to be available in general
VI. Access to personal dataHint
Reference Chapter:1.7.2
-
Question 626 of 673
626. Question
1 pointsQID503:Which of the following is NOT one of the 6 principles set in the
Personal Data (Privacy) Ordinance?Correct
Option C, Manner of saving personal data, is not a principle stated in the Schedule 1 of the PDPO.
Incorrect
Option C, Manner of saving personal data, is not a principle stated in the Schedule 1 of the PDPO.
Hint
Reference Chapter:1.7.2
-
Question 627 of 673
627. Question
1 pointsQID2471:Which institution should banks apply for a license or register if they want to engage in futures trading business?
Correct
Banks should register from the SFC rather than applying for a license if they want to engage in futures trading business. Futures trading is a Type 2 regulated activity.
Incorrect
Banks should register from the SFC rather than applying for a license if they want to engage in futures trading business. Futures trading is a Type 2 regulated activity.
Hint
Reference Chapter:1.7.6
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Question 628 of 673
628. Question
1 pointsQID493:The MLGN specifies which of the following procedures and objectives?
I. The need for awareness and vigilance
II. The setting up of a system to report suspicious transactions
III. Requiring intermediaries to adopt a risk-based approach in their customer due diligence process
IV. Requiring intermediaries to adopt a merit-based approach in conducting account opening activitiesCorrect
The GAML specifies the need for awareness and vigilance and the setting up of a system to report suspicious transactions.
Licensed corporations should adopt a risk-based approach in their CDD process. This means that an enhanced CDD process is adopted for higher-risk categories of customers, business relationships or transactions.Incorrect
The GAML specifies the need for awareness and vigilance and the setting up of a system to report suspicious transactions.
Licensed corporations should adopt a risk-based approach in their CDD process. This means that an enhanced CDD process is adopted for higher-risk categories of customers, business relationships or transactions.Hint
Reference Chapter:1.8.
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Question 629 of 673
629. Question
1 pointsQID1683:Mr Ko, a client of Kaoxiong Securities is a gang member. Mr Ko’s income sources may originate from drug related activities. Under which of the scenario that Kaoxiong handles Mr Ko’s assets should be considered as money laundering?
I. The acceptance of Mr Ko’s cash asset
II. Buying and selling securities for Mr Ko
III. Transferring securities for Mr. Ko
IV. Storing securities for Mr. KoCorrect
The DTRPO makes it an offence to deal with property that is known or believed to be the proceeds of drug trafficking. Dealing includes:
(a) receiving or acquiring the property;
(b) concealing or disguising the property;
© disposing of or converting the property;
(d) moving it in or out of Hong Kong; and/or
€ using the property to borrow money or as security.Incorrect
The DTRPO makes it an offence to deal with property that is known or believed to be the proceeds of drug trafficking. Dealing includes:
(a) receiving or acquiring the property;
(b) concealing or disguising the property;
© disposing of or converting the property;
(d) moving it in or out of Hong Kong; and/or
€ using the property to borrow money or as security.Hint
Reference Chapter:1.8.10
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Question 630 of 673
630. Question
1 pointsQID2690:Ms Lam is a private investor, the SFC demands her to assist in a drug related investigation, which of the following is correct?
Correct
The SFC can investigate anyone at anytime.
Incorrect
The SFC can investigate anyone at anytime.
Hint
Reference Chapter:1.8.13
-
Question 631 of 673
631. Question
1 pointsQID2562:the United Nations Anti-Terrorism Measures Ordinance is primarily concered with:
Correct
UNATMO is primarily concerned with inhibiting the financing of terrorist activities pursuant to implementing decisions made by the United Nations Security Council Resolutions(“UNSCRs”).
Incorrect
UNATMO is primarily concerned with inhibiting the financing of terrorist activities pursuant to implementing decisions made by the United Nations Security Council Resolutions(“UNSCRs”).
Hint
Reference Chapter:1.8.17
-
Question 632 of 673
632. Question
1 pointsQID480:Order handling procedures should NOT cover:
Correct
Option C is not included in the section of Dealing Practices stated on the ICG.
Incorrect
Option C is not included in the section of Dealing Practices stated on the ICG.
Hint
Reference Chapter:1.8.18
-
Question 633 of 673
633. Question
1 pointsQID197:Which of the following descriptions about associated entities is correct?
Correct
An associated entity of an intermediary includes overseas incorporated companies that have established a place of business in Hong Kong.
An associated entity of an intermediary cannot conduct any other business unless authorised in writing by the SFC (this requirement does not apply in the case of AFIs).Incorrect
An associated entity of an intermediary includes overseas incorporated companies that have established a place of business in Hong Kong.
An associated entity of an intermediary cannot conduct any other business unless authorised in writing by the SFC (this requirement does not apply in the case of AFIs).Hint
Reference Chapter:1.8.19
-
Question 634 of 673
634. Question
1 pointsQID2608:Kaohsiung asset management manages portfolios of securities and futures for Wen Bin tradings. Recently, Kaohsiung securities found that there may be tons of chemicals used to produce chemical weapons in the warehouse of Wen Bin. What should Kaohsiung securities do?
Correct
There is a huge flaw in this question. Actually, A and D can both be the answer. However, the Weapons of Mass Destruction (Control of Provision of Services) Ordinance, answer D, can be the more specific words which is more suitable for exams. Therefore, the answer is D. The correct procedure is to investigate first. There is no problem if there is a reasonable explanation. If there is a problem, they can report to the officials.
Incorrect
There is a huge flaw in this question. Actually, A and D can both be the answer. However, the Weapons of Mass Destruction (Control of Provision of Services) Ordinance, answer D, can be the more specific words which is more suitable for exams. Therefore, the answer is D. The correct procedure is to investigate first. There is no problem if there is a reasonable explanation. If there is a problem, they can report to the officials.
Hint
Reference Chapter:1.8.20
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Question 635 of 673
635. Question
1 pointsQID492:Kaohsiung Securities is a licensed corporation. An employee of Kaohsiung Securities, Mr. Ko, suspects a client, Seven Blessings Jewellery, of money laundering. According to the Anti-Money Laundering Ordinance (AMLO), Drug Trafficking Recovery of Proceeds (DTRPO), Organized and Serious Crimes Ordinance (OSCO), and the United Nations Anti-Terrorism Measures Ordinance (UNATMO), in which of the following situations is Kaohsiung Securities considered to have “handled” Seven Blessings Jewellery’s laundered money?
I. When accepting Seven Blessings Jewellery’s deposits.
II. When carrying out futures trading for Seven Blessings Jewellery.
III. When providing Seven Blessings Jewellery with advice on corporate finance services.
IV. When transferring money overseas for Seven Blessings Jewellery.Correct
All of these activities carried out for a client that is suspected of money laundering are described in the GAML and being involved in one of them is considered an offence.
Incorrect
All of these activities carried out for a client that is suspected of money laundering are described in the GAML and being involved in one of them is considered an offence.
Hint
Reference Chapter:1.8.22
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Question 636 of 673
636. Question
1 pointsQID1359:Guideline on Anti-Money Laundering and Counter-Terrorist Financing issued by the Securities and Futures Commission (SFC) requires the installation of which of the following procedures and policies by licensed corporations to counteract possible money laundering?
I. The issuing of statements of policies and procedures that reflect the GAML to its staff.
II. The identification of client in non-face-to-face situations by using reputable references sources and ensuring all original documents are checked by reliable overseas agents.
III. Reporting of all transactions in overseas accounts or by overseas clients for over HKD100,000 to the Joint Financial Intelligence Unit.
IV. The retention of all relevant transactions which might be required by investigators for at least 5 years.Correct
The GAML specifies the need for awareness and vigilance and the setting up of a system to report suspicious transactions. It requires licensed corporations to:
(a) issue statements of policies and procedures to staff reflecting the provisions of the GAML;
A greater degree of alertness in opening accounts is now required, particularly with overseas clients. If an account is opened using a non-face-to-face approach, care should be taken to note the requirements of the Code of Conduct (discussed in section 2 of this Topic) in addition to the CDD requirements set out in the GAML. Credible sources should be used to verify overseas accounts. Anonymous accounts are not permitted.
Customer documents and information should be kept throughout the business relationship and for a period of 5 years after the end of the business relationship.Incorrect
The GAML specifies the need for awareness and vigilance and the setting up of a system to report suspicious transactions. It requires licensed corporations to:
(a) issue statements of policies and procedures to staff reflecting the provisions of the GAML;
A greater degree of alertness in opening accounts is now required, particularly with overseas clients. If an account is opened using a non-face-to-face approach, care should be taken to note the requirements of the Code of Conduct (discussed in section 2 of this Topic) in addition to the CDD requirements set out in the GAML. Credible sources should be used to verify overseas accounts. Anonymous accounts are not permitted.
Customer documents and information should be kept throughout the business relationship and for a period of 5 years after the end of the business relationship.Hint
Reference Chapter:1.8.26
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Question 637 of 673
637. Question
1 pointsQID2851:The order of stages of money laundering is
Correct
The sequence of the stages of money laundering is 1. Placement 2. Layering 3. Integration
Incorrect
The sequence of the stages of money laundering is 1. Placement 2. Layering 3. Integration
Hint
Reference Chapter:1.8.26
-
Question 638 of 673
638. Question
1 pointsQID488:“Anti-Money Laundering and Counter-Terrorists Financing (Financial Institutions) Ordinance ” imposes a general duty on licensed corporations to:
I. Recognise, and be alert about suspicious transactions.
II. Set up a system to report suspicious transactions.
III. Carry out customer due diligence measures.
IV. Adopt a review-based approach.Correct
The GAML specifies the need for awareness and vigilance and the setting up of a system to report suspicious transactions.
Licensed corporations should adopt a risk-based approach in their CDD process. This means that an enhanced CDD process is adopted for higher-risk categories of customers, business
relationships or transactions.Incorrect
The GAML specifies the need for awareness and vigilance and the setting up of a system to report suspicious transactions.
Licensed corporations should adopt a risk-based approach in their CDD process. This means that an enhanced CDD process is adopted for higher-risk categories of customers, business
relationships or transactions.Hint
Reference Chapter:1.8.26
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Question 639 of 673
639. Question
1 pointsQID822:Is non-face-to-face account opening acceptable to an intermediary?
Correct
A greater degree of alertness in opening accounts is now required, particularly with overseas clients. If an account is opened using a non-face-to-face approach, care should be taken to note the requirements of the Code of Conduct in addition to the CDD requirements set out in the GAML. Credible sources should be used to verify overseas accounts. Anonymous accounts are not permitted.
Incorrect
A greater degree of alertness in opening accounts is now required, particularly with overseas clients. If an account is opened using a non-face-to-face approach, care should be taken to note the requirements of the Code of Conduct in addition to the CDD requirements set out in the GAML. Credible sources should be used to verify overseas accounts. Anonymous accounts are not permitted.
Hint
Reference Chapter:1.8.29
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Question 640 of 673
640. Question
1 pointsQID2798:Which agency should an intermediary report to if they suspect a client of money laundering?
Correct
If intermediaries suspect clients of money laundering, they should report to the Joint Financial Intelligence Unit.
Incorrect
If intermediaries suspect clients of money laundering, they should report to the Joint Financial Intelligence Unit.
Hint
Reference Chapter:1.8.32
-
Question 641 of 673
641. Question
1 pointsQID2554:Miss. Sie is a manager at Kaohsiung Securities. Miss Peng is planning to open an account at Kaohsiung Securities. According to the risk-based principles, Miss Sie should:
Correct
According to risk-based principles, customer due diligence should be subject to enhanced measures for higher-risk customers, and may be simplified for lower-risk customers.
Incorrect
According to risk-based principles, customer due diligence should be subject to enhanced measures for higher-risk customers, and may be simplified for lower-risk customers.
Hint
Reference Chapter:1.8.36
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Question 642 of 673
642. Question
1 pointsQID767:Which of the following is a measure suggested by the Prevention of Money Laundering and Terrorist Financing Guideline issued by the Securities and Futures Commission to tackle money laundering?
Correct
Licensed corporations should adopt a risk-based approach in their CDD process. This means that an enhanced CDD process is adopted for higher-risk categories of customers, business relationships or transactions. Conversely, a simplified CDD process may be adopted for lower-risk categories of customers, business relationships or transactions.
Incorrect
Licensed corporations should adopt a risk-based approach in their CDD process. This means that an enhanced CDD process is adopted for higher-risk categories of customers, business relationships or transactions. Conversely, a simplified CDD process may be adopted for lower-risk categories of customers, business relationships or transactions.
Hint
Reference Chapter:1.8.36
-
Question 643 of 673
643. Question
1 pointsQID1360:Which of the following are possible traits of money laundering activities?
I. Large or unusual trading in securities under anonymous identities.
II. Transfer a large amount of cash and funds to settle payments for overseas residential property.
III. Buying the Hang Seng Index Futures and selling shares of similar value simultaneously.
IV. Client refusing to provide explanation for its financial transactions.Correct
Chapter 7, GAML provides a list of situations that might give rise to suspicion of money laundering activity, including those set out below. The list is not exhaustive and licensed corporations need to be alert to their responsibilities under applicable legislation and regulations.
(c.) Settlement/custody/transfers-related
(i) large or unusual settlements in cash or bearer form, or dealings only in cash or cash equivalentsIncorrect
Chapter 7, GAML provides a list of situations that might give rise to suspicion of money laundering activity, including those set out below. The list is not exhaustive and licensed corporations need to be alert to their responsibilities under applicable legislation and regulations.
(c.) Settlement/custody/transfers-related
(i) large or unusual settlements in cash or bearer form, or dealings only in cash or cash equivalentsHint
Reference Chapter:1.8.37
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Question 644 of 673
644. Question
1 pointsQID494:Which of the following is a suspicious circumstance in relation to money laundering?
Correct
Section 7, GAML provides a list of situations that might give rise to a suspicion of money laundering activity, including:
(a) the holding of idle funds by a client, which are not used to trade, with the licensed corporation.Incorrect
Section 7, GAML provides a list of situations that might give rise to a suspicion of money laundering activity, including:
(a) the holding of idle funds by a client, which are not used to trade, with the licensed corporation.Hint
Reference Chapter:1.8.37
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Question 645 of 673
645. Question
1 pointsQID496:Which of the following persons is more suspicious or more likely to have the opportunity to engage in money laundering activities?
Correct
Section 7, GAML provides a list of situations that might give rise to a suspicion of money laundering activity, including the following:
(i) buying and selling activities which are unusual or have no obvious purpose; and
(ii) frequent transactions in small amounts, purchased in cash and then sold in one transaction with proceeds paid to a third party.Incorrect
Section 7, GAML provides a list of situations that might give rise to a suspicion of money laundering activity, including the following:
(i) buying and selling activities which are unusual or have no obvious purpose; and
(ii) frequent transactions in small amounts, purchased in cash and then sold in one transaction with proceeds paid to a third party.Hint
Reference Chapter:1.8.37
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Question 646 of 673
646. Question
1 pointsQID1019:Common characteristics of money laundering are
I. frequent fund transfers to or from unverified third parties
II. Large or unusual settlements in cash or bearer form
III. Holding of large amounts of idle funds that are not used to trade
IV. Consistently profitable dealing records.Correct
Consistently profitable dealing records has little to do with money laundering.
Incorrect
Consistently profitable dealing records has little to do with money laundering.
Hint
Reference Chapter:1.8.37
-
Question 647 of 673
647. Question
1 pointsQID2854:What do intermediaries need to pay special attention to when dealing with clients to prevent activities like money laundering?
I. Stricter scrutiny of high-risk customers
II. Learn the client’s background such as whether they are political figures
III. Consider whether the client is engaged in high-risk business activities
IV. For overseas clients, video conference must be used to verify their identitiesCorrect
For overseas clients, video conferences cannot be used to verify their identities. The identities should be confirmed by postal or online channels in accordance with the regulations.
Incorrect
For overseas clients, video conferences cannot be used to verify their identities. The identities should be confirmed by postal or online channels in accordance with the regulations.
Hint
Reference Chapter:1.8.37
-
Question 648 of 673
648. Question
1 pointsQID1361:Under the Money Laundering and Terrorist Financing Guidelines issued by the Securities and Futures Commission (SFC), which of the following are classified as suspicious transactions?
I. Substantial amounts of money are noted to be passing in both directions through an account in respect of property deals in Australia, Canada and the United Kingdom.
II. The matching of buys and sells in particular instruments giving the illusion of trading.
III. The holding of substantial funds in an account with a licensed corporation which are not being used for trading.
IV. A client wishes to deal only in cash or cash equivalents rather than through banking channelsCorrect
Chapter 7, GAML provides a list of situations that might give rise to suspicion of money laundering activity, including those set out below. The list is not exhaustive and licensed corporations need to be alert to their responsibilities under applicable legislation and regulations.
(b) Trading-related
(i) buying and selling activities which are unusual or have no obvious purpose
(c.) Settlement/custody/transfers-related
(i) large or unusual settlements in cash or bearer form, or dealings only in cash or cash equivalents;
(ii) holding of idle funds by a client, which are not used to trade, with the licensed corporation.Incorrect
Chapter 7, GAML provides a list of situations that might give rise to suspicion of money laundering activity, including those set out below. The list is not exhaustive and licensed corporations need to be alert to their responsibilities under applicable legislation and regulations.
(b) Trading-related
(i) buying and selling activities which are unusual or have no obvious purpose
(c.) Settlement/custody/transfers-related
(i) large or unusual settlements in cash or bearer form, or dealings only in cash or cash equivalents;
(ii) holding of idle funds by a client, which are not used to trade, with the licensed corporation.Hint
Reference Chapter:1.8.37
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Question 649 of 673
649. Question
1 pointsQID2702:In the process of due diligence and risk assessment, the client’s nationality, citizenship, resident status, place of registration, and business establishment are analyzed. What risks are the analysis looking at?
Correct
In the process of due diligence and risk assessment, the nationality, citizenship, resident status, place of registration, and business establishment of the client are analyzed, mainly for analysing country risks.
Incorrect
In the process of due diligence and risk assessment, the nationality, citizenship, resident status, place of registration, and business establishment of the client are analyzed, mainly for analysing country risks.
Hint
Reference Chapter:1.8.37
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Question 650 of 673
650. Question
1 pointsQID2590:When client wishes to open an account by non-face-to-face method and is about to sign the client agreement, which of th following ways is the most appropriate?
Correct
When there is a non-face-to-face account opening, the intermediary should specifically direct the client’s attention to the risk disclosure statements delivered along.
Incorrect
When there is a non-face-to-face account opening, the intermediary should specifically direct the client’s attention to the risk disclosure statements delivered along.
Hint
Reference Chapter:1.8.37
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Question 651 of 673
651. Question
1 pointsQID938:A client has acquired a large number of Vitamilk shares through Kaohsiung Securities and then dispose the shares a few days later. The client then instructed Kaohsiung Securities to transfer the proceedings of the disposal of Vitamilk shares to a third party. This series of actions are more likely to be
Correct
These activities seem to be a cover-up of the source of funds, which may be an act of money laundering.
Incorrect
These activities seem to be a cover-up of the source of funds, which may be an act of money laundering.
Hint
Reference Chapter:1.8.37
-
Question 652 of 673
652. Question
1 pointsQID498:If an intermediary discovers that a client is a suspicious character or is involved in suspicious transactions, the intermediary is obligated to report his suspicions to which of the following organizations?
I. The Joint Financial Intelligence Unit
II. The police.
III. The Independent Commission Against Corruption.
IV. The customs.Correct
The obligation to report under the DTRPO, OSCO or UNATMO rests with the individual who becomes suspicious of a person, transaction or property. Disclosures of suspicious transactions under the DTRPO, OSCO or UNATMO should be made to the JFIU.
Incorrect
The obligation to report under the DTRPO, OSCO or UNATMO rests with the individual who becomes suspicious of a person, transaction or property. Disclosures of suspicious transactions under the DTRPO, OSCO or UNATMO should be made to the JFIU.
Hint
Reference Chapter:1.8.38
-
Question 653 of 673
653. Question
1 pointsQID499:Kaohsiung Securities is a licensed corporation. An employee of Kaohsiung Securities, Mr. Ko, suspects client, Seven Blessings Jewellery, of money laundering. According to the Anti-Money Laundering Ordinance (AMLO), Drug Trafficking Recovery of Proceeds (DTRPO), Organized and Serious Crimes Ordinance (OSCO), and the United Nations Anti-Terrorism Measures Ordinance (UNATMO), in which of the following situations does Kaohsiung Securities possess the opportunity to break the law and commit a foul?
I. Refusing the account before Seven Blessings Jewellery opens an account.
II. Refusing deposits after Seven Blessings Jewellery has opened an account.
III. Regularly monitoring the account after Seven Blessings Jewellery has opened the account, but making a report to the Joint (Financial) Intelligence Unit before determining that Seven Blessings Jewellery has been laundering money.
IV. Regularly monitoring the account after Seven Blessings Jewellery has opened the account, reporting the matter to the Joint (Financial) Intelligent Unit, and taking the initiative to notify Seven Blessings Jewellery’s person-in-charge about the reported issues.Correct
Once a suspicion has arisen concerning a possible money laundering situation, the need for disclosure should be considered and may require urgent discussions with senior management,
appropriate questioning of the customer, and a review of all information already held about the customer. If suspicion remains and a decision is made to report the matter to the JFIU, it
should be done without delay, by telephone, if necessary.
The licensed corporations or associated entities, their directors and staff must not inform or warn the client when information is disclosed to the JFIU.Incorrect
Once a suspicion has arisen concerning a possible money laundering situation, the need for disclosure should be considered and may require urgent discussions with senior management,
appropriate questioning of the customer, and a review of all information already held about the customer. If suspicion remains and a decision is made to report the matter to the JFIU, it
should be done without delay, by telephone, if necessary.
The licensed corporations or associated entities, their directors and staff must not inform or warn the client when information is disclosed to the JFIU.Hint
Reference Chapter:1.8.39
-
Question 654 of 673
654. Question
1 pointsQID486:In Hong Kong, which of the following pieces of legislation specifically address money laundering?
I. Anti-Money Laundering Ordinance
II. Drug Trafficking Recovery of Proceeds Ordinance
III. Organized and Serious Crimes Ordinance
IV. World Bank Anti-Terrorism Measures OrdinanceCorrect
The four main pieces of legislation in Hong Kong which specifically address money laundering are: the AMLO, the DTRPO, the OSCO and the UNATMO.
Incorrect
The four main pieces of legislation in Hong Kong which specifically address money laundering are: the AMLO, the DTRPO, the OSCO and the UNATMO.
Hint
Reference Chapter:1.8.4
-
Question 655 of 673
655. Question
1 pointsQID491:American Industrial and Commercial Securities is a licensed corporation. The licensed representative of the company, Mr. Ko, discovers that a client, Mr. Ip, frequently trades high volumes of unknown foreign securities. Mr. Ko suspects that Mr. Ip is engaging in terrorist and money laundering activities. How should Mr. Ko handle the situation?
I. Make a report to the Joint Financial Intelligence Unit personally.
II. He should hold urgent discussions with senior management
and carry out appropriate inquiries and reviews of the client’s
information they have in hand.
III. Personally conduct an investigation on Mr. Ko, including hiring an independent consultant to understand Mr. Ip’s financial sources and objectives.
IV. Refuse to accept business orders from Mr. Ip and freeze his account.Correct
The DTRPO establishes that it will be an offence to move money or property for a client that is suspected to be involved in criminal activities.
The DTRPO also requires any person who knows or suspects that any property relates to drug trafficking should, as soon as it is reasonable, report to an authorised officer, who may be a police officer, a customs and excise officer or the Joint Financial Intelligence Unit (“JFIU”), which has been set up and is operated by the Hong Kong Police Force and the Customs and
Excise Department.Incorrect
The DTRPO establishes that it will be an offence to move money or property for a client that is suspected to be involved in criminal activities.
The DTRPO also requires any person who knows or suspects that any property relates to drug trafficking should, as soon as it is reasonable, report to an authorised officer, who may be a police officer, a customs and excise officer or the Joint Financial Intelligence Unit (“JFIU”), which has been set up and is operated by the Hong Kong Police Force and the Customs and
Excise Department.Hint
Reference Chapter:1.8.40
-
Question 656 of 673
656. Question
1 pointsQID490:Mr. Wan is an employee at England Construction Securities. He discovers that a client, Miss Chan is suspected of engaging in money-laundering activities. How should Mr. Wan handle the matter?
I. Stop all account activities and report the matter to an authorised officer.
II. Inform the customer that she is being investigated.
III. If the client is charged with drug-trafficking, restraint and charging orders on the property of the customer can be issued.
IV. Continue with the disposition of assets according to the customer’s instructions without any doubts.Correct
The DTRPO requires any person who knows or suspects that any property relates to drug trafficking should, as soon as it is reasonable, report to an authorised officer, who may be a
police officer, a customs and excise officer or the Joint Financial Intelligence Unit (“JFIU”), which has been set up and is operated by the Hong Kong Police Force and the Customs and
Excise Department.
The DTRPO also provides for the issuing of restraint and charging orders on the property of a person charged with a drug trafficking offence. Licensed corporations and registered institutions may receive such orders and may be required to deliver documents or information under the order. Failure to do so will be an offence.Incorrect
The DTRPO requires any person who knows or suspects that any property relates to drug trafficking should, as soon as it is reasonable, report to an authorised officer, who may be a
police officer, a customs and excise officer or the Joint Financial Intelligence Unit (“JFIU”), which has been set up and is operated by the Hong Kong Police Force and the Customs and
Excise Department.
The DTRPO also provides for the issuing of restraint and charging orders on the property of a person charged with a drug trafficking offence. Licensed corporations and registered institutions may receive such orders and may be required to deliver documents or information under the order. Failure to do so will be an offence.Hint
Reference Chapter:1.8.40
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Question 657 of 673
657. Question
1 pointsQID489:Miss Miriam Yung is a licensed representative at New Land Securities and she discovered that there was an abnormal activity in her customer, Mr Tsang’s account. She suspects that her customer had used the account for drug-trafficking and other criminal activities. She immediately filled a report with the police. After that, she told her partner, Miss Yancy Ho, about the whole incident, including the progress of the investigation. Based on the above, has Miss Miriam Yung broken the law?
Correct
It is an offence, in certain circumstances, to disclose to another person that a disclosure has been made as above. This is presumably to cover the need for an investigation to be done in secret. A person making a disclosure to the authorities is excused from any resulting breach of any contract or professional obligation and will not be liable for any loss or damage arising from the disclosure.
Incorrect
It is an offence, in certain circumstances, to disclose to another person that a disclosure has been made as above. This is presumably to cover the need for an investigation to be done in secret. A person making a disclosure to the authorities is excused from any resulting breach of any contract or professional obligation and will not be liable for any loss or damage arising from the disclosure.
Hint
Reference Chapter:1.8.40
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Question 658 of 673
658. Question
1 pointsQID497:How should the situation be handled if a customer is suspected of money laundering?
Correct
Once a suspicion has arisen concerning a possible money laundering situation, the need for disclosure should be considered and may require urgent discussions with senior management,
appropriate questioning of the customer, and a review of all information already held about the customer. If suspicion remains and a decision is made to report the matter to the JFIU, it
should be done without delay, by telephone, if necessary.Incorrect
Once a suspicion has arisen concerning a possible money laundering situation, the need for disclosure should be considered and may require urgent discussions with senior management,
appropriate questioning of the customer, and a review of all information already held about the customer. If suspicion remains and a decision is made to report the matter to the JFIU, it
should be done without delay, by telephone, if necessary.Hint
Reference Chapter:1.8.40
-
Question 659 of 673
659. Question
1 pointsQID1358:The GAML suggests that all necessary records of transactions should be retained for at least
Correct
Customer documents and information should be kept throughout the business relationship and for a period of 5 years after the end of the business relationship.
Incorrect
Customer documents and information should be kept throughout the business relationship and for a period of 5 years after the end of the business relationship.
Hint
Reference Chapter:1.8.44
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Question 660 of 673
660. Question
1 pointsQID495:“Anti-Money Laundering and Counter-Terrorists Financing (Financial Institutions) Ordinance ” and “Anti-Money Laundering Ordinance” require customer documents and information to be kept throughout the business relationship and for which ONE of the following periods after the end of the business relationship?
Correct
Customer documents and information should be kept throughout the business relationship and for a period of five years after the end of the business relationship.
Incorrect
Customer documents and information should be kept throughout the business relationship and for a period of five years after the end of the business relationship.
Hint
Reference Chapter:1.8.44
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Question 661 of 673
661. Question
1 pointsQID2777:Which of the following is not a suspicious transaction of potential money laundering activity?
Correct
It may rather be market misconduct by selling bonds in large quantities with the intent to influence the bond price. It is also related to money laundering in a broad sense. However, the definition of money laundering in this exam is narrower and therefore makes this the best option.
Incorrect
It may rather be market misconduct by selling bonds in large quantities with the intent to influence the bond price. It is also related to money laundering in a broad sense. However, the definition of money laundering in this exam is narrower and therefore makes this the best option.
Hint
Reference Chapter:1.8.46
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Question 662 of 673
662. Question
1 pointsQID2609:As a relevant authority of the Anti-Money Laundering Ordinances, what’s the power of the Hong Kong Monetary Authority?
Correct
As relevant authorities, the Hong Kong Monetary Authority and the Securities and Futures Commission can investigate and prosecute financial institutions monitored by relevant authorities who violates the rules of the Anti-Money Laundering Ordinances.
Incorrect
As relevant authorities, the Hong Kong Monetary Authority and the Securities and Futures Commission can investigate and prosecute financial institutions monitored by relevant authorities who violates the rules of the Anti-Money Laundering Ordinances.
Hint
Reference Chapter:1.8.6
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Question 663 of 673
663. Question
1 pointsQID487:Which of the following are the consequences of violating customer due diligence and recording keeping requirements as imposed by the “Anti-Money Laundering Ordinance” (AMLO)?
I. Punishable by imprisonment.
II. Punishable by fine.
III. Being publicly criticised.
IV. Rendering a licensed corporation or registered institution to be subjected to regulatory discipline.Correct
A breach of the AMLO requirements is a criminal offence. Employees or managers of licensed corporations and registered institutions who knowingly cause or permit the
corporate entity to breach a specified provision of the AMLO are also committing a criminal offence. The maximum penalty is a fine of HK$1 million and imprisonment for two years. If
fraud (on any relevant authority or the licensed corporation or registered institution) is involved, there will be a maximum term of imprisonment of seven years and a fine of HK$1 million.
A breach of the AMLO requirements will also render a licensed corporation or registered institution subject to regulatory discipline.Incorrect
A breach of the AMLO requirements is a criminal offence. Employees or managers of licensed corporations and registered institutions who knowingly cause or permit the
corporate entity to breach a specified provision of the AMLO are also committing a criminal offence. The maximum penalty is a fine of HK$1 million and imprisonment for two years. If
fraud (on any relevant authority or the licensed corporation or registered institution) is involved, there will be a maximum term of imprisonment of seven years and a fine of HK$1 million.
A breach of the AMLO requirements will also render a licensed corporation or registered institution subject to regulatory discipline.Hint
Reference Chapter:1.8.8
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Question 664 of 673
664. Question
1 pointsQID2741:What kind of punishment is less likely to be imposed by the SFC for a licensed corporation or registered institution that violates the guidelines and standards?
Correct
Imprisonment can only be imposed by a court.
Incorrect
Imprisonment can only be imposed by a court.
Hint
Reference Chapter:1.9.
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Question 665 of 673
665. Question
1 pointsQID2794:The penalties that the SFC can impose do not include
Correct
Penalties that the SFC can impose include
I. Public or private reprimands.
II. Revocation or Suspension of Licence.
III. Prohibit the person from applying for a licence or registration.
IV. Require the person to pay HKD 10 million or 3 times any profit gained/loss avoidance. (whichever is greater)Incorrect
Penalties that the SFC can impose include
I. Public or private reprimands.
II. Revocation or Suspension of Licence.
III. Prohibit the person from applying for a licence or registration.
IV. Require the person to pay HKD 10 million or 3 times any profit gained/loss avoidance. (whichever is greater)Hint
Reference Chapter:1.9.2
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Question 666 of 673
666. Question
1 pointsQID81:What kind of sanctions can the SFC impose on individuals who violate or breach the code and guidelines of the SFC?
I. Reprimand
II. Imprisonment
III. Suspension of licence
IV. Revocation of licenceCorrect
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.
€ The SFC has the power to reprimand (privately or publicly), to fine and to suspend or revoke a licence or registration in relation to all or any part of the regulated activities specified on the licence or certificate of registration.Incorrect
The SFC may enquire into or investigate suspected breaches of the SFO and any subsidiary legislation, codes and guidelines:
(d) Codes and guidelines do not have the force of law and are not legally enforceable. However, the SFC is able to penalise licensed or registered persons breaching the codes and guidelines by applying the blanket principle that a breach of these may impugn the licensed or registered person’s fitness and properness to remain licensed or registered.
€ The SFC has the power to reprimand (privately or publicly), to fine and to suspend or revoke a licence or registration in relation to all or any part of the regulated activities specified on the licence or certificate of registration.Hint
Reference Chapter:1.9.2
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Question 667 of 673
667. Question
1 pointsQID1478:In imposing fines, conduct which is intentional or reckless, damages the integrity of the market, causes loss or imposes costs on others, or provides a benefit to the guilty intermediary or client or others, is considered
Correct
Certain types of conduct are considered to be more serious, including conduct:
(a) that is intentional or reckless;
(b) that damages the integrity of the market;
(c) that causes loss or imposes costs on others;
(d) which provides a benefit to the firm or individual engaged in that conduct, or other related personsIncorrect
Certain types of conduct are considered to be more serious, including conduct:
(a) that is intentional or reckless;
(b) that damages the integrity of the market;
(c) that causes loss or imposes costs on others;
(d) which provides a benefit to the firm or individual engaged in that conduct, or other related personsHint
Reference Chapter:1.9.3
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Question 668 of 673
668. Question
1 pointsQID1641:When considering the imposition of a punishment for the offenders of market misconduct, which of the following factors is considered more serious?
Correct
Certain types of conduct are considered to be more serious, including conduct:
(b) that damages the integrity of the marketIncorrect
Certain types of conduct are considered to be more serious, including conduct:
(b) that damages the integrity of the marketHint
Reference Chapter:1.9.3
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Question 669 of 673
669. Question
1 pointsQID1477:According to the Disciplinary Fining Guidelines, which ONE of the following matters has the Securities and Futures Commission (SFC) indicated as being more serious than the others in determining the scale of the fines that it imposes?
Correct
Certain types of conduct are considered to be more serious, including conduct:
© that causes loss or imposes costs on othersIncorrect
Certain types of conduct are considered to be more serious, including conduct:
© that causes loss or imposes costs on othersHint
Reference Chapter:1.9.4
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Question 670 of 673
670. Question
1 pointsQID210:The SFC can suspend or revoke a licence or registration with the exception of?
Correct
Sections 195 and 197, SFO define other circumstances where disciplinary action may be taken by the SFC, including suspension or revocation of a licence or registration in the event
of:
(c) mental incapacity of individuals or directors.
This case doesn’t apply to shareholders.Incorrect
Sections 195 and 197, SFO define other circumstances where disciplinary action may be taken by the SFC, including suspension or revocation of a licence or registration in the event
of:
(c) mental incapacity of individuals or directors.
This case doesn’t apply to shareholders.Hint
Reference Chapter:1.9.4
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Question 671 of 673
671. Question
1 pointsQID1476:Which of the following factors will not negatively impact the decision in imposing a fine?
Correct
Some of the specific factors that may be considered include whether:
(a) a breach of fiduciary duty was involved;
(b) the conduct shows serious or systematic weaknesses in the management or internal control systems of the firm;
(g) the firm or staff have a previous disciplinary recordIncorrect
Some of the specific factors that may be considered include whether:
(a) a breach of fiduciary duty was involved;
(b) the conduct shows serious or systematic weaknesses in the management or internal control systems of the firm;
(g) the firm or staff have a previous disciplinary recordHint
Reference Chapter:1.9.4
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Question 672 of 673
672. Question
1 pointsQID2449:Rich Securities, a licensed corporation, violates some chapters of the Code of Conduct, and they report to the SFC proactively. What will the SFC consider when determining the penalties?
I. Rich Securities proactively report and cooperate.
II. Whether Rich Securities benefits from the violation
III. The remedies of Rich Securities
IV. Past violations of Rich SecuritiesCorrect
When determining penalties, the SFC will consider:
I. whether it violates the fiduciary duties
II. whether there are some flaws in the system or structure
III. whether they benefit from the violation
IV. whether fines will affect the sustainability of the company’s business
V. whether they cooperate with the SFC and report proactively to them
VI. whether there are remedies
VII. whether there are records of disciplines in the past
VIII. whether there are other penalties or the third party is taking civil legal actionsIncorrect
When determining penalties, the SFC will consider:
I. whether it violates the fiduciary duties
II. whether there are some flaws in the system or structure
III. whether they benefit from the violation
IV. whether fines will affect the sustainability of the company’s business
V. whether they cooperate with the SFC and report proactively to them
VI. whether there are remedies
VII. whether there are records of disciplines in the past
VIII. whether there are other penalties or the third party is taking civil legal actionsHint
Reference Chapter:1.9.6
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Question 673 of 673
673. Question
1 pointsQID1479:Disciplinary actions, other than minor ones, will be communicated by the SFC through the following means?
I. To the financial secretary through a monthly report
II. Placed on a public register in accordance with the SFO
III. To the media
IV. Brought to court immediatelyCorrect
Disciplinary actions, other than minor ones such as private reprimands, will be communicated to the media and placed in a public register under the provisions of the SFO.
Incorrect
Disciplinary actions, other than minor ones such as private reprimands, will be communicated to the media and placed in a public register under the provisions of the SFO.
Hint
Reference Chapter:1.9.6
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