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100+ Free HKSI LE Paper 2 Practice Questions

Pass your HKSI Licensing Examination Paper 2 - Regulation of Securities exam on the first try — instant access, no signup required.

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2026 Statistics

Key Facts: HKSI LE Paper 2 Exam

40 questions

HKSI LE Paper 2 has 40 multiple-choice questions

HKSI Institute - Licensing Examination overview

60 minutes

Time allowed to complete Paper 2 - Regulation of Securities

HKSI Institute - Licensing Examination overview

70%

Pass mark required for each HKSI Licensing Examination paper

HKSI Institute - Licensing Examination overview

Type 1

Paper 2 is a competence paper for dealing in securities (Type 1 regulated activity)

Securities and Futures Commission - Licensing

HKD1,930

2026 examination fee at the Hong Kong examination centre

HKSI Institute - Examination fees

Monthly

The HKSI Institute offers Paper 2 on a monthly basis

HKSI Institute - Licensing Examination overview

Closed-book

Paper 2 is a closed-book, computer-based multiple-choice examination

HKSI Institute - LE Examination Handbook

100

Free original practice questions in this bank

OpenExamPrep

HKSI Licensing Examination Paper 2 - Regulation of Securities is a 40-question, 60-minute multiple-choice paper with a 70% pass mark, administered monthly by the Hong Kong Securities and Investment Institute (HKSI Institute). It is a recognised regulatory competence paper for SFC Type 1 regulated activity (dealing in securities) and is usually paired with Paper 1. It covers the Securities and Futures Ordinance, subsidiary legislation and client-asset protection, the SFC Code of Conduct, account opening and client agreements, securities dealing and margin financing, and market misconduct. The 2026 examination fee is HKD1,930 at the Hong Kong centre and HKD2,350 at global centres. This 100-question bank provides original practice modelled on the current syllabus.

Sample HKSI LE Paper 2 Practice Questions

Try these sample questions to test your HKSI LE Paper 2 exam readiness. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1Under the Securities and Futures Ordinance (SFO), which type of regulated activity does a person 'dealing in securities' carry on?
A.Type 1
B.Type 2
C.Type 4
D.Type 9
Explanation: Dealing in securities is Type 1 regulated activity under Schedule 5 to the SFO. Paper 2 - Regulation of Securities is one of the recognised competence papers for Type 1.
2Which body is the statutory regulator responsible for licensing securities intermediaries in Hong Kong?
A.The Hong Kong Monetary Authority
B.The Securities and Futures Commission (SFC)
C.The Stock Exchange of Hong Kong
D.The HKSI Institute
Explanation: The Securities and Futures Commission (SFC) is the statutory regulator that licenses corporations and individuals for regulated activities under the SFO. The HKSI Institute administers examinations but does not grant licences.
3A licensed corporation must appoint at least how many responsible officers for each regulated activity it conducts?
A.One
B.Two
C.Three
D.Four
Explanation: An SFC-licensed corporation must have at least two responsible officers for each regulated activity it is licensed for, and at least one of them must be an executive director who is available to supervise the business at all times.
4In deciding whether an applicant is 'fit and proper' to be licensed, the SFC will primarily consider which of the following?
A.The applicant's social media following
B.Financial status, qualifications, reputation and ability to carry on the activity competently
C.The size of the applicant's office premises
D.Whether the applicant has a university degree only
Explanation: Under section 129 of the SFO and the Fit and Proper Guidelines, the SFC considers financial status, education and other qualifications, reputation, character, reliability and the ability to carry on the regulated activity competently, honestly and fairly.
5Which of the following is an example of a licensing exclusion, where a person dealing in securities does NOT require a Type 1 licence?
A.A brokerage executing client orders for commission
B.An authorised financial institution registered with the SFC for the same activity
C.An individual giving stock tips for a fee to the public
D.A firm running a securities margin financing business
Explanation: Authorised financial institutions (banks) are registered institutions regulated by the HKMA and do not need a separate SFC licence to carry on the same regulated activities, although they are still subject to SFC conduct supervision. The other options describe activities requiring a Type 1 licence.
6Under the Securities and Futures (Financial Resources) Rules, a licensed corporation must at all times maintain at least its required level of which two financial measures?
A.Profit and turnover
B.Paid-up share capital and liquid capital
C.Market capitalisation and dividends
D.Goodwill and retained earnings
Explanation: The Financial Resources Rules require a licensed corporation to maintain at all times not less than the required minimum paid-up share capital and the required minimum liquid capital prescribed for its regulated activities.
7Under the Client Money Rules, client money received by a licensed corporation must generally be paid into a segregated account maintained with an authorised financial institution within what period?
A.The same business day or one business day after receipt
B.Seven business days after receipt
C.One calendar month after receipt
D.Whenever the firm chooses
Explanation: The Securities and Futures (Client Money) Rules require client money to be paid into a segregated account within one business day after receipt (or the same day), keeping it separate from the firm's own money.
8The Securities and Futures (Client Securities) Rules require client securities and securities collateral received in Hong Kong to be held in which type of account?
A.The firm's own house account
B.A segregated account designated as a trust or client account
C.A director's personal account
D.Any convenient account
Explanation: Under the Client Securities Rules, client securities and securities collateral must be deposited in safe custody in a segregated account established and maintained as a trust account or client account, separate from the firm's own assets.
9The Investor Compensation Fund in Hong Kong is designed primarily to do which of the following?
A.Guarantee investors a profit on their trades
B.Compensate investors for losses caused by adverse market movements
C.Compensate investors for losses arising from a default of a licensed intermediary or authorised institution in relation to exchange-traded products
D.Insure firms against operational errors
Explanation: The Investor Compensation Fund compensates investors, up to a prescribed limit, for monetary losses arising from a default (such as insolvency or misappropriation) of a licensed intermediary or authorised financial institution in relation to exchange-traded products.
10Under the SFC Code of Conduct, the 'know your client' (KYC) requirement obliges a licensed person to do which of the following before providing services?
A.Guarantee the client a minimum return
B.Take all reasonable steps to establish the client's identity, financial situation, investment experience and objectives
C.Only obtain the client's name and telephone number
D.Avoid asking about the client's risk tolerance
Explanation: The Code of Conduct requires a licensed person to take all reasonable steps to establish the true and full identity of each client, and the client's financial situation, investment experience and investment objectives, so that services and recommendations are appropriate.

About the HKSI LE Paper 2 Exam

The HKSI Licensing Examination Paper 2 - Regulation of Securities is one of the local regulatory papers in the HKSI Institute's Licensing Examination for Securities and Futures Intermediaries. It is a recognised competence paper for individuals seeking to be licensed or registered with the Securities and Futures Commission (SFC) for Type 1 regulated activity (dealing in securities), and is normally taken with Paper 1 - Fundamentals of Securities and Futures Regulation. The paper tests applied knowledge of the Securities and Futures Ordinance (SFO), its subsidiary legislation (including the Financial Resources Rules, Client Securities Rules and Client Money Rules), the SFC Code of Conduct, account opening and client agreements, suitability, securities margin financing, short selling, the operation of the Stock Exchange of Hong Kong, and market misconduct and offences. It is a closed-book, computer-based multiple-choice examination of 40 questions in 60 minutes with a 70% pass mark, offered monthly by the HKSI Institute.

Assessment

40 multiple-choice questions covering the regulatory framework for dealing in securities: the SFO, subsidiary legislation and client-asset rules, the SFC Code of Conduct, securities-dealing activities and market misconduct.

Time Limit

60 minutes.

Passing Score

70% (answer at least 70% of the 40 questions correctly).

Exam Fee

HKD1,930 at the Hong Kong examination centre and HKD2,350 at global examination centres (HKSI Institute fees current as at 2026). (Hong Kong Securities and Investment Institute (HKSI Institute))

HKSI LE Paper 2 Exam Content Outline

20%

Regulatory framework and SFC licensing for Type 1 activity

The Securities and Futures Ordinance (SFO) framework, the SFC's role, Type 1 regulated activity (dealing in securities), licensing of corporations and licensed representatives, responsible officers, fit-and-proper criteria, registered institutions and licensing exclusions.

20%

Subsidiary legislation and client asset protection

Financial Resources Rules, Client Securities and Securities Collateral Rules, Client Money Rules, contract notes and statements, the Keeping of Records Rules and the Investor Compensation Fund arrangements that protect client securities and money.

25%

Conduct, supervision and Code of Conduct requirements

The SFC Code of Conduct for Persons Licensed by or Registered with the SFC, know-your-client and account opening, client agreements and the suitability requirement, management and supervision responsibilities, internal controls, complaint handling, anti-money-laundering duties and continuous professional training.

20%

Dealing in securities and other securities activities

Dealing on the Stock Exchange of Hong Kong, exchange participants and trading mechanics, clearing and settlement through HKSCC, securities margin financing, short selling, approved introducing agents and the provision of securities advisory services.

15%

Market misconduct and offences

Insider dealing, false trading, price rigging, stock market manipulation, disclosure of false or misleading information inducing transactions, the Market Misconduct Tribunal, unsolicited calls and boiler-room operations.

How to Pass the HKSI LE Paper 2 Exam

What You Need to Know

  • Passing score: 70% (answer at least 70% of the 40 questions correctly).
  • Assessment: 40 multiple-choice questions covering the regulatory framework for dealing in securities: the SFO, subsidiary legislation and client-asset rules, the SFC Code of Conduct, securities-dealing activities and market misconduct.
  • Time limit: 60 minutes.
  • Exam fee: HKD1,930 at the Hong Kong examination centre and HKD2,350 at global examination centres (HKSI Institute fees current as at 2026).

Keys to Passing

  • Complete 500+ practice questions
  • Score 80%+ consistently before scheduling
  • Focus on highest-weighted sections
  • Use our AI tutor for tough concepts

HKSI LE Paper 2 Study Tips from Top Performers

1Learn the structure of the SFO first: the nine schedules of conduct under the Code of Conduct, the types of regulated activity, and where Type 1 (dealing in securities) fits, so individual rules have a framework to hang on.
2Memorise the client-asset rules precisely - the difference between the Client Securities Rules and the Client Money Rules, the one-business-day settlement of client money, and when securities may be deposited or pledged - because these are heavily tested.
3Practise applying the suitability requirement: know-your-client, reasonable basis for a recommendation, and the documentation that must support it, as exam questions are usually scenario-based.
4Distinguish the categories of market misconduct (insider dealing, false trading, price rigging, stock market manipulation, disclosure offences) and remember which are dealt with civilly by the Market Misconduct Tribunal and which can be criminal offences.
5Use the HKSI Institute LE Paper 2 eStudy Guide and the official syllabus as your spine, and check any rule against the current SFC Code of Conduct because thresholds and wording are updated over time.
6Because there is no negative marking and a 70% pass mark, answer every question and flag uncertain ones to revisit; eliminating clearly wrong options improves your odds on the rest.

Frequently Asked Questions

How many questions are on HKSI LE Paper 2 and how long is it?

Paper 2 - Regulation of Securities has 40 multiple-choice questions to be answered in 60 minutes. It is a closed-book, computer-based examination administered by the HKSI Institute.

What is the pass mark for HKSI Paper 2?

The pass mark is 70%, meaning a candidate must answer at least 28 of the 40 questions correctly. No marks are deducted for incorrect answers, so candidates should attempt every question.

Which SFC licence does Paper 2 relate to?

Paper 2 is a recognised regulatory competence paper for Type 1 regulated activity - dealing in securities - under the Securities and Futures Ordinance. It is usually taken together with Paper 1 to meet the SFC's competence requirements.

What topics does HKSI Paper 2 cover?

It covers the SFO and SFC licensing, subsidiary legislation and client-asset rules, the SFC Code of Conduct, account opening and client agreements, securities dealing and margin financing, short selling, and market misconduct and offences.

How much does HKSI LE Paper 2 cost?

As at 2026 the HKSI Institute examination fee is HKD1,930 at the Hong Kong examination centre and HKD2,350 at global examination centres. The Institute revises examination fees from time to time, so confirm the current fee when booking.

Are these official HKSI Institute questions?

No. These are original OpenExamPrep practice questions modelled on the current LE Paper 2 syllabus. The HKSI Institute publishes its own eStudy Guide and study materials separately.