100+ Free HKSI LE Paper 3 Practice Questions
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Key Facts: HKSI LE Paper 3 Exam
40 questions
Paper 3 has 40 equally weighted multiple-choice questions
HKSI Institute - LE Examination Handbook
60 minutes
Time allowed to complete all 40 questions on Paper 3
HKSI Institute - LE Examination Handbook
70% pass mark
Required score to pass any HKSI Licensing Examination paper
HKSI Institute - LE Examination Handbook
HKD1,750
Examination fee for Paper 3 per attempt
HKSI Institute - LE Examination Handbook
Type 2 and Type 5
Regulated activities for which Paper 3 is the regulatory paper
HKSI Institute - LE Paper 3 syllabus
8 topics
Number of syllabus topics covered by Paper 3
HKSI Institute - LE Paper 3 syllabus
2 October 2024
Date from which Paper 3 questions are based on the current eStudy Guide
HKSI Institute - LE Paper 3 eStudy Guide
100
Free original practice questions in this bank
OpenExamPrep
HKSI Licensing Examination Paper 3 - Regulation of Derivatives is the regulatory paper for the SFC Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts) regulated activities, administered by the HKSI Institute. It is a computer-based examination of 40 multiple-choice questions in 60 minutes, with a 70% pass mark and no negative marking; the fee is HKD1,750 per attempt. The syllabus has eight topics: regulatory framework, licensing and registration, client securities and money, conduct of business, record keeping and reporting, futures trading and settlement, OTC derivatives, and an overview of overseas futures markets. Examination questions have been based on the LE Paper 3 eStudy Guide since 2 October 2024. This 100-question bank provides original multiple-choice practice modelled on those eight topics.
Sample HKSI LE Paper 3 Practice Questions
Try these sample questions to test your HKSI LE Paper 3 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 is 'dealing in futures contracts'?
2Which statutory body is the principal regulator of the securities and futures markets in Hong Kong?
3A futures contract is best described as an agreement to:
4Which two entities are the principal wholly owned subsidiaries of HKEX responsible for the futures market in Hong Kong?
5Which ONE of the following is NOT among the regulatory objectives of the SFC under the SFO?
6Where in the SFO are the types of regulated activity defined?
7Which regulator supervises a bank (an authorized institution) that conducts Type 2 regulated activity as a registered institution?
8Which ONE of the following best distinguishes an exchange-traded futures contract from an over-the-counter (OTC) forward?
9The SFC's power to make rules, codes and guidelines under the SFO is intended primarily to:
10A 'leveraged foreign exchange trading' business is which type of regulated activity?
About the HKSI LE Paper 3 Exam
HKSI Licensing Examination (LE) Paper 3 - Regulation of Derivatives is a regulatory paper of the Licensing Examination for Securities and Futures Intermediaries, administered by the Hong Kong Securities and Investment Institute (HKSI Institute) and recognised by the Securities and Futures Commission (SFC). It is the local regulatory framework paper required for the SFC Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts) regulated activities. The paper tests the Securities and Futures Ordinance (SFO) framework for derivatives, licensing and registration of corporations and representatives, the treatment of client securities and money, the Code of Conduct and other conduct-of-business requirements, record keeping, contracts limits and position reporting, HKFE participantship, clearing and margin and settlement, and the reporting, clearing, conduct and margin obligations for OTC derivative transactions. It also covers an overview of major overseas futures exchanges and clearing houses. The combination most commonly used to complete the HKSI Institute Practising Certificate - Derivatives is LE Papers 1, 7 and 9, while Paper 3 satisfies the regulatory competence requirement for futures-related regulated activities.
Assessment
40 multiple-choice questions, all carrying equal marks, drawn from eight syllabus topics: regulatory framework; licensing and registration; client securities and money; conduct of business; record keeping, contracts limits and reporting; futures trading and settlement; OTC derivatives trading, reporting and clearing; and an overview of major overseas futures exchanges and clearing houses.
Time Limit
60 minutes to answer all 40 questions. Some questions require selecting a combination of correct statements, which makes elimination strategies less effective.
Passing Score
70%. Results are pass or fail only, with no grades assigned and no negative marking.
Exam Fee
HKD1,750 per attempt, payable to the HKSI Institute on enrolment. (Hong Kong Securities and Investment Institute (HKSI Institute))
HKSI LE Paper 3 Exam Content Outline
Regulatory framework
Definition of derivatives and futures contracts, the Securities and Futures Ordinance (SFO) and subsidiary legislation, the statutory objectives and powers of the Securities and Futures Commission (SFC), the role of Hong Kong Exchanges and Clearing Limited (HKEX) and its subsidiaries HKFE and HKCC, and other relevant regulators.
Licensing and registration
Licensing and registration requirements under the SFO, the ten types of regulated activity with focus on Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts), fit and proper criteria, licensing of corporations and representatives, responsible officers, executive directors, temporary licences and activity reports.
Client securities and money
General requirements and the Securities and Futures (Client Securities) Rules and (Client Money) Rules: segregation of client assets in trust or segregated accounts, permitted uses, standing authorities, treatment of margin and the consequences of breaches.
Conduct of business
The Code of Conduct for Persons Licensed by or Registered with the SFC, market integrity, know-your-client and suitability obligations, risk disclosure for derivatives, senior management responsibility, the Management Supervision and Internal Control Guidelines, anti-money laundering, unsolicited calls, market misconduct and enforcement actions.
Record keeping, contracts limits and reporting
Records to be kept by intermediaries under the Keeping of Records Rules, contract notes, statements of account and receipts, and the Securities and Futures (Contracts Limits and Reportable Positions) Rules governing prescribed limits and large open position reporting.
Futures trading and settlement
Hong Kong Futures Exchange (HKFE) participantship categories and continuing obligations, the central counterparty role of the HKFE Clearing Corporation (HKCC), margin and the daily mark-to-market and variation margin process, and the settlement of exchange-traded futures and options.
OTC derivatives trading, reporting and clearing
Reporting and record-keeping obligations and the mandatory reporting regime to the HKMA trade repository, mandatory clearing of standardised OTC derivative transactions through designated central counterparties, conduct requirements, and margin requirements for non-centrally cleared OTC derivatives.
Overview of major overseas futures exchanges
Major international futures exchanges and their products, international futures clearing houses, principal differences in overseas regulatory systems, and the practical considerations of dealing in international futures markets for Hong Kong intermediaries.
How to Pass the HKSI LE Paper 3 Exam
What You Need to Know
- Passing score: 70%. Results are pass or fail only, with no grades assigned and no negative marking.
- Assessment: 40 multiple-choice questions, all carrying equal marks, drawn from eight syllabus topics: regulatory framework; licensing and registration; client securities and money; conduct of business; record keeping, contracts limits and reporting; futures trading and settlement; OTC derivatives trading, reporting and clearing; and an overview of major overseas futures exchanges and clearing houses.
- Time limit: 60 minutes to answer all 40 questions. Some questions require selecting a combination of correct statements, which makes elimination strategies less effective.
- Exam fee: HKD1,750 per attempt, payable to the HKSI Institute on enrolment.
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 3 Study Tips from Top Performers
Frequently Asked Questions
Which SFC licence does HKSI Paper 3 cover?
Paper 3 - Regulation of Derivatives is the local regulatory framework paper required for the SFC Type 2 (dealing in futures contracts) and Type 5 (advising on futures contracts) regulated activities. It is paired with practical Paper 9 for Type 2 work.
How many questions are on HKSI Paper 3 and how long is the exam?
Paper 3 has 40 multiple-choice questions and you have 60 minutes to complete it. All questions carry equal marks and there is no negative marking.
What is the pass mark for HKSI Paper 3?
The pass mark is 70%. Results are reported strictly as pass or fail, with no grades assigned. You would need at least 28 of 40 questions correct.
How much does HKSI Paper 3 cost?
The examination fee is HKD1,750 per attempt, payable to the HKSI Institute when you enrol through the Online Portal. Study guides and manuals are purchased separately.
What topics does HKSI Paper 3 cover?
The eight-topic syllabus covers the regulatory framework, licensing and registration, client securities and money, conduct of business, record keeping and reporting, futures trading and settlement, OTC derivatives, and an overview of overseas futures exchanges.
Is HKSI Paper 3 a multiple-choice exam?
Yes. Paper 3 is a computer-based, multiple-choice examination offered in English and Traditional Chinese. Some questions ask you to choose the correct combination of statements, such as 'I and III only'.