Introduction
If you’re gearing up for HKSI exams, you’ll soon encounter questions that test not just memorization but your understanding of how Hong Kong’s financial regulators and markets work. In this post, we walk through five practice questions, unpack the reasoning behind the answers, and highlight the key takeaways you should carry into your study routine.
Q1. Which statements are correct?
- I. The licensing regime is jointly specified by the Monetary Authority (HKMA) and the SFC, but the HKMA is the frontline supervisor.
- II. The HKMA, when supervising licensees, adopts the SFC's capital adequacy requirements.
- III. Accountants engaging in Class 5 regulated activities do not need a licence.
- IV. Trust companies performing Class 4 regulated activities incidental to acting as trustees do not need a licence.
Answer: C (I & IV)
Explanation (from the provided answer key):
- II is false: the HKMA does not adopt the SFC’s capital adequacy standards.
- III is false: incidental activities stemming from professional status are not a licence exemption.
- Based on the above, I and IV are the statements that can be considered correct in this framework.
Key takeaways:
- The HKMA and SFC are distinct regulators with separate standards; capital adequacy is not simply borrowed from the SFC.
- Licensing requirements can depend on the nature of the activity and its relation to professional roles; do not assume exemptions without explicit regulatory basis.
Q2. Through which system are listed stocks traded in Hong Kong?
- A. Derivatives Clearing and Settlement System (DCASS)
- B. Central Clearing and Settlement System (CCASS)
- C. OTP-C
- D. HKATS (Electronic Trading System)
Answer: C (OTP-C)
Explanation: The stock exchange trading system referenced here is OTP-C.
Key takeaways:
- Different systems in HK target different parts of the market (trading vs. settlement). Remember the names and their primary roles, especially for exam questions that test system knowledge.
Q3. Which item is not among the Hong Kong Monetary Authority’s main functions?
- A. Maintaining monetary stability
- B. Acting as an intermediary among banks
- C. Supervising the conduct and operation of banks (and authorized institutions)
- D. Managing the Exchange Fund
Answer: B
Explanation: The HKMA acts as the central bank and lender of last resort, with core duties including monetary stability, monetary policy, and prudential supervision of banks. While it supports the banking system, its primary role is not to act as a market intermediary.
Key takeaways:
- The HKMA’s core functions revolve around monetary stability, monetary policy, and bank supervision; remember these core pillars for exam-style questions.
Q4. Which statement about futures is incorrect?
- A. Every trade contract has both a buyer and a seller.
- B. Each contract is backed by the clearing house as the counterparty.
- C. Only the buyer is required to post margin/c collateral.
- D. Margin requirements can change if prices move significantly.
Answer: C
Explanation: Futures trading requires margin/collateral from both sides; the statement that only the buyer posts margin is incorrect.
Key takeaways:
- Understand margin mechanics in futures: both parties post collateral, with potential variations based on risk moves and mark-to-market mechanisms.
Q5. A person nicknamed the “stock god” uses computer analysis of stock charts to predict trends. Which method is this most likely?
- A. Fundamental analysis
- B. Technical analysis
- C. Industry analysis
- D. Random analysis
Answer: B
Explanation: Technical analysis relies on charting and historical price data to forecast future price movements, aligning with the described approach.
Key takeaways:
- Distinguish between fundamental vs. technical analysis; charts and historical price patterns are core to technical analysis.
Closing thoughts
The HKSI exams test both regulatory knowledge and practical market concepts. A solid strategy is to map each question to the governing bodies (HKMA, SFC, etc.), the market infrastructure (trading vs. settlement systems), and the mechanics of instruments (like futures). With regular practice, you’ll be better prepared to identify the right choices even when questions blend regulatory nuance with market operations.
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