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HKSI Paper 3 (Regulation of Derivatives) English Free Trial
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HKSI Paper 3 English Free Preview
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- Question 1 of 10
1. Question
Market misconduct is defined as which of the following?
I. Insider dealing
II. Disclosure of information about daily transactions
III. Stock market manipulation
IV. False tradingCorrectMarket misconduct is defined as:
(a) insider dealing;
(b) false trading;
(c) price rigging;
(d) disclosure of information about prohibited transactions;
(e) disclosure of false or misleading information inducing transactions; or
(f) stock market manipulation.IncorrectMarket misconduct is defined as:
(a) insider dealing;
(b) false trading;
(c) price rigging;
(d) disclosure of information about prohibited transactions;
(e) disclosure of false or misleading information inducing transactions; or
(f) stock market manipulation. - Question 2 of 10
2. Question
An intermediary that enters into margined transactions such as an intermediary which deals in futures contracts, must also, in respect of each client on whose behalf it enters into such transactions, keep records showing which of the following?
I. details of margin calls made
II. the market value and margin value of each type of securities collateral deposited with it
III. the aggregate market value and the aggregate margin value of such securities collateral
IV. details of securities held by the intermediaryCorrectAn intermediary that enters into margined transactions such as an intermediary which deals in futures contracts, must also, in respect of each client on whose behalf it enters into such transactions, keep records showing:
(a) the market value and margin value of each type of securities collateral deposited with it;
(b) the aggregate market value and the aggregate margin value of such securities collateral; and
(c) details of margin calls made.IncorrectAn intermediary that enters into margined transactions such as an intermediary which deals in futures contracts, must also, in respect of each client on whose behalf it enters into such transactions, keep records showing:
(a) the market value and margin value of each type of securities collateral deposited with it;
(b) the aggregate market value and the aggregate margin value of such securities collateral; and
(c) details of margin calls made. - Question 3 of 10
3. Question
An applicant for HKFE participantship must ordinarily be a limited company incorporated in Hong Kong and must do the following except?
CorrectAn applicant for HKFE participantship must ordinarily be a limited company incorporated in Hong Kong and must:
(a) submit a properly completed application in writing to HKFE on the prescribed form, including an undertaking to be bound by HKFE Rules, with a certified copy of a board minutes authorising a director to sign the undertaking on behalf of the company;
(b) have fulfilled the Securities and Futures (Financial Resources) Rules (“FRR”) and other financial requirements of HKFE;
(c) pay HKFE all required fees in full;
(d) demonstrate that there are no reasons why it should not be licensed by or registered with the SFC to carry on Type 2 regulated activity;
(e) acquire an HKFE trading right; and
(f) have complied with any other conditions specified in the notice of approval.IncorrectAn applicant for HKFE participantship must ordinarily be a limited company incorporated in Hong Kong and must:
(a) submit a properly completed application in writing to HKFE on the prescribed form, including an undertaking to be bound by HKFE Rules, with a certified copy of a board minutes authorising a director to sign the undertaking on behalf of the company;
(b) have fulfilled the Securities and Futures (Financial Resources) Rules (“FRR”) and other financial requirements of HKFE;
(c) pay HKFE all required fees in full;
(d) demonstrate that there are no reasons why it should not be licensed by or registered with the SFC to carry on Type 2 regulated activity;
(e) acquire an HKFE trading right; and
(f) have complied with any other conditions specified in the notice of approval. - Question 4 of 10
4. Question
The procedures for operating discretionary accounts should include the following except?
CorrectThe procedures for operating discretionary accounts should include:
(a) executing a discretionary account agreement which includes the investment objectives and strategies of the client and the terms under which discretion will be exercised;
(b) regular reviews of the account’s performance by designated staff independent of those handling 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.IncorrectThe procedures for operating discretionary accounts should include:
(a) executing a discretionary account agreement which includes the investment objectives and strategies of the client and the terms under which discretion will be exercised;
(b) regular reviews of the account’s performance by designated staff independent of those handling 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. - Question 5 of 10
5. Question
The important regulators in Hong Kong include which of the following?
I. The SFC
II. The HKFE
III. The HKMA
IV. The Companies RegistryCorrectThe important regulators in Hong Kong are:
(a) the SFC;
(b) the HKMA; and
(c) the Companies Registry.IncorrectThe important regulators in Hong Kong are:
(a) the SFC;
(b) the HKMA; and
(c) the Companies Registry. - Question 6 of 10
6. Question
The requirements in relation to the receipt of money or cash rebates include the following except?
Correct2.20 The requirements in relation to the receipt of money or cash rebates are:
(a) the licensed or registered person must have described its practices in relation to rebates and the client consented in writing to the licensed or registered person receiving and retaining the rebates; this may be provided for in the client agreement or other investment management agreement;
(b) brokerage rates are not in excess of customary full-service rates; and
(c) the rebates and their approximate values are disclosed to the client; such information must be provided to the client at least twice annually, or in each contract note.Incorrect2.20 The requirements in relation to the receipt of money or cash rebates are:
(a) the licensed or registered person must have described its practices in relation to rebates and the client consented in writing to the licensed or registered person receiving and retaining the rebates; this may be provided for in the client agreement or other investment management agreement;
(b) brokerage rates are not in excess of customary full-service rates; and
(c) the rebates and their approximate values are disclosed to the client; such information must be provided to the client at least twice annually, or in each contract note. - Question 7 of 10
7. Question
Licensed representatives must report changes in which of the following information?
I. Their basic information, including names, identity card numbers and contact details
II. The status of any authorisation by a non-regulatory organisation in or outside Hong Kong
III. The status of their membership of a stock exchange or futures exchange in or outside Hong Kong
IV. The relevant information as specified in the Information RulesCorrectLicensed representatives must report changes in the following information:
(a) their basic information, including names, identity card numbers and contact details;
(b) the status of any authorisation by a regulatory organisation in or outside Hong Kong;
(c) the status of their membership of a stock exchange or futures exchange in or outside Hong Kong; and
(d) the relevant information as specified in the Information RulesIncorrectLicensed representatives must report changes in the following information:
(a) their basic information, including names, identity card numbers and contact details;
(b) the status of any authorisation by a regulatory organisation in or outside Hong Kong;
(c) the status of their membership of a stock exchange or futures exchange in or outside Hong Kong; and
(d) the relevant information as specified in the Information Rules - Question 8 of 10
8. Question
The requirement for a licence or registration for Type 5 regulated activity applies to corporations which carry on a business of advising on futures contracts and applies to all staff members who perform regulated functions for the licensed corporation with the exception of?
I. Managers
II. Accountants
III. Clerks
IV. CashiersCorrectThe requirement for a licence or registration for Type 5 regulated activity applies to corporations which carry on a business of advising on futures contracts. The requirement applies to all staff members who perform regulated functions for the licensed corporation, with the exception of accountants, clerks or cashiers.
IncorrectThe requirement for a licence or registration for Type 5 regulated activity applies to corporations which carry on a business of advising on futures contracts. The requirement applies to all staff members who perform regulated functions for the licensed corporation, with the exception of accountants, clerks or cashiers.
- Question 9 of 10
9. Question
Where the assessment is made in respect of an AFI, it will relate to the following except?
CorrectWhere the assessment is made in respect of an AFI, it will relate to:
(a) any director;
(b) the chief executive;
(c) managers (as defined in s. 2(1) of the Banking Ordinance); and
(d) executive officers of the AFI.IncorrectWhere the assessment is made in respect of an AFI, it will relate to:
(a) any director;
(b) the chief executive;
(c) managers (as defined in s. 2(1) of the Banking Ordinance); and
(d) executive officers of the AFI. - Question 10 of 10
10. Question
Which of the following is/are products that meet the definition of futures contracts?
I. Futures contracts
II. Option contracts
III. Forward contracts
IV. Contracts for differencesCorrectThe only products of significance for the present Topic are those that meet the definition of futures contracts, which include:
(a) contracts for differences (which meet either the futures contract or options on futures contract definitions);
(b) forward contracts (but only when they are traded on an exchange); and
(c) futures contracts and option contracts (where these are options on futures contracts and traded on an exchange).IncorrectThe only products of significance for the present Topic are those that meet the definition of futures contracts, which include:
(a) contracts for differences (which meet either the futures contract or options on futures contract definitions);
(b) forward contracts (but only when they are traded on an exchange); and
(c) futures contracts and option contracts (where these are options on futures contracts and traded on an exchange).
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