The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the legal framework for regulating various market activities, including leveraged foreign exchange trading. Section 114 outlines the circumstances under which a person is considered to be carrying on a regulated activity. Specifically, it addresses situations where a person actively solicits another to enter into an agreement to deal in securities or leveraged foreign exchange contracts. This provision is crucial for ensuring that individuals and firms engaging in such activities are properly licensed and regulated, thereby protecting investors and maintaining market integrity. The SFO aims to prevent unauthorized or unqualified individuals from providing financial services, which could potentially lead to investor losses or market manipulation. Understanding the scope and application of Section 114 is essential for anyone involved in leveraged foreign exchange trading in Hong Kong, as it defines the boundaries of regulated conduct and the obligations of market participants. Failing to comply with these provisions can result in significant penalties and legal repercussions, as enforced by the Securities and Futures Commission (SFC).

The Securities and Futures Ordinance (SFO) is indeed the primary legislation governing the securities and futures markets in Hong Kong, including leveraged foreign exchange trading. Therefore, statement I is correct. The Securities and Futures Appeals Tribunal (SFAT) provides a venue for appealing certain decisions made by the SFC and other specified bodies, making statement II correct. The Hong Kong Monetary Authority (HKMA) primarily regulates banking institutions, and while it has a role in overseeing registered institutions that may also engage in leveraged foreign exchange trading, its primary focus isn’t direct regulation of leveraged foreign exchange trading firms. Thus, statement III is incorrect. The Market Misconduct Tribunal (MMT) deals with instances of market misconduct as defined under the SFO, which can include activities related to leveraged foreign exchange trading if they involve market manipulation or other prohibited conduct. Hence, statement IV is correct. Therefore, the correct combination is I, II & IV only.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the legal framework for regulating various aspects of the industry, including licensing, market conduct, and investor protection. Section 114 outlines the circumstances under which a person is considered to be carrying on a business in regulated activities. The SFO empowers the Securities and Futures Commission (SFC) to oversee and enforce these regulations. Understanding the scope of Section 114 is crucial for determining whether an entity requires licensing to engage in leveraged foreign exchange trading activities in Hong Kong. This section is fundamental to ensuring compliance and maintaining the integrity of the financial markets. It is important to note that the SFO and its subsidiary legislation are constantly reviewed and updated to address emerging market trends and challenges. Therefore, practitioners must stay informed of the latest amendments and interpretations to ensure ongoing compliance.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the legal framework for regulating various market activities, including leveraged foreign exchange trading. Section 114 outlines the circumstances under which a person is considered to be carrying on a regulated activity. This section is crucial for determining whether an entity requires licensing from the Securities and Futures Commission (SFC) to engage in leveraged foreign exchange trading. Understanding the scope of Section 114 is essential for ensuring compliance with the SFO and avoiding potential legal repercussions. It defines the boundaries of regulated activities, thereby protecting investors and maintaining market integrity. The SFO empowers the SFC to oversee and enforce these regulations, contributing to the stability and transparency of the financial markets. Therefore, correctly interpreting Section 114 is fundamental for anyone involved in leveraged foreign exchange trading in Hong Kong.

The Securities and Futures Ordinance (SFO) empowers the Securities and Futures Commission (SFC) to establish and enforce regulatory standards for leveraged foreign exchange (LFX) trading. A crucial aspect of this regulatory framework is the licensing regime for intermediaries. The SFO mandates that individuals and corporations engaging in regulated activities, including LFX trading, must obtain the appropriate license from the SFC. This licensing process ensures that only those who meet the stringent ‘fit and proper’ criteria, possess the necessary competence, and maintain adequate financial resources are permitted to operate in the market. The licensing requirement is not merely a formality; it is a cornerstone of investor protection and market integrity. By requiring intermediaries to be licensed, the SFC can effectively monitor their activities, enforce compliance with regulatory requirements, and take disciplinary action against those who violate the rules. This helps to maintain a fair, transparent, and orderly LFX market, fostering investor confidence and promoting the long-term health of the industry. The SFO’s licensing provisions are designed to prevent unqualified or unscrupulous individuals from entering the market and to ensure that those who do operate in the market adhere to the highest standards of conduct and professionalism. This is essential for protecting investors from potential losses and for maintaining the integrity of the financial system.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed provides the overarching legal structure within which leveraged foreign exchange trading is regulated. Statement II is also correct as Cap 571E specifically outlines exemptions related to leveraged foreign exchange trading, defining circumstances under which certain activities may be exempt from specific regulatory requirements. Statement III is incorrect because while the Securities and Futures (Client Securities) Rules and the Securities and Futures (Client Money) Rules (Cap 571H and 571I respectively) are crucial for safeguarding client assets, they are not specific to leveraged foreign exchange trading but apply more broadly to securities and futures activities. Statement IV is incorrect because the Leveraged Foreign Exchange Trading Arbitration Panel, while relevant, is not the primary body for licensing intermediaries; the Securities and Futures Commission (SFC) holds that responsibility. Therefore, only statements I and II accurately reflect the regulatory framework pertaining to leveraged foreign exchange trading in Hong Kong.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed provides the overarching legal structure for regulating leveraged foreign exchange trading activities, defining what constitutes such trading and setting the stage for more specific regulations. Statement II is also correct. Subsidiary legislation, such as the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F), supplements the SFO by providing detailed rules and procedures for specific aspects of leveraged foreign exchange trading, including dispute resolution mechanisms like arbitration. Statement III is incorrect because while the HKMA regulates financial institutions, its direct regulatory oversight of leveraged foreign exchange trading firms is less comprehensive than that of the SFC. The SFC is the primary regulator for these firms. Statement IV is incorrect as the SFO does not explicitly exempt all transactions between sophisticated parties from regulatory oversight. Certain exemptions exist under specific conditions, but a blanket exemption isn’t provided solely based on the parties’ sophistication. Therefore, only statements I and II are correct.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the legal framework for regulating various aspects of the industry, including leveraged foreign exchange trading. Statement I is accurate because the SFO indeed provides the foundation for regulating leveraged foreign exchange trading activities, defining what constitutes such trading and setting the stage for more specific regulations. Statement II is also correct. The Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) specifically outline the procedures for resolving disputes related to leveraged foreign exchange trading through arbitration, offering an alternative to traditional litigation. Statement III is incorrect as the Securities and Futures (Client Securities) Rules (Cap 571H) primarily deal with the handling of client securities, not client money specifically related to leveraged foreign exchange trading. While client money is a related concern, these rules have a broader application. Statement IV is incorrect. The Securities and Futures (Unsolicited Calls — Exclusion) Rules (Cap 571A) aim to protect investors from unwanted marketing calls related to investments, but they do not specifically target leveraged foreign exchange trading. Therefore, only statements I and II are correct.

The Securities and Futures Ordinance (SFO) empowers the Securities and Futures Commission (SFC) to establish and enforce rules regarding financial resources for licensed corporations. These rules, detailed in the Securities and Futures (Financial Resources) Rules (Cap 571N), are crucial for maintaining the financial stability of intermediaries and protecting client interests. The liquid capital requirement, a key component of these rules, ensures that licensed corporations possess sufficient liquid assets to meet their immediate obligations. This requirement is calculated based on a firm’s liabilities and risk exposures, reflecting the scale and complexity of its operations. Regular monitoring and reporting of liquid capital are mandatory, allowing the SFC to promptly identify and address any potential financial vulnerabilities. Failure to comply with these rules can result in disciplinary actions, including fines, suspension, or revocation of licenses, underscoring the importance of adherence to these regulatory standards. The paid-up share capital requirement is a separate but related requirement that focuses on the minimum equity a corporation must maintain, while notification requirements pertain to informing the SFC of any breaches or significant changes in financial resources.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is accurate because the SFO indeed provides the overarching legal structure for regulating leveraged foreign exchange trading activities.

Statement II is also correct. The Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) specifically outline the procedures for arbitration in disputes related to leveraged foreign exchange trading. These rules facilitate an alternative dispute resolution mechanism outside of the courts.

Statement III is incorrect. While the HKMA regulates financial institutions, its direct regulatory role in leveraged foreign exchange trading is less prominent than that of the SFC, which is the primary regulator for securities and futures activities.

Statement IV is also correct. The Securities and Futures (Financial Resources) Rules (Cap 571N) set out the financial requirements that licensed corporations engaging in leveraged foreign exchange trading must meet. These rules ensure that firms have sufficient capital to meet their obligations and protect client assets. Therefore, statements I, II, and IV are correct.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is accurate because the SFO defines and regulates leveraged foreign exchange trading activities. Statement II is also correct as Cap 571E provides exemptions under specific conditions, such as transactions with recognized counterparties, to avoid unduly burdening legitimate business activities. Statement III is incorrect because while the SFC is responsible for licensing and regulating intermediaries, the HKMA oversees registered institutions, including banks, that may also engage in leveraged foreign exchange trading. The HKMA’s role is crucial in maintaining the stability of the financial system. Statement IV is incorrect because the Securities and Futures Appeals Tribunal handles appeals against certain decisions made by the SFC, the HKMA, or the Hong Kong Exchanges and Clearing Limited (HKEX), ensuring fairness and due process in regulatory actions. Therefore, the correct combination is I & II only.

The Securities and Futures Ordinance (SFO) empowers the Securities and Futures Commission (SFC) to establish and enforce rules regarding the financial resources of licensed corporations. These rules, detailed in the Securities and Futures (Financial Resources) Rules (Cap 571N), are crucial for maintaining the financial stability and integrity of the leveraged foreign exchange trading market. The liquid capital requirement is a key component, ensuring that firms possess sufficient readily available assets to meet their immediate obligations and withstand potential losses. This requirement is not a one-time assessment but an ongoing obligation, demanding continuous monitoring and reporting. Failing to meet the liquid capital requirement can lead to regulatory intervention, including restrictions on business operations or even suspension of licenses. The SFC’s oversight in this area aims to protect investors and prevent systemic risks within the financial system. Therefore, understanding and adhering to the liquid capital requirements is paramount for licensed corporations engaging in leveraged foreign exchange trading in Hong Kong.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the legal framework for regulating various aspects of these markets, including leveraged foreign exchange trading.

Statement I is correct because the SFO indeed defines and regulates leveraged foreign exchange trading, setting out the requirements for licensing and conduct of business in this area. This is a core function of the SFO in ensuring market integrity and investor protection.

Statement II is incorrect. While the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) provides a framework for arbitration, it does not mandate that all disputes must be resolved through arbitration. Parties can agree to other dispute resolution methods.

Statement III is correct. The SFO empowers the Securities and Futures Commission (SFC) to license and supervise intermediaries engaging in leveraged foreign exchange trading. This includes setting standards for financial resources, competence, and conduct of business.

Statement IV is incorrect. The Hong Kong Monetary Authority (HKMA) primarily regulates banking institutions. While the HKMA may have some oversight of registered institutions that also engage in leveraged foreign exchange trading, the primary regulator for leveraged foreign exchange trading firms that are not banking institutions is the SFC.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the legal framework for regulating various activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed defines the scope and activities regulated within the securities and futures industry, including leveraged foreign exchange trading. Statement II is also correct; the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) provide a framework for resolving disputes related to leveraged foreign exchange trading through arbitration, offering an alternative to court proceedings. Statement III is incorrect because the Securities and Futures (Client Securities) Rules and the Securities and Futures (Client Money) Rules (Cap 571H and Cap 571I respectively) are designed to protect client assets by setting out requirements for how licensed corporations should handle client securities and money, but they do not specifically address the segregation of duties within a firm. Statement IV is incorrect because the Securities and Futures (Financial Resources) Rules (Cap 571N) outline the financial requirements that licensed corporations must meet to ensure their solvency and ability to meet their obligations, but they do not directly dictate the composition of a firm’s board of directors. Therefore, only statements I and II are accurate regarding the SFO and its subsidiary legislation related to leveraged foreign exchange trading.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed defines and regulates leveraged foreign exchange trading activities, setting the legal parameters within which these activities must operate. Statement II is also correct. The Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) provide a framework for resolving disputes related to leveraged foreign exchange trading through arbitration, offering an alternative to court proceedings. Statement III is incorrect because the Securities and Futures (Client Securities) Rules (Cap 571H) and the Securities and Futures (Client Money) Rules (Cap 571I) are designed to protect client assets, ensuring that client securities and money are properly segregated and handled by licensed corporations, and are not specific to leveraged foreign exchange trading but apply broadly across securities and futures activities. Statement IV is incorrect because the Securities and Futures (Financial Resources) Rules (Cap 571N) sets out the minimum financial requirements, such as paid-up share capital and liquid capital, that licensed corporations must maintain to ensure their financial stability and ability to meet their obligations. These rules apply to all licensed corporations, not exclusively those engaged in leveraged foreign exchange trading. Therefore, only statements I and II are correct.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed defines and regulates leveraged foreign exchange trading, setting the legal foundation for its oversight. Statement II is also correct; the Securities and Futures Commission (SFC) is empowered by the SFO to license and supervise intermediaries engaged in leveraged foreign exchange trading, ensuring they meet certain standards of competence and financial soundness. Statement III is incorrect as the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) specifically provides a framework for resolving disputes related to leveraged foreign exchange trading through arbitration, and is not about unsolicited calls. Statement IV is correct; the Securities and Futures (Financial Resources) Rules (Cap 571N) sets out the minimum financial requirements, such as paid-up share capital and liquid capital, that licensed corporations engaging in leveraged foreign exchange trading must maintain to ensure their financial stability and ability to meet their obligations. Therefore, statements I, II, and IV are correct, making ‘I, II & IV only’ the correct combination.

The Securities and Futures Ordinance (SFO) empowers the Securities and Futures Commission (SFC) to establish and enforce rules regarding the financial resources of licensed corporations. These rules, detailed in the Securities and Futures (Financial Resources) Rules (Cap 571N), are crucial for maintaining the financial stability of intermediaries and protecting client interests. The liquid capital requirement is a key component, ensuring that firms possess sufficient liquid assets to meet their immediate obligations, even under adverse market conditions. This requirement is not a one-time assessment but an ongoing obligation, demanding continuous monitoring and reporting. Failure to meet the liquid capital requirement can lead to regulatory intervention, including restrictions on business operations or even suspension of licenses. The SFC’s oversight in this area aims to mitigate systemic risk and promote confidence in the financial markets. The specific calculation methods and reporting thresholds are detailed within Cap 571N, requiring licensed corporations to maintain meticulous records and adhere to strict valuation standards. This framework is directly relevant to the Leveraged Foreign Exchange Traders Responsible Officer Examination Paper 1, focusing on the regulatory framework and compliance obligations.

The Securities and Futures Ordinance (SFO) (CAP 571) provides the overarching legal framework for the regulation of securities and futures markets in Hong Kong. It defines the scope of regulated activities, including leveraged foreign exchange trading, and establishes the powers and functions of the Securities and Futures Commission (SFC). Understanding the SFO is crucial for anyone involved in leveraged foreign exchange trading, as it sets out the legal requirements and standards that must be adhered to. The SFO empowers the SFC to oversee market participants, enforce regulations, and protect investors. It also addresses various aspects of market misconduct and provides mechanisms for dispute resolution. Therefore, familiarity with the SFO is essential for ensuring compliance and maintaining the integrity of the leveraged foreign exchange market. The SFO is the primary legislation governing the securities and futures industry in Hong Kong, and it is regularly updated to reflect changes in the market and international regulatory standards. This makes it a fundamental piece of legislation for all licensed intermediaries and responsible officers.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is correct because the SFO defines the scope of regulated activities, including leveraged foreign exchange trading, and sets out the licensing requirements for intermediaries engaging in such activities. Statement II is also correct; the SFO empowers the Securities and Futures Commission (SFC) to oversee and regulate leveraged foreign exchange trading, ensuring market integrity and investor protection. The SFC’s regulatory objectives include maintaining fair, efficient, and transparent markets, reducing systemic risk, and protecting investors. Statement III is incorrect because while the HKMA plays a role in the broader financial system, the direct regulation and licensing of leveraged foreign exchange trading firms primarily falls under the purview of the SFC, not the HKMA. Statement IV is correct because the SFO and its subsidiary legislation, such as the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules, provide mechanisms for resolving disputes related to leveraged foreign exchange trading, including arbitration. Therefore, the correct combination is I, II & IV only.

The Securities and Futures Ordinance (SFO) empowers the Securities and Futures Commission (SFC) to establish and enforce rules regarding financial resources for licensed corporations. These rules, detailed in the Securities and Futures (Financial Resources) Rules (Cap 571N), are crucial for maintaining the financial stability of intermediaries and safeguarding client assets within the leveraged foreign exchange trading sector. The liquid capital requirement, a key component of these rules, ensures that licensed corporations possess sufficient liquid assets to meet their immediate obligations and withstand potential financial shocks. This requirement is not a fixed amount for all firms; instead, it is calculated based on a firm’s specific risk profile, business activities, and the volume of client assets under management. Regular monitoring and reporting of liquid capital are mandatory, enabling the SFC to promptly identify and address any potential breaches, thereby mitigating risks to the financial system and protecting investors. The SFC’s oversight in this area is vital for fostering confidence and integrity in the leveraged foreign exchange market. Failing to meet the liquid capital requirement can lead to regulatory actions, including suspension or revocation of licenses.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed provides the overarching legal structure within which leveraged foreign exchange trading is regulated. Statement II is also correct; the SFO defines and specifies which activities fall under the umbrella of regulated activities, including leveraged foreign exchange trading. Statement III is incorrect because while the HKMA plays a role in the broader financial system, the direct regulation and licensing of leveraged foreign exchange trading firms primarily falls under the purview of the SFC, not the HKMA. Statement IV is correct as the SFO empowers the SFC to create subsidiary legislation and guidelines that provide detailed rules and standards for licensed corporations engaging in leveraged foreign exchange trading, ensuring compliance and investor protection. Therefore, the correct combination is I, II & IV only.

The Securities and Futures Ordinance (SFO) is indeed the primary legislation governing the securities and futures markets in Hong Kong, including leveraged foreign exchange trading. Therefore, statement I is correct. The Securities and Futures Commission (SFC) is the main regulatory body responsible for supervising and regulating these markets, making statement II correct. The Hong Kong Monetary Authority (HKMA) also plays a role, particularly in relation to registered institutions involved in leveraged foreign exchange trading, so statement III is also correct. The SFO empowers the SFC to set licensing requirements and standards of conduct for intermediaries, which includes those engaged in leveraged foreign exchange trading, making statement IV correct. Therefore, all the statements are correct, reflecting the comprehensive regulatory framework in Hong Kong.

The Securities and Futures Ordinance (SFO) empowers the Securities and Futures Commission (SFC) to establish and enforce regulatory standards for various market participants, including those engaged in leveraged foreign exchange trading. A crucial aspect of this regulatory oversight is the licensing regime for intermediaries. The SFO mandates that individuals and corporations conducting regulated activities, such as leveraged foreign exchange trading, must obtain the appropriate license from the SFC. This licensing process ensures that only competent and financially sound entities are permitted to operate in the market, thereby protecting investors and maintaining market integrity. The SFC assesses applicants based on their fitness and properness, competence, and financial resources. Failure to comply with the licensing requirements can result in severe penalties, including fines, suspension, or revocation of licenses. The licensing regime is a cornerstone of the SFC’s regulatory framework, promoting transparency, accountability, and investor protection in the leveraged foreign exchange market. The SFO’s licensing requirements are detailed in Part V of the Ordinance, which outlines the conditions, procedures, and obligations associated with obtaining and maintaining a license to conduct regulated activities in Hong Kong.

The Securities and Futures Ordinance (SFO) empowers the Securities and Futures Commission (SFC) to regulate leveraged foreign exchange trading activities in Hong Kong. A crucial aspect of this regulation involves licensing intermediaries who engage in leveraged foreign exchange trading. The SFC assesses the ‘fitness and properness’ of these intermediaries, considering factors such as their financial soundness, competence, integrity, and reputation. This assessment ensures that only qualified and ethical individuals and corporations are permitted to conduct leveraged foreign exchange trading, protecting investors and maintaining market integrity. The ‘fit and proper’ criteria are ongoing requirements, meaning that licensed persons must continuously meet these standards to maintain their licenses. Failure to do so can result in disciplinary actions, including suspension or revocation of licenses. The SFC’s stringent licensing regime is a cornerstone of its regulatory framework for leveraged foreign exchange trading, aligning with its objectives of investor protection and market stability. The Securities and Futures (Licensing and Registration) (Information) Rules (Cap 571S) further detail the information required for licensing and registration, supporting the SFC’s assessment process.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed defines and regulates leveraged foreign exchange trading, setting out the legal parameters within which such activities must operate. Statement II is also correct. The Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) provide a framework for resolving disputes related to leveraged foreign exchange trading through arbitration, offering an alternative to court proceedings. Statement III is incorrect because the Securities and Futures (Client Securities) Rules (Cap 571H) and the Securities and Futures (Client Money) Rules (Cap 571I) are designed to protect client assets, but they are not specifically focused on unsolicited calls. The Securities and Futures (Unsolicited Calls — Exclusion) Rules (Cap 571A) addresses unsolicited calls. Statement IV is correct. The Securities and Futures (Financial Resources) Rules (Cap 571N) set out the minimum financial requirements that licensed corporations must maintain to ensure their financial stability and ability to meet their obligations. Therefore, statements I, II, and IV are correct, while statement III is incorrect.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the legal framework for regulating various activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed defines and regulates leveraged foreign exchange trading activities, ensuring that these activities are conducted within a regulated environment to protect investors and maintain market integrity. Statement II is also correct as the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) provides a framework for resolving disputes related to leveraged foreign exchange trading through arbitration, offering an alternative to court proceedings. Statement III is incorrect because the Securities and Futures (Client Securities) Rules (Cap 571H) and the Securities and Futures (Client Money) Rules (Cap 571I) are designed to safeguard client assets, including both securities and money, and are not specifically exclusive to leveraged foreign exchange trading but apply more broadly across regulated activities. Statement IV is incorrect because the Securities and Futures (Financial Resources) Rules (Cap 571N) sets out the minimum financial requirements for licensed corporations, including those engaged in leveraged foreign exchange trading, to ensure they have sufficient capital to meet their obligations and manage risks. Therefore, the correct combination is I & II only.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the legal framework for regulating various aspects of the industry, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed defines and regulates leveraged foreign exchange trading activities, setting out the requirements for licensing and conduct of business. Statement II is also correct; Cap 571A, the Securities and Futures (Unsolicited Calls — Exclusion) Rules, is a subsidiary legislation under the SFO, addressing unsolicited calls related to securities and futures, including leveraged foreign exchange trading. This rule aims to protect investors from aggressive marketing tactics. Statement III is incorrect because the Hong Kong Monetary Authority (HKMA) primarily regulates banking institutions and does not directly oversee the licensing of leveraged foreign exchange traders; this falls under the purview of the Securities and Futures Commission (SFC). Statement IV is incorrect as the Leveraged Foreign Exchange Trading Arbitration Panel is established under the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F), not the SFO itself, although it operates within the SFO’s regulatory framework. Therefore, only statements I and II are correct.

The Securities and Futures Ordinance (SFO) (CAP 571) forms the bedrock of the regulatory framework governing leveraged foreign exchange trading in Hong Kong. It establishes the legal basis for regulating various activities related to securities and futures, including leveraged foreign exchange trading. The SFO empowers the Securities and Futures Commission (SFC) to oversee and enforce regulations in this sector. The Securities and Futures (Leveraged Foreign Exchange Trading — Exemption) Rules (CAP 571E) provide exemptions under specific conditions, such as transactions with recognized counterparties. The Securities and Futures (Financial Resources) Rules (CAP 571N) set out the financial requirements that licensed corporations must meet to ensure their solvency and ability to meet their obligations to clients. The Securities and Futures (Client Money) Rules (CAP 571I) outline the requirements for handling client money, ensuring that client funds are segregated and protected. Therefore, statements I, II, III, and IV are all correct.

The Securities and Futures Ordinance (SFO) is the primary legislation governing the securities and futures markets in Hong Kong. It establishes the regulatory framework for various market activities, including leveraged foreign exchange trading. Statement I is correct because the SFO indeed provides the overarching legal structure within which leveraged foreign exchange trading is regulated. Statement II is also correct as the Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) specifically addresses the resolution of disputes arising from leveraged foreign exchange trading activities through arbitration. This subsidiary legislation provides a mechanism for resolving conflicts between licensed corporations and their clients. Statement III is incorrect because the Securities and Futures (Client Securities) Rules (Cap 571H) primarily deals with the handling of client securities, not client money in the context of leveraged foreign exchange trading. The rules concerning client money are addressed in the Securities and Futures (Client Money) Rules (Cap 571I). Statement IV is incorrect because the Securities and Futures (Financial Resources) Rules (Cap 571N) sets out the financial requirements for licensed corporations, including those engaged in leveraged foreign exchange trading, to ensure their financial stability and ability to meet their obligations. Therefore, the correct combination is I & II only.

The Securities and Futures Ordinance (SFO) empowers the Securities and Futures Commission (SFC) to oversee and regulate leveraged foreign exchange trading activities in Hong Kong. This includes licensing intermediaries, setting conduct standards, and enforcing regulations to protect investors and maintain market integrity. The SFC’s regulatory objectives encompass ensuring fair and transparent markets, reducing systemic risk, and promoting investor confidence. The SFO provides the legal framework for the SFC to carry out these functions effectively. The Securities and Futures (Leveraged Foreign Exchange Trading) (Arbitration) Rules (Cap 571F) specifically outlines the procedures for resolving disputes related to leveraged foreign exchange trading through arbitration, offering an alternative to traditional litigation. The Securities and Futures Appeals Tribunal provides a venue for appealing certain decisions made by the SFC. The HKMA plays a role in regulating registered institutions that may also engage in leveraged foreign exchange trading, coordinating with the SFC to ensure comprehensive oversight of the financial sector.