LE Paper 1 Trainer · Topics · Exam guide · Sample questions
Practice questions written by us, with the correct answer and the rule cited. They are not official questions.
1. In Hong Kong, which ONE of the following bodies is responsible for the supervision of insurers and insurance intermediaries?
Insurers and insurance intermediaries come under the Insurance Authority, an independent statutory body. The SFC's remit is the securities and futures industry, the HKMA is the banking supervisor and the MPFA oversees Mandatory Provident Fund schemes; none of these three is the insurance regulator.
2. At what percentage of the issued voting shares of a listed corporation does a person first have a notifiable interest under Part XV of the SFO, unless another percentage is prescribed?
Section 315(1)(a) of the SFO sets the notifiable percentage level at 5%, subject to any other percentage prescribed by regulations. The 1% figure is the specified percentage level for short positions under section 315(2)(a), while 10% and 30% are not the Part XV notifiable level.
3. Under Part 1 of Schedule 5 to the SFO, which Type of regulated activity is asset management?
Part 1 of Schedule 5 to the SFO lists asset management as Type 9 regulated activity. Type 4 is advising on securities, Type 6 is advising on corporate finance and Type 8 is securities margin financing.
4. Which of the following are among the nine General Principles of the Code of Conduct? I. Prompt execution II. Compliance III. Best execution IV. Client assets
General Principle 7 (compliance) and General Principle 8 (client assets) are among the nine General Principles of the Code of Conduct, so statements II and IV are correct. Prompt execution and best execution are specific requirements in paragraphs 3.1 and 3.2 of the Code, not General Principles, so statements I and III are wrong.
5. Under section 19 of the Personal Data (Privacy) Ordinance, within how many days after receiving a data access request must a data user comply with it?
Section 19(1) of the Personal Data (Privacy) Ordinance requires a data user to comply with a data access request within 40 days after receiving it. The 14-day figure is the period in section 35E for written confirmation of oral direct marketing consent, and 21 and 60 days do not appear in section 19.
6. Client K sells 1,000 shares through Harbourview Securities Limited on Monday 4 January 2027. Assume there is no public holiday or market disruption that week. When do the shares settle in CCASS on the standard cycle?
Settlement of on-exchange share trades in CCASS is on a T+2 basis (settlement cycle as at 1 January 2027), so a trade on Monday 4 January 2027 settles on Wednesday 6 January 2027. Tuesday would be T+1, which is not the cycle in force, and Thursday and Friday would be T+3 and T+4.
7. Under the Definitions in the Takeovers Code, “control” is deemed to mean a holding, or aggregate holdings, of what proportion of the voting rights of a company?
The Definitions state that “control shall be deemed to mean a holding, or aggregate holdings, of 30% or more of the voting rights of a company”, whether or not it gives de facto control. 50% is a common but wrong answer: it is only the upper limit of the Rule 26.1(c) creeper band, not the definition of control. 35% and 75% do not appear in the definition.
8. What is the minimum number of transactions required for stock market manipulation under section 278(1) of the SFO?
Section 278(1) of the SFO requires 2 or more transactions in securities of a corporation that increase, reduce or maintain the price, entered into with the intention of inducing another person to buy, sell or subscribe, or to refrain from doing so. One transaction is not enough, although false trading under section 274(3) can involve one or more transactions. Three and five are not the threshold.