Paper 4 Exam Study Guide (2026)
Everything the HKSI LE Paper 4: Regulation of Credit Rating Services tests, topic by topic: what each section covers, the facts that come up most, and how to study it. Pair it with the free 15-question practice test.
The exam at a glance
| Questions | 40 multiple-choice questions |
|---|---|
| Time | 60 minutes |
| Passing score | 70% |
| Format | Closed book, computer-based |
| Certifying body | Hong Kong Securities and Investment Institute (HKSI Institute) |
| Test provider | HKSI Institute computer-based test centre in Hong Kong, or Prometric centres outside Hong Kong |
Mind map: the whole exam on one screen
Read the complete Paper 4 study notes for “Regulatory Framework and Licensing”
Our first full set of comprehensive notes, about 10 minutes of reading: What credit rating services are · The regulatory framework and the SFC · Who does what · Personal data · Anti-money laundering and counter-financing of terrorism · Discipline and governance, a worked exam example, the traps examiners use and a one-minute recap. Create a free account to read it and see how premium notes work before you decide.
1. Regulatory Framework and Licensing
The SFO framework for licensing Type 10 credit rating services, the SFC's role, and the codes and ordinances that surround a licensed CRA.
Key facts
- Type 10 regulated activity under Schedule 5 to the SFO is providing credit rating services: preparing credit ratings for dissemination to the public or distribution by subscription.
- A rating prepared privately for one client's own internal use, and not disseminated or distributed by subscription, falls outside Type 10.
- The SFC licenses and supervises CRAs; the CRA Code is based on the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies.
- Licensed corporations must also comply with the Code of Conduct, the Management, Supervision and Internal Control Guidelines (ICG), the PDPO and AML/CFT requirements under the AMLO.
- The SFC applies fit and proper criteria to directors, Responsible Officers and Representatives of licensed corporations.
- The SFC can fine, suspend or revoke licences, and its fining principles are set out in guidance under the SFO and AMLO.
Flashcards
Exam tip: Learn the definition of credit rating services and its exclusions cold; it is the most tested concept in Topic 1.
2. Operational Compliance
Ongoing notification, capital, record keeping and audit obligations of a licensed CRA.
Key facts
- Licensed corporations must notify the SFC of prescribed events and changes, such as business address changes and changes in particulars of officers.
- Capital requirements come from the Securities and Futures (Financial Resources) Rules.
- Records must be kept under the Securities and Futures (Keeping of Records) Rules, generally for at least 7 years.
- Audited accounts and the auditor's report must reach the SFC within 4 months after the financial year end (Accounts and Audit Rules).
- Auditors must be qualified and independent, and the SFC may require additional audits.
- The SFC can appoint an auditor to investigate a licensed corporation's financial affairs.
Flashcards
Exam tip: The 7-year record keeping rule and the 4-month deadline for audited accounts are the two numbers most likely to appear.
3. CRA Code of Conduct
The SFC Code of Conduct for Persons Providing Credit Rating Services: quality, independence, responsibility and transparency.
Key facts
- The CRA Code applies to all licensed corporations carrying on Type 10 activity and is based on the IOSCO Code.
- Each CRA must adopt, publish and adhere to its own code of conduct showing how it implements the CRA Code.
- Rating methodologies must be rigorous, systematic, documented and publicly disclosed.
- Ratings must be monitored on an ongoing basis after publication, and updated as circumstances change.
- Conflicts of interest must be identified and managed, including those arising from the fee model, related parties and structured finance products.
- CRAs have responsibilities to both the investing public and rated entities, including disclosure of ratings and of the limitations of ratings.
Flashcards
Exam tip: Map every question to one of the four IOSCO pillars: quality of process, independence, responsibilities to users, and disclosure and transparency.
Test yourself on these topics
Take the free 15-question Paper 4 test, then save your results to unlock your Readiness Score and the mistakes bank.
4. Market Misconduct
Market misconduct under the SFO, the Market Misconduct Tribunal and criminal prosecution.
Key facts
- Part XIII of the SFO covers civil market misconduct proceedings before the Market Misconduct Tribunal; Part XIV covers criminal prosecution in court.
- Market misconduct includes insider dealing, false trading, price rigging, disclosure of false or misleading information, disclosure of information about prohibited dealings, and stock market manipulation.
Flashcards
Exam tip: Always ask whether the question describes a Part XIII (MMT, civil) or Part XIV (court, criminal) route; the sanctions differ.
How to pass
- 40 questions in 60 minutes is 90 seconds each, which is comfortable if you know the material.
- You need 70% to pass: 28 out of 40, so you can only afford to miss 12.
- The CRA Code follows the IOSCO Code of Conduct Fundamentals: know its main themes, namely quality and integrity of the rating process, independence and conflicts of interest, and responsibilities to the investing public and issuers.
- For misconduct, keep Part XIII (Market Misconduct Tribunal, civil) and Part XIV (criminal prosecution) of the SFO straight: same conduct, different tribunals and different consequences.
Frequently asked questions
How long should I study for the Paper 4 exam?
Most working candidates need 4 to 8 weeks at 45 to 60 minutes a day. Book your exam once your Readiness Score has stayed at 80 or higher for about a week.
Can I take the Paper 4 exam online?
Yes. Paper 4 can be taken at the HKSI Institute's computer-based test centre in Hong Kong or, for candidates outside Hong Kong, at a Prometric centre (higher fee). Format: closed book, computer-based. Check the HKSI Institute's current candidate information for the rules.
What score do I need to pass the Paper 4 exam?
70%. The exam has 40 multiple-choice questions and a time limit of 60 minutes.
What are the most tested topics?
The outline covers regulatory framework and licensing, operational compliance, cra code of conduct, market misconduct. Use the free practice test to see which ones you need most.
The premium Paper 4 study path
Premium Paper 4 prep is studied one topic at a time. Each step starts with that topic's key notes and flashcard deck, then its own question sets of 25, so you master one topic before you move to the next. When every topic is strong, the 6 full mock exams show you're ready.
Your step-by-step study path
- 1Regulatory Framework and Licensing15 key notes, 200 flashcards, then 750 practice questions in 30 sets of 25Notes free with an account
- 2Operational Compliance15 key notes, 200 flashcards, then 750 practice questions in 30 sets of 25Premium
- 3CRA Code of Conduct15 key notes, 200 flashcards, then 750 practice questions in 30 sets of 25Premium
- 4Market Misconduct15 key notes, 200 flashcards, then 750 practice questions in 30 sets of 25Premium
- Final step: 6 full mock exams50 questions each, timed like test day. Pass them, then book your exam.Premium
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Summarized from the HKSI Institute's official candidate information and the rules cited, checked October 2026. Confirm current requirements with Hong Kong Securities and Investment Institute (HKSI Institute).