Paper 18 Exam Study Guide (2026)
Everything the HKSI LE Paper 18: Regulation of Providing Depositary 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 18 study notes for “General Regulatory Framework”
Our first full set of comprehensive notes, about 10 minutes of reading: Who regulates what · What Type 13 covers · Licensing, competence and CPT · The Code of Conduct: client assets and conflicts · Open-ended fund companies · Personal data and AML/CFT, 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. General Regulatory Framework
The regulators, licensing rules and general SFC requirements that frame Type 13 depositary services.
Key facts
- Type 13 regulated activity is providing depositary services for relevant collective investment schemes (Schedule 5, SFO Cap. 571).
- Depositary services include safekeeping of scheme assets, monitoring cash flows, and checking that dealings in units and their valuation follow the scheme's constitutive documents.
- Key regulators: SFC (securities and futures), HKMA (banks and monetary stability), MPFA (MPF schemes), IA (insurers); overlapping mandates are handled through memoranda of understanding.
- SFC objectives under section 4 of the SFO include fair and orderly markets, investor protection, minimizing crime and misconduct, and reducing systemic risk.
- Type 13 Responsible Officers must pass LE Papers 1, 7, 18 and 19, and licensed individuals complete at least 10 CPT hours each calendar year.
- AML/CFT under the AMLO (Cap. 615): customer due diligence, a risk-based approach, suspicious transaction reports to the JFIU, 5-year records, and tipping off is an offence.
Flashcards
Exam tip: Match each regulator to its mandate (SFC, HKMA, MPFA, IA); the exam mixes them into a single question.
2. RA13 Conduct Requirements
The SFO subsidiary rules that govern depositaries day to day: notifications, capital, client assets, records and audit.
Key facts
- Ongoing notifications: prescribed changes such as Responsible Officers, addresses and firm particulars must be notified to the SFC under the Information Rules.
- Financial Resources Rules: depositaries must maintain required liquid capital and file financial returns with the SFC.
- Client Money Rules: client money goes into segregated client accounts with authorized institutions, never mixed with the firm's own funds.
- Client Securities Rules: client securities are held in segregated accounts and cannot be used without consent.
- Keeping Records Rules: records kept for at least 7 years; the Accounts and Audit Rules require annual audited accounts and auditor reports to the SFC on notifiable matters.
- The Code of Conduct sets extra requirements for Type 13 depositaries, including safeguarding scheme assets and overseeing delegates and third parties.
Flashcards
Exam tip: Learn the rule acronyms (FRR, CMR, CSR, KRR, AAR) and what each covers; the exam names them by title.
3. RA13 Product Regulations
The SFC product codes that apply to the funds a depositary serves: UT Code, REITs, OFCs, PRFs and OTC reporting.
Key facts
- CISs offered to the Hong Kong public must be authorized by the SFC under section 104 of the SFO; offering an unauthorized CIS is an offence.
- UT Code: authorized funds need an SFC-licensed management company (Type 9) and a trustee or custodian, and must follow diversification and borrowing limits.
- Code on REITs: SFC authorization and listing, borrowing capped at 50% of gross asset value, and at least 90% of after-tax income distributed.
- OFCs: corporate open-ended funds under Part IVA of the SFO and the OFC Rules, with a licensed manager and a custodian; the Code on OFCs sets ongoing requirements.
- Pooled retirement funds are authorized under the PRF Code.
- Specified OTC derivative transactions must be reported to the Hong Kong Trade Repository, subject to exemptions.
Flashcards
Exam tip: The REIT numbers (45% borrowing, 90% distribution) are easy marks; memorize them cold.
Test yourself on these topics
Take the free 15-question Paper 18 test, then save your results to unlock your Readiness Score and the mistakes bank.
4. Misconduct
The six market misconduct offences, the Market Misconduct Tribunal and SFC enforcement.
Key facts
- The SFO sets out six types of market misconduct (civil under Part XIII, criminal under Part XIV): insider dealing, false trading, price rigging, disclosure of information about prohibited transactions, disclosure of false or misleading information inducing transactions, and stock market manipulation.
- Insider dealing (s.270 civil, s.291 criminal): dealing while in possession of specific, price-sensitive information that is not generally known.
Flashcards
Exam tip: In scenario questions, match the conduct to the offence name before looking at the options.
How to pass
- 40 questions in 60 minutes: about 90 seconds per question.
- The pass mark is 70%, so you need 28 out of 40 and can only drop 12.
- Know exactly what Type 13 covers (depositary services for relevant collective investment schemes) and which regulator does what; almost every topic starts from there.
- Learn the rule acronyms (FRR, CMR, CSR, KRR, AAR) and the REIT numbers (45% borrowing cap, 90% distribution); they are quick marks.
Frequently asked questions
How long should I study for the Paper 18 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 18 exam online?
Yes. Paper 18 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 18 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 general regulatory framework, ra13 conduct requirements, ra13 product regulations, misconduct. Use the free practice test to see which ones you need most.
The premium Paper 18 study path
Premium Paper 18 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
- 1General Regulatory Framework15 key notes, 200 flashcards, then 750 practice questions in 30 sets of 25Notes free with an account
- 2RA13 Conduct Requirements15 key notes, 200 flashcards, then 750 practice questions in 30 sets of 25Premium
- 3RA13 Product Regulations15 key notes, 200 flashcards, then 750 practice questions in 30 sets of 25Premium
- 4Misconduct15 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).