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Responsible Officer papers · Last updated October 2026

HKSI LE Paper 2: Regulation of Securities: free practice test

The paper for Responsible Officers of Type 1 (dealing in securities), Type 4 (advising on securities) and Type 8 (securities margin financing) licensed corporations, taken with Papers 1, 7 and 8. It covers the SFO regulatory framework, the subsidiary legislation, the Code of Conduct and supervision, dealing on the Stock Exchange of Hong Kong, other securities activities, options and OTC derivatives, and market misconduct.

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About the Paper 2 exam

The paper for Responsible Officers of Type 1 (dealing in securities), Type 4 (advising on securities) and Type 8 (securities margin financing) licensed corporations, taken with Papers 1, 7 and 8. It covers the SFO regulatory framework, the subsidiary legislation, the Code of Conduct and supervision, dealing on the Stock Exchange of Hong Kong, other securities activities, options and OTC derivatives, and market misconduct.

What's on the exam

Paper 2
Regulatory Framework
6 key facts
Subsidiary Legislation Requirements
7 key facts
Management and Supervision
6 key facts
Dealing on the SEHK
6 key facts
Other Securities Activities
6 key facts
Exchange Traded Options and OTC Derivatives
6 key facts
Market Misconduct and Improper Practices
6 key facts

Each branch is a topic in the official outline. Members see every key fact on the full mind map. Read the free study guide →

How to pass the Paper 2 exam

  • 40 questions in 60 minutes is 90 seconds each.
  • You need 70%: 28 out of 40, so you can only miss 12.
  • Learn the numbers that repeat: stamp duty 0.1% each side, ICF HK$500,000, client money into trust accounts within 1 business day, contract notes by the end of the second business day, most records kept 7 years.
  • Know the six types of market misconduct and the split between civil MMT proceedings and criminal prosecution; the MMT cannot impose imprisonment.

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Create a free account after the test: your score by topic, a mistakes bank, the complete study notes for the first topic, flashcards and the HKSI Key Numbers Sheet.

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What's in the premium Paper 2 prep

Premium Paper 2 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.

3,000practice questions, every answer explained
6full-length mock exams, 50 questions each, timed
800flashcards with spaced repetition, sorted by topic
60comprehensive key notes across 7 topics

Your step-by-step study path

  1. 1
    Regulatory Framework9 key notes, 115 flashcards, then 450 practice questions in 18 sets of 25
    Notes free with an account
  2. 2
    Subsidiary Legislation Requirements9 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25
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  3. 3
    Management and Supervision9 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25
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  4. 4
    Dealing on the SEHK9 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25
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  5. 5
    Other Securities Activities8 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25
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  6. 6
    Exchange Traded Options and OTC Derivatives8 key notes, 115 flashcards, then 425 practice questions in 17 sets of 25
    Premium
  7. 7
    Market Misconduct and Improper Practices8 key notes, 110 flashcards, then 425 practice questions in 17 sets of 25
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  8. Final step: 6 full mock exams50 questions each, timed like test day. Pass them, then book your exam.
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Read the complete Paper 2 study notes for “Regulatory Framework”

Our first full set of comprehensive notes, about 10 minutes of reading: The SFO and the regulatory framework · The SFC · Other regulators and the exchanges · The licensing regime and regulated activities · Fit and proper, competence and CPT · Governance and reporting to the SFC, 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.

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Study tools included

3,000 practice questions

3,000 exam-style questions per exam, organized topic by topic in sets of 25. Every answer explained, with the rule it comes from.

6 full mock exams

6 full-length timed mock exams per exam, with real question counts and time limits, so test day feels like practice day.

Exam Readiness Score

One 0 to 100 number that tells you when you're ready to book. Reach 80 and you're covered by our Pass Guarantee.

800 flashcards + spaced repetition

800 flashcards per exam, in a deck for each topic, that come back right before you'd forget them. Five minutes a day keeps every number fresh.

60 comprehensive key notes

60 key notes per exam, split across its topics and each explained in full: the concepts, worked exam examples, the traps examiners use and a quick recap. Your first set is free with an account.

Mind maps

See the whole exam on one screen: every topic and the facts under it.

Sample questions with answers

These are the questions in the free test above, with answers. Try the test first. You'll learn more by getting some wrong.

1. Under the SFO, 'dealing in securities' is:
Answer: Regulated Activity 1. Dealing in securities is Regulated Activity 1. Advising on securities is RA4 and securities margin financing is RA8.
2. The Securities and Futures Commission is best described as:
Answer: An independent statutory body funded by fees, levies and investment income. The SFC is a statutory body established in 1989 under what is now the SFO (Cap 571). It is independent of the civil service and is funded by market fees and levies, not government subvention.
3. Under the Securities and Futures (Client Money) Rules, when a licensed corporation receives money from a client it must pay it into a segregated client trust account:
Answer: Within 1 business day after receipt. The Client Money Rules require client money to be paid into a segregated client trust account at an authorized institution within 1 business day after receipt, to protect client money from the corporation's creditors.
4. If a licensed corporation defaults, the maximum compensation available to an individual investor from the Investor Compensation Fund is:
Answer: HK$500,000. The Investor Compensation Fund pays up to HK$500,000 per investor for losses of securities and futures arising from the default of a licensed intermediary.
5. A licensed representative of a Type 4 firm recommends a high-risk stock to a retired client with conservative investment objectives. Under the Code of Conduct, the representative has breached:
Answer: The suitability requirement, because the recommendation does not match the client's financial situation and investment objectives. Under the Code of Conduct, when a licensed person solicits a purchase or sale or gives advice, it must ensure the recommendation is suitable in light of the client's financial situation, investment experience and objectives.
6. A compliance officer suspects that a client's transactions involve the proceeds of crime. A suspicious transaction report must be filed with:
Answer: The Joint Financial Intelligence Unit. Suspicious transaction reports go to the Joint Financial Intelligence Unit, run by the Police and Customs. The duty to report comes from the Organized and Serious Crimes Ordinance (s.25A) and related ordinances, and tipping off the client is an offence.
7. Trades in securities on the SEHK are settled through CCASS on:
Answer: T+2. Hong Kong securities trades settle on a T+2 basis through CCASS, operated by HKSCC, with settlement completed on the second business day after trade date.
8. Since 17 November 2023, stamp duty on a purchase of Hong Kong shares is charged at:
Answer: 0.1% payable by each of the buyer and the seller. Stamp duty was reduced from 0.13% to 0.1% of the consideration with effect from 17 November 2023, and it is payable by both the buyer and the seller on each transaction.
9. A client instructs a broker to short sell a stock that is not on the SEHK's list of designated securities eligible for short selling. The broker should:
Answer: Refuse the order, because only designated securities may be short sold on the SEHK. On the SEHK, short selling is permitted only in designated securities on the published list, and the seller must have borrowed or arranged to borrow the stock. Naked short selling is an offence under section 170 of the SFO.
10. A Hong Kong platform that operates a virtual asset trading platform for retail investors must:
Answer: Be licensed by the SFC as a virtual asset trading platform operator under the AMLO. Since the VATP regime came into force in June 2023, centralised platforms trading virtual assets for clients in Hong Kong must be licensed by the SFC under the AMLO, with conduct requirements set out in SFC guidelines.
11. Stock options traded on the SEHK are cleared and settled by:
Answer: SEOCH. The Stock Exchange Options Clearing House (SEOCH) clears and settles stock options traded on the SEHK. HKSCC clears securities through CCASS and HKCC clears futures and options on HKFE.
12. Under the OTC derivative transaction reporting rules, specified OTC derivative transactions entered into by licensed corporations must be reported to:
Answer: The HKMA's trade repository (HKTR). The Securities and Futures (OTC Derivative Transactions - Reporting and Record Keeping Obligations) Rules require specified OTC derivative transactions to be reported to the HKMA's trade repository (HKTR), with matching record keeping obligations.
13. A director learns confidentially that her company will shortly announce a takeover offer. She buys shares in her own company before the announcement. This is:
Answer: Insider dealing, which can be prosecuted criminally or pursued before the Market Misconduct Tribunal. Trading while in possession of inside information is insider dealing, one of the six types of market misconduct under the SFO. The same conduct may be pursued as a civil case before the MMT or as a criminal prosecution, but not both.
14. The Market Misconduct Tribunal:
Answer: Hears civil proceedings and imposes civil sanctions such as disqualification orders, cease and desist orders and disgorgement. The MMT is a civil tribunal headed by a judge. It imposes civil sanctions including disqualification from being a director, cold shoulder orders, cease and desist orders and disgorgation; imprisonment is only available through criminal prosecution in the courts.
15. Under section 174 of the SFO, an intermediary making an unsolicited call to a member of the public to induce an agreement to buy or sell securities:
Answer: Is generally prohibited, subject to limited exceptions such as calls to professional investors or existing clients. Section 174 of the SFO generally prohibits unsolicited calls (cold calling) to induce investment agreements. The exceptions are limited, for example calls to professional investors and certain calls to existing clients.

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Certification guide

Which HKSI papers do you need?: To become an SFC licensed representative (or a relevant individual at a bank), you usually pass three HKSI Licensing Examination papers: Paper 1 on regulation, Paper 7 on financial markets, and one paper for your regulated activity. Here's which one.

Paper 2 exam FAQ

How many questions are on the Paper 2 exam?

40 multiple-choice questions, with a time limit of 60 minutes. Format: closed book, computer-based.

What is the passing score for Paper 2?

70%.

How much does the Paper 2 exam cost?

HK$2,000 in Hong Kong (HK$2,450 at overseas Prometric centres). Fees change, so confirm with the HKSI Institute before you enrol.

Which languages is the Paper 2 exam offered in?

English or Traditional Chinese.

Where do I take the Paper 2 exam?

HKSI Institute computer-based test centre in Hong Kong, or Prometric centres outside Hong Kong.

Is this Paper 2 practice test free?

Yes. The 15-question practice test on this page is free, with an explanation for every answer and no signup. A free account also unlocks the complete study notes for the first topic. The full Paper 2 prep is Premium at HK$1,147 a month for this exam.

What's in the premium Paper 2 prep?

3,000 practice questions organized topic by topic (Regulatory Framework: 450; Subsidiary Legislation Requirements: 425; Management and Supervision: 425; Dealing on the SEHK: 425; Other Securities Activities: 425; Exchange Traded Options and OTC Derivatives: 425; Market Misconduct and Improper Practices: 425), 6 full-length timed mock exams of 50 questions, 800 flashcards and 60 comprehensive key notes split across all 7 topics, plus a mistakes bank and the Readiness Score.

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Exam details are summarized from the official candidate information available in October 2026. HKSI Institute changes formats and fees, so confirm with Hong Kong Securities and Investment Institute (HKSI Institute) before you book. HKSIMock is not affiliated with the HKSI Institute or the SFC.

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