HKSI Paper 1 mock questions20 questions. Find your next revision target.

Correct answer：A — Promote fair, orderly markets and investor protection

Regulation concerns market integrity and conduct. Setting returns, selecting investments and covering every market loss confuse regulation with investment management or a capital guarantee.

Correct answer：B — The SFO and relevant subsidiary legislation

The SFO and subsidiary legislation confer the powers. Corporate documents, private contracts and exam materials do not grant statutory investigative authority.

Correct answer：C — Type 1: Dealing in securities

Client securities dealing points to Type 1. Type 4 concerns securities advice, Type 6 corporate-finance advice and Type 9 asset management.

Correct answer：D — Type 4: Advising on securities

The service, not the job title, matters. Individual securities recommendations point to Type 4; the facts do not describe futures dealing, margin lending or credit ratings.

Correct answer：A — No; it must assess whether the advice is wholly incidental to dealing

The exemption is conditional on the activity being wholly incidental. A distinct paid service cannot simply assume it qualifies. Any licence or Hong Kong listing is insufficient; saying no incidental exemption exists is also wrong.

Correct answer：B — Assess the recommendation using client information obtained through due diligence

Suitability concerns the fit with this client’s circumstances. Past returns, acceptance of commission and authorisation cannot individually replace that assessment.

Correct answer：C — Obtain sufficient information or refrain from an inadequately assessed recommendation

Missing necessary information cannot be treated as a completed assessment. Age alone, a disclaimer and low commission do not fill those gaps.

Correct answer：D — Disclose it and take reasonable steps to treat the client fairly

Disclosure and fair treatment both matter. Disclosure alone, an internal record alone or a profitable outcome does not fully address the conflict.

Correct answer：A — The latest audited balance sheet and profit and loss account required to be filed with the SFC

Paragraph 8.4 calls for the relevant latest audited accounts on request and disclosure of subsequent material adverse changes. Targets, client holdings and commission totals are not substitutes.

Correct answer：B — Investigate and remedy the related issues as well

Paragraph 12.3(d) requires investigation and remediation of broader issues even without other complaints. Waiting, recording alone or leaving it entirely to frontline discretion is insufficient.

Correct answer：C — Management retains primary responsibility; it is not wholly transferred

A compliance function does not remove management’s primary responsibility. Compliance supports controls; responsibility neither waits for a criminal conviction nor transfers to clients.

Correct answer：D — Place it in a segregated account at an authorised financial institution in Hong Kong

Segregation concerns custody at account level. A spreadsheet does not turn an operating account into a segregated one; personal custody and temporary operational use also fail the stated requirement.

Correct answer：A — Lack of segregation of duties and independent review

Control of the whole process can conceal error or abuse. Separate duties, or use adequate review where full separation is infeasible. The alternatives do not establish effective checks.

Correct answer：B — Investigate, resolve appropriately and document the discrepancy

Reconciliation detects exceptions for follow-up. Arbitrarily changing numbers, choosing the larger balance or waiting for complaints conceals rather than resolves the problem.

Correct answer：C — Make further enquiries to verify the instruction’s origin

The SFC circular calls for further enquiry where recordings or other trails are missing. Execution and profit do not establish authorisation; fabricated records are unacceptable.

Correct answer：D — Discharge delivery obligations for securities and money

Execution establishes the trade; settlement handles delivery. Security selection, licensing and price protection are separate from settlement.

Correct answer：A — Central clearing and settlement services

CCASS is the Central Clearing and Settlement System. Corporate earnings forecasts, examination grading and assessing client recommendations are not its functions.

Correct answer：B — Authorisation is not a recommendation, universal suitability or return guarantee

Authorisation does not endorse an investment, guarantee performance or establish suitability for everyone. Capital protection and universal retail suitability are also unsupported inferences.

Correct answer：C — Trading ahead using the client order, contrary to client priority

Paragraph 9.1 addresses client-order priority. Paying commission, eventual execution or later cancellation does not remove the problem of exploiting a client order to trade ahead.

Correct answer：D — Provide relevant, material information for informed decisions

Disclosure supports informed decisions. Cherry-picking favourable information, delaying material facts or using misleading language defeats that purpose.