Besides Paper 1, so far HKSI has only released the past Q&A for another regulatory exam Paper 6 (Regulation of Asset Management). Again let me provide my own explanations in this blog in 2 parts:
HKSI LE Paper 6 (Dec 2006) - Q&A 1~20 (with explanations):
1(A) - SFC is only responsible for authorizing MPF products and licensing MPF fund managers. (III) & (IV) are handled by MPFA instead.
2(A) - (A) is incorrect because because Insurance Authority does not regulate MPF products.
3(D) - (A) is wrong because advertisements made only to professional investors are exempt from SFC authorization. (B) & (C) are wrong because referring to securities in the ordinary course of media business do not constitute advertisements.
4(A) - Insurance Authority only directly regulate insurers. Insurance agents are directly regulated by the Insurance Agents Registration Board.
5(B) - (IV) is wrong because SFC does not aim at protecting overseas investors as well.
6(C) - (C) is wrong because MPF can't ensure "maximizing investment returns" by regulating MPF schemes.
7(D) - (A) is wrong because no forecast of a scheme's performance is allowed. (B) is wrong because performance data must be actual rather than simulated results. (C) is wrong because use of past records are subject to certain restrictions (e.g. minimum track period).
8(B) - (I) is wrong because reference to past performance of SFC CIS managed by the investment managers may only be made on a restrictive basis and successful past records would not assist in predicting future performance. (IV) is wrong because the Code requires all client payments to be made payable to the trustee of the scheme.
9(B) - Leverage foreign exchange funds are definitely not permissible investment for a MPF constituent fund, but now MPFA has already permitted investment in REITs. The answer is outdated.
10(B) - (I) is wrong because warning statements should be audibly read out at the end of each broadcast (only in printed form are not acceptable). (III) is wrong because there is no such requirement.
11(D) - Simply speaking, both (I) and (II) are not requirements specified in the UT Code in respect of hedge fund authorization.
12(D) - "Insurance linked hedge fund" is not mentioned in this Code. Hedge fund should be covered by the UT Code instead.
13(B) - (II) is wrong because superiority of returns is supported by facts, not opinions. (IV) is wrong because it is not a requirement specified in the Code.
14(A) - (II) is wrong because the average portfolio maturity should not exceed 90 days instead. (IV) is wrong because the fudn may only hold up to 30% value in Government securities in the same issue.
15(C) - (I) is wrong because an executive director must be a responsible officer, but not the reverse. (IV) is wrong because this is not a requirement specified by SFO.
16(C) - (I) & (II) are requirements specified by SFO, but (IV) is not the case because the financial statements and auditor's reports of a licensed corporation must be filed with SFC within 4 months of the year end instead. The answer is wrong.
17(A) - (I) & (II) are items that must be reported to SFC under the Rules because they would materially affect an intermediary's financial soundness which is highly concerned by SFC.
18(D) - A person licensed or registered to deal in securities, as per (III) & (IV), is not deemed as engaging in asset management if his asset management activity (w.r.t. securities only) is wholly incidential to dealing in securities. A person licensed or registered to deal in futures contracts, as per (II), is also not deemed so if his asset management activity (w.r.t. futures contracts only) is wholly incidental to dealing in futures contracts.
19(A) - (III) & (IV) refer to advice not specific to the underlying fund investments of a MPF scheme and thus do not fall within Type 4 regulated activity.
20(B) - (I) and (III) are not requirements specified by MPFA.
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