Securities & Futures Commission of Hong Kong

Licensing examinations

Q1:

For a person who has been licensed before and re-applies within 3 years from the date of expiry or revocation of his last licence, does he have to take any exams in order to be licensed again?

A:

Normally, this person does not have to take any exams if he intends to engage in regulated activities with the same competence requirements as indicated in the table below and in the same role (i.e. licensed representative or responsible officer) as previously licensed. There is no exam requirement for Type 7 regulated activity.  

Groups of regulated activities with the same competence requirements

Type of regulated activities

1 - dealing in securities

4 - advising on securities

8 - securities margin financing

2 - dealing with futures contracts

5 - advising on futures contracts

However, the SFC reserves the right to require such persons to take the examination(s) where appropriate.

Q2:

Which exam does a new entrant have to take if he applies for a representative licence to carry on Type 3 (leveraged foreign exchange trading) regulated activity?

A:

He is required to take the Leveraged Foreign Exchange Trader’s Representative Examination conducted by the Institute of Professional Education And Knowledge of the Vocational Training Council. However, he may apply for exemption from the recognized industry qualification and/or local regulatory framework paper if he satisfies the exemption criteria as set out in Appendices D and/or E of the Guidelines on Competence.

Q3:

Has the HKSI developed any revision tools to assist candidates to prepare for its Licensing Exam?

A:

Yes, a list of these tools have been developed. Please visit the HKSI’s website at http://www.hksi.org/hksi/index.php?option=com_content&view=article&id=62&Itemid=65&lang=en for details.

Q4:

I have been involved in compliance work for many years. Can I be exempted from the local regulatory framework examination requirement in order to be licensed?

A:

Yes, the Commission may consider granting you the exemption if you have been actively involved in regulatory or compliance work:

  • in Hong Kong;
  • on a full-time basis;
  • for over 3 years in the past 6 years; and
  • in the same regulated activity as the licence you apply for. 

However, your licence may still be subject to such condition(s) as the SFC considers appropriate.

Q5:

I have been a Responsible Officer carrying on Type 1 regulated activity for many years, and now I would like to be the Responsible Officer to carry on Type 9 regulated activity. Can I be exempted from the local regulatory framework paper (LRP) requirement under item 9 of Appendix E of the Guidelines on Competence?

A:

If you have 5 years’ local industry experience over the past 8 years and now apply for approval to engage in managing discretionary accounts for your clients, you may apply for conditional exemption from passing the LRP as set out in item 9 of Appendix E of the Guidelines on Competence. To be eligible for this exemption, you will only be allowed to engage in discretionary account management under Type 9 regulated activity. If you will also serve as a Manager-In-Charge of the Overall Management Oversight function of your sponsoring corporation, the firm will be subject to the same business restriction. Also, the exemption will be subject to the completion of additional CPT hours.

Alternatively, you may consider applying for the conditional exemption from the LRP requirement if you and your sponsoring corporation could satisfy all the prescribed requirements as set out in the Circular titled “SFC Adopts a Pragmatic Approach to Licensing Fund Managers”.

Please refer to the “Circular to clarify competence requirements for existing licensed persons intending to provide asset management services” for more details.

Q6:

According to item 6 of the exemption criteria as set out in Appendix E of the Guidelines on Competence, an individual may apply for conditional exemption from taking the local regulatory framework paper if he satisfies, among other things, the condition that he will only be involved in a limited scope of activities. To what extent will my activities be considered as “limited scope”?

A:

The following will generally be regarded as "limited scope of activities":

  • The applicant only engages in certain restricted activities within the sponsoring corporation;
  • The applicant assumes a very senior management level role and is not involved in the day-to-day operations; or
  • The sponsoring corporation is only carrying on a limited scope of business activities.

Examples of applicants' involvement in “limited scope of activities” include:

  1. Regional Research Head coming to Hong Kong occasionally and is accompanied by other local licensed staff in client meetings, or 
  2. Persons only providing technical advice to clients on the structuring of corporate finance deals.

The above examples are not intended to be exhaustive.

Q7:

Are there any exemptions from the competence examinations requirement for former practitioners applying for a licence to re-enter the industry?

A:

Please refer to Question 2 above. For former practitioners who have left the industry for between 3 and 8 years, they may be exempted from the relevant competence examinations (including both industry qualification and local regulatory framework papers) when they re-apply for a licence or seek to be re-engaged by a registered institution as a relevant individual. This exemption is only available where the applicants apply to practise in the same regulated activity (or an activity having the same competence requirements) and role as before. To be eligible for the exemption, applicants must, in addition to the applicable industry and management experience requirements, also meet at least one of the following requirements:

  • Completion of five Continuous Professional Training (CPT) hours for each year of absence from the industry. Regulatory training must make up at least 50% of the CPT activities;
  • Attendance at a specialised course conducted by the Hong Kong Securities and Investment Institute in respect of securities or futures, or the Vocational Training Council in respect of leveraged foreign exchange trading.
Q8:

How many CPT hours does a former practitioner who had left the industry for four years and two months need to undergo before he is eligible for the above exemption?

A:

The requirement is five CPT hours per regulated activity for each year of absence. In this case, the applicant would have to complete 25 CPT hours for each applicable regulated activity (any fraction of a year would be rounded up for this purpose). The applicant may complete the required 25 CPT hours before lodging the application.

Q9:

Does the applicant have to submit all relevant CPT records to the SFC to obtain the exemption?

A:

At the time of application, an applicant for a licence is only required to submit a letter from his/her principal certifying that he/she has completed the required number of CPT hours, and that the regulatory content of the CPT activities was not less than 50%. The related supporting records and documentary evidence may be inspected by the SFC as and when required.

In relation to a person who seeks to be re-engaged by a registered institution as a relevant individual, the registered institution concerned should maintain records and documentary evidence of completion of such additional CPT by the person. These should be made available for inspection when required by the HKMA.

Q10:

If I satisfy the conditional exemptions as set out in Appendix E of the Guidelines on Competence, I know that I need to complete additional CPT hours in the appropriate area. Is there a requirement on what types of CPT courses I should choose and when should I complete them?

A:

The additional CPT hours to be completed must be in local regulatory knowledge in the relevant regulated activity. They may either be taken within 6 months preceding the application or within 12 months after the approval is granted.

If you have completed the additional CPT hours within 6 months preceding the application, your application should be accompanied by documentary evidence.

If you opt to complete the additional CPT hours within 12 months after the approval is granted, your sponsoring corporation must ensure that you complete the necessary CPT hours within the prescribed timeframe and provide an undertaking to this effect. If you fail to complete the additional CPT hours as required, the fitness and properness of both your sponsoring corporation and yourself may be impugned and your licensing status may be adversely affected.

Q11:

According to item 10 of the exemption criteria as set out in Appendix E of the Guidelines on Competence, an individual may apply for conditional exemption from taking the local regulatory framework paper if he possesses an extra 3 years of relevant industry experience. I have the extra years of experience gained outside Hong Kong, can I be qualified for the exemption?

A:

No. In order to ensure that the person has sufficient knowledge and understanding of how the local regulatory framework operates, the extra experience must be acquired in Hong Kong and it must be recent and relevant. Experience as a relevant individual registered with the HKMA may also be considered.

Example:

Academic/Industry Qualification Relevant degree holder
Industry experience 3 years over past 6 years 
Management experience  2 years 
Additional experience requirement 3 more recent years of licensed experience (or as a relevant individual) in Hong Kong. 
Q12:

I am currently licensed as a representative for Type 1 regulated activity. I took HKSI LE Papers 1 and 7 before I was licensed 4 years ago. Can I be exempted from re-taking both papers if I want to apply additionally to engage in Type 2 regulated activity?

A:

To additionally engage in another type of regulated activity having a different competence requirement (see Q2), you are supposed to have fulfilled the industry based qualification and passed the local regulatory framework paper required for the new type of regulated activity. However, if you have:

  1. passed Papers 1 and 7; and 
  2. been licensed by the SFC within the past 3 years,

you may apply for a full exemption from taking both exams even if the exams were taken more than 3 years ago. In the event that you can only fulfil either (a) or (b) above, you will not be qualified for this full exemption.

Q13:

I have been a relevant individual registered with the HKMA for Type 1 regulated activity until recently. I would like to change employment to a licensed corporation as a licensed representative for Type 2 regulated activity, do I have to re-take HKSI LE Papers 1 and 7 if I have passed those 2 exams before I became a relevant individual 4 years ago?

A:

As relevant individuals are treated the same as licensed representatives under the Guidelines on Competence, you may apply for a full exemption if you have been registered with the HKMA as a relevant individual within the past 3 years, i.e. same principle as in Question 12 above applies.

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