Licensing Examination for Securities and Futures Intermediaries Frequently Asked Questions 1.

I have already passed certain papers of the Foundation Programme Examination (FPE)/Financial Market Principal Programme Examination (PPE). Will these qualifications be recognised for licensing purpose after the operation of Securities and Futures Ordinance (SFO)? Your FPE/PPE exam results will continue to be recognised by the Securities and Futures Commission (SFC) for licensing purpose provided the exams are completed not more than 3 years prior to the date of application for licence. The papers you have passed in FPE/PPE will be mapped to certain LE papers. The result is that you will be treated as if you have passed the equivalent LE papers for licensing purpose. The table below shows the mapping details. Table 1 Mapping Table for FPE and LE for Licensing Purpose FPE papers Equivalent LE Papers FPE Paper 1 (Core) Paper 1 (Fundamentals of Regulation) And Paper 7 (Financial Markets) FPE Paper 2 Paper 8 (Securities) And Paper 11 (Corporate Finance) And Paper 12 (Asset Management) FPE Paper 3 Paper 9 (Derivatives) Securities & Futures

Table 2 Mapping Table for PPE and LE for Licensing Purpose PPE papers Equivalent papers in LE PPE Paper 1 (SFC) Paper 1 (Fundamentals of Securities Regulation) And Paper 5 (Regulation of Corporate Finance) And Paper 6 (Regulation of Asset Management) PPE Paper 2 Paper 2 (Regulation of Securities) (SEHK) PPE Paper 3 Paper 3 (Regulation of Derivatives) (HKFE) & Futures

If you intend to apply for licence under the new licensing regime using the FPE/PPE results, you should read the above tables together with the SFCs Guidelines on Competence to determine what additional LE papers you need to take in the LE (see illustration in Question 2 below).

2. I have only done FPE Paper 1. What papers do I need to take in the LE in order to obtain a representative licence for dealing in securities under the new licensing regime? The SFO introduces a single licensing regime with nine types of regulated activities (see Table 3). Each licensed person will only be given one licence that sets out the type of regulated activities he/she can perform. Table 3 Regulated activities under SFO Type RA1 RA2 RA3 RA4 RA5 RA6 RA7* RA8 RA9 Regulated Activity Dealing in Securities Dealing in Futures Contracts Leveraged Foreign Exchange Trading Advising on Securities Advising on Futures Contracts Advising on Corporate Finance Providing Automated Trading Services Securities Margin Financing Asset Management

* There is no competence requirement for RA7.

Dealing in securities is classified as Regulated Activity 1 (RA1). According to the SFCs Guidelines on Competence, for a representative to conduct RA1, he/she has to complete Papers 1, 7 and 8 of the LE in order to obtain the required local regulatory framework paper and recognised industry qualification. Assuming you have passed FPE Paper 1 within 3 years prior to the date you apply for SFC licence, according to the mapping table in Question 1, you will be regarded as passed Papers 1 and 7 of the LE. Thus, the only paper you need to take is LE Paper 8.

3. I need to sit for the new licensing examination. What is the best way for me to prepare? You can prepare for the exam by self-studying. Study manuals are now available for purchase at the HKSI office. As a supplement to your private study, our Training Department will offer a series of Professional Courses on SFC Regulated Activities as listed in Table 3. Please check our website at www.hksi.org or call the training hotline on 3120 6200 for more information.

4. Is there any relationship between the SFCs licensing requirements and HKSI qualifications? By taking the appropriate combination of LE papers, you will fulfill the SFCs competence requirements for respective Regulated Activities, either as a Representative or as a Responsible Officer. For details, please refer to the SFCs Guidelines on Competence. Even if you do not wish to apply for licence with the SFC, on completion of a preset combination of LE papers, you will still be awarded with HKSI qualifications. There are two levels of certification: HKSI Practising Certificates and HKSI Specialist Certificates. The following tables show the combination of LE papers you have to complete in order to obtain HKSI s certificates. Table 4 - HKSI Practising Certificates LE Papers HKSI Practising Certificates Papers 1 + 7 + 8 Papers 1 + 7 + 9 Papers 1 + 7 + 11 Papers 1 + 7 + 12 HKSI Practising Certificate Securities HKSI Practising Certificate Derivatives HKSI Practising Certificate Corporate Finance HKSI Practising Certificate Asset Management

Table 5 - HKSI Specialist Certificates LE Papers HKSI Specialist Certificates Papers 1 + 2 + 7 + 8 Papers 1 + 3 + 7 + 9 Papers 1 + 5 + 7 + 11 Papers 1 + 6 + 7 + 12 HKSI Specialist Certificate Securities HKSI Specialist Certificate Derivatives HKSI Specialist Certificate Corporate Finance HKSI Specialist Certificate Asset Management

Other than fulfilling the licensing requirements, each level of certification is also aligned to the HKSI professional membership. Holders of the HKSI Practicing Certificate can apply for HKSI Affiliate Membership while holders of HKSI Specialist Certificate will be eligible to apply for HKSI Ordinary Membership if they possess three to five years relevant industry experience.

5. I have already passed Papers 1, 7 and 8 and I have obtained the Practising Certificate in Securities in July 2003. Will I be able to obtain another certificate if I pass some other LE papers? Certificates other than the Practising Certificate in Securities will be awarded to candidates if they can pass the required additional LE paper(s) within the 3-year completion period (please refer to the LE Examination Handbook for details of the 3-year completion period). However, if a candidate passes the same LE paper(s) within the 3-year completion period, the same certificate will NOT be issued in this case. (Also see Question 6 below)

6. Will I get an additional certificate if I have passed the same LE papers for a second time within the 3-year completion period? No. Additional certificate of the same type will be issued to candidates only when they have completed ALL the LE examination papers offered by the HKSI within the required 3-year completion period and have subsequently re-attempted and passed the required preset combination of examination papers for the corresponding certificate(s). In this case, candidates will be given another 3 years to complete the required examination papers. The new completion period will commence from the date of the first re-attempted LE paper that the candidate passes.

7. I have attempted and passed the following LE papers, what certificate(s) will I obtain and when will the 3-year completion period expire? Paper 8 on 21 June 2003 Paper 7 on 20 July 2003 Paper 1 on 23 August 2003 Paper 9 on 21 September 2003 According to the existing examination policy, you will be entitled to a Practising Certificate in Securities in August 2003 and Practising Certificate in Derivatives in September 2003. The 3-year completion period will commence from 21 June 2003, and will expire on 30 June 2006. And will I get a Specialist Certificate in Derivatives if I passed Paper 3 in August 2006? The certificate will not be granted to you as you obtained a pass in Paper 3 after the 3-year completion period, which expired in June 2006.