Paper 1 Part 3: The Securities and Futures Ordinance (SFO)
HKSI LE Paper 1 · Regulatory Framework of the Securities & Futures Market · Part 3 · with answers and explanations
These 2 questions are all drawn from HKSI LE Paper 1 Part 3 “The Securities and Futures Ordinance (SFO)” and are identical to the free preview a non-paying app user sees (the first 2 questions by id). Tap an option to answer and instantly see the explanation. The full app covers 82 questions in this part.
Under Part XIVA of the Securities and Futures Ordinance, what is one statutory characteristic of 'inside information' in relation to a corporation?
Explanation: Section 307A of the SFO defines 'inside information' as information not generally known to persons who customarily deal in the corporation's listed securities. It must also be reasonably likely to have a material effect on the price of those securities if generally known.
Under section 307D of Part XIVA, when is a listed corporation NOT regarded as having failed to take reasonable precautions to preserve the confidentiality of inside information?
Explanation: Section 307D provides that disclosure in the ordinary course of business to persons who require the information does not amount to a failure to take reasonable precautions. Mass public disclosure (e.g. website or all-shareholder email) would constitute formal publication, not a confidentiality exception.
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