Paper 3: Regulation of Derivatives

What this paper covers

This is a Regulatory Paper — what the SFC Guidelines on Competence calls a Local Regulatory Framework Paper (LRP). It tests Hong Kong regulation, the licensing regime and compliance obligations.

Questions	40 multiple-choice
Time	60 minutes
Pass mark	70%
Delivery	Computer-based (CBE), in English or Traditional Chinese

Syllabus areas

• Legislation and regulation
• Securities and Futures Commission
• Hong Kong Exchanges and Clearing Limited
• Other regulators
• Regulated activities under the SFO
• Licensing of corporations
• Licensing of representatives
• Activity reports

A summary of the main areas. Chapter structure and question weighting follow the latest HKSI Institute study material.

Who needs this paper?

This is an additional competence requirement for specific business lines. Type 6 (corporate finance) staff doing sponsor work take Paper 15 (principals) or Paper 16 (representatives); those advising on Takeovers Code and share buy-back matters also take Paper 17.

Full RA mapping and exemption rules: the complete SFC LE guide.

How to study for it

Regulatory papers reward precision on statutory wording, definitions and exceptions. Skim the HKSI study material's chapter outline first to build a classification framework, then use practice questions to test your recall of the detail. The matching practical paper covers the same ground from the other side — study them against each other.

At 40 questions in 60 minutes you have roughly 90 seconds per question — practise under timed conditions.