The pass rate for Paper 1 held on 31 July 2004 was
49.7%, which is the highest to date. Figure 1 shows the
distribution by scores of the exam results.
Figure 1. Exam results distribution for Paper 1 - July
2004
Highlights of the Month
1. Topical Correctness
Figure 2 shows the overall topical correctness
achieved in the examination, i.e. how well candidates
have performed in each topic.
The score system of topical correctness provides a
performance score for each topic,
ranging from 0 to 1. When all questions relating to the
same topic are answered correctly
by all candidates, the topical correctness score will
be 1. Conversely, if all questions
relating to the same topic are answered incorrectly by
all candidates, the topical
correctness score will be 0.
Figure 2. Topical correctness for Paper 1 - July 2004
The July 2004 exam results show a noticeable
improvement in the correctness level of Topic 7
(Securities, Options and Futures), historically the
topic in which candidates' performance has been weakest
(see 2 below). The performance of candidates in other
topics remains fairly consistent, although topics 3 and
5 show a decline in their correctness rates from the
previous month (see 3 below).
2. Topic 7
Although the correctness level of Topic 7 has
improved in the July examination, this topic has
historically been the weakest among the 9 topics in
Paper 1 in terms of candidates' performance. Candidates
are reminded that, unlike other topics which explain
broad concepts and general principles, Topic 7 focuses
on specific matters relating to the dealing activities
carried out on the Stock Exchange of Hong Kong (SEHK),
the Hong Kong Futures Exchange (HKFE) and the respective
clearing houses. As such, candidates are expected to
understand the details and specifics of this topic.
Candidates are expected to know in particular:
• The definitions
of various important terms under the SFO such as
"securities", "dealing in securities",
"securities margin financing", "dealing in futures contracts"
and "advising in securities";
• The exceptions to the above
definitions;
• The general structure of the Hong
Kong Exchanges and Clearing Ltd. (HKEx); and
• The trading, clearing and
settlement systems in Hong Kong as well as the
categories of participants and
obligations of participants in the Hong Kong exchanges and
clearing houses.
Topic 7 is not in itself a difficult topic, but it
contains a lot of factual information. It also includes
some practical details which may not be easily digested
by those candidates who are not familiar with the
operation of the exchanges in Hong Kong and/or are not
involved in executing clientsˇ¦ orders in a professional
capacity. In preparing for this particular topic, it may
be helpful for candidates who are able to do so,
especially those who do not have relevant local and
practical experience, to discuss the different issues
covered in this topic with experienced market
practitioners.
3. Well Performed and Poorly Performed Subjects
Our analysis indicates that candidates performed
particularly well in a number of subject areas:
• Companies
Ordinance;
• Listing Rules;
• Management, Supervision and
Internal Control Guidelines; and
• Money laundering.
Candidates have also shown improvement in answering
questions relating to subsidiary legislation, including
the Securities and Futures (Keeping of Records) Rules
and the Securities and Futures (Client Securities)
Rules.
However, candidates are performing unsatisfactorily
in the subject areas relating to:
• Functions of the
SFC's operational divisions;
• Capital requirements under the SFO;
• Fund Manager Code of Conduct; and
• Market Misconduct.
Candidates may refer to the following sections in the
Study Manual for Paper 1 regarding the above-mentioned
subject areas:
• Section 3 of
Topic 1;
• Section 7 of Topic 3;
• Section 3 of Topic 5; and
• Section 1 of Topic 9.
Transferral of Examinations
The HKSI receives numerous requests from candidates
to transfer / postpone their examination dates and/or
transfer from one examination paper to another after
they have submitted their enrolment form(s) and in some
cases, after the enrolment deadline(s) and at very short
notice.
The HKSI understands that many candidates are
affected by sudden changes of plan, particularly
relating to travel arrangements, but candidates should
be aware that for administrative reasons, the HKSI is
unable to accommodate these requests. The enrolment
deadline for LE Paper 1 is only 10 full working days
prior to the examination date and given this relatively
short period, candidates are expected to plan
accordingly and to adhere to the examination schedules.
For those candidates who have enrolled in advance of
the enrolment deadlines, the HKSI has introduced a
refund policy to give candidates greater flexibility in
changing their plans. The refund application deadline
for LE Paper 1 is only 8 full working days prior to the
examination date. Once again, candidates are reminded
that for administrative reasons, the refund application
deadline(s) cannot be moved any closer to the actual
examination date(s) and applications by candidates for
refunds after the deadline(s) will not be processed. The
refund policy is not designed to address last minute
changes of plan.
