In 2004, the HKSI focused solely on the examination results statistics for Paper 1. As shown in our articles published on the HKSI website, the performance of candidates in LE Paper 1 improved significantly in 2004 and the pass rate since June 2004 appears to have stabilised at approximately 50% (please refer to LE Examination Results Statistics - LE Paper 1 December 2004 for details).

In 2005, the HKSI plans to expand its statistical analyses of exam results to include other LE Papers. In this article, we have included statistical analyses for Papers 2 and 6, in addition to a summary of candidates' performance for Paper 1.

LE Paper 1 in Jan 2005

The pass rate for Paper 1 held on 16 Jan 2005 was 50%. Figures 1 and 2 show the distribution by scores of the exam results and the overall topical correctness achieved in the examination.

  
     Figure 1. Exam results distribution for Paper 1 - Jan 2005              Figure 2. Topical correctness for Paper 1 - Jan 2005

¹ 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.

As shown by the topical correctness levels in Figure 2, there has once again been a marked improvement in candidates' performance in Topic 5 (Business Conduct and Client Relations) when compared with the previous month. On the other hand, the correctness rates of Topic 7 (Securities, Options and Futures), Topic 8 (Other SFC Regulated Activities) and Topic 9 (Market Misconduct, Improper Trading Practices and Compliance) have fallen once again.

Table 1 shows the average topical correctness of each of the 9 topics in LE Paper 1 in 2004. Candidates¡¦ performance to date has been most volatile in Topics 4, 5, 7, 8 and 9 and this is clearly reflected in the lower average correctness rates of these topics when compared with the remaining 4 topics. Candidates are advised to pay special attention to these 5 topics when preparing for the examination.

LE Paper 2 in Jan 2005

Paper 2 is a specialised paper designed for Responsible Officers for Dealing in Securities (Type 1), Advising on Securities (Type 4), Providing Automated Trading Services (Type 7) and Securities Margin Financing (Type 8) . In particular, it focuses on the Securities and Futures Ordinance (SFO), key aspects of laws which are relevant to running a securities business in Hong Kong, and dealing in securities traded on the Stock Exchange of Hong Kong (SEHK). Candidates who sit for this examination are expected to have an in-depth knowledge of securities regulations since they are required to supervise a licensed securities firm in their capacity as Responsible Officers.

The pass rate of LE Paper 2 held on 16 Jan 2005 was 37%. Figures 3 and 4 show the distribution by scores of the exam results and the overall topical correctness achieved in the examination.

  
     Figure 3. Exam results distribution for Paper 2 - Jan 2005              Figure 4. Topical correctness for Paper 2 - Jan 2005

² For details of the nine Regulated Activities under the Securities and Futures Ordinance, please refer to section 1 - Introduction on page 3 of the LE Examination Handbook.

Well Performed and Poorly Performed Subjects

Our analysis indicates that candidates performed well in a number of subject areas:
 • Requirements of risk management policies and procedures;
 • Market misconduct; and
 • Financial Resources Rules.

Candidates are performing unsatisfactorily in questions relating to the following subject areas:
 • Various classes of options trading participants;
 • False trading; and
 • Clearing and settlement services.

Candidates are recommended to carefully revise section 6 of Topic 4, section 2 of Topic 6, and section 2 of Topic 7 which cover these subject areas. In addition, since the correctness rate of Topic 1 is well below that achieved in the other 6 topics included in this examination, candidates are also advised to pay special attention to this topic.

LE Paper 6 in Jan 2005

Paper 6 is a specialised paper designed for Responsible Officers for Asset Management (Type 9). In particular, it focuses on laws, regulations, codes and guidelines, the authorisation procedures for investment products, the licensing/registration and supervision of intermediaries, and the common industry practices and standards that are relevant to the asset management industry in Hong Kong. Candidates are expected to have an in-depth knowledge of subject areas related to the asset management industry since they are required to supervise a licensed fund management company in their capacity as Responsible Officers.

The pass rate of LE Paper 6 held on 23 Jan 2005 was 24%. Figures 5 and 6 show the distribution by scores of the exam results and the overall topical correctness achieved in the examination.

  
     Figure 5. Exam results distribution for Paper 6 - Jan 2005                   Figure 6. Topical correctness for Paper 6 - Jan 2005

Well Performed and Poorly Performed Subjects

Our analysis indicates that candidates performed well in a number of subject areas:
 • Licensing regime under the Securities and Futures Ordinance (SFO);
 • General requirements under the Code on Unit Trusts and Mutual Funds; and
 • Features of good management in the Internal Control Guidelines.

Candidates are performing unsatisfactorily in questions relating to the following subject areas:
 • Different codes applicable to the asset management industry;
 • Transitional provisions of the SFO; and
 • Proper compliance procedures.

Candidates are recommended to carefully review section 4 of Topic 1, section 2 of Topic 3 and section 7 of Topic 5 which cover these subject areas. In addition, since candidates¡¦ performance in Topic 4 is the weakest among the 6 topics in Paper 6, special attention should be paid to this topic.