Examination Results Statistics for LE Papers 1, 2 and 6 in Feb 2007

LE Paper 1 in Feb 2007

The pass rate of LE Paper 1 held on 24 Feb 2007 was 52%. Figures 1 and 2 show the distribution by scores of the exam results and the overall topical correctness¹ achieved in the examination.

 
             Figure 1. Exam results distribution for LE Paper 1 - Feb 2007                           Figure 2. Topical correctness for LE Paper 1 - Feb 2007

Table 1 below shows a comparison of the topical correctness rates of each topic of LE Paper 1 in the January and February 2007 exams.

	Topic
Month	1	2	3	4	5	6	7	8	9
Jan-07	0.71	0.61	0.72	0.68	0.60	0.78	0.62	0.65	0.75
Feb-07	0.71	0.69	0.73	0.62	0.72	0.70	0.61	0.77	0.76
Table 1. Topical correctness rates for LE Paper 1: Jan - Feb 2007

When compared with the previous month, candidates' performance in this examination remains remarkably consistent, with the exception of Topic 5 (Business Conduct and Client Relations) and Topic 8 (Other SFC Regulated Activities) where the correctness rates in both cases improved significantly by 12 per cent.

Table 2 lists four subject areas in Topics 4, 6 and 7 in which candidates performed unsatisfactorily, and indicates the topics/sections in the Study Manual which candidates should read when revising for these subject areas.

Unsatisfactory subject areas		Recommended topics/sections
		Topic	Section
1	Approved introducing agent	4	2
2	Securities and Futures (Contract Notes, Statements of Account and Receipts) Rules	4	6
3	Money laundering and terrorist financing	6	3
4	Participants of the exchanges and clearing houses	7	2 and 4
Table 2. Unsatisfactory subject areas for LE Paper 1 - Feb 2007

Revision notes on unsatisfactory subject areas
Candidates are required to know:
1) the criteria for licensed corporations to be approved as introducing agents.
2) to whom contract notes have to be issued and the details to be included in them.
3) that a person "dealing" (as specifically defined in the ordinances related to money laundering) with any property, which he knows
     or believes to represent the proceeds of crime, is committing an offence.
4) that (i) individuals and corporate investors are allowed to open direct stock accounts with CCASS and (ii) HKFE trading
     participants may not be members of the HKCC..

LE Paper 2 in Feb 2007

The pass rate of LE Paper 2 held on 24 Feb 2007 was 40%. 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 LE Paper 2 - Feb 2007                           Figure 4. Topical correctness for LE Paper 2 - Feb 2007

Table 3 below shows a comparison of the topical correctness rates of each topic of LE Paper 2 in the January and February 2007 exams.

	Topic
Month	1	2	3	4	5	6	7
Jan-07	0.46	0.65	0.81	0.75	0.67	0.75	0.47
Feb-07	0.48	0.76	0.73	0.65	0.70	0.59	0.52
Table 3. Topical correctness rates for LE Paper 2: Jan - Feb 2007

The performance of candidates in the February examination remained highly volatile. When compared with the January examination, the correctness rate of Topic 2 (Relevant Statutory and Related Requirements) improved by 11 per cent, whilst the correctness rates of Topic 4 (Dealing in Securities Traded on the Stock Exchange of Hong Kong) and Topic 6 (Options and OTC Derivatives) dropped by 10 and 16 per cent, respectively.

Table 4 lists five subject areas in Topics 1, 6 and 7 in which candidates performed unsatisfactorily, and indicates the topics/sections in the Study Manual which candidates should read when revising for them.

Unsatisfactory subject areas		Recommended topics/sections
		Topic	Section
1	Functions and powers of the SFC and its committees, tribunals and panels	1	4
2	Roles of key financial regulators in Hong Kong	1	5
3	Position limits and reporting requirements of options exchange participants	6	3
4	Risk reduction techniques for over-the-counter business	6	7
5	False trading	7	2
Table 4. Unsatisfactory subject areas for LE Paper 2 - Feb 2007

Candidates are particularly advised to revise carefully subject area 5, "False trading", in which candidates have performed unsatisfactorily for two consecutive months.

Revision notes on unsatisfactory subject areas
Candidates are required to know:
1) which functions the SFC has delegated to its committees.
2) that authorised financial institutions are regulated by the HKMA and have to register with the SFC to conduct SFC-regulated
     activities, as well as how SFC Rules apply to these institutions.
3) that the SEHK may impose limitations on the number and type of contracts of an option class in order to maintain an orderly
     market.
4) the different forms of risk reduction techniques used for OTC business.
5) the nature of transactions relating to false trading.

LE Paper 6 in Feb 2007

The pass rate of LE Paper 6 held on 10 Feb 2007 was 58%. 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 LE Paper 6 - Feb 2007                           Figure 6. Topical correctness for LE Paper 6 - Feb 2007

Table 5 below shows a comparison of the topical correctness rates of each topic of LE Paper 6 in the January and February 2007 exams.

	Topic
Month	1	2	3	4	5	6
Jan-07	0.65	0.68	0.54	0.71	0.65	0.74
Feb-07	0.80	0.73	0.64	0.76	0.58	0.64
Table 5. Topical correctness rates for LE Paper 6: Jan - Feb 2007

When compared with the previous month, the correctness rate of Topic 1 (Overview of Legal and Regulatory Structure) improved considerably (up by 15 per cent) as did that of Topic 3 (Regulation of Intermediaries: Licensing and Subsidiary Legislation), albeit to a lesser extent (up by 10 per cent). However, the correctness rate of Topic 6 (Market Misconduct and Compliance Issues) showed an equally marked decline, dropping by 10 per cent.

Table 6 highlights one subject area in Topic 5 in which candidates performed unsatisfactorily, and indicates the section in the Study Manual which candidates should read when revising for this subject area.

Unsatisfactory subject area		Recommended topic/section
		Topic	Section
1	SFC¡¦s regime for non-Hong Kong based CIS	5	12
Table 6. Unsatisfactory subject area for LE Paper 6 - Feb 2007

Revision notes on unsatisfactory subject area
Candidates are required to know the functions/responsibilities of the representatives of non-Hong Kong based CIS.

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.