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HKSI PrepStudyingPaper 1
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Ms Lee, a licensed representative of Shek O Securities Ltd (Type 1 only), suggests which SEHK stocks to buy when clients phone in orders, for no separate fee. What is the licensing position?
Advising on securities (Type 4) covers advice on whether, which, when or on what terms securities should be bought or sold, and issuing analyses or reports for that purpose. Schedule 5 Part 2 excludes advice given by a person licensed for Type 1 that is wholly incidental to carrying on Type 1. Ms Lee and her firm are both licensed for Type 1, and her comments are given while taking clients' orders without a separate fee, so they are incidental to dealing and neither needs Type 4. A representative is licensed to act for the corporation she is accredited to (s.120), not on her own account. Oral advice is not excluded as such; the test is whether the advice is incidental. Source: SFO (Cap. 571) Sch. 5 Pt 2, definition of advising on securities, exclusion (ii); s.120(1) (as at October 2026).
Thinking every stock tip needs Type 4. The test is whether the advice is wholly incidental to the Type 1 dealing business.
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