Overview
Based on monthly average pass rates reported for the year-to-date, the most challenging papers continue to be Papers 1 (Fundamentals of Securities and Futures Regulation: 52.9%) and 9 (Derivatives: 54.6%), however Paper 2 (Regulation of Securities) and Paper 6 (Regulation of Asset Management) cannot be taken for granted.
The Paper 1 pass rate remained above 50% for the first three months of 2020, having been below 50% for two months in 2019. While the Paper 6 pass rate for August 2019 fell to 51% – the lowest pass rate for many years – it rose to 58% in March 2020, the highest rate this year so far. The pass rate for Paper 2 fell to 65% in March, while the pass rate for Paper 3 rose to 93% in February. The pass rates for Paper 5 for the first three months of 2020 were all well above 70%, with the March rate reaching 81%.
The pass rates for the practical papers in February and March revolved around the year-to-date averages:
HKSI Paper | February | Year-to-date Average | March |
| 7 | 64.4% | 65.9% | 69.4% |
| 8 | 56.4% | 60.6% | 61.1% |
| 9 | 46.7% | 54.6% | 57.1% |
| 12 | 55.2% | 55.8% | 66.7% |
Let’s have a look at some of the individual papers.
Paper 1 – Fundamentals of Securities and Futures Regulation
| Average monthly pass rate | 52.9% |
| Standard deviation of monthly averages | 1.4% |
| Range of monthly pass rates | 51.6% to 54.4% |
All figures year-to-date
The range of monthly pass rates has narrowed compared to 2019 (48.5% to 58.5%) with the monthly mean pass rate rising by less than 1%. The general trend for the Paper 1 pass rate in early 2020 has been stabilisation in the low 50s. As ever, Paper 1 cannot be taken for granted.
Paper 2 – Regulation of Securities
| Average monthly pass rate | 68.9% |
| Standard deviation of monthly averages | 4.5% |
| Range of monthly pass rates | 64.7% to 73.6% |
All figures year-to-date
While the Paper 2 monthly pass rate has hovered around 70% for the past few years, the March rate of 64.7% was well below this average. Indeed, the March pass rate is the second lowest for many years (September 2019: 62.7%). Paper 2 questions continue to challenge.
Paper 3 – Regulation of Derivatives
| Average monthly pass rate | 84.7% |
| Standard deviation of monthly averages | 9.2% |
| Range of monthly pass rates | 75.0% to 93.3% |
All figures year-to-date
Paper 3 is notable for the wide range of monthly pass rates (almost 20%), which continues to reflect a small sample rather than exam difficulty. However, the monthly average pass rate is relatively high. The Paper 3 exam traditionally occurs once a month.
Paper 5 – Regulation of Corporate Finance
| Average monthly pass rate | 77.2% |
| Standard deviation of monthly averages | 3.7% |
| Range of monthly pass rates | 74.0% to 81.3% |
All figures year-to-date
The Paper 5 2020 monthly average pass rate is similar to 2018, and markedly greater than 2019 (73.6%). The current range of monthly pass rates is relatively narrow and is likely to widen as the months pass. As the exam is traditionally run once a month, small sample sizes give rise to high variability in average scores.
Paper 6 – Regulation of Asset Management
| Average monthly pass rate | 56.5% |
| Standard deviation of monthly averages | 1.6% |
| Range of monthly pass rates | 55.0% to 58.2% |
All figures year-to-date
The Paper 6 average monthly pass rate has fallen consistently year-on-year since 2017, when the average was 75.7%. As shown above, it is now 56.5%. The number of candidates sitting Paper 6 each month is normally greater than 30, which suggests that, statistically, the exam is becoming more difficult. Candidates should make sure that they are well-prepared.
Paper 7 – Financial Markets
| Average monthly pass rate | 65.8% |
| Standard deviation of monthly averages | 3.1% |
| Range of monthly pass rates | 63.8% to 69.4% |
All figures year-to-date
All Paper 7 average monthly pass rates exceeded 60% in 2020, as was the case for most of 2019. While the range and standard deviation of the monthly averages reflect large sample sizes, with the exam being run eight times per month, March’s pass rate of 69.4% is the highest since mid-2016.
Paper 8 – Securities
| Average monthly pass rate | 60.6% |
| Standard deviation of monthly averages | 4.0% |
| Range of monthly pass rates | 56.4% to 64.4% |
All figures year-to-date
Paper 8, which is often taken in conjunction with Paper 7, has a wider range, higher standard deviation but a lower average pass rate than Paper 7. Interestingly, the average monthly pass rate has remained at 60% since 2016. As with Paper 7, it is run eight times per month, which suggests that candidates continue to find Paper 8 more difficult than Paper 7.
Paper 9 – Derivatives
| Average monthly pass rate | 54.6% |
| Standard deviation of monthly averages | 7.0% |
| Range of monthly pass rates | 46.7% to 60.0% |
All figures year-to-date
Paper 9 has always been the most difficult SFC licensing exam to pass, however 2020 has started relatively well, although February’s pass rate fell to 46.7%. The average monthly pass rate has not exceeded 50% for a number of years and it remains to seen, if 2020 will be the same. In 2019, there were two monthly pass rates below 30% – dispiriting for many a Paper 9 candidate.
Paper 12 – Asset Management
| Average monthly pass rate | 55.8% |
| Standard deviation of monthly averages | 10.6% |
| Range of monthly pass rates | 45.5% to 66.7% |
All figures year-to-date
Paper 12 is traditionally run twice a month, giving a relatively small sample size, which goes some way to explain the wide range of monthly pass rates and the relatively high standard deviation of 10.6%. It is worth noting that the monthly average pass rate of this technical paper did not fall below 50% in 2019, whereas we have already seen 45.5% recorded in January 2020.
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