What is the relationship of HKEX and SEHK?

• A. HKEX is the exchange controller of SEHK and its holding company
• B. SEHK is the holding company of HKEX
• C. They are unrelated regulators
• D. SEHK regulates HKEX's corporate governance

Answer: (B)

The relationship being tested is how a holding company and its subsidiary relate in a corporate group. A holding company owns and controls another company, which operates as a subsidiary.

If SEHK is the holding company of HKEX, SEHK would own HKEX and direct its strategy and governance as the parent entity, while HKEX would carry out the exchange operations under SEHK’s umbrella. This captures the idea of one entity having controlling ownership over the other.

The other descriptions misrepresent the hierarchy or roles (for example, suggesting HKEX controls SEHK, or that they are unrelated regulators), whereas identifying SEHK as the holding company emphasizes the ownership-and-control relationship.