The CISI Qualification
The Chartered Institute for Securities and Investments (CISI) have designed the CISI Certificate in Investment and Risk course in liaison with many of the leading global financial services companies and educational providers. The CISI certificate is intended to offer a comprehensive knowledge and skills base to any individual working in the application of securities and derivatives to private or corporate clients.
The flexible, modular structure of the CISI qualification course allows you to tailor the study programme to meet your specific needs and follow only those modules which are relevant to your career. To be awarded the Level 3 CISI certificate, you are required to study one of the two following regulatory units:
• FSA Financial Regulations, or
• The Principles of Financial Regulation
You must also select one of the following technical units which will most closely meet their career requirements:
• Financial Derivatives
• Commodity Derivatives
• Investment Management
• Risks in Financial Services
• Combatting Financial Crime, or
• Global Financial Compliance
CISI recommends that if you are hoping to sit the CISI exam, you should allow an average of 100 hours study time for each paper followed. The computer based examination assessments are available throughout the year from a number of CISI accredited course providers.
The Derivatives Technical Unit
The principle aims of the CISI Derivatives module are to develop your understanding of the primary characteristics involved in the field:
• swaps, and
• how they relate to underlying cash securities
By the end of the course you should be familiar with their use in investment and trading applications and understand how they may be applied to controlling risks in derivatives and derivative portfolios.
The Derivatives module is structured into nine different elements and you are required to meet the following four criteria for each element:
1. To know all of the data, rules, strategies and facts included in the element.
2. To understand and have the ability to demonstrate that understanding of those principles, rules and facts.
3. To have the ability to calculate and demonstrate their comprehension of formulae and calculations.
4. To have the ability to apply their knowledge to a specific set of circumstances.
The examination following the Derivatives course is composed of 100 multiple choice questions for which you are allowed two hours to complete. A mark of 70 per cent is required to achieve a pass level, and the average pass rate amongst candidates is 83 per cent. If you would like to access past examination papers for revision purposes may do so through the CISI website.
The Derivatives Syllabus
The nine elements included in the Derivative Syllabus are shown below with their examination weightings:
1. General Introduction to Derivatives (seven questions)
2. Underlying Markets; Foreign Exchange, Government and Corporation Debt, Equity, Softs and Agricultural, Base and Precious Metals (12 questions)
3. Exchange Traded Futures and Options; Trading Mechanisms and Exchanges, Aspects of Delivery (nine questions)
4. The Principles of Exchange Traded Futures and Options; Pricing, Market-Transparency, Trade Registration, Reporting and Management of Trading (16 questions)
5. The Principle of OTC (over-the-counter) Derivatives; Forwards and Swaps, Characteristics and Concepts, Structured Products, Marketing Platforms (16 questions)
6. The Principles of Clearing and Margins; Definition and Purposes, Principles of Margin, Collateral and Credit (10 questions)
7. Delivery and Settlement; Exercising Options and Aspects of Delivery (seven questions)
8. Trading, Hedging and Investment Strategies; Futures-Spread Trading, Basics of Futures and Options Trading, Options Strategies, Application of Derivative Strategies (16 questions)
9. Special Regulation Requirements; Differences between US and EU Regulations, International Accounting Standards, Principle Based Regulations, Mergers and Acquisitions (seven questions)
You are advised that weighting will vary slightly from year to year, but the basic allocations will stay the same within each element.
Studying for the CISI Level 3 Certificate Qualification
One of the providers of the CISI qualification study programme is 7 City Learning. You have a choice of study applications including a two day Intensive Study option (from £380), a standard two and a half weekday course (from £420) or, for those who prefer to study at their own pace, a Distance Learning option (from £260).
BPP Financial also offers the CISI Securities qualification. Their classroom based two and a half day course is run through their London training centre and has fees from £474. A Distance Learning option is also provided, priced from £282.
The CISI are advising potential candidates that, due to the need to comply with new Retail Distribution Review (RDR) legislation initiated by the FSA, all professionals who offer advice to clients must be qualified to a minimum of Level 4.
Many candidates and employers are switching to the RDR accredited Level 4 Investment, Risk and Taxation exam which is part of the Investment Advice Diploma.You should be aware that as from 31st December 2012, the CISI will no longer be offering the Level 3 exam.