SEC-CISI Diploma cheat sheet

The exam's published materials do not enumerate content domains; the single domain below consolidates the concepts most consistently associated with the SEC-CISI credential.

SEC-CISI is a certificate-level credential; it is not a license, registration, or substitute for the Series 7, Series 24, or any FINRA qualification.

CISI stands for the Chartered Institute for Securities & Investment, a UK-based professional body; the SEC prefix denotes a US securities-market focus.

Core subject areas reported by candidates: US securities-market structure, regulatory framework, ethics and professional standards, and client-facing conduct.

The exam is computer-based and delivered in English; the exact number of items and the passing score are set by the awarding body and can change between sittings.

A candidate should confirm the current syllabus, item count, and pass mark on the awarding body's official site before scheduling.

Terminology is drawn from both UK (CISI) and US (SEC/FINRA) usage; questions may use either, so both vocabularies should be recognized.

No single textbook is designated; study material should be cross-checked against primary regulatory sources such as the Securities Act of 1933 and the Exchange Act of 1934.

Primary market: issuer sells new securities to investors; proceeds go to the issuer. Secondary market: investors trade existing securities among themselves; proceeds go to the seller.

An IPO is a first-time public offering; a follow-on (secondary) offering by a listed issuer raises additional capital in the primary market.

Equity securities confer ownership: common stock typically carries voting rights and residual claim; preferred stock typically carries a fixed dividend and priority over common in liquidation.

Debt securities are contractual loans: the issuer owes principal at maturity and interest per the coupon; bondholders rank ahead of shareholders in a liquidation.

Money-market instruments have original maturities of one year or less: Treasury bills, commercial paper, certificates of deposit, and repurchase agreements.

Derivatives derive value from an underlying: options confer a right, futures and forwards impose an obligation; swaps exchange cash flows.

Collective investment vehicles pool investor money: open-end mutual funds issue and redeem at NAV; closed-end funds and ETFs trade intraday on exchanges.

Market participants include broker-dealers, investment advisers, transfer agents, clearing agencies, exchanges, and alternative trading systems (ATSs).

Securities Act of 1933: requires registration of public offerings and mandates prospectus disclosure; Section 5 governs the offering process.

Securities Exchange Act of 1934: created the SEC, governs secondary-market trading, periodic reporting (10-K, 10-Q, 8-K), and broker-dealer registration.

Investment Company Act of 1940: regulates mutual funds and other pooled vehicles, including diversification, leverage, and disclosure requirements.

Investment Advisers Act of 1940: requires adviser registration and imposes fiduciary duties; the SEC oversees advisers above the AUM threshold, states oversee smaller ones.

Regulation D provides private-placement safe harbors; Rule 506(b) permits general solicitation prohibition with accredited investors, Rule 506(c) permits general solicitation with verification.

Regulation S-K and Regulation S-X set disclosure content and financial-statement form; Regulation FD prohibits selective disclosure of material nonpublic information.

Insider trading is prohibited by Section 10(b) of the 1934 Act and Rule 10b-5; the tipper and tippee can both be liable.

Sarbanes-Oxley (2002) and Dodd-Frank (2010) imposed internal-control, whistleblower, and executive-compensation requirements on public companies.

Core ethical duties: integrity, objectivity, competence, confidentiality, and fair dealing with clients and counterparties.

Suitability: recommendations must be consistent with the client's objectives, risk tolerance, time horizon, and financial circumstances.

Know-your-customer (KYC): identity, beneficial ownership, source of funds, and risk profile must be established before onboarding.

Anti-money-laundering (AML): suspicious activity must be escalated internally; in the US, a suspicious activity report (SAR) is filed with FinCEN and is not disclosed to the client.

Conflicts of interest must be identified, disclosed, and managed; undisclosed compensation for a recommendation is a conflict.

Chinese walls and information barriers separate research from investment banking to prevent misuse of material nonpublic information.

Best execution: firms must seek the best available terms for client orders, considering price, speed, likelihood of execution, and cost.

Record-keeping: communications and transaction records must be retained per applicable rules; retention periods vary by jurisdiction and record type.

Return: holding-period return = (ending value − beginning value + income) / beginning value.

Compound annual growth rate (CAGR) = (ending value / beginning value)^(1/n) − 1, where n is the number of years.

Present value = future value / (1 + r)^n; a higher discount rate reduces present value.

Bond price and yield move inversely; duration approximates the percentage price change for a 1% change in yield.

Risk types: market (systematic) risk is undiversifiable; credit, liquidity, and idiosyncratic risks are diversifiable in a portfolio.

Sharpe ratio = (portfolio return − risk-free rate) / standard deviation of portfolio returns; it measures excess return per unit of total risk.

Beta measures sensitivity to market movements; beta > 1 implies greater volatility than the market, beta < 1 implies less.

Diversification reduces unsystematic risk but cannot eliminate systematic risk; correlation below 1 produces diversification benefit.

In the US, equity trades settle on a T+1 basis; the standard was shortened from T+2 in May 2024.

Clearing houses act as central counterparties (CCPs), novating trades and managing counterparty default risk through margin and a default fund.

Delivery-versus-payment (DVP) ensures securities transfer only against payment, reducing principal risk in settlement.

Short selling requires locating borrowable shares; naked short selling is restricted, and Regulation SHO governs locate and close-out requirements.

Market manipulation includes wash trades, spoofing, layering, and marking the close; all are prohibited under the 1934 Act.

Circuit breakers halt trading market-wide at defined S&P 500 percentage declines; limit-up/limit-down bands apply to individual securities.

Custody rules require client assets to be segregated from firm assets and reconciled regularly.

Business-continuity planning requires documented recovery objectives and periodic testing of failover arrangements.