FINRA SIE Certification Exam Syllabus

• The high-level purpose and mission of securities regulation
• Definition, jurisdiction and authority of the SEC

- Self-regulatory Organizations (SROs)

• Purpose and mission of an SRO
• Jurisdiction and authority of SROs (e.g., CBOE, FINRA, MSRB)

- Other Regulators and Agencies

• Department of the Treasury/IRS
• State regulators (e.g., NASAA)
• The Federal Reserve
• Securities Investor Protection Corporation (SIPC)
• Federal Deposit Insurance Corporation (FDIC)

- Market Participants and their Roles

• Investors (e.g., accredited, institutional, retail)
• Broker-Dealers (e.g., introducing, clearing, prime brokers)
• Investment advisers
• Municipal advisors
• Issuers and underwriters
• Traders and market makers
• Custodians and trustees
• Transfer agents
• Depositories and clearing corporations (e.g., Depository Trust & Clearing Corporation (DTCC), Options Clearing Corporation (OCC))

• The primary market
• The secondary market (e.g., electronic, over-the-counter (OTC), physical)
• The third market
• The fourth market

• Monetary vs. fiscal policy
• Open market activities and impact on economy
• Different rates (e.g., interest rate, discount rate, federal funds rate)

- Business Economic Factors

• Purpose of financial statements (e.g., balance sheet, income statement)
• Business cycle (e.g., contraction, trough, expansion, peak)
• Indicators (e.g., leading, lagging, coincident, inflation)
• Basic effects on bond and equity markets (e.g., cyclical, defensive, growth)
• Principal economic theories (e.g., Keynesian, Monetarist)

- International Economic Factors

• U.S. balance of payments
• Gross domestic product (GDP), gross national product (GNP)
• Exchange rates

• Public vs. private securities offering
• Initial public offering (IPO), secondary offering and follow-on offering
• Methods of distribution (e.g., best efforts, firm commitment)

- Shelf registrations and distributions (e.g., definition, purpose)
- Types and purpose of offering documents and delivery requirements (e.g., official statement, program disclosure document, prospectus)
- Regulatory filing requirements and exemptions (e.g., SEC, blue-sky laws)

• Types of equities
  - Common stock
  - Preferred stock
  - Rights
  - Warrants
  - American Depositary Receipts (ADRs)

- Knowledge of:

• Ownership (e.g., order of liquidation, limited liability)
• Voting rights
• Convertible
• Control and restrictions (e.g., SEC Rule 144)

- Debt Instruments

• Treasury securities (e.g., bills, notes, receipts, bonds)
• Agency (e.g., asset-backed and mortgage-backed securities)
• Corporate bonds
• Municipal securities
  - General obligation (GO) bonds
  - Revenue bonds
  - Others (e.g., special type bonds, taxable municipal securities, short-term obligations)
• Others (e.g., money market instruments, certificate of deposit (CD), bankers’ acceptance, commercial paper)

- Knowledge of:

• Varying maturities
• Generate income (e.g., interest)
• Coupon value
• Par value
• Yield
• Ratings and rating agencies
• Callable and convertible features
• Short-term vs. long-term characteristics
• Relationship between price and interest rate
• Negotiated vs. competitive offerings via underwriters and syndicates
• Auction

- Options

• Types of options
  - Puts and calls
  - Equity vs. index

- Knowledge of:

• Hedging or speculation
• Expiration date
• Strike price
• Premium
• Underlying or cash settlement
• In-the-money, out-of-the money
• Covered vs. uncovered
• American vs. European
• Exercise and assignment
• Varying strategies (e.g., long, short)
• Special disclosures (e.g., Options Disclosure Document (ODD))
• Options Clearing Corporation (OCC) for listed option

- Packaged Products

• Investment companies
  - Types of investment companies
  1. Closed-end funds
  2. Open-end funds
  3. Unit investment trusts (UITs)
  4. Variable contracts/annuities

- Knowledge of:

• Loads
• Share classes
• Net asset value (NAV)
• Disclosures
• Costs and fees
• Breakpoints
• Right of accumulation (ROA)
• Letter of intent (LOI)
• Net transactions
• Surrender charges
• Sales charges

- Municipal Fund Securities

• 529 Plans
  - Prepaid tuition
  - Savings plans
• Local government investment pools (LGIPs)
• ABLE accounts

- Knowledge of:

• Municipal fund securities
• Owner vs. beneficiary
• Restricted use of plan assets
• Tax advantages
• Direct or adviser sold

- Direct Participation Programs (DPPs)

• Types of DPPs
  - Limited partnerships
  - Tenants in common (TIC)

- Knowledge of:

• Pass-through tax treatment
• Unlisted
• Generally illiquid

- Real Estate Investment Trusts (REITs)

• Types of REITs
  - Private
  - Registered, non-listed
  - Listed

- Knowledge of:

• Real estate equity or debt
• Tax-advantaged income without double taxation

- Hedge Funds
- Knowledge of:

• Minimum investment
• Partnership structure
• Private equity
• Generally illiquid

- Exchange-traded Products (ETPs)

• Types of ETPs
  - Exchange-traded funds (ETFs)
  - Exchange-traded notes (ETNs)

- Knowledge of:

• Alternative investments to mutual funds
• Fee considerations
• Active vs. passive

• Capital
• Credit
• Currency
• Inflationary/purchasing power
• Interest rate/reinvestment
• Liquidity
• Market/systematic
• Non-systematic
• Political
• Prepayment

- Strategies for Mitigation of Risk

• Diversification
• Portfolio rebalancing
• Hedging

• Types of orders (e.g., market, stop, limit, good-til-canceled (GTC), discretionary vs. non-discretionary, solicited vs. unsolicited)
• Buy and sell, bid-ask
• Trade capacity (e.g., principal, agency)
• Long and short, naked and covered
• Bearish and bullish

- Investment Returns

• Components of return (e.g., interest, dividends, realized/unrealized gains, return on capital)
• Different types of dividends (e.g., cash, stock)
• Dividend payment dates (e.g., record date, ex-dividend date, payable date)
• Concepts of measurement (e.g., yield, yield to maturity (YTM), yield to call (YTC), total return, basis points)
• Cost basis requirements
• Benchmarks and indices

- Trade Settlement

• Settlement time frames for various products (e.g., T, T + 1)
• Physical vs. book entry (e.g., delivery and settlement)

- Corporate Actions

• Types of corporate actions (e.g., splits, reverse splits, buybacks, tender offers, exchange offers, rights offerings, mergers and acquisitions (M&A))
• Impact of stock splits and reverse stock splits on market price and cost basis
• Adjustments to securities subject to corporate actions
• Delivery of notices and corporate action deadlines
• Proxies and proxy voting

• Cash
• Margin
• Options
• Discretionary vs. non-discretionary
• Fee-based vs. commission
• Educational accounts

- Customer Account Registrations

• Individual
• Joint
• Corporate/institutional
• Trust (e.g., revocable, irrevocable)
• Custodial (e.g., UTMA)
• Partnerships
• Retirement (e.g., individual retirement account (IRA), qualified plans)
  - Types and characteristics
  - Required minimum distributions
  - Contributions

- Anti-money Laundering (AML)

• Definition of money laundering
• Stages of money laundering (e.g., structuring, layering, placement)
• AML compliance program
• Suspicious Activity Report (SAR)
• Currency Transaction Report (CTR)
• FinCEN
• Office of Foreign Asset Control (OFAC) and the Specially Designated Nationals and Blocked Persons (SDNs) List

- Books and Records and Privacy Requirements

• Books and records retention requirements
• Confirmations and account statements
• Holding of customer mail
• Business continuity plans (BCP)
• Customer protection and custody of assets
• Privacy requirements (e.g., Regulation S-P)
  - Nonpublic personal information
  - Confidentiality of information
  - Privacy notifications
  - Safeguard requirements

- Communications with the Public and General Best Interest Obligations and Suitability Requirements

• Communications with the public and telemarketing
  - Classifications and general requirements
  - Do-not-call list
• Best interest obligations and suitability requirements
  - Know-your-customer (KYC)
  - General requirements (e.g., what constitutes a recommendation)

• Definition of market manipulation
• Types of market manipulation (e.g., market rumors, pump and dump, front running, excessive trading, marking the close, marking the open, backing away, freeriding)

- Insider Trading

• Definition of insider trading
• Definition of material nonpublic information
• Identifying involved parties
• Penalties (e.g., fines, expulsion, incarceration)

- Other Prohibited Activities

• Restrictions preventing associated persons from purchasing initial public offerings (IPOs)
• Use of manipulative, deceptive or other fraudulent devices
• Improper use of customers’ securities or funds
  - Borrowing from customers
  - Sharing in customer accounts
• Financial exploitation of seniors
• Activities of unregistered persons
  - Prohibition against paying commissions to unregistered persons
  - Prohibition against solicitation of customers and taking orders
• Falsifying or withholding documents
  - Signatures of convenience
  - Responding to regulatory requests
• Prohibited activities related to maintenance of books and records (e.g., falsifying records and improper maintenance/retention of records)

• SRO qualification and registration requirements
  - Definition of registered vs. non-registered person
  - Permitted activities of registered and non-registered persons
  - Ineligibility for membership or association
  - Background checks
  - Fingerprinting
  - Statutory disqualification
  - Failing to register an associated person
• State registration requirements (e.g., blue-sky laws)
• Continuing Education (CE) requirement
  - Firm Element
  - Regulatory Element

• Form U4 and Form U5 (e.g., purpose, when to update forms)
• Consequences of filing misleading information or omitting information
• Customer complaints
• Potential red flags

- Reportable Events

• Outside business activities
• Private securities transactions
• Reporting of political contributions and consequences for exceeding dollar contribution thresholds
• Dollar and value limits for gifts and gratuities and non-cash compensation
• Business entertainment
• Felony, financial-related misdemeanors, liens, bankruptcy