International Introduction to

Securities & Investments

Chartered Institute for Securities and Investment (CISI)

• Leading professional body for staff employed in the investment industry.

• Global presence - exams offered in Australia, China, India, the Middle
East and Europe.
• Main examining body for investment related exams and offers unique
range of exams focused on international marketplace.
• Extensive continuing professional development (CPD) programme.

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Chartered Institute for Securities and Investment (CISI)
CISI Qualifications

Foundation Level Fundamentals of Financial Services

International Introduction to Securities & Investments

Professional Exams Wealth Management

Financial Planning
Corporate Finance
Investment Operations
Islamic Finance
Regulatory exams

Post Graduate Chartered Wealth Manager

Professional Exams Certified Financial Planner
Diploma in Investment Compliance
Diploma in Investment Operations
Diploma in Corporate Finance
Diploma in Capital markets

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Objective of the Qualification

• International Introduction to Securities and Investment is designed to

meet the needs of new entrants to the investment industry.
• With a tailored and focused approach to international markets, the
award provides an overview of all areas of investment .
• The qualification offers staff in a wide range of roles a valuable
understanding of the language of the industry and provides firms with a
benchmark entry level qualification which can be used for induction
purposes.
• The Award is a stand alone benchmark examination as well as a
technical unit within the Certificate in Investment Operations.

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Chapters
1. Financial Services Sector
• An introduction to the financial services sector and
the main participants that are seen in financial
centres around the globe
2. Economic Environment
• Some key aspects of macro-economics, key measures
of economic data and the role of central banks in
management of the economy
3. Financial Assets and Markets
• Overview of the main types of assets and the range
of financial markets
4. Equities
• Formation of companies, how companies are listed,
the benefits and risks of owning shares and the
methods by which they are settled
5. Bonds
• Key characteristics and types of government and
corporate bonds and the risks and returns associated
with them
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6. Derivatives
• Brief review of derivatives to provide an
understanding of the key features of futures
and options and the terminology associated
with them
7. Investment Funds
• Main types including unit trusts, OEICs,
Investment Trusts, Hedge Funds and Private
Equity
8. Regulation and Ethics
• An overview of international regulation
including specific areas such as financial crime
and insider dealing as well as professional
integrity and ethics
9. Financial Products
• Main types of financial products, including
pensions, loans, mortgages and life assurance
Syllabus

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Exam Specification

• Exam format is multiple choice – 50 questions from across the syllabus.

• Questions are written by experienced practitioners who work in the
industry and go through a quality control process to ensure they are
appropriately worded and warrant asking.
• Questions test the Learning Objectives contained in the syllabus and the
syllabus will drive the type of question depending upon whether it is a
knowledge learning objective or an understanding one.

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 Exam Questions: Samples
Know …….

The Bank of Japan is which of the following?

a) Retail Bank
b) Investment Bank
c) Central Bank
d) Custodian Bank

Understand …..

What is the most likely effect of a central bank raising interest rates?
a) Share prices will rise
b) Share prices will fall
c) Government bond prices will rise
d) Corporate bond prices will rise

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Exam Specification
Chapter Subject No of Questions

1 Financial Services sector 2

2 Economic Environment 3

3 Financial Markets & Assets 7

4 Equities 9

5 Bonds 5

6 Derivatives 6

7 Investment Funds 7

8 Financial Services Regulation 5

9 Other Financial Products 6

Total Questions 50

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Chapter 1
(approximately 2 out of the 50 examination questions)

The Financial Services Sector

What is the main role of the financial services sector?

Sub-topics
• The Role of the Financial Services Sector
• Financial Markets
• Participants
The Role of the Financial Services Sector

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Financial Markets: Equity Markets

• Equity markets are the known of the financial markets and facilitate the
trading of shares in quoted companies.
• Global market capitalisation was over US$83 trillion (2017) and US$78
trillion (2018).
• Major stock markets in the world include NYSE, Nasdaq, Tokyo Stock
Exchange (TSE), Shanghai Stock Exchange, London Stock Exchange, etc.
• Rivals to traditional stock exchanges arisen with the development
technology and communication networks known as multilateral trading
facilities (MTFs) – systems that bring together multiple parties that are
interested in buying/selling financial instruments such as shares, bonds
and derivatives.

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Financial Markets: Bond Markets

• Compared to equity markets, bond markets are larger both in size and
value of trading – estimated amounts outstanding exceed US$100
trillion globally.
• The bonds traded range from domestic bonds issued by companies and
governments, to international bonds issued by companies,
governments, and supranational agencies such as the World Bank.
• US has the largest bond market, but trading in international bonds is
predominantly undertaken in European markets.

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Financial Markets: Foreign Exchange Markets

• FX markets are the largest of all financial markets, with average daily
turnover in excess of US$5 trillion.
• The strength of one currency in relation to another is determined by
market forces of demand and supply.
• Governments, companies, and individuals are able to deal with their
cash inflows and outflows denominated in overseas currencies.
• The market is provided by the major banks, who each provide rates of
exchange at which there are willing to buy/sell currencies.
• FX is an over-the-counter (OTC) market – brokers/dealers negotiate
directly with one another, there is no central exchange or clearing
house.

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Financial Markets: Foreign Exchange Markets

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Financial Markets: Derivatives Markets

• Derivatives markets trade a range of complex products based on

underlying instruments, including currencies, indices, interest rates,
equities, commodities and credit risk.
• Derivatives are available on both the exchange-traded market and the
OTC market. The largest of the exchange-traded derivatives markets is
the Chicago Mercantile Exchange (CME), while Europe dominates
trading in the OTC derivatives markets worldwide.
• Interest rate derivatives contracts account for the majority of
outstanding derivatives contracts, followed by the FX derivatives, equity-
linked contracts, credit derivatives and commodity contracts which are
used to hedge against risk or for speculation.

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Participants

• Retail/commercial banks – provide services such as taking deposits

from, and lending funds to, retail customers, as well as providing
payment and money transmission services.
• Saving institutions – same as retail banks, specialising in offering savings
products to retail customers.
• Investment banks – corporate finance and advisory work for
governments, institutions and companies, or carry out mergers and
acquisitions. Treasury, investment management, securities trading etc.
• Custodian banks – looking after portfolios of securities on behalf of
others, such as fund managers, pension funds and insurance companies.
Arranging settlement of purchases and sales of securities.

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Participants

• Fund managers – investment managers, portfolio managers or asset

managers, run portfolios of investments for others.
• Stock brokers – execution only services, robo-advisors, advisory and
discretionary wealth managers, institutional brokers.
• Private banks – tailored services, wider range of investment vehicles,
integrated banking plus extra services, range of estate and tax planning
services.
• International private banks - huge market dominated by Swiss Banks
and Global Banks, services designed for ultra-wealthy, able to offer
individual specialist services because of size of investable funds.

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Participants

• Insurance companies – collect premiums in exchange for the coverage

provided. This premium income is invested in equities and bonds and, as
a result, the insurance industry is a major investor in both equity and
bond markets.
• Retirement schemes – large, long-term investors in shares, bonds and
money markets, and property.
• Peer-to-Peer (P2P) and crowdfunding – P2P lending cuts out the banks
so that borrowers often receive slightly lower rates, while savers get far
improved headline rates, with the P2P firms themselves profiting via a
fee.
• Third Party Administrators – outsourced investment administration.

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Participants

• Sovereign wealth funds – state-owned investment fund that holds

financial assets such as equities, bonds, real estate, or other financial
instruments. Defined as special purpose investment funds or
arrangements owned by a government with varied and undisclosed
investment objectives.
• Trade bodies – International Capital Market Association (ICMA), which
concentrates on international bond dealing, and the International Swaps
and Derivatives Association (ISDA), which produces standards that firms
that operate in OTC derivatives follow when dealing with each other.

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