CISI CMP Securities/Derivatives Exam Blueprint

How to use this Exam Blueprint

This independent Exam Blueprint is for candidates preparing for the Chartered Institute for Securities & Investment exam CISI Capital Markets Programme - Securities / Derivatives, exam code CISI CMP Sec/Deriv.

Use it as a readiness map, not as a claim about exact official weighting or section counts. Work through each topic area and ask:

• Can I explain the instrument or process in plain market language?
• Can I identify who uses it, why, and what risk it creates?
• Can I apply the rule or concept to a client, trading, operations, or control scenario?
• Can I perform the basic calculations without relying on answer patterns?
• Can I spot the most likely distractor: terminology, timing, cash flow direction, margin, tax/accounting treatment, settlement, or regulatory conduct?

A strong final-review target is to be able to move between product knowledge, market process, risk, client suitability, documentation, disclosure, and calculation logic without treating them as separate topics.

Exam identity and readiness scope

Topic-area readiness table

What “ready” means for this exam

Readiness for CISI CMP Sec/Deriv is applied understanding. Memorising definitions is not enough.

Securities readiness checklist

Equity securities

Check that you can do the following without notes:

• Distinguish ordinary shares from preference shares.
• Explain voting rights, dividend rights, residual claims, and limited liability.
• Describe why equity is higher risk than senior debt from an investor-ranking perspective.
• Explain how share price, dividends, and total return relate.
• Identify the effect of common corporate actions such as rights issues, bonus issues, stock splits, dividends, and takeovers at a concept level.
• Explain the purpose of equity indices and why index composition matters.
• Recognise the difference between direct share ownership and exposure through funds, depositary receipts, or structured products where relevant.
• Explain why liquidity and free float can affect trading cost and price volatility.

Debt securities

Debt-security tasks:

• Explain the difference between government, supranational, corporate, and money-market debt at a high level.
• Identify short-term instruments versus longer-term bonds.
• Explain fixed-rate, floating-rate, zero-coupon, inflation-linked, and convertible bond concepts.
• Link market interest-rate movements to fixed-rate bond price movements.
• Explain why longer-duration bonds are usually more price-sensitive to rate movements.
• Identify reinvestment risk, inflation risk, credit spread risk, and liquidity risk.
• Interpret a bond quote or term description in terms of cash flows and investor exposure.

Primary and secondary markets

Derivatives readiness checklist

Derivatives core concepts

A derivative question often tests whether you can identify the exposure before choosing the rule or formula.

• Identify the underlying asset, rate, index, currency, commodity, credit event, or other reference.
• Identify long versus short exposure.
• State whether the contract creates a right, an obligation, or both.
• Distinguish exchange-traded standardised contracts from OTC customised contracts.
• Explain notional amount and why notional is not always the amount at risk.
• Explain leverage and why small underlying movements can create large percentage gains or losses.
• Distinguish hedging, speculation, and arbitrage.
• Recognise counterparty risk, margin risk, liquidity risk, and basis risk.
• Explain cash settlement versus physical delivery at a concept level.
• Identify when a derivative reduces risk and when it increases risk.

Futures and forwards

Futures/forwards readiness tasks:

• Explain why a producer, investor, borrower, or portfolio manager might use a forward or future.
• Identify the payoff direction for a long position and a short position.
• Calculate simple profit or loss from price movement and contract size.
• Explain basis risk: the hedge instrument does not perfectly match the exposure.
• Distinguish closing out a futures position from holding to delivery or settlement.
• Explain why margin is a performance bond, not a part-payment for the underlying.

Options

Options readiness tasks:

• Define call, put, strike, expiry, premium, exercise, assignment, intrinsic value, and time value.
• Classify options as in the money, at the money, or out of the money.
• Calculate simple intrinsic value for calls and puts.
• Calculate basic profit or loss after including premium.
• Identify breakeven for simple long-call and long-put positions.
• Explain why option buyers have rights and writers have obligations.
• Explain why volatility, time to expiry, rates, dividends, and underlying price can affect option value at a concept level.
• Distinguish protective puts, covered calls, and speculative option purchases.

Swaps

Swaps readiness tasks:

• Identify which leg is fixed and which leg is floating.
• Explain payer/receiver language in an interest-rate swap at a concept level.
• Match a swap to a hedging objective.
• Explain reset dates, payment dates, notional amount, and reference rate concepts.
• Recognise counterparty, collateral, valuation, and termination risk.
• Avoid confusing economic exchange with legal ownership of the underlying asset.

Calculation and formula readiness

Do not just memorise formulas. For each calculation, practise saying: “The result means…”

Return and percentage change

Use for basic securities and derivative mark-to-market questions.

\[ \text{Percentage change} = \frac{\text{New value} - \text{Original value}}{\text{Original value}} \times 100 \]

Readiness checks:

• Know whether the question asks for price return or total return.
• Include income such as coupon or dividend only when the question requires it.
• Keep signs clear: gain is positive, loss is negative.
• Convert percentage and decimal forms correctly.

Total return

\[ \text{Total return} = \frac{\text{Ending price} - \text{Beginning price} + \text{Income received}}{\text{Beginning price}} \times 100 \]

Readiness checks:

• Include coupons or dividends when measuring total return.
• Exclude income when the question asks only for capital gain or price movement.
• Interpret the answer from the investor’s perspective.

Bond price and yield intuition

You may not need advanced bond mathematics for every question, but you should understand the relationship:

Readiness checks:

• Do not assume coupon equals yield.
• Do not assume face value equals market price.
• Recognise premium, discount, and par pricing concepts.
• Understand that yield incorporates price and expected cash flows.
• Explain why a zero-coupon bond is issued at a discount and redeemed at face value.

Accrued interest concept

For coupon-bearing bonds, a buyer may compensate the seller for interest earned since the last coupon date, depending on the market convention and transaction terms.

Plain-language formula:

• Accrued interest = coupon for the period × fraction of coupon period elapsed
• Dirty price = clean price + accrued interest

Readiness checks:

• Know the conceptual difference between clean and dirty price.
• Identify who receives the next coupon and why accrued interest may be paid.
• Avoid mixing annual coupon rate with coupon amount for the settlement period.
• Watch day-count and timing details if the question supplies them.

Futures profit and loss

Plain-language formula:

• Futures P/L = price movement × contract size × number of contracts
• Long position gains when futures price rises.
• Short position gains when futures price falls.

Readiness checks:

• Identify whether the candidate is long or short.
• Use the correct contract size or multiplier if supplied.
• Multiply by number of contracts.
• Interpret variation margin as daily gain/loss settlement, where applicable.
• Do not confuse margin deposit with profit or loss.

Option intrinsic value and profit

Plain-language formulas:

• Call intrinsic value = max(underlying price - strike price, 0)
• Put intrinsic value = max(strike price - underlying price, 0)
• Long call profit at expiry = intrinsic value - premium paid
• Long put profit at expiry = intrinsic value - premium paid
• Short option profit is the opposite of the long option result before considering transaction costs or other adjustments.

Readiness checks:

• Include the premium in profit/loss.
• Separate intrinsic value from total option value before expiry.
• Know that out-of-the-money options can expire worthless.
• Identify the writer’s obligation if the option is exercised.
• Avoid reversing call and put payoff direction.

FX and cross-currency checks

If a securities or derivatives question includes currency conversion:

• Identify the base currency and quoted currency.
• Decide whether to multiply or divide based on the quote.
• Keep the client’s reporting currency in mind.
• Separate investment performance from currency effect.
• Recognise currency risk even when the underlying asset price is unchanged.

Scenario and decision-point checks

Product selection: security or derivative?

Use this decision path when a question asks what product or structure best matches an objective.

    flowchart TD
	    A[Start with client or trading objective] --> B{Need ownership or income?}
	    B -->|Yes| C[Consider cash security: equity, bond, fund, or money-market instrument]
	    B -->|No or indirect exposure acceptable| D{Need hedge or leveraged exposure?}
	    D -->|Hedge existing risk| E[Consider derivative aligned to exposure, size, timing, and basis risk]
	    D -->|Speculative exposure| F[Assess leverage, loss potential, liquidity, and suitability]
	    E --> G{Standardised exposure sufficient?}
	    G -->|Yes| H[Exchange-traded derivative may fit]
	    G -->|No| I[OTC derivative may be considered with counterparty and documentation checks]
	    F --> J[Check disclosures, risk tolerance, and loss capacity]
	    C --> K[Check issuer risk, liquidity, settlement, custody, and disclosures]
	    H --> L[Confirm margin, clearing, settlement, and exit route]
	    I --> M[Confirm legal terms, collateral, valuation, and termination]

Scenario cues table

Conduct, regulation, and ethics readiness

For finance exams, conduct questions often test judgment under pressure. The correct answer is usually the one that protects market integrity, client interests, transparency, and proper records.

Conduct checklist

• Recognise conflicts of interest and know that disclosure alone may not always remove the need to manage or avoid the conflict.
• Distinguish personal account dealing concerns from client-order handling concerns.
• Identify market abuse risks such as insider dealing, improper disclosure, manipulation, misleading impressions, and misuse of confidential information.
• Know when information is public, non-public, price-sensitive, or confidential at a concept level.
• Apply fair client communication principles: clear, fair, not misleading.
• Identify suitability/appropriateness issues in product recommendations and execution-only contexts where relevant.
• Recognise that complex or leveraged products require stronger risk explanation and client understanding.
• Understand the importance of accurate confirmations, records, and audit trails.
• Escalate suspicious activity, errors, conflicts, and complaints through proper internal channels.
• Avoid answers that prioritise revenue, speed, or relationship management over compliance obligations.

Client-facing decision prompts

Market process readiness

Trading and execution

Execution readiness tasks:

• Choose between market and limit order based on urgency and price control.
• Explain how bid/offer spread affects client cost.
• Identify the risk of trading large size in an illiquid market.
• Recognise when best-execution-style considerations may be relevant.
• Distinguish agency and principal capacity at a concept level.
• Explain why market data, quotes, and last traded price are not always the same thing.

Clearing, settlement, and custody

Readiness prompts:

• Can you explain why delivery versus payment reduces settlement risk?
• Can you identify who is affected by a settlement fail?
• Can you distinguish legal title, beneficial ownership, nominee holding, and custody records at a concept level?
• Can you explain why corporate-action deadlines matter?
• Can you identify operational risk even when market risk is low?

Risk readiness map

Securities-versus-derivatives comparison

Product suitability and appropriateness lens

Even when the exam is product-heavy, many questions are easier if you apply a client lens.

Common weak areas and traps

“Can you do this?” final skill checklist

Instrument classification

• Given a description, classify the product as equity, debt, money-market instrument, derivative, structured product, or hybrid.
• Identify whether the investor has ownership rights, creditor rights, or contractual derivative rights.
• Identify whether return comes from dividends, coupons, capital gain, premium, spread, index movement, rate movement, or payoff formula.
• Identify seniority and payment priority where relevant.
• Identify whether capital is guaranteed, protected, at risk, or conditionally protected based on wording.

Cash-flow and payoff logic

• Draw a simple timeline of purchase, income, maturity/expiry, settlement, and final cash flow.
• Calculate simple return including income where relevant.
• Calculate futures profit/loss from price movement.
• Calculate option intrinsic value and profit after premium.
• Explain whether a swap changes fixed/floating or currency exposure.
• Distinguish realised cash flow from mark-to-market value.

Risk and control judgment

• Match each product to market, credit, liquidity, counterparty, operational, and conduct risk.
• Identify which risk is most important in the given scenario.
• Recognise when leverage magnifies risk.
• Recognise when collateral, margin, or clearing reduces some risks but does not remove all risks.
• Explain how documentation and confirmation reduce legal and operational risk.
• Identify when a client or firm should escalate an issue.

Market mechanics

• Explain primary versus secondary market roles.
• Distinguish issuer proceeds from secondary trading proceeds.
• Interpret bid, offer, and spread from buyer and seller perspectives.
• Choose a market, limit, or trigger-based order concept based on scenario needs.
• Explain clearing, settlement, custody, and asset servicing as separate steps.
• Identify why settlement failure creates risk.

Conduct and communication

• Identify misleading or incomplete product descriptions.
• Spot conflicts of interest in underwriting, research, trading, and client advice scenarios.
• Recognise misuse of confidential or inside information.
• Apply client objective, risk tolerance, knowledge, experience, and loss capacity to product selection.
• Select the answer that documents, discloses, manages, or escalates appropriately.
• Avoid recommending complex or leveraged products based only on higher potential return.

Mini case drills

Use these to test applied readiness.

Case 1: Rising interest rates and a fixed-rate bond

A client holds a fixed-rate corporate bond. Market interest rates rise, and credit spreads also widen.

Can you answer?

• What is the likely direction of the bond price?
• Which part of the move is interest-rate risk?
• Which part is credit spread risk?
• Does the coupon payment necessarily change?
• Why might the client’s ability to sell at a fair price also be affected?

Case 2: Importer with foreign-currency payment

A company must pay a foreign-currency invoice in three months and fears its domestic currency may weaken.

Can you answer?

• What currency exposure does the company have?
• Would an FX forward be a hedge or a speculation?
• What does the hedge lock in?
• What opportunity cost exists if the currency moves favourably instead?
• What counterparty or settlement considerations remain?

Case 3: Protective put

An investor owns shares and buys a put option on the same shares.

Can you answer?

• What downside risk is reduced?
• What cost is paid for protection?
• Does the investor still participate in upside?
• What happens if the option expires out of the money?
• Why is this different from selling the shares?

Case 4: Uncovered short call

A trader writes a call option without owning the underlying asset.

Can you answer?

• What premium is received?
• What obligation does the trader accept?
• What happens if the underlying price rises sharply?
• Why can the loss be large?
• What conduct or suitability concerns arise if this is recommended to a client?

Case 5: Secondary market trade fail

A client buys a security. The trade is executed, but settlement fails.

Can you answer?

• Has the trade been executed?
• Has final delivery and payment occurred?
• What operational risks arise?
• What records and confirmations matter?
• Why is settlement not the same as execution?

Final-week review checklist

Seven to five days before the exam

• Build a one-page instrument map: equities, debt, money markets, futures, forwards, options, swaps, structured products.
• Rework your weakest calculation types without looking at answers.
• Review all long/short, call/put, fixed/floating, buyer/seller, bid/offer direction rules.
• Practise explaining bond price/yield relationships aloud.
• Create flashcards for risk types and scenario cues.
• Review primary market, secondary market, clearing, settlement, and custody as one workflow.
• Identify conduct scenarios where escalation, disclosure, or refusal is the safest answer.

Four to two days before the exam

• Complete mixed practice sets that combine securities, derivatives, risk, and conduct.
• For every missed question, label the error: knowledge gap, direction error, calculation mistake, or scenario judgment.
• Redo all missed calculation questions from scratch.
• Review option payoff diagrams or payoff tables for long call, short call, long put, short put.
• Review common product features: callable, convertible, floating-rate, zero-coupon, margin, collateral, notional, premium.
• Practise reading the last sentence of each question first to identify what is being asked.
• Check that you can eliminate distractors based on client objective and risk.

Final day

• Review only high-yield notes, error logs, and formula prompts.
• Do not try to learn an entirely new topic unless it is a basic definition gap.
• Rehearse sign conventions: long gains when price rises; short gains when price falls.
• Rehearse option rights: call = right to buy; put = right to sell; buyer has right; writer has obligation.
• Rehearse bond intuition: yield up, fixed-rate bond price down; yield down, fixed-rate bond price up.
• Rehearse conduct principle: protect market integrity, clients, records, and escalation standards.
• Sleep and keep calculation practice light.

Exam-day answering habits

Practical next step

Use this blueprint to create a personal gap list for CISI CMP Sec/Deriv. For each weak area, complete three actions: review the concept, practise applied questions, and write one sentence explaining the correct rule in your own words. Then move into mixed practice so you can handle securities, derivatives, calculations, market process, risk, and conduct in the same sitting.