CISI IAD Securities Technical Unit Exam Blueprint & Readiness Checklist

How to use this Exam Blueprint

This Exam Blueprint is an independent readiness checklist for the Chartered Institute for Securities & Investment CISI IAD Securities Technical Unit exam, official code CISI IAD Securities. Use it to convert the broad securities-advice syllabus into practical revision tasks.

Because exact official topic weights are not supplied here, treat the areas below as readiness areas, not as a prediction of exam weighting. Your goal is to be able to apply securities knowledge in client, product, market, risk, tax, and suitability scenarios rather than only recall definitions.

A good final-review method:

1. Work through each topic-area row.
2. Mark your confidence honestly.
3. Revisit any area where you cannot explain the rule, perform the calculation, or choose the suitable action in a short scenario.
4. Finish with mixed practice questions so you can switch topics quickly under exam conditions.

Topic-area readiness map

Core “can you do this?” checklist

Use this section as a practical gate before final practice. If any item feels vague, revise the underlying topic and then answer applied questions.

Securities and market structure

• Explain the difference between the primary market and secondary market.
• Identify the role of a broker, market maker, custodian, registrar, nominee, fund manager, and depositary or trustee where relevant.
• Distinguish quoted securities, unquoted securities, exchange-traded instruments, and over-the-counter exposure.
• Explain what a client receives after a trade and what records matter for ownership or beneficial interest.
• Recognize why liquidity, bid-offer spread, dealing frequency, and market depth affect suitability.
• Identify when execution-only, advised, and discretionary situations raise different client-information and documentation expectations.

Equities

• Explain ordinary share rights: voting, dividends, residual ownership, and capital risk.
• Compare ordinary shares with preference shares.
• Identify the impact of dividend announcements, ex-dividend dates conceptually, and dividend reinvestment choices.
• Explain how a rights issue affects a shareholder’s choices: take up, sell rights, allow lapse, or combine actions.
• Distinguish a rights issue, bonus issue, share split, consolidation, takeover, and buyback at a practical level.
• Calculate or interpret earnings per share, dividend yield, price/earnings ratio, and basic total return.
• Explain why equity income is not guaranteed and why capital values can be volatile.

Fixed income

• Explain coupon, nominal value, maturity, redemption, clean price, dirty price, and accrued interest.
• Distinguish government, supranational, investment-grade corporate, high-yield corporate, and convertible debt at a risk level.
• Explain interest-rate risk: why longer-dated and lower-coupon bonds are typically more price-sensitive.
• Explain credit risk, default risk, downgrade risk, reinvestment risk, inflation risk, and liquidity risk.
• Interpret yield to redemption conceptually, even if a detailed yield calculation is not required in a scenario.
• Distinguish running yield/current yield from redemption yield.
• Recognize when a bond may be unsuitable despite offering a high coupon.

Funds and pooled investments

• Compare direct securities with pooled investment exposure.
• Explain diversification benefits and limits.
• Distinguish active and passive management.
• Compare open-ended funds with closed-ended investment companies.
• Explain why investment trusts can trade at a premium or discount to net asset value.
• Identify how gearing in a fund or investment trust changes risk.
• Explain income units/shares vs accumulation units/shares.
• Recognize liquidity, pricing, dealing frequency, and charges as suitability considerations.

Derivatives and leveraged instruments

• Distinguish calls and puts.
• Explain intrinsic value and time value conceptually.
• Identify the buyer’s maximum loss for a plain-vanilla option as the premium paid.
• Recognize when a written option can expose the writer to substantial or open-ended risk.
• Distinguish hedging, income generation, speculation, and arbitrage uses.
• Explain margin and why margin calls matter.
• Identify counterparty risk in OTC derivatives and issuer risk in structured products.
• Recognize that capital protection may be conditional, not absolute, depending on product design.

Risk, return, and suitability

• Separate attitude to risk from capacity for loss.
• Identify time horizon, liquidity need, income requirement, tax position, knowledge and experience, and concentration risk.
• Explain why a high expected return usually involves higher risk or lower certainty.
• Distinguish market risk, credit risk, liquidity risk, currency risk, inflation risk, reinvestment risk, operational risk, and regulatory risk.
• Identify conflicts between client objectives, such as high income, instant liquidity, low risk, and high capital growth.
• Decide when no recommendation should be made because client information is insufficient.
• Document a recommendation using client facts, product features, risks, costs, and alternatives.

Formula and calculation readiness

Do not only memorize formulas. Be ready to interpret what the result means in a client or product scenario.

Equity and fund metrics

Dividend yield:

\[ \text{Dividend yield} = \frac{\text{Annual dividend per share}}{\text{Market price per share}} \times 100 \]

Price/earnings ratio:

\[ \text{P/E ratio} = \frac{\text{Market price per share}}{\text{Earnings per share}} \]

Earnings per share:

\[ \text{EPS} = \frac{\text{Profit attributable to ordinary shareholders}}{\text{Number of ordinary shares}} \]

Total return:

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

Net asset value per share or unit:

\[ \text{NAV per share} = \frac{\text{Assets} - \text{Liabilities}}{\text{Number of shares or units}} \]

Bond metrics

Current yield/running yield:

\[ \text{Current yield} = \frac{\text{Annual coupon}}{\text{Market price}} \times 100 \]

Simple capital gain or loss to redemption:

\[ \text{Capital gain or loss} = \text{Redemption proceeds} - \text{Purchase price} \]

Approximate total cash return to maturity, before costs and tax:

\[ \text{Total cash return} = \text{Coupons received} + \text{Redemption proceeds} - \text{Purchase price} \]

Product comparison readiness

Scenario decision checks

Suitability decision path

Use this mental workflow when a question gives client facts and multiple plausible products.

    flowchart TD
	    A[Client objective stated] --> B{Enough client facts?}
	    B -- No --> C[Do not recommend yet; gather missing information]
	    B -- Yes --> D{Time horizon and liquidity fit?}
	    D -- No --> E[Reject or modify product choice]
	    D -- Yes --> F{Risk profile and capacity for loss fit?}
	    F -- No --> E
	    F -- Yes --> G{Product understood and explainable?}
	    G -- No --> H[Use simpler alternative or provide further explanation]
	    G -- Yes --> I{Costs, tax, concentration, and conflicts considered?}
	    I -- No --> J[Reassess recommendation]
	    I -- Yes --> K[Document rationale and key risks]

Scenario cues to practise

Securities administration and corporate-action checks

Regulation, ethics, and conduct readiness

The CISI IAD Securities Technical Unit is not only about products. Securities advice is tested through client protection, professional judgement, and defensible decision-making.

Common weak areas and traps

Final-week readiness checklist

Seven to five days before the exam

• Re-read your notes on equities, bonds, funds, derivatives, risk, and suitability.
• Create a one-page comparison of ordinary shares, preference shares, bonds, funds, ETFs, investment trusts, derivatives, and structured products.
• Practise mixed questions rather than studying one topic at a time only.
• Review every formula you may need and write what each output means.
• Make a list of your five weakest areas and assign a targeted practice block to each.
• Revisit incorrect answers and classify the cause: knowledge gap, calculation error, misread scenario, or poor judgement.

Four to two days before the exam

• Practise client-scenario questions that require choosing the most suitable or least unsuitable action.
• Drill bond price/yield interpretation until it is automatic.
• Review corporate actions and settlement administration.
• Check that you can explain all major risks in plain language.
• Practise rejecting unsuitable products even when they have attractive features.
• Review conduct topics: conflicts, disclosure, complaints, financial crime, market abuse, and documentation.

Day before the exam

• Stop trying to learn large new topics.
• Review formulas, product comparisons, and common traps.
• Rework a small set of previously missed questions.
• Prepare your exam logistics and identification requirements according to the current instructions from the exam provider.
• Sleep and avoid late-night cramming that reduces accuracy.

Exam-day mental checklist

Before selecting an answer in a scenario, ask:

• What is the client’s main objective?
• What constraint matters most: risk, loss capacity, time horizon, liquidity, income, tax, knowledge, or concentration?
• Is there enough information to advise?
• Does the product’s risk match the client’s facts?
• Is the question asking for a product, a calculation, a disclosure, a documentation step, or an ethical action?
• Have I chosen the answer that is most defensible, not merely technically possible?

Practical next step

Use this blueprint as a gap checklist, then move into timed mixed practice. For each missed question, write one short correction note: the rule you missed, the client fact you ignored, or the calculation step you made incorrectly. Repeat until your errors are isolated and no major readiness area remains uncertain.