How to Pass the CISI Securities Exam (CMP Level 3)
This guide covers the Capital Markets Programme Level 3 Securities paper, not the separate Level 4 IAD Securities unit. Here are the nine weightings, calculations and revision plan.
Looking for the Level 4 IAD Securities paper?What is on the CISI Securities exam?
One hundred multiple-choice questions in 120 minutes, with a 70% pass mark, across nine syllabus elements. Asset Classes is the biggest at 27 questions, and with Primary Markets (14), Secondary Markets (15) and Accounting Analysis (14) those four carry 70 of the 100 marks. It is one of the two Level 3 technical units of the Capital Markets Programme, sat with UK Financial Regulation, and it has real calculation content in the yields and accounting ratios. This is not the separate Level 4 IAD Securities unit.
- Format
- 100 multiple-choice questions in 120 minutes, computer based
- Pass mark
- 70%
- Biggest element
- Asset Classes, 27 of the 100 questions
- Top four elements
- Asset Classes 27, Secondary Markets 15, Primary Markets 14, Accounting Analysis 14, so 70 marks combined
- Lightest element
- Markets, worth 2 of the 100 questions
- Calculations
- Bond yields including flat versus redemption yield, dividend yield and investor ratios, accounting ratios such as gearing, current ratio, return on capital and earnings per share
- Prerequisite
- IntegrityMatters, CISI's online integrity test
- Where it fits
- One of two technical units of the Capital Markets Programme; you sit Securities or Derivatives, not both
This guide covers the Level 3 Securities unit of the CISI Capital Markets Programme, not the separate Level 4 Investment Advice Diploma Securities unit. It is a step up from the foundation paper in three ways: it is longer, it goes deeper, and it has real calculation content. Pass it by respecting all three. This guide shows you where the marks are and what trips people.
It is 100 multiple-choice questions in 120 minutes, with a 70% pass mark, computer based, no negative marking. You complete the Capital Markets Programme with this paper plus the regulatory unit, UK Financial Regulation. IntegrityMatters, CISI's online integrity test, is a prerequisite for sitting it.
Know the weightings before you revise
The 100 questions are spread across nine elements, and the spread is very uneven. One element is more than a quarter of the paper; another is just two questions.
| # | Element | Questions |
|---|---|---|
| 1 | The Financial Services Industry | 3 |
| 2 | Asset Classes | 27 |
| 3 | Markets | 2 |
| 4 | Primary Markets | 14 |
| 5 | Secondary Markets | 15 |
| 6 | Corporate Actions | 7 |
| 7 | Clearing & Settlement | 8 |
| 8 | Accounting Analysis | 14 |
| 9 | Investment Management | 10 |
Asset Classes alone is 27 of 100. Add Primary Markets, Secondary Markets and Accounting Analysis and those four elements are 70 of the 100 marks. Get those solid and the rest is mopping up. Do not spend an evening on the Markets element; it is worth two questions.
Test yourself on CMP: Securities
4 questions written to the current syllabus, in the format of the real paper. Pick an answer and the explanation appears. Nothing to sign up for.
Which of the following activities is NOT carried out on the buy-side of the securities industry?
Not quite. The answer is B.
Making markets means committing the firm's own capital to quote two way prices, which is a defining sell-side activity: the sell side originates, structures, distributes and makes markets in financial products. The buy side manages money on behalf of its owners, so selecting shares for an equity fund, running a pension fund's securities mandate and setting the asset allocation of an insurance fund are all buy-side work, each carried out for the investor whose money is at risk rather than for the firm's own book.
A gilt trades at a clean price below its par value. How does its flat yield compare with its coupon rate?
Not quite. The answer is A.
The flat yield divides the annual coupon by the clean price. When the price paid is below par, the fixed coupon is spread over a smaller outlay, so the flat yield rises above the coupon rate. A price above par would push the flat yield below the coupon rate, and only a bond trading exactly at par has a flat yield equal to its coupon; the two figures are always directly comparable.
Which of the following would NOT be found in the capital market?
Not quite. The answer is D.
A Treasury bill matures within a year and is a money market instrument, issued at a discount to provide short term government funding. A corporate debenture is long term borrowing and is dealt in the capital market alongside ordinary and preference shares, which are permanent capital and never fall due at all. The dividing line is the original term of the instrument rather than who issued it.
What does the greenshoe option included in an IPO allow the lead manager to do?
Not quite. The answer is B.
The greenshoe lets the manager allot more shares than the base deal, creating a short position it can close either by buying in the market if the price is weak or by calling shares from the issuer if the price is strong. The closest distractor is repricing the offer, which is impossible once the price has been struck at the close of the book. Suspending the offer, or holding it open for longer, is a decision for the issuer and its advisers under the offer timetable, and the greenshoe reaches neither of them.
That is 4 of more than 10,800 questions in the PasskeyPrep bank. Chapter 1 of every exam is free, with the study notes and flashcards that go with it, and every answer is marked and explained the way these were.
What each heavy element tests
Asset Classes (27). The biggest single block. Equities and the rights attaching to shares, the full range of bonds and their features and yields, money market instruments, and the characteristics that separate them. A lot of this is recall, but some of it calculates, which brings us to the part candidates dread.
Primary and Secondary Markets (29 combined). How securities are issued, listing and the routes to market, and then how they trade: order-driven versus quote-driven, on-exchange versus over-the-counter, the role of the central counterparty. Nearly a third of the paper between them.
Accounting Analysis (14). This is where rusty maths shows up. Reading a set of accounts and computing the ratios: profitability, liquidity, gearing, investor ratios. You need to recognise the ratio the question wants and apply it without hesitation, which only comes from drilling them.
Investment Management (10). Portfolio construction, the styles and approaches, performance measurement and the principles behind it.
The calculations you must nail
A meaningful slice of this paper asks you to calculate, and these are clean marks if you have practised and dropped marks if you have not. The recurring ones:
- Bond yields, especially the flat yield and how it differs from the redemption yield. Worked through in flat yield versus redemption yield.
- Dividend yield and the investor ratios, covered in how to calculate dividend yield.
- Accounting ratios from a set of figures: gearing, current ratio, return on capital, earnings per share.
Do not just read the methods. Do enough of each that the moment you see the question type, the formula is already in your head. Under a two-hour clock with 100 questions, hesitation is what costs you.
Where people slip
The first trap is the length. One hundred questions in two hours is a stamina test as much as a knowledge test, and concentration drifts in the final stretch. Sitting full, timed mocks is the only way to build the endurance for it.
The second is skipping the calculations because they feel harder than the recall. They are not harder; they are just unpractised. Ten worked examples of each calculation type turns your weakest area into your most reliable marks.
The third is the usual one across every exam PasskeyPrep covers: revising by reading. The Securities syllabus is broad and precise, and it only sticks when you are tested on it rather than reminded of it.
How to revise it
Read the workbook once to map the nine elements, then move to questions, weighting your time to the paper: most of it on Asset Classes, the two Markets elements and Accounting Analysis. Drill the calculations until they are automatic. Then sit full, timed, 100-question mocks weighted exactly like the real paper. Use repeated full, timed mock results alongside your timetable, confidence and remaining weak areas when deciding whether to book; no mock score can predict an individual result.
Drill it for free. Try a set of free CISI Securities practice questions. For the full method across every exam PasskeyPrep covers, see the complete guide.
Hunting for past papers? Read CISI Securities past papers: what exists and the best mock exams.
Sit a whole paper for free. The free 100-question Securities mock exam runs to the real time limit and the published element weighting, with a score, an element breakdown and an explanation for every answer. No sign-up.
Frequently asked questions
How many questions are on the CISI Securities exam?
One hundred multiple-choice questions in 120 minutes, with a 70% pass mark. It is computer based with no negative marking, so never leave a question blank.
Is the CISI Securities exam hard?
It is a clear step up from the foundation paper, mainly because of its length and its calculation content. The concepts are manageable; the challenge is stamina across 100 questions and being quick and confident on the accounting and yield calculations. See how hard the CISI exams are.
Do I have to sit both Securities and Derivatives?
No. The Capital Markets Programme is completed with the regulatory unit plus one technical unit, so you choose Securities or Derivatives depending on your role. PasskeyPrep covers both so you are prepared either way.
What is the most heavily weighted topic?
Asset Classes, at 27 of the 100 questions. Primary Markets, Secondary Markets and Accounting Analysis are the next biggest. Those four elements carry 70 per cent of the paper.