CISI Capital Markets Programme Derivatives — Information & Free Practice

About CISI Capital Markets Programme Derivatives

CISI Capital Markets Programme Derivatives · GB

Key exam facts

Provider

Chartered Institute for Securities & Investment (CISI), examination owner and provider.

Format

Computer-based multiple-choice examination, available on demand at test centres; remote exams also available.

Exam questions

Total questions: 100–110; Scored questions: 100; Unscored questions: 0–10; The total includes the scored and unscored questions.

Time limit

2 hours for 100 core questions; proportionately more time is given for additional trial questions.

Passing score

70%: Pass 70–100 marks; Fail 0–69 marks.

Exam fee

UK exam fee GBP 286, 1 April 2026–31 March 2027. Mandatory workbook GBP 105; saver package (exam, workbook and Revision Express) GBP 406. One-off first-qualification registration fee GBP 68. Concessionary rates available for unemployed individuals; international prices differ.

Topics covered

• Introduction to Derivatives (17%)

  • Risk and reward
  • Options
  • Futures and Forwards
  • Contracts for difference (CFDs)
  • Swaps
  • Derivatives trading
  • understand the risk and rewards associated with derivatives:
  • understand the significance of gearing to derivatives:
  • know the basic concepts and fundamental characteristics of options contracts, including:
  • understand how to interpret basic options diagrams (long call, long put, short call, short put)
  • know the basic concepts and fundamental characteristics of:
  • know the basic concepts and fundamental characteristics of contracts for difference (CFDs)
  • know how spread betting differs from other CFDs:
  • know the basic concepts and fundamental characteristics of swaps
  • know the basic concepts and fundamental characteristics of interest rate swaps:
  • know the purpose of inflation swaps
  • know the basic concepts and fundamental characteristics of zero- coupon inflation products
  • know the basic concepts and fundamental characteristics of FX and currency forwards and swaps:
  • know the basic concepts and fundamental characteristics of equity forwards, swaps and swaptions:
  • know the common equity swap instruments and their relationship to other markets and products:
  • know the basic concepts of total return and asset swaps
  • know the basic concepts and fundamental characteristics of commodity forwards, swaps
  • know the basic purpose of commodity swaps
  • know the common interest rate swap features and their relationships to other markets:
  • know the trading mechanisms by which OTC and exchange traded markets meet:
  • understand the principles and differences between the two major measures of exchange-traded liquidity (open interest and volume)
  • know the main features and differences of OTC traded products in contrast to exchange-traded products:
  • know the essential details of the trading environment:
  • know the exchange membership structures (brokers, dealers and broker / dealers) and their main activities:

• Underlying Markets (16%)

  • Money Market instruments
  • Foreign Exchange
  • Bonds
  • Equities
  • Commodities
  • Other markets
  • know the uses and requirements of inter-bank deposits:
  • understand the risk implications of trading in money market contracts:
  • know the basic characteristics of Treasury Bills:
  • know the basic characteristics of Certificates of Deposit and Commercial Paper:
  • understand the nature of the spot market and the trading and settlement of spot transactions:
  • understand the nature, characteristics, markets and uses of FX forward contracts:
  • understand the factors that determine forward rates and how forward rates are quoted:
  • be able to calculate forward foreign exchange rates using interest rate differentials
  • know the main characteristics of bonds
  • understand the reasons for government bond issuance
  • know the main government bond markets and their main features:
  • understand the relationship between return and maturity shown by yield curves:
  • know the main features of the corporate bond market
  • understand the relationship between government and corporate bonds:
  • know the principal features and characteristics of ordinary shares and non-voting shares
  • know corporate actions:
  • know the main softs and agriculturals and the influences on price:
  • know the main base and precious metals and the influences on price:
  • know the main energy products and the influences on price (crude oil, electricity and natural gas):
  • know the principal features and characteristics of cryptocurrencies and digital assets:
  • know features of markets in:

• Market Structure (9%)

  • Derivatives exchanges
  • Order types
  • Wholesale trading facilities
  • Over the counter (OTC) markets
  • Market conventions
  • Account types
  • Trade reporting
  • know the main products of the main derivatives exchanges
  • understand the range of types of orders, their uses and effects:
  • know the essential details of wholesale trading facilities:
  • understand the significance, implications and uses of wholesale trading facilities
  • understand the reasons for using OTC markets
  • know the principles of order flow:
  • know the definition, significance and differences between principal and agency orders (ie of dual capacity versus agency orders):
  • know the processes involved in trade registration, trade input and trade matching and differing requirements of electronic and open outcry markets
  • understand the use of different types of accounts:
  • understand the purpose and importance of give-ups / allocations:
  • know the purpose and requirements of trade reporting in markets:
  • know the advantages and main sources for Exchange Price Feeds:
  • understand the importance of monitoring volume and open interest:

• Principles of Pricing and Valuation (11%)

  • Approaches to valuation
  • Calculating forward prices
  • Futures Pricing
  • Options Pricing
  • understand the concept of arbitrage free pricing
  • understand the concept of cash flow pricing
  • understand the mechanisms for OTC derivative pricing and the relationship with the underlying cash prices together with the significance of contributing factors:
  • understand the mechanisms for futures pricing and the relationship with the underlying cash prices together with the significance of contributing factors:
  • understand the implications of the cost or benefit of carry and what may be included in these:
  • be able to calculate the fair value of a future from relevant cash market prices, yields and interest rates
  • understand the importance of basis risk
  • understand the principles of cash / futures arbitrage:
  • understand basic option pricing concepts:
  • understand the basic mechanisms of option pricing and the relationship with the underlying cash prices together with the significance of contributing factors:
  • be able to calculate the Put / Call Parity Theorem:
  • be able to calculate the approximate change in option price due to a change in underlying price
  • understand the qualitative characteristics of the following Greeks and their uses:
  • know the requirements of, and process for, premium payment:

• OTC Derivatives (7%)

  • Derivative instruments
  • understand the basic concepts and fundamental characteristics of:
  • understand the basic concepts and fundamental characteristics of credit derivatives and the main credit events for single entity and index contracts:
  • know the common credit derivative instruments and their relationships to other markets and products:
  • understand the mechanisms for pricing credit derivatives and the relationships with asset swap prices
  • know the common OTC option products and features:
  • know the basic requirements of, and process for, premium payment:
  • understand the basic concepts and fundamental characteristics of flex options:
  • understand how structured products utilise embedded derivatives to achieve a risk/return profile:
  • know the main ISDA documents supporting OTC derivative activities:
  • understand the potential impact of credit exposures on OTC positions:

• Principles of Clearing and Margin (14%)

  • Clearing
  • Prime brokers
  • Margin
  • understand the purpose of clearing and the function of novation:
  • understand the risks mitigated through the clearing process:
  • understand the role played by the clearing house in the clearing process:
  • understand the relationship between clearing members and non- clearing members:
  • understand the principles and backing arrangements in place in the event of a member default:
  • understand the services offered by prime brokers as they relate to derivatives:
  • understand how OTC products can be centrally cleared:
  • understand price limits / circuit breakers and position limits and the effects of their application:
  • understand how a firm deals with margin payments for its own positions and for its clients' positions through its books:
  • understand the difference between the clearing house’s margin and that of the broker and the collection / payment process:
  • understand the differences between initial and variation margin:
  • know methods of margining for centrally cleared OTC products and their implications:
  • understand the nature and use of offsets for spread/spot month margining:
  • understand why the clearing house might call intra-day margin:
  • know methods of initial margining including SPAN:
  • know the means by which exchanges establish settlement prices:
  • know the definition, purpose and uses of collateral and the major types of acceptable collateral (cash versus non-cash)
  • understand the significance of credit and initial margin lines
  • understand the mechanisms of collateral management:
  • understand the impact of uncleared margin rules (UMR):

• Delivery and Settlement (6%)

  • Clearing houses
  • Settlement
  • Delivery
  • Options exercise
  • Effective process control
  • know the role of the clearing house as counterparty in delivery:
  • be able to calculate the profit / loss on delivery / expiry of futures and options
  • understand the differences between cash settlement and physically delivered contracts and the final payment process:
  • understand the importance and implications of the delivery of open contracts at expiry and the significance of the short position:
  • understand the purpose of the Exchange Delivery Settlement Price (EDSP) and the factors affecting it:
  • understand the significance and implications of the exercise of options, the assignment of obligations, abandonment and expiry:
  • understand the significance of automatic exercise:
  • know the importance of accurate and timely settlement processes:
  • understand the main control process:

• Trading, Hedging and Investment Strategies (14%)

  • Users
  • Spreads
  • Long / Short positions
  • Hedging
  • Trading strategies
  • understand the categories of users of derivatives and structured products and their respective uses of these products:
  • know the distinctions between intra-market spreads and intermarket spreads and the scenarios in which they may be appropriate:
  • know the characteristics and implications of long and short positions
  • understand the importance of hedging ratios in cheapest to deliver bonds (CTDs):
  • understand hedge ratio calculation for other short-term interest rate futures:
  • understand hedge ratio calculation for equity futures:
  • understand basis, basis trading and basis risk:
  • understand the application and effects of delta hedging and be able to establish an investor’s net long / short position
  • understand the use of derivatives for speculation and hedging:
  • understand the uses and advantages of covered calls and protective puts:
  • be able to calculate (through the knowledge gained above), a derivatives position with an underlying market equivalency, either to establish or to hedge a required exposure:
  • understand the characteristics and effects of vertical spreads:
  • be able to calculate maximum profits / losses in simple examples of the above strategies
  • understand the uses, characteristics and effects of horizontal and diagonal spreads:
  • understand the characteristics and effects of long and short straddles and strangles:
  • understand how to create basic synthetic options and futures:
  • understand the advantages and disadvantages of using exchange- traded versus OTC products:
  • understand the relative attractiveness of derivative positions or investments to specific client circumstances:

• Regulatory Requirements (6%)

  • Regulation
  • know in general terms the scope and purposes of regulation of derivatives and the main activities of regulators:
  • know the primary requirements of a regulated derivatives exchange
  • know in general terms the importance of the principles-based approach to derivatives regulation:
  • know the differences between rules-based and principles-based regulation
  • know the role of regulation on derivative markets:
  • know the role of the Securities and Exchange Commission (SEC) in the regulation of derivatives:
  • know the role of the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA):
  • know the prohibitions of CFTC Part 30 (Foreign Futures and Segregation of Customer Funds)

How to prepare

Work through the topics, read the explanation after each answer, and revisit the areas where you miss questions. Use the official outline and reference materials below to guide your study.

These independent practice questions are not actual exam items and do not guarantee a passing result.

Frequently asked questions

Official sources and references

• CISI Derivatives Level 3 Syllabus

  printed p.3 (PDF p.5)

• CISI Capital Markets Programme

  Pass Mark / Pass Rate

• CISI Price List 2026–2027

  UK exam prices, Capital Markets Programme, Derivatives

• CISI Candidate Update

  Level 3 Certificates, Derivatives V25

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