Free CISI Global Securities Operations Practice Questions

Sample Practice Questions

Try these 10 sample questions from the CISI Global Securities Operations practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1Which investor is an institution rather than an individual investing personally?

   1. A.An employee buying shares in a personal trading account
   2. B.A company pension plan investing assets for its membersCorrect answer: B
   3. C.A retiree purchasing bonds with personal savings
   4. D.A student holding fund units in a personal account

   Explanation: The source states: "Institutional investors include company pension plans". A pension plan is an institutional investor. The other choices describe natural persons investing their own assets; buying fund units does not turn a person into an institution.

   Reference: OCC Comptroller’s Handbook: Investment Management Services — Investment Clients — Institutional Investors, p. 7

2. 2Which comparison helps a custodian detect a disagreement in trade details before affirming settlement instructions?

   1. A.The agreed custody fee schedule against the invoice for custody services
   2. B.The announced dividend per share against the amount of income received
   3. C.The broker-side trade confirmation against the client's trade instructionsCorrect answer: C
   4. D.The depository's settled holdings against the internal securities ledger

   Explanation: The source states: "matches the information to instructions for the trade received from its customer.". Before affirmation, the two sides' versions of the trade must agree. Invoice verification, income reconciliation and holdings reconciliation are valid controls, but do not compare broker and client trade details for affirmation.

   Reference: OCC Comptroller’s Handbook: Custody Services — Trade Affirmation/Confirmation, p. 18

3. 3Which arrangement best implements dual control over movements of assets held in custody?

   1. A.One officer initiates and approves transfers using separate passwords
   2. B.One officer completes transfers and reports monthly totals to management
   3. C.Separate authorised officers must initiate and approve each transferCorrect answer: C
   4. D.Separate officers process different clients but approve their own transfers

   Explanation: The source states: "Dual control procedures should ensure that one person, acting alone, does not have the ability to complete all phases of a transaction, or move custody assets.". Separate initiators and approvers prevent a single person from completing the transfer alone. Two passwords, later aggregate reporting, or dividing clients while retaining self-approval do not provide that control.

   Reference: OCC Comptroller’s Handbook: Custody Services — p. 6, Dual Control

4. 4A UK individual receives ordinary cash dividends outside an ISA, exceeding all available personal and dividend allowances. Which factor determines the applicable dividend tax rate under the published 2026–27 rules?

   1. A.The number of days since the shares were purchased
   2. B.The individual's applicable Income Tax bandCorrect answer: B
   3. C.The exchange on which the shares were originally listed
   4. D.The nominal value printed on the share certificate

   Explanation: The source states: "How much tax you pay on dividends above the dividend allowance depends on your Income Tax band.". The published rules use the individual's Income Tax band for dividend income above allowances. Holding period, exchange listing and nominal value do not determine that band-dependent rate.

   Reference: HMRC: Tax on dividends — How much tax you pay, 2026–27 table introduction

5. 5A custodian's processing system duplicates a corporate-action instruction because of a software error. Which risk category most directly describes the cause?

   1. A.Issuer credit risk
   2. B.Market price risk
   3. C.Operational riskCorrect answer: C
   4. D.Political risk

   Explanation: The source states: "Transaction risk is also referred to as operational risk.". The source links transaction processing, computing systems and errors to operational risk. The cause is a processing failure, not issuer default, changing market prices, or political intervention.

   Reference: OCC Comptroller’s Handbook: Custody Services — p. 3, Transaction Risk

6. 6An investor grants an investment manager discretion within an agreed investment policy. What does that authority ordinarily permit?

   1. A.Changing the policy without regard to the client's mandate
   2. B.Transferring the client's beneficial ownership to the manager
   3. C.Choosing purchases and sales within the agreed guidelinesCorrect answer: C
   4. D.Requiring the client to approve every routine purchase first

   Explanation: The source states: "The bank’s investment authority is usually subject to investment policy guidelines established in the investment agency contract.". Discretion permits investment decisions within the mandate. It does not remove policy limits, transfer beneficial ownership, or make every routine decision subject to prior consent.

   Reference: OCC Comptroller’s Handbook: Investment Management Services — Investment Agency Accounts, p. 4

7. 7What information does the Place of Settlement (PSET) field identify in post-trade processing?

   1. A.The location where the securities transaction will settleCorrect answer: A
   2. B.The date on which the parties intend the transaction to settle
   3. C.The identifier of the security to be delivered at settlement
   4. D.The cash consideration to be exchanged against the securities

   Explanation: The source states: "identifies the location where a transaction will be settled". PSET specifies the settlement location. Intended settlement date, security identifier and cash consideration are other trade details, not the place-of-settlement field.

   Reference: DTCC Learning: CTM — Place of Settlement Field (PSET)

8. 8A UK firm holds a client's payment mandate subject to CASS 8. The client permits instructions only to a named bank account. What must the firm's mandate controls ensure?

   1. A.Instructions comply with the client's restriction on the receiving accountCorrect answer: A
   2. B.Instructions may use any account if the amount is below the mandate limit
   3. C.Instructions comply with the restriction only when the client repeats it
   4. D.Instructions may use another account if reconciled by the next business day

   Explanation: The source states: "in accordance with any conditions placed by the client". The named receiving account is a condition on use of the mandate. A low amount, absence of a repeated instruction, or later reconciliation does not authorise a payment outside it.

   Reference: FCA Handbook: CASS 8.3 Records and internal controls — CASS 8.3, rule 2, paragraph (3)

9. 9For a US individual subject to the ordinary rules described in IRS Topic 403, how is interest on US Treasury bills, notes and bonds treated?

   1. A.Exempt from federal tax but taxable by states and localities
   2. B.Exempt from both federal and all state and local income taxes
   3. C.Taxable federally and by every state and locality without exception
   4. D.Subject to federal income tax but exempt from state and local income taxesCorrect answer: D

   Explanation: The source states: "This interest is subject to federal income tax but is exempt from all state and local income taxes.". The exemption applies at state and local level, not federal level. The alternatives reverse it, extend it to federal tax, or remove it from state and local taxes.

   Reference: IRS Topic 403: Interest received — Types of interest, Treasury bills, notes and bonds

10. 10A client fails to repay a settlement advance made by its custodian. Which risk most directly materialises for the custodian?

    1. A.Credit risk from the client's failure to performCorrect answer: A
    2. B.Market risk from a movement in quoted security prices
    3. C.Political risk from a change in government policy
    4. D.Operational risk from an incorrectly entered trade

    Explanation: The source states: "a custodian may be exposed to credit risk if it advances funds to settle trades for a customer.". The advance exposes the custodian to the client's nonpayment. The scenario does not attribute the loss to price changes, government action, or trade-entry error.

    Reference: OCC Comptroller’s Handbook: Custody Services — p. 4, Credit Risk