Securities Industry Essentials (SIE) Exam

The Securities Industry Essentials (SIE) exam assesses a candidate's basic knowledge of the securities industry.
The exam focuses on industry terminology, securities products, market structure, regulatory agencies, and prohibited practices.

The exam consists of 75 multiple-choice items, divided into four sections:
- Knowledge of Capital Markets (16% of exam items)
- Understanding Products and Their Risks (44% of exam items)
- Understanding Trading, Customer Accounts, and Prohibited Activities (31% of exam items)
- Overview of the Regulatory Framework (9% of exam items)

Regulatory Entities, Agencies, and Market Participants
- Securities and Exchange Commission (SEC)
- Self-Regulatory Organizations (SROs)
- Other regulators and agencies (e.g., Department of the Treasury, Federal Reserve, State regulators)
- Market participants and their roles (e.g., investors, broker-dealers, investment advisers, issuers)
Market Structure
- Types of markets (e.g., primary, secondary, third, fourth)
- Market participants and their roles
Economic Factors
- Federal Reserve Board's impact on business activity and market stability
- Business economic factors (e.g., financial statements, business cycle, indicators)
- International economic factors (e.g., U.S. balance of payments, GDP, exchange rates)

Products
- Equity securities (e.g., common stock, preferred stock, rights, warrants)
- Debt instruments (e.g., Treasury securities, agency securities, corporate bonds, municipal securities)
- Options (e.g., puts, calls, equity vs. index)
- Packaged products (e.g., investment companies, mutual funds, exchange-traded funds)
- Municipal fund securities (e.g., 529 plans, local government investment pools)
- Direct Participation Programs (DPPs) (e.g., limited partnerships, tenants in common)
- Real Estate Investment Trusts (REITs)
- Hedge Funds
- Exchange-traded products (ETPs)
Investment Risks
- Definition and identification of risk types (e.g., capital, credit, currency, inflationary, interest rate, liquidity, market, political)
- Strategies for mitigation of risk (e.g., diversification, portfolio rebalancing, hedging)

Trading, Settlement, and Corporate Actions
- Orders and strategies (e.g., market, stop, limit, good-til-canceled)
- Investment returns (e.g., components of return, dividend payment dates, benchmarks)
- Trade settlement (e.g., settlement time frames, physical vs. book entry)
- Corporate actions (e.g., stock splits, reverse splits, buybacks, mergers and acquisitions)
Customer Accounts and Compliance Considerations
- Account types and characteristics (e.g., cash, margin, options, discretionary vs. non-discretionary)
- Compliance considerations (e.g., account opening, customer information, suitability, supervision)

FINRA Rules (e.g., 2266, 2269, 5250)
MSRB Rules (e.g., G-11, G-32, G-34)
SEC Rules and Regulations (e.g., Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940)### Educational Accounts
Types of customer account registrations:
- Individual
- Joint
- Corporate/Institutional
- Trust (e.g., revocable, irrevocable)
- Custodial (e.g., UTMA)
- Partnerships
- Retirement (e.g., individual retirement account (IRA), qualified plans)

Definition of money laundering
Stages of money laundering:
- Structuring
- Layering
- Placement
AML compliance program requirements
Suspicious Activity Report (SAR) and Currency Transaction Report (CTR) requirements
FinCEN and Office of Foreign Asset Control (OFAC) regulations
Specially Designated Nationals and Blocked Persons (SDNs) List

Communications with the public and telemarketing requirements
Classifications and general requirements
Do-not-call list requirements
Best interest obligations and suitability requirements:
- Know-your-customer (KYC)
- General requirements (e.g., what constitutes a recommendation)

Market manipulation:
- Definition
- Types (e.g., market rumors, pump and dump, front running, excessive trading, marking the close, marking the open, backing away, freeriding)
Insider trading:
- Definition
- Material nonpublic information
- Identifying involved parties
- Penalties (e.g., fines, expulsion, incarceration)
Other prohibited activities:
- Restrictions on associated persons purchasing initial public offerings (IPOs)
- Use of manipulative, deceptive, or fraudulent devices
- Improper use of customers' securities or funds
- Borrowing from customers
- Sharing in customer accounts
- Financial exploitation of seniors
- Activities of unregistered persons
- Prohibition against paying commissions to unregistered persons
- Prohibition against solicitation of customers and taking orders
- Falsifying or withholding documents
- Signatures of convenience
- Responding to regulatory requests
- Prohibited activities related to maintenance of books and records (e.g., falsifying records, improper maintenance/retention of records)

List of specific rules and regulations, including:
- FINRA Rules (e.g., 2010, 2020, 2090, 2111, 2120)
- MSRB Rules (e.g., G-8, G-9, G-13, G-14, G-15)
- SEC Rules and Regulations (e.g., Regulation M, Regulation S-P, Section 10, Section 11(d), Section 14, Section 15, Section 20A, Section 21A)