This unit considers the regulatory environment in the UK and the background that led to the creation of the Financial Services Authority (FSA) as the sole regulator. The role of the FSA is considered as well as the content of the FSA Handbook. The material also looks at the detail of The Financial Services and Markets Act 2000 (FSMA), defining regulated activities and specified investments, the authorisation process for firms and the approval process for individuals performing controlled functions.

Thereafter, they consider other sources of regulation including measures designed to prevent financial crime as well as considering a number of European Union (EU) Directives, with special emphasis on the Markets in Financial Instruments Directive (MIFID).

The next part of the unit is extremely important since it considers the FSA’s Conduct of Business Rules (COBS) and Client Assets Rules. MIFID has had a dramatic impact on these rules and this underlines the fact that regulation is increasingly being determined at the European level.

This unit is aimed at employees who advise and/or deal on behalf of retail clients.

They start by discussing the macro-economic factors that impact on people’s investment needs. They then discuss a wide range of asset classes. Whilst many of these (such as equity and bonds) are covered in the Securities unit, students require an understanding of National Savings and Investments products, collective investment schemes, tax wrappers such as ISA's, property and the products offered by life assurance companies.

Socially responsible investment is considered briefly before they then discuss aspects of investment risk and reward. This leads to an examination of the tax regime in the UK with attention given to income tax, capital gains tax, inheritance tax and corporation tax. The unit is completed by discussing the process of providing financial advice and techniques used when managing and advising on investments.

The syllabus for the Investment & Risk exam has significant overlap with Unit 2 Securities, particularly in the sections on bonds and equities. They would recommend that delegates requiring both courses consider sitting the Unit 2 course first to provide the basic knowledge of these asset classes. Please be aware that this Unit 2 course content will be also repeated in the Investment and Risk course.

They also look at how a business can raise finance and the cost of capital associated with their capital structure. They then consider the four methods used to value a business. Finally, they look at the motivations behind acquisitions and disposals, and finish by discussing the various documentation used in corporate finance.

This unit considers the different securities traded in the financial markets including shares, warrants, bonds (with special emphasis on UK Government bonds) and currencies.

They then consider how securities are brought to market and discuss the role of stock exchanges. Initial Public Offerings as well as further issuances (including rights issues and bonus issues) are described. The trading of securities is then described before they examine how securities trades are cleared and settled at securities depositories.

Attention is then given to regulations across a number of important markets with special emphasis on the rules relating to disclosure of interests in shares. Accounting is then addressed with an examination of the main financial statements that companies must produce before they move on to the analysis of accounts. Finally they examine investment management by considering the risk and reward associated with investing in various asset classes.

This unit begins with an introduction to futures and options and discuss much of the terminology that it is important to understand. They also consider the cash products that underlie derivative contracts. They then move on to discuss derivative exchanges and consider the trading platforms and clearing mechanisms used.

They analyse how futures and options are priced and examine a number of arbitrage trades. With particular emphasis on Euronext.liffe, they discuss trade reporting requirements, order types and the need for trade registration.

Over the counter (OTC) derivatives offer much more flexibility than exchange traded derivatives. They discuss a wide range of OTC products including forwards, swaps, structured products and options.

They then examine the principles of clearing, margining and settlement, with the emphasis on LCH.Clearnet. They will also consider how market participants employ a variety of options strategies when hedging or speculating. Finally, they look at how regulations are applied in the main derivatives markets.

The descriptions used in this section have been drawn mainly from the BPP website: http://www.bppfinancialservices.com/courses/.

Some of relevant CISI examination formats and requirements are presented below: