Derivatives Level 3 (IOC) Exam

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CISI – Derivatives Level 3 (IOC) Quiz 04 is completed –
Know the principal features and characteristics of cryptocurrencies and digital assets: • currencies, coins, non-fungible tokens • central control • use of distributed ledger technologies • risks (regulatory risks, volatility risks, ESG risks)
know some of the other markets: • freight • emissions • weather • volatility
know the main products of the main exchanges
know the exchange membership structures (brokers, dealers and broker / dealers) and their principal rights: • executing trades for third parties • executing trades for their own account • executing trades for other members • capacity as broker • capacity as dealer
know the basic structure of OTC markets
know the essential details of the trading environment: • open outcry, telephone and electronic platforms • whether quote or order driven • how the trading host matches orders • the order types accepted by the markets • the trading strategies that are recognised
know the essential details of wholesale trading facilities: • block trades • basis trades
understand the significance, implications and uses of wholesale trading facilities
understand the reasons for using OTC markets
know the principles of order flow: • how clients, brokers and exchange members are linked • electronic and open outcry markets • audit trail
know the definition, significance and differences between principal and agency orders (ie of dual capacity versus agency orders): • dealing as a principal • cross trading • advantages to the client
understand the range of types of orders, their uses and effects: • market order • limit order • market if touched order • opening and closing orders • good ‘til cancelled • immediate or cancel / fill or kill order • stop order • stop limit order • day order
know the processes involved in trade registration, trade input and trade matching and differing requirements of electronic and open outcry markets
understand the purpose and importance of give-ups / allocations: • reasons to allocate a trade to an account • use of give-up agreements • risk implications
understand the use of different types of accounts: • use of house accounts • customer accounts – segregated and non-segregated
know the purpose and requirements of trade reporting in markets: • information to be reported • process and timelines of reporting • responsibility for reporting

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