CM-SIP study guide

Capital Markets – Specified Investment Products (SIP): Derivatives and Collective Investment Schemes

A concise guide to the CM-SIP examination: derivatives, structured products and collective investment schemes. It condenses the official study guide into what the examination tests, section by section.

• Exam: 80 multiple-choice/multiple-response questions in 2 hours 30 minutes, plus 6 case studies containing 18 questions (3 per case study); 70% to pass.
• Currency of the material: the official guide states its regulatory information as current at 30 September 2023. Check the latest MAS, SFA, SGX and product terms before relying on a rule or specification.
• This is a study aid, not a replacement for the prospectus, Product Highlights Sheet (PHS), term sheet, risk disclosure statement or current law. If you will conduct regulated activity, you must also meet the relevant MAS representative-notification and competency requirements.

How to use this guide

1. Learn the product mechanism before memorising the payoff.
2. For every product, ask: what is the underlying, what is the investor’s position, what triggers payment/conversion/termination, what can be lost, and who is the counterparty?
3. Practise the formulas in Appendix D and the application cases in Chapter 12.
4. Use CMSIP_QUESTIONS.md only after reading the relevant section; its answers explain the reasoning rather than merely naming a letter.

Examination orientation

• The examination tests knowledge, understanding and application of SIPs.
• Format: 80 multiple-choice/multiple-response questions in 2 hours 30 minutes, plus 6 case studies containing 18 questions (3 per case study); the passing mark is 70%.
• Unless a question says otherwise, use a 365-day convention for Singapore Government Securities and a 360-day convention for other products.
• A non-programmable financial calculator may be used and a formula sheet is provided.
• Scope: exchange-traded and OTC derivatives, structured products and collective investment schemes. Candidates who will conduct regulated activity must also satisfy the relevant MAS representative-notification and competency requirements.

Master mental model

Every derivative or structured product transfers one or more of these exposures:

Exposure	Typical instrument or feature	Main question
Direction	Futures, forwards, calls, puts, CFDs, warrants	Does the investor profit from a rise or fall?
Volatility	Straddles, strangles, barrier options, volatility ETFs	Does the investor need movement or stability?
Time	Option time value, calendars, rollovers, callable notes	How does time decay, maturity or early termination matter?
Carry/yield	Interest-rate futures, swaps, structured deposits/notes	What is paid or received while the position is open?
Credit	CDS, CLNs, issuer/SPV obligations	Who may fail to pay?
Liquidity	OTC customisation, lock-ups, exotic derivatives	Can the position be closed at a fair price?
Currency	FX forwards/options/swaps, translated warrants, DCIs	Which currency is invested, settled and exposed?
Leverage	Margin, futures, CFDs, DLCs, warrants, accumulators	Can a small move create a large loss or margin call?

Contents

• 1 Overview of Derivatives
• 2 Futures, Forwards and Swaps
• 3 Futures Strategies
• 4 Options
• 5 Structured Warrants and Daily Leveraged Certificates
• 6 Barrier Options, Binary Options and Callable Contracts
• 7 Structured Deposits and Other Structured Products
• 8 Structured Notes
• 9 Structured Funds
• 10 Contracts for Differences (CFDs)
• 11 Key Products and Investment Risks
• 12 Case Studies
• Appendix A — CPPI strategy worked examples
• Appendix B — MAS Product Highlights Sheet practice note
• Appendix C — Futures contract specifications
• Appendix D — Formulae sheet (consolidated)
• Appendix E — Review Questions: what they test
• Appendix F — Essential readings
• Appendix G — Glossary and cross-reference

Chapters that have questions end with a link to that chapter’s quiz.