SIE study guide: the four sections and what to know in each

Start with the weights

Two sections carry three quarters of the score: products and their risks (33 items) and trading, customer accounts and prohibited activities (23 items). A sensible split of your study time follows the same shape, with extra review for whatever your first practice set shows you miss most.

1. Knowledge of Capital Markets (16%, 12 items)

This section is about who is who and how securities come to market.

• Regulators and participants: the SEC, self-regulatory organizations such as FINRA and the MSRB, other agencies and state regulators, and the roles of broker-dealers, investment advisers, custodians and transfer agents.
• Market structure: primary vs secondary markets, exchanges and over-the-counter trading, and the third and fourth markets.
• Economic factors: the Federal Reserve's tools, interest rates, the business cycle, economic indicators and international factors such as exchange rates.
• Offerings: the participants in an offering, registration of a new issue, exempt offerings and how securities are distributed.

Learn the vocabulary first. Many items here are short definitions ("does the SEC approve a new issue?" — no: it declares a registration statement effective but never approves the securities). Capital markets practice questions.

2. Understanding Products and Their Risks (44%, 33 items)

The biggest section, and the one to study hardest.

• Equity: common and preferred stock, rights, warrants and American depositary receipts.
• Debt: Treasuries, agency and mortgage-backed securities, corporate bonds, municipal securities and money market instruments. Know why bond prices fall when interest rates rise, and the difference between a coupon, current yield and yield to maturity.
• Options: calls and puts, who has the right and who has the obligation, and simple strategies such as covered calls and protective puts.
• Packaged products: investment companies (mutual funds, closed-end funds, unit investment trusts), municipal fund securities such as 529 plans, direct participation programs, REITs, hedge funds and exchange-traded products.
• Investment risks: market, interest rate, inflation, credit, liquidity, call and currency risk, and how diversification and allocation manage them.

The small calculations on the exam mostly live here; the SIE math formulas guide has every one with a worked example. Practice by topic: bonds, options, packaged products.

3. Trading, Customer Accounts and Prohibited Activities (31%, 23 items)

• Trading: order types, long and short positions, returns, settlement and corporate actions such as dividends and splits. US stock trades settle regular way on T+1 (one business day after the trade) since May 28, 2024.
• Customer accounts: account types and registrations, including retirement accounts, and what a firm must know when it opens one.
• Compliance: anti-money laundering, books and records, privacy, communications with the public and suitability.
• Prohibited activities: market manipulation, insider trading and other misconduct such as churning and misusing customer funds.

This section rewards precise rules: who must approve what, in writing or not, and which numbers trigger a report. Margin is a good example: under the Federal Reserve's Regulation T a firm may lend up to 50% of the price of a margin equity security on a new purchase. Customer accounts and prohibited activities practice pages.

4. Overview of the Regulatory Framework (9%, 7 items)

• Registration and continuing education: who must register, the qualification exams, Forms U4 and U5, and the continuing education that keeps a registration current.
• Employee conduct and reportable events: customer complaints, outside activities, gifts and other events a registered person must report.

Only 7 items, but they are some of the most learnable points on the exam. Do not skip it. Regulatory framework practice questions.

How to study the outline

1. Take a short practice set first to see where you stand before reading anything.
2. Learn one section at a time with short lessons, then answer questions on that section the same day.
3. Read every rationale, including for the questions you got right: the SIE likes "EXCEPT" stems and close distractors, and the rationale is where you learn why the tempting answer is wrong.
4. Finish with timed sets at the real pace: 105 minutes for 80 items is about 1 minute 18 seconds each.

Need a calendar? 2, 4 and 6-week SIE study plans.