Securities & Investment

Institute level 3
Certificate in
Investment Administration

Unit 13

Information Technology in
Investment Operations

Effective from 17 September 2008

© Securities & Investment Institute

 Information Technology in Investment Operations v2.3

This syllabus is valid for examinations from 17 September 2008 onwards.

ASSESSMENT STRUCTURE

A 1 hour examination of 50 multiple choice questions.

Candidates sitting the examination by Computer Based Testing may have, in addition, a small
number of trial questions that will not be separately identified and do not contribute to the result.
Candidates will be given proportionately more time to complete the test.

The unit is divided into elements. These are broken down into a series of learning objectives.

Each learning objective begins with either know or understand. These words indicate the
different levels of skill to be tested.

Know requires the candidate to recall information such as facts, rules and principles.

Understand requires the candidate to demonstrate comprehension of an issue, fact, rule or

principle.

Examination Specification

Each examination paper is constructed from a specification that determines the weightings that
will be given to each element. The specification is given below.

It is important to note that the numbers quoted may vary slightly from examination to examination
as there is some flexibility to ensure that each examination has a consistent level of difficulty.
However, the number of questions tested in each element should not change by more than plus or
minus 2.

Examination Specification
50 Multiple choice Questions

Element Questions
1 6
2 3
3 7
4 5
5 8
6 3
7 7
8 7
9 4
Total 50

Candidate Update

Candidates are reminded to check the Candidate Update area of the Institute's website on a
regular basis for updates resulting from industry changes that may affect their examination.
(www.sii.org.uk)

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SUMMARY SYLLABUS

ELEMENT 1 INFORMATION TECHNOLOGY IN THE SECURITIES INDUSTRY

ELEMENT 2 IT AND THE FUNCTIONAL FLOW OF FINANCIAL INSTRUMENTS

ELEMENT 3 THE ROLE OF IT IN THE FRONT OFFICE

ELEMENT 4 THE ROLE OF IT IN THE PRE-SETTLEMENT PHASE

ELEMENT 5 THE ROLE OF IT IN THE SETTLEMENT AND POST-SETTLEMENT PHASES

ELEMENT 6 THE IMPACT OF IT ON FINANCIAL CONTROL

ELEMENT 7 IT MANAGEMENT

ELEMENT 8 IT MANAGEMENT AND BUSINESS CHANGE

ELEMENT 9 THE GLOBALISATION OF IT SERVICES

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Element 1 Information Technology in the Securities Industry

1.1 Know the elements of a secondary market equity trade

1.2 Know the elements of a secondary market bond trade
1.3 Understand the concept of straight-through processing
1.4 Know the significance of the Financial Services And Markets Act 2000
1.5 Know the objectives of the main statutory UK regulator
1.6 Know the purpose of MiFID and its impact on the following:
• Scope
• Functions affected
• IT perspective
1.7 Know the features and characteristics of Basel II
1.8 Know the significance of the Data Protection Act 1998
1.9 Understand the requirements of Data Retention
1.10 Know the offences that constitute Insider Dealing and Market Abuse
1.11 Know the significance of Chinese Walls
1.12 Know the three stages of Money Laundering
1.13 Know the purpose of “Know Your Customer”
1.14 Know the features and characteristics of Sarbanes-Oxley

Element 2 IT and the Functional Flow of Financial Instruments

2.1 Understand the function and connectivity of Investment Exchanges

2.2 Understand the function and connectivity of Clearing Houses
2.3 Understand the functionality of the following external Real Time Information
Sources:
• Thomson Reuters
• Bloomberg

Element 3 The role of IT in the Front Office

3.1 Understand the IT support requirements of order placing and filling,

including:
• Order Entry (Agency, Proprietary and 3rd Party Orders)
• Best Execution
• Treating Customers Fairly
• Transaction Capture
• Client Connectivity
• Communication via Electronic Media
• Pooling
• Allocation
• Pooling, Allocation and Aggregation of a Single Order Across Two or
More Investors/Funds
• Dealing Systems
• Charges, Fees and Expenses
3.2 Understand the function and IT implications of “Automated” Trading sytems,
including:
• Retail Service Providers
• Direct Market Access (DMA)

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3.3 Understand the basic IT characteristics of Trade Capture and Risk

Management for the following Front Office functions:
• Risk Management
• Transaction Capture
• Best Execution

Element 4 The role of IT in the Pre-settlement Phase

4.1 Understand the IT Alignment to Pre-Settlement Phase Key Risk Indicators,

including:
• Static Information
• Standard Settlement Instructions
• Client and Counterparty Agreements
4.2 Understand the IT implications of Trade Agreement Process
4.3 Understand the role of matching engines
4.4 Understand the IT requirements for reporting to Regulators
4.5 Understand the IT requirements for reporting to customers

Element 5 The role of IT in the Settlement and Post-settlement Phases

5.1 Understand the IT support requirements of Transaction Instructions

5.2 Understand the purposes of Stock Lending and Repos, their IT implications
and the importance of segregation
5.3 Understand the IT requirements for Cash Funding (Positioning)
5.4 Understand the function of IT within the settlement process
5.5 Know the function of the following Messaging Standards:
• SWIFT
• FIX
5.6 Understand the function of IT within post-settlement reconciliation
procedures, including:
• Reconciliation Requirements and Record Keeping
• Ensuring Cash and Stock Movements are recorded
• Clearing
• Journal Movements
• Corporate Actions (including Dividends, Bonus Issues and Rights Issues)
• Custody
• Failed Trades
• Fund Administration

Element 6 The Impact of IT on Financial Control

6.1 Understand the IT impact on the Financial Control Function (FCD)

6.2 Understand the IT requirements of General Ledger Accounts (GLA)
6.3 Understand the IT requirements of the Stock Record

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Element 7 IT Management

7.1 Understand the IT Governance relating to:

• Measuring IT Performance
• Managing and Monitoring Risk
7.2 Understand the concept of Management and Support of Applications
7.3 Understand the function of Service (Help) Desks And Follow-The-Sun
Model
7.4 Know the purpose of Service Level Agreements (SLAs) and Metrics
(Internal And External)
7.5 Understand Prioritisation Levels and the responsibilities of Support Teams
7.6 Understand the IT implications of Disaster Recovery (DR) and Business
Continuity Planning (BCP)
7.7 Understand the purpose of change control procedures

Element 8 IT Management and Business Change

8.1 Understand the key stages of a Software Development Life Cycle (SDLC)
including:
• Project Planning
• Feasibility Study
• Systems Analysis
• Requirements Definition
• Systems Design
• Code Generation
• Development
• Integration and Testing
• Acceptance, Installation, Deployment
• Maintenance

8.2 Understand the different Software Development Methodologies, including:

• Traditional or Waterfall methodologies
• Iterative incremental methodologies
8.3 Know the following different methodologies used in technology delivery:
• PRINCE
• PMI
• ISO/BS Accreditation
8.4 Understand the need for testing and its importance to Quality Assurance,
including:
• Testing Strategies
• Defect Tracking and Prevention
8.5 Understand the Buy Versus Build Decision

Element 9 The Globalisation Of IT Services

9.1 Know the Advantages and Disadvantages of Outsourcing

9.2 Know the Advantages and Disadvantages of Insourcing
Know the Advantages and Disadvantages of Offshoring, Near-Shoring,
9.3 Best-Shoring
9.4 Understand the Vendor Selection Process For IT Projects, including:
• Vendor Assessment
• Task Order/ Work Order / Contract Negotiation And Finalisation

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