Section 1: Knowledge of Capital Markets. Everything this outline item asks of you, in one place.
Runtime 8 minutes 46 seconds, measured from the published video.
1 more lesson for this unit is recorded and waiting to be published. Every rule it teaches is already written out below.
Five to ten minutes on this one unit: what the exam wants, the idea in plain words, then straight into the trap and the practice.
The outline wants every participant type placed correctly on the chain a trade actually follows, plus the one dollar test (accredited investor) and the one acronym trap (OCC) it names by name.
One trade touches a chain of named participants. The outline expects each one placed on it correctly. An investor is retail by default. It is institutional if it is a large organization, such as a pension fund. It is accredited if it clears a dollar test: one million dollars in net worth, not counting the primary home, or two hundred thousand dollars of income alone (three hundred thousand joint) in each of the last two years. Either test alone is enough. A candidate never needs both.
A broker-dealer is not one job. An introducing firm brings in the customer and the trade. A clearing firm holds the assets and settles it. A prime broker does both, for one large client, under a single relationship. Two related roles sit beside these three. An investment adviser gives investment advice for pay, in general. A municipal advisor does the same thing, but only for a municipal issuer, a city or a school district, not an individual investor. The issuer is the company raising money. The underwriter buys the new securities from that issuer and takes on the resale risk the issuer does not want.
A market maker stands ready to buy and sell a security all the time, quoting both sides. One FINRA rule shapes what an issuer may pay it. Rule 5250 lets an issuer pay a firm for real services, such as underwriting. The same rule's other line forbids a member from taking any payment from an issuer just to publish a quote or make a market in its stock. Pay for underwriting: allowed. Pay for a quote: never, under that same rule, from that same issuer.
The back office finishes the chain. A custodian holds a customer's assets safely; a transfer agent does a different job, keeping the official record of who owns what and processing changes to it. Depositories and clearing corporations move and settle securities in bulk after a trade is agreed, and the outline names two by name: the DTCC for general securities settlement, and the OCC. On this exam's own outline, OCC sits specifically under depositories and clearing corporations, which is the Options Clearing Corporation, not the bank regulator the same three letters usually mean elsewhere.
Outside this exam, OCC almost always means the Office of the Comptroller of the Currency, a bank regulator. On the SIE's own outline, OCC sits under depositories and clearing corporations, which makes it the Options Clearing Corporation instead. The section a term sits in is the clue every time this abbreviation appears.
One rule per screen, with its trick, the method, and the questions that test it. Tap any of them to start there.
Everything on this page comes from this unit's own lessons and from FINRA's 2025 SIE content outline, item 1.1.4. Nothing is added.