Procedures, Rules and Regulations

In keeping with the Eastern Caribbean Securities Regulatory Commission's (the Commission) objective of maintaining the highest standard of professional conduct in the Eastern Caribbean Securities Market, candidates for these examinations are expected to conduct themselves professionally throughout the examination process.

Success in these examinations is a prerequisite for obtaining a licence to operate as a Principal, Representative or Investment Advisor in the ECSM.

Examination candidates are expected to familiarise themselves with these rules and regulations well in advance of the examination. Additional information on the ECSM Certification Programme can be found in the ECSM Certification Examination Syllabus.

EXAMINATION APPLICATION

Prospective candidates are required to complete an examination application form. The information provided in this application form will be used to determine the prospective candidate's eligibility to participate in the ECSM Certification Examinations. The deadline for applications for the February examinations is 15 December, while the deadline for the September examinations is 15 July.

WITHDRAWAL AND DEFERMENT

Requests to withdraw from an examination or defer the examination date will be granted if received by the Commission at least three weeks before the scheduled examination date. Withdrawing applicants will be refunded fifty percent (EC$250.00) of the application fee, while deferment applicants will be allowed to take the examination at the next scheduled examination date on payment of a deferment fee of One Hundred Eastern Caribbean Dollars (EC$100.00).

Candidates are allowed to defer an examination only once. Candidates who were granted a deferment are not eligible for a withdrawal refund.

PASS MARK

To pass any of the certification examinations, a candidate must successfully answer 70.0% of the examination; the pass mark for examinations is 70.0%.

EXAMINATION RESULTS

Examination results will be provided to candidates and their sponsors (if any) within four (4) weeks of completing the examination. A certificate of accomplishment is provided to all successful candidates in the ECSM Certification Examinations. This certificate is not a licence to operate in the ECSM.

EXAMINATION RULES

1) Programmable calculators must be cleared prior to entering the examination centre. Failure to do so will result in confiscation of the calculator for the duration of the examination or the expulsion of the candidate from the examination.

2) Candidates are not allowed to leave the examination centre within forty-five minutes of the commencement of the examination and thirty minutes prior to the conclusion of the examination.

3) All materials (question paper, rough sheets, answer sheets, etc) provided to candidates for the examination are the property of the Commission. These materials should not be removed from the examination centre. Failure to return all materials provided prior to exiting the examination centre may result in the candidate's examination script not being graded.

4) Legal action may also be taken against any candidate or person who removes and/or reproduces any examination material.

5) Any candidate who engages in any form of disruptive or dishonest activity may be expelled from the examination centre. Such actions include inter alia:

(i) sharing of information, that is, giving or receiving help to/from other candidates;
(ii) using reference or resource material during the examination;
(iii) participating in an act of impersonation or any other form of cheating;
(iv) failure to follow the instructions of the invigilator or other examination centre official;
(v) unauthorised speaking or moving around during the examination;
(vi) unauthorised use of electronic devices such as cellular phones, beepers and paging devices.

Any candidate who fails to adhere to any instruction, policy or procedure necessary for the orderly conduct of the examination may be prevented from sitting the examination through expulsion from the centre, non-grading of examination scripts, suspension of results or termination of eligibility to participate in future examinations in the ECSM Certification Programme.

QUERIES AND EXAMINATION CONCERNS

All queries and/or complaints about the administration, conduct, procedures, results, etc, of an examination should be forwarded to the Commission, to reach the Commission within 30 days of completing the examination. Failure to submit queries and/or complaints within the stipulated timeframe would result in the candidate losing his/her right of complaint or query.

Back to Top

Syllabus

[Certification Examination Syllabus]

EXAMINATION OBJECTIVE

The objective of this programme is to assess prospective market participant's competence in securities market issues and the laws and regulations in force in the Eastern Caribbean Securities Market (ECSM). The assessment will be used to determine candidates' eligibility to be licensed as market participants.

This syllabus outlines the primary subject areas in the ECSM Certification Examinations.

WHY PARTICIPATE IN THESE EXAMINATIONS

Success in the ECSM Certification Examination is one of the eligibility criteria for obtaining a licence to operate as a principal, representative or investment advisor in the ECSM. The Eastern Caribbean Securities Regulatory Commission (the Commission) will not grant a licence to an individual who has not been successful in the required examinations in the Certification Programme.

WHO SHOULD PARTICIPATE IN THESE EXAMINATIONS

The ECSM Certification Programme is targeted at persons with a background and/or experience in finance and investment, banking, accounting, and economics. The ideal candidate is someone with academic training and practical experience in securities market issues. This Programme will be of particular interest to recent graduates who wish to specialise in securities business. Candidates will find that the Programme contains challenging theoretical and practical elements, which would equip them for responsibility in a broker-dealer firm or as an investment advisor.

The workshops and examinations for this programme are conducted at a postgraduate level, and as such, candidates are expected to have a first degree or extensive experience in one of the recommended disciplines.

STRUCTURE OF EXAMINATIONS

The examinations consist exclusively of multiple-choice questions, with four available choices per question. Each of the three sets of examinations - principal, representative and investment advisor - consist of 200 questions; divided into two papers, each consisting of 100 questions. Each examination is completed in two sittings of one paper each. Two hours is allocated to complete each paper, which translates into 1.2 minutes per question.

The examinations for the principals and representatives have a significant number of the same and/or similar questions.

STRUCTURE OF EXAMINATION

Representative

Back to Top

The topics listed below represent the core subject areas in which candidates will be examined. Although care is taken to make each set of examinations of approximately the same degree of difficulty some areas of coverage may, from time to time, receive more or less emphasis on different examinations. Candidates are therefore advised to study all topics in the syllabus.

ECONOMIC ANALYSIS

Candidates should have an appreciation of how economic decisions affect the performance of the securities market. This includes an understanding of, and familiarity with, basic economic terms.

The following specific areas are examined under this section

i) Measures of economic activity/performance, e.g. GDP;
ii) Different measures of money used when assessing money in circulation in an economy, e.g. M1;
iii) Measures used by the government/central bank to influence money supply, e.g. open market operations;
iv) Economic policies to influence inflation and the impact of inflation on price levels;
v) Terms of trade and balance of trade issues.

MARKET ANALYSIS

Candidates should be familiar with market efficiency theories, methods of predicting (estimating) stock market movements, and company fundamentals and their impact on stock prices and other corporate decisions.

The following specific areas are examined under this section:

i) The efficient market hypothesis theory of market behaviour;
ii) Theories on risk: market risk, diversifiable and undiversifiable risks;
iii) Characteristics of primary and secondary markets for securities;
iv) Investment decisions pertaining to different stages of a business life cycle;
v) Issues which influence movements in the stock market e.g. speculative bubbles and fundamental shifts;

FINANCIAL ANALYSIS

Candidates should be able to make investment decisions about a company based on an analysis of its financial statements. While the emphasis in this section is on the company's balance sheet, candidates should have a working knowledge and appreciation of the income statement, the statement of changes in financial position (cash flow statement) and the statement of changes in retained earnings.

The following issues are examined under this section:

i) Stock splits and reverse stock splits: stock value and dividend payable before and after the stock split;
ii) Identifying working capital and its impact on financial decision making;
iii) Inventory valuation methods and their impact on financial reporting;
iv) How transactions affect different accounts on the balance sheet;
v) The use of ratios in evaluating the financial performance of a company;
vi) Determining the value of a company's shares under the following assumptions/ scenarios:

PORTFOLIO MANAGEMENT

Candidates should be able to value financial assets by applying basic quantitative and analytical tools. Candidates' quantitative skills will be assessed in this area.

The following are some of the areas examined under this section:

i) Cash flow analysis, discounted cash flows, time value of money and net present value calculations;
ii) Internal rate of return and required rate of return calculations;
iii) The calculation of asset yields and risk and return analysis;
iv) A general understanding of the Capital Asset Pricing Model (CAPM);
v) Techniques for forming a 'riskless' portfolio;

UNDERWRITING AND CORPORATE FINANCE

Candidates are expected to be able to identify and differentiate between the different methods of issuing securities, the benefits of each method and basic aspects of underwriting securities.

The following are some of the areas examined under this section:

i) An understanding of the roles and functions of the different agents that may be used by an issuer in placing securities in the primary and secondary market, e.g. underwriter;
ii) Types of underwriting contracts;
iii) Methods of placing securities;
iv) Types of prospectuses and the requirements of the various types;
v) An understanding of the terminology used in underwriting and corporate financing;
vi) Factors that affect a company's choice of equity vs. debt financing or a combination of both.

Back to Top

SECURITIES

Candidates should be able to value/price different types of securities using different valuation techniques. Candidates should be able to identify different classes of securities (primarily shares) and have an appreciation for rights and associated risks attached to these securities. Candidates should have an understanding of the factors that affect the market price of securities.

The following specific areas are examined under this section:

i) Types of securities with attached rights, risk and return;
ii) Securities valuation methods, computation and securities features e.g. warrants, convertibility, rights and options;
iii) The calculation of dividends payable under different scenarios, and for different classes and types of securities;
iv) An understanding of bond duration;
v) An appreciation of the relationship between the rate and frequency of interest/coupon payments and the price of the security;
vi) The relationship between bond price and interest rate;
vii) The impact on a company's stock price of a rights offering/issue, stock splits, a change in dividend policy, share repurchase, mergers and acquisitions, etc.
viii) Mutual funds: definition, types, valuation, expense ratio, etc:

TRADING

Candidates are expected to be familiar with the characteristics of securities markets and instruments in general, and the ECSM in particular (a quote driven call auction securities market). The emphasis in this section is on trading activities in the ECSM.

The following specific areas are examined under this section:

i) Methods of issuing securities - private placements, initial public offerings and negotiated offerings - and the registration requirements and procedures;
ii) An appreciation of trading in a call auction securities market/environment;
iii) How trades are executed and settled in the ECSM;
iv) The workings of the Eastern Caribbean Securities Exchange, the Eastern Caribbean Central Securities Depositary and the Eastern Caribbean Central Securities Registry.
v) Trade types and approval requirements, discretionary accounts;
vi) Definition of terms used in the ECSM;
vii) Types of quotes and options in pricing securities (bid/ask pricing);
viii) Types of trade options (solicited/unsolicited);
ix) Regulatory requirements specific to different certification and licensing;
x) Illegal or restricted activities by market participants.
xi) Familiarity with the clearing and settlement bank/institution system, and the trade settlement procedures.

REGULATIONS

Candidates are expected to be familiar with all laws and regulations pertaining to the ECSM. Including issues pertaining, but not limited to:

i) The management of customers' accounts;
ii) Reporting and record retention and maintenance requirements;
iii) Custodial duties and operation;
iv) Terms and issues related to investment, investment advice and portfolio management;
v) Licensing requirements and fees;
vi) Legal and economic ramifications of business misconduct;
vii) Settlement of disputes and arbitration procedures;
viii) Order acceptance and execution;
ix) Disclosure requirements.

Back to Top

REFERENCE MATERIAL/RECOMMENDED READING

i) The Securities Act, 2001

ii) The Securities Regulations, 2001

iii) The Eastern Caribbean Central Securities Depository Participant Operations Procedures Manual

iv) The Eastern Caribbean Securities Exchange Rules for Intermediaries

v) A general text on finance and investment, e.g. Investment Science by David G. Luenberger (Oxford University Press, 1998); Principles of Corporate Finance by Richard A Brealey and Stewart C Myers (most recent edition).

vi) A general text on accounting and financial analysis.

Fees

EXAMINATION FEES

An examination fee of Six Hundred Eastern Caribbean Dollars (EC$600.00), per examination, is payable for the Principal, Representative and Investment Advisor certification examinations. An additional fee of One Hundred Eastern Caribbean Dollars (EC$100.00) is payable to sit any examination for which a deferment was previously granted.

Examination fees should be paid by bank draft made payable to the 'Eastern Caribbean Securities Regulatory Commission', and submitted along with the examination application form. Unsuccessful applicants will be notified and refunded no later than three weeks prior to the scheduled examination date.

Dates

EXAMINATION DATES AND CENTRES

ECSM Certification Examinations will be held during February and September each year. The normal venue for the examinations is the Eastern Caribbean Central Bank Headquarters, Bird Rock, Basseterre, St Kitts.

The Commission reserves the right - at its sole discretion - to set the dates, times and centres for scheduled or rescheduled examinations. The Commission also reserves the right - at its sole discretion - to cancel, reschedule or defer any scheduled or rescheduled examination. Except in the cases of natural or manmade disasters, cancellation, rescheduling or deferment notices will be sent to applicants within three weeks of the scheduled date of the examinations.

Back to Top