What is QCF?

Some Organizations and Exams Related to QCF

Different types of certification are offered by different organizations in the areas related to quantitative and computational finance.

Association for Investment Management and Research (AIMR) and the CFA Program
Chartered Alternative Investment Analyst (CAIA) Association
Global Association of Risk Professionals (GARP) and the FRM Certification Program
International Association of Financial Engineers (IAFE) and future IAFE Certification
Market Technicians Association (MTA) and the Chartered Market Technician (CMT) Program
Professional Risk Managers' International Association (PRMIA) and the Certified Risk Manager Program
Exams given by National Association of Securities Dealers (NASD), National Futures Association (NFA), New York Stock Exchange, and the Chicago Board Options Exchange

Association for Investment Management and Research (AIMR)

"The Association for Investment Management and Research is a global, nonprofit organization of more than 36,000 investment professionals from over 80 countries worldwide. Through its headquarters in the United States and 87 affiliated Societies and Chapters throughout the world, AIMR provides Knowledge to investment professionals while promoting a high level of Standards, Ethics, and Professionalism within the investment industry."

The Chartered Financial Analyst (CFA) Program is a globally recognized standard for measuring the competence and integrity of financial analysts. Its curriculum develops and reinforces a fundamental knowledge of investment principles. Three levels of examination measure a candidate's ability to apply these principles at a professional level. The CFA exam is administered annually in more than 70 nations worldwide.

Charter Requirements

To be awarded the CFA charter, the candidate must sequentially pass the Level I, Level II, and Level III examinations; have at least three years of acceptable professional experience working in the investment decision-making process (the candidate may proceed to take the three examinations, but the charter will not be awarded until this requirement is met).

For the purpose of assessing the work experience of a candidate, AIMR recognizes as acceptable activities those that to a significant extent consist of (1) collecting, evaluating, or applying financial, economic, or statistical data as part of the investment decision-making process, or (2) supervising, directly or indirectly, those who practice such activities, or (3) teaching such activities.

AIMR Candidate Body of Knowledge

The CFA curriculum is solidly grounded in the practice of the investment profession. Periodically (most recently in 1995), AIMR surveys CFA charterholders around the world to determine those elements of the body of investment knowledge that are important to them in their practice. The survey results help establish the Candidate Body of Knowledge (CBOK) and determine how much emphasis each of the major topic areas should receive on the CFA examinations.

The CBOK is organized into four major areas: ethical and professional standards, tools and inputs for investment valuation and management (investment tools), asset valuation, and portfolio management. You should note two features of the CBOK that are especially relevant to the CFA exams. First, the curriculum for each level of the exams is organized primarily around a functional area:

The Level I study program emphasizes tools and inputs and includes an introduction to asset valuation and portfolio management techniques.

The Level II study program emphasizes asset valuation and includes applications of the tools and inputs (including economics, accounting, and quantitative techniques) in asset valuation.

The Level III study program emphasizes portfolio management and includes strategies for applying the tools and inputs in managing equity and fixed-income securities. The second important feature of the CBOK is that ethical and professional standards are an integral part of all three functional areas of investment management and, hence, are covered at all three levels of the curriculum.

Candidate Body of Knowledge Outline Following is an outline of the CBOK covered in the CFA Program.

Ethical and Professional Standards

Professional Standards of Practice: AIMR Code of Ethics, AIMR Standards of Professional Conduct
Ethical conduct and professional obligations: Knowledge and compliance with governing laws and regulations, Responsibilities (e.g., clients, research reports), Obligations to disclose material information (e.g., compensation, conflicts of interest), Fiduciary duties, Corporate governance, "Prudent Person Rule" and "Prudent Expert Rule", General business ethics and obligations, Professional misconduct
Global (cross-national) differences: Extent and implications, Laws and regulations, Customs and attitudes

Quantitative Methods

Time Value of Money: Basic concepts (e.g., present value, future value, discounting), Mechanics, Discounted cash flow analysis
Basic statistical concepts: Data collection and presentation (e.g., tables, charts, graphs), Frequency distributions (e.g., histograms, stem and leaf plots), Descriptive statistics, Shape
Probability theory and concepts: Sample and event space, Conditional probability, Joint probability and marginal probability, Bayes' Rule
Random variables: Discrete, Continuous
Probability distributions: Discrete (e.g., uniform, binomial), Continuous (e.g., normal, exponential), Sampling theory and distributions
Sampling from a population: Mean square error techniques, Sampling distributions, Central Limit Theorem, Law of Large Numbers
Statistical inference: Estimation, Hypothesis testing
Regression and Correlation: Assumptions, Parameter estimation, Statistical measures, Statistical tests, Confidence intervals, Qualitative or dummy variables, Model validation, Other considerations (e.g., heteroskedasticity)
Time-Series Analysis and Forecasting: Trend, Time-series models, Smoothing models, Model comparison, Stationarity
Performance indicators: Theory and construction, Domestic and international security market indicators , Types of indicators (e.g., security market, economic)
Multivariate techniques: Factor and principal component analysis, Cluster analysis, Discriminant analysis

Economics

Microeconomics: Basic model of competition, Economic interdependence, Concepts of demand and supply, Analysis of supply and demand, Government
Macroeconomics: Policy objectives and measures of activity, Alternative macroeconomic models, Consumption and investment, Aggregate demand and supply, Markets
International financial systems: Role of government in market economies, International flow of funds, International banking activities
Perfect markets: Consumption, Savings, Demographics (e.g., aging, income distribution), Labor-supply decisions, Production decisions, Competitive equilibrium
Imperfect markets: Monopoly, Imperfect competition, Government policies (e.g., nationalization, antitrust), Problems of imperfect information
Relationship of economic activity to investment process: Impact of changes in aggregate domestic economies on security markets, Impact of macroeconomic factors on global security markets, Factors to consider in regional (country) weighting, Factors to consider in sector weightings (e.g., cyclicals vs. noncyclicals), Treatment of currencies and asset allocation

Accounting and Corporate Finance

Accounting objectives, conventions, and standards: U.S. generally accepted accounting principles (GAAP), Non-U.S. country-specific GAAP, International (International Accounting Standards), Influential organizations, Process of development, Enforcement and penalties, Auditing
Financial statements and other required disclosures: Consolidation requirements, Balance sheet, Income statement, Statement of cash flows (IAS, U.S., other), Statement of changes in financial positions (some non-U.S.), Statement of shareholders’ equity, Management discussion and analysis, Proxy statement, Pro forma presentations of financial statements
Specific accounting principles and practices: Inventories, Long-term (fixed) assets, Income taxes, Liabilities (e.g., debt, leases), Pensions, Other postemployment benefits, Inflation and changing prices, Off-balance-sheet activities, Hedging activities, Intercorporate investments, Segment disclosures, Business combinations, Foreign currency translation, Other disclosure practices (e.g., environmental, forecasts)
International financial statement analysis: Nonfinancial considerations (e.g., environmental or cultural values), Financial information considerations (e.g., timeliness, language)
Ratio and financial analysis: Common-size statements, Trend statements, Activity analysis, Liquidity analysis, Long-term debt and solvency analysis, Profitability analysis, Integrated ratio analysis (e.g., duPont formulation), Earnings per share, Types of comparisons (e.g., time series, international)
U.S. Securities and Exchange Commission accounting and disclosure requirements: U.S. companies, Foreign registrants
Basics of corporate finance: Forms of business organization, Corporate governance issues, Financial planning
Capital investment decisions: Investment decision criteria, Cash flow projections, Common pitfalls (e.g., sunk costs, depreciation), Definitions of cash from operations, Common corporate decisions using discounted cash flow analysis, Project analysis and evaluation, Managerial options, Capital rationing
Long-term financing decisions: Financial leverage, Capital structure, Cost of capital, Dividend policy
Short-term financing decisions: Cash conversion cycle, Considerations for current asset financing policy, Borrowing options
Cash and liquidity management: Cash, Float, Variations in cash flows
Credit and inventory management: Credit policy, Inventory management
Mergers and acquisitions: Legal forms of acquisition, Classifications (e.g., horizontal), Takeover issues, Tax issues, Expectations from acquisition (e.g., synergy, cost reductions), Costs, Defensive tactics
Special considerations of multinational corporations: Capital budgeting, Exchange-rate risk management, Currency translation effects, Political risk, Taxes

Global Markets and Instruments

Characteristics of financial markets: Availability of information, Liquidity, Transaction costs, External (informational) efficiency
Market structures: Auction markets (call and continuous), Over-the-counter markets, Intermediated markets, Private markets
Market organizations: Primary capital markets, Secondary financial markets, Third market (i.e., trading of exchange-listed shares over the counter), Fourth market (i.e., trading without broker intermediary), Intermediated markets and private placements
Structural features of financial markets: Trading mechanisms, Issue and settlement procedures, Custodianship, Liquidity/trading volume, Market capitalization, Costs, Depth vs. breadth, Level of privatization, Accounting and auditing systems
Fixed-income markets and instruments: Fixed-income investments (bonds, collateralized mortgage obligations), Fixed-income derivatives, Issuers of fixed-income securities, Basic structure of fixed-income investment (e.g., coupon, maturity), National bond markets, Eurobond market
Equity markets and instruments: Equity securities, Equity derivatives, U.S. markets, Other national markets, Euroequity market, Trading procedures, Considerations in dual listings, Other trading issues (e.g., taxes), Commercial information services, Domestic stock indicators, International stock indicators
Options markets: Instruments, Kinds of options, Market organization
Futures markets: Functions of futures, Basic characteristics of futures contracts, Applications, Kinds of futures, Regulatory issues
Currency or foreign exchange markets: Exchange rates, Quotation (i.e., amount of local currency required to purchase one unit of foreign currency), Market organization and costs, Related markets (e.g., forward, interest rate)
Swap markets: Types of swaps, Characteristics, Rationale for use of swaps
Real estate markets: Kinds of investments, Kinds of properties, Private-market structure, Issues in international investment (e.g., monitoring, taxes), Investment trends

Valuation and Investment Theory

Basic concepts: Return, Risk
Efficient market theory: Assumptions for informationally efficient market, Alternative hypotheses, Violations of conditions n real capital markets, Economically efficient market, Implications of capital market efficiency, Empirical tests of informational efficiency, Market rationality, Implications for approaches to financial analysis
Portfolio theory: Early work (e.g., Markowitz), Basic assumptions of investor behavior
Asset pricing theories and models: Capital asset pricing model (CAPM), International CAPM, Arbitrage pricing theory (APT), International APT
Required input variables for valuation models: Expected return, Required rate of return, Expected growth rate of dividends
Basic investment valuation models: Bond (i.e., present value of future interest and principal payments), Preferred stock (i.e., present value of a perpetuity), Common stock, Futures, Options

Analysis of Fixed-Income Investments

Term-structure analysis: Characterizations of the term structure, Theories, Term structure (market risk), Term-structure models, Measure of volatility exposure
Yield-spread analysis: Types of spreads, Determinants of relative value (e.g., business cycle)
Sources of risk: Interest rate risk, Reinvestment risk, Call risk, Credit or default risk, Maturity risk (yield-curve risk), Liquidity risk, Exchange-rate risk, Volatility risk, Inflation or purchasing power risk, Political risk, Event risk, Sector or industry risk
Return or yield measures: Current yield, Yield to maturity, Yield to call, Horizon (total) return, Promised vs. expected yield, Yield on floating-rate instruments, Bond-equivalent yield, Option-adjusted yield
Analysis of option-free bonds: Basic price–yield relationship, Reasons for bond price changes, Price volatility, Measures of price volatility, Convexity
Analysis of bonds with embedded options (e.g., callable bonds): Instruments, Contingent claims analysis, Option-pricing methodology, Option-adjusted yield-spread methodology
Analysis of convertible or exchangeable debt: Provisions, Investment characteristics, Valuation variables, Risks, Option-pricing approach
Analysis of mortgage-backed securities: Types of mortgages, Types of instruments, Evaluation issues, Cash flows, Risk analysis, Prepayment benchmark conventions, Valuation methodologies
Analysis of asset-backed securities: Collateral, Credit analysis, Characteristics of cash flows
Credit analysis for corporate bonds: Industry analysis, Financial analysis, Bond covenants, Credit ratings. Analysis of high-yield securities, Bankruptcy prediction, Analysis of distressed securities
Analysis of fixed-income derivatives: Interest rate futures contracts, Interest rate options
Custom interest rate agreements: Interest rate swaps, Interest rate caps, floors, and associated derivatives, Compound options
Analysis of interest rate swaps: Terminology, Alternative definitions of the Treasury yield curve, Characteristics of generic swap, Deviations from generic swap, Valuation methodology
Issues in analysis of international bonds: Characterization of appropriate term structure, Risk analysis

Analysis of Equity Investments

Fundamental Analysis: Assumptions, Implications of efficient market hypothesis, Analysis of stock market series (S&P 500 Index, Financial Times 100 Index), Country analysis, Industry analysis, Company analysis
Technical analysis: Definition and assumptions, Comparison with fundamental analysis, Indicators and rules
Special applications of fundamental analysis: Analysis of distressed and bankrupt companies, Analysis and appraisal of closely held companies and inactively traded securities, Analysis of venture capital investments
Analysis of equity options: Common stock options, Stock index options, Stock index futures
Analysis of warrants: Comparison with call option, Modification of option-pricing models for additional shares issued

Analysis of Alternative Investments

Analysis of real estate investments: Forms of commercial/multifamily real estate, Analysis requirements, Real estate appraisal concepts, Valuation approaches
Analysis of investment companies: Basic organization characteristics, Characteristics of closed-end investment companies, Characteristics of open-end investment companies
Analysis of currency or foreign exchange investments: Determinants of exchange-rate levels, Cash market, Currency futures, Forward contracts, Options

Portfolio Management

Portfolio management policies for individual investors: Demographics, Objectives, Constraints, Requirements of effective policy
Portfolio management policies for institutional investors: Objectives, Constraints, Pensions and employee benefit funds, Endowment funds, Insurance companies and commercial banks
Capital market expectations: Key macroeconomic factors affecting security pricing, Development of expectations, Macro valuation model, Elements of discounting process
Asset allocation: Assessment of opportunities, Determination of asset mix, Selection approaches, Issues in multiple-manager environments
General portfolio construction and revision: Inputs to portfolio construction and revision, Diversification issues, Portfolio monitoring and rebalancing, Implementation issues
Fixed-income portfolio management strategies: Active management, Passive management, Hybrid strategies (dedication), Derivative strategies
Equity portfolio management strategies: Active management, Passive management, Hybrid/combined strategies, Hedging strategies using derivatives
Real estate portfolio management: Traditional types of diversification. Alternative approaches to definition of location, Analysis of critical attributes, Property-type attractiveness indexes, Portfolio restructuring
Hedging and hedging strategies: Fundamentals, Estimation of hedge ratio, Results of hedge, Management of hedge, Criteria for hedge accounting, Types of derivatives used, Types of strategies, Tax considerations
Performance measurement: Fundamental issues, Return measures (e.g., arithmetic, geometric, dollar weighted, Risk adjustment, Annualization method
Performance attribution analysis: Identification of impact of portfolio management decisions, Measurement of strategic policy effect: benchmark portfolios, Measurement of allocation effect, Measurement of selection effect, Attribution comparison options, Benchmarks for real estate portfolios, Other problematic portfolios (e.g., inactively traded), Evaluation of performance fees

Chartered Alternative Investment Analyst(sm) Association (CAIA)

The Chartered Alternative Investment Analyst (CAIA ) Association is a non-profit educational association, which focuses on alternative investment education and is the sponsoring organization for the Chartered Alternative Investment Analyst designation. Alternative investments include, but are not limited to, hedge funds, managed futures, real estate, private equity, and venture capital. The CAIA Association is sponsored by the Alternative Investment Management Association (http://www.aima.org/aimasite/indexfrm.htm) and the Center for International Securities and Derivatives Markets (http://www.umass.edu/som/cisdm/).

The Chartered Alternative Investment Analyst Program

The Chartered Alternative Investment Analyst Program (the CAIA Program) is a professional certification program designed to promote and maintain professional standards for those employed or engaged in the alternative investments industry. The CAIA designation appeals broadly to hedge fund managers, managed futures advisors, real estate, private equity and venture capital managers, institutional investors, and other professionals in the area of alternative investments. Like many charter programs in finance and accounting, the CAIA designation is structured as long-distance education and requires candidates to accumulate a level of knowledge necessary to implement various aspects of alternative investment decision-making, both from the buy side and from the sell side. This level of knowledge includes, but is not limited to, asset allocation among traditional and alternative investments, benchmarking, manager, strategy and asset selection, and legal and qualitative differences between different alternative investment strategies and structures.

In order to obtain the CAIA designation a candidate must pass both levels of CAIA exams, hold a Bachelor's or an equivalent degree, fulfill the CAIA Association membership requirements, and apply concurrently for membership in the CAIA Association. The CAIA exams cover traditional (real estate, private equity and commodity) and modern (hedge fund and CTA) alternative investment vehicles with current emphasis on hedge funds. The CAIA Association administers all exams online at proctored testing centers worldwide.

Level I: Section 1 - Foundation of Traditional Investments: Requires an understanding of fundamental concepts of finance, accounting and statistics as they relate to investment markets. Section 2 - Foundations of Alternative Investments: Covers types of AI, trading strategies employed by AI managers, sources of returns to those strategies, compensation structure, legal and economic aspects, liquidity and transparency, due diligence practices and standards for professional conduct.

Level II - Advanced Topics in Alternative Investments: Concentrates on the application of portfolio theory to AI, manager, strategy and asset selection and oversight, understanding differences in alternative asset classes and risk management and standards of practice.

Section 1: Foundations of Traditional Investments
Quantitative Analysis: Review of Quantitative Methods
Markets and Traditional Instruments: Traditional Markets; Fixed Income Securities; Equity Securities; Alternative Markets.
Valuation and Investment Theory: Basic Risk Return Relationship; Efficient Capital Markets and Empirical Evidence; Portfolio Management; Market Risk Management; Options and the Black-Scholes Option Pricing Model; Other Derivatives and Market Strategies.
Section 2: Ethics and Foundations of Alternative Investments
Ethical and Professional Standards: Standards I, II and III of the AIMR Standards of Professional Conduct
Hedge Funds

Global Association of Risk Professionals (GARP)

"The Global Association of Risk Professionals (GARP) is a not-for-profit, independent organization of financial risk management practitioners and researchers. GARP was founded by a group of risk managers from banks who felt that the financial risk management profession should extend beyond the risk control departments of financial institutions. GARP is now a diverse international association of professionals from a variety of backgrounds and organizations who share a common interest in the field. GARP's mission is to serve its members by facilitating the exchange of information, developing educational programs, and promoting standards in the area of financial risk management. GARP members discuss risk management techniques and standards, critique current practices and regulation, and help bring forth potential risks in the financial markets to the attention of other members and the public. GARP seeks to provide open forums for discussion and free access to information such as events, publications, consulting and software services, jobs, Internet sites, etc."

Financial Risk Manager (FRM) Certification Program

Certification Requirements: (i) A passing score on the FRM Examination; (ii) Active membership in the Global Association of Risk Professionals; and (iii) A minimum of two years experience in the area of financial risk management or another related field including, but not limited to, trading, portfolio management, academic or industry research, economics, auditing, risk consulting, and/or risk technology.

FRM Examination

The FRM Exam is designed to test for an admixture of basic analytical skills , general knowledge and intuitive capability acquired through experience in capital markets. It focuses on the core body of knowledge required for independent risk management analysis and decision making. FRM candidates are given 5 hours to complete the examination. The following outline establishes the topics in financial risk management with relative weights of those topics in the FRM Exam. Within each topic, general concepts and techniques are also listed.

Quantitative Analysis (15%): Time value of money, Probability distributions and their properties, Correlation and regression analysis, Correlation and regression forecasting
Capital Markets (15%): Fixed income derivatives, Foreign exchange derivatives, Futures, forwards, swaps, and options, Equity derivatives, Commodity derivatives, Emerging markets
Market Risk Management (25%): Interest rate, foreign exchange, equity, and commodity risks, Emerging market risk, Liquidity risk, Derivatives risk, Portfolio risk, VaR, Approaches to VaR. Parametric VaR, Delta-Normal VaR, Simulation VaR, Stress Testing
Credit Risk Management (25%): Credit exposure and credit risk, Counterparty exposure and countparty risk, Default probability and recovery rate, Credit rating migration, Netting, Margin and Collateral Requirements, Pre Settlement Risk, Settlement Risk, Counterparty Risk, Portfolio credit risk, Measuring and managing credit risk, Credit derivatives
Operational & Integrated Risk Management (5%): Operational risk, Policies and procedures, Best practices, Business structure, Firmwide risk management, Calculation of risk capital, RAROC, Model risk, Other risks
Legal, Accounting, and Tax Risk Management (5%): Legal, Accounting, and Tax aspects, Legal risk, Accounting risk, Tax risk
Regulation and Compliance (10%): BIS Capital Accord (1988), BIS Market Risk Amendment (1996). EU Capital Adequacy Directive, Fed Pre-Commitment Model

The International Association of Financial Engineers (IAFE)

"Dedicated to Defining and Fostering the Profession of Financial Engineering" IAFE has considered certification of degree programs in financial engineering, but seems to have given up on this initiative. It appears that IAFE is now considering certification of individuals in this area, as discussed in the following statement available at its website.

IAFE Certification Statement

(the version of February 22, 1999, downloaded May 27, 1999))

"The International Association of Financial Engineers is planning for a certification in financial engineering. This is a reflection of the increasing complexity of today's financial markets, and signifies the coming of age of the financial engineering professional. The growing demands and needs of corporations, public funds, and individual and institutional investors have caused rapid innovation in the financial markets. Today's sophisticated financial markets have spurred the demand for financial professionals with a complex and unique skills set. Quantitative and analytical methods and techniques have become critical to understanding today's financial instruments. The risks and complexities of the financial markets, and the business environment in general, have mandated knowledge of tools traditionally associated with the natural science and engineering disciplines. All the while, traditional disciplines, such as accounting and economics, continue to play an important part in business decisions and market innovation. As a result, a newly formed discipline is evolving that requires a composite mix of skills from historically distinct disciplines.

Like other certified professionals, employers need to be able to confidently assess the qualifications of financial engineers, who play a growing role in fields, such as risk management, structuring, etc. The certification addresses this need.

Preliminary plans anticipate several components to the certification. In addition to educational requirements from accredited institutions, the certification will require satisfactory completion of a written exam or series of exams covering subjects such as statistics, mathematics, finance, etc., as well as knowledge of the financial instruments and markets. Additional requirements will include an ethics standard, adherence to a standard of conduct, and professional experience.

The requirements for the certification are still in development, and the financial , business, and academic communities are encouraged to provide comments and suggestions for the content, requirements and format of the certification process.

To obtain information, email main@iafe.org."

IAFE Statement on Financial Engineering Core Body of Knowledge

(the version of February 21, 1999, downloaded May 27, 1999)

Finance

Term Structure of Interest Rates: General Theory, Math (Including C-I-R and beyond)
Valuation of Cash Flows: Net Present Value, Implications of Efficient Markets, Market Conventions
Valuation of Contingent Claims
Portfolio Theory
Asset Pricing (CAPM and beyond)
International Finance
Performance Measures
Credit Risk Evaluation
Derivative Instruments and Securities
Forwards, Futures, and Swaps Options: General Theory, Applications, Mathematics
Hybrid Securities
Asset-Backed Securities (Particularly Mortgage-Backed Securities)
Experience in Structuring (Engineering and Reverse Engineering Structures)
Markets and Processes
Understanding of the Global markets: Money Markets, Treasury Markets (US, JGB, Gilts...), Foreign Exchange Market, Markets for Commodities, Equity Markets, Corporate Debt Markets
Debt Issuance Process
Arbitrage: Classic, Covered Interest, Tax and Regulatory

Economics

Micro Theory
Macro Theory

Market Technicians Association (MTA) and the Chartered Market Technician

(CMT) Program

The Market Technicians Association (MTA), incorporated in 1973, is the national organization of market analysis professionals in the United States. This not-for-profit association has three main goals:: - encourage the exchange of technical information and collectively explore new frontiers in the area of technical research;; - educate the public and the investment community about the use, value and limitations of technical research; and; - uphold a code of ethics and the professional standards among technical analysts.
These goals of the MTA are accomplished through a wide variety of activities and publications, and with the voluntary involvement and dedication of many members through several committees.

The Chartered Market Technician (CMT) Program

The Chartered Market Technician (CMT) Program is a certification process in which candidates are required to demonstrate proficiency in a broad range of technical analysis subjects. Administered by the Accreditation Committee of the Market Technicians Association (MTA), the CMT Program consists of three levels: Level 1 is a multiple choice exam; Level 2 is an essay/multiple choice exam. At level 3, candidates have the option of writing a research paper or taking a third exam.
The objectives of the CMT Program are:: - To guide candidates in mastering a professional body of knowledge and indeveloping analytical skills;; - To promote and encourage the highest standards of education; and; - To grant the right to use the professional designation of Chartered Market Technician (CMT) to those members who successfully complete the program and agree to abide by the MTA Code of Ethics.

The Three Levels

- Level 1: Definition: The level 1 exam measures basic, entry-level competence and understanding on the part of the candidate. The CMT Level 1 candidate needs to have a working knowledge of the basic tools of the technical analyst. Exam time: 2 hours; format: Multiple Choice. The general fields of study for the level 1 exam encompass: Basic definitions and information; methods of charting; establishing price targets; Market trend determination; bond, commodity, currency, futures, index and option analysis.
- Level 2: Application: The CMT Level 2 exam requires the candidate to demonstrate a greater depth of competency in a variety of fields of expertise. The CMT Level 2 candidate is expected to demonstrate proficiency in applying more advanced analytical techniques. Exam time: 4 hours; format: Essay/Multiple Choice.
- Level 3: Integration: For level 3, the candidate may choose to take an exam or write a research paper; candidates will not be allowed to register for both. The CMT Level 3 exam will test the candidate on the formation of well- thought out research opinions, portfolio strategies or trading decisions based on a wide range of charts and technical data. Exam length: 4 hours; format: Essay. Candidates who choose to write a research paper will be expected to demonstrate a sound mastery of research techniques as applied to the practice of technical analysis. The conclusions reached should extend the body of knowledge in the field of technical analysis. All tests, analyses, studies or other documentation presented to verify or validate points being made must be capable of being replicated. Papers submitted will be reviewed by a peer review panel of the MTA Accreditation Committee. If a paper is approved, it will be submitted to the Journal of Technical Analysiss for possible publication, although the approval of a paper does not necessarily indicate that it will be published in the Journal of Technical Analysis as the MTA reserves the right to publish.

Professional Risk Managers' International Association (PRMIA)

The PRMIA Mission is to provide a free and open forum for the promotion of sound risk management standards and practices globally. To accomplish this mission, PRMIA seeks to be:: -a leader of industry opinion and a proponent for the risk management profession;; -driving the integration of practice and theory and certifying the credentials of those in this profession;; -connecting practitioners, researchers, students and others interested in the field of risk management;; -global in focus, promoting cross-cultural ethical standards, serving emerging as well as more developed markets;; -transparent, nonprofit, independent, member-focused and member-driven; and; -working with other professional associations in furtherance of the PRMIA mission.
Membership in PRMIA is free of charge. Main activities of PRMIA include regional meetings, web-based activities, and the PRMIA Certified Risk Manager program

PRMIA Certified Risk Manager program

The PRMIA Certified Risk Manager program seeks to set the standard for assessing the knowledge, competence and integrity of risk professionals. This is accomplished in part through the PRMIA CRM Exam. Successful passage of the Exam leads to PRMIA Risk Manager Certification. The exam tests a candidate's knowledge and ability to apply the essentials of financial risk management to everyday, real-life situations in the workplace. The PRMIA exam is offered at over 350 locations across the globe.

The learning objectives for certification through the Exam are to demonstrate:: -knowledge of basic Linear Algebra, Calculus and Probability Theory; -knowledge of classic Finance theory; -knowledge of the foundation of option theory; -knowledge of financial instruments and their associated risks; -an understanding of the daily form and function of trading markets; -an understanding of risk practices; -an understanding of failed systems and practices from major risk events; -knowledge of the PRMIA Code of Conduct; -knowledge of PRMIA's Bylaws

The exam is six hours in length, five hours of testing with a one-hour break during the exam. The subject matter of the exam is broken down as follows:

Mathematics (20%): Calculus (5%) Derivatives, single and multiple integrals, word problems (rate of change, optimization; area/volume).; Linear Algebra (5%) Matrix operations, determinants, singular/nonsingular matrices, eigenvalues and eigenvectors, positive definite matrices, Cholesky factorization.; Probability (10%) Probability distributions, random variables and random vectors (probability functions, probability distribution functions and cumulative distribution functions); conditional probabilities; marginal probabilities; parameters (mean, variance, skewness, kurtosis); covariance and correlation matrices; linear polynomials of random vectors; distribution families (Uniform, Normal, Lognormal, Chi-squared, Poisson); principal components; word problems.
Finance (25%): Finance Theory (10%) Asset Pricing Theory (Mean-Variance Portfolio Theory, efficient frontiers, Capital market line; CAPM, APT, ICAPM, CCAPM; Beta); Black-Scholes-Merton theory; Interest rate parity; Put-call parity.; Financial instruments - descriptive and pricing knowledge (5%) Compounding methods (simple, annual, semi-annual, continuous); simple (non-optional) bonds; floating rate notes; futures; forwards; swaps; options.; Markets (10%) Money market / FX market; Markets for commodities (natural gas and oil).
Financial Risk Management Practices (30%): Market risk (10%) Duration and convexity; Greeks of instruments and portfolios; Value-at-Risk (VaR); calculation of VaR for linear portfolios; Monte Carlo and Historical calculation of VaR; covariance matrix construction (UWMA and EWMA); Market risk limits (stop-loss, exposure, VaR); stress testing.; Credit risk (15%) Exposure, loss given default and expected loss; marginal vs cumulative default risk; corporate vs sovereign risk; settlement risk and netting systems; Market prices, accounting (Altman) and actuarial methods; rating agencies and their grades; transition matrix; credit derivatives.; Operational risk (5%) Typologies of operational risk; insurance, reinsurance; causal models; risk management processes, prevention and mitigation; loss events databases and their uses.
Case Studies (20%): Barings (5%);; Metallgesellschaft (5%);; LTCM (5%);; Group of 30 Report (5%)
PRMIA Bylaws and Code of Conduct (5%) Exams given by NASD, NFA, NYSE, and CBOE National Association of Securities Dealers (NASD) National Futures Association (NFA) New York Stock Exchange (NYSE) Chicago Board Options Exchange (CBOE) Examples of examinations given as part of the regulation activities of these and other organizations are the following: Series 3: National Commodity Futures Series 4: Registered Options Principal Series 5: Interest Rate Options Series 6: Investment Company/Variable Contracts Representative (Mutual Funds) Series 7: General Securities Registered Representative Series 8: NYSE Branch Office Manager/General Securities Sal-es Supervisor Series 11: Assistant Representative Order Processing Series 15: Foreign Currency Options Series 17: Limited Registered Representative registration Series 22: Direct Participation Programs Representative Series 24: General Securities Principal Series 26: Investment Company/Variable Contracts Principal Series 27: Financial and Operations Principal Series 28: Introducing Broker/Dealer Financial and Operations Principal Series 30: Futures - Branch Office Manager Series 31: Futures - Managed Funds Series 32: Limited Futures Examination Series 33: Financial Instruments Examination Series 37: Canada Module of Series 7 Exam (Options required) registration Series 38: Canada Module of Series 7 Exam (Options Not Required) registration Series 39: Direct Participation Programs Principal Series 42: Registered Option Representative Series 52: Municipal Securities Representative Series 53: Municipal Securities Principal Series 55: Equities Trader Series 62: Corporate Securities Limited Representative Series 63: Uniform Securities Agent State Law Series 64: Uniform Real Estate Securities Exam Series 65: Uniform Registered Investment Advisor Series 66: Unified Combined State Law Exam Series 72: Government Securities Representative Some specific details on some of the more basic of these exams are given now. For additional information on some of these exams, one can look to websites such as that of the Futures Industry Institute and the NASD. Through a websearch one can also find numerous companies that assist exam registrants in the preparation for the exam. Series 3: National Commodity Futures The National Futures Association requires that the Series 3 National Commodities Futures Exam (Series 3) be passed by any individuals who offer or solicit business in futures or options on futures as a futures commission merchant (FCM) or introducing broker (IB) or who supervise any such person; who are associated with a commodity trading advisor (CTA) who solicits discretionary accounts or who supervise persons so engaged; who are associated with a commodity pool operator (CPO) who solicits funds for participation in a commodity pool or who supervise such persons; or who are Series #7 or Series #22 registered representatives who are interested in receiving commissions on the sale of commodity limited partnerships or managed funds The Series 3 exam consists of 120 True/False and multiple-choice questions; 85 questions cover industry and technical information (market fundamentals) and 35 cover regulations and compliance. The two sections are scored separately, with a 70 percent minimum score on each required to pass the exam. (Time limit: 2 hours 30 minutes) Ethics Training: New registrants must complete a 4-hour (initial) ethics training program within 6 months of registration (i.e., 6 months before or after registration) and a 1-hour (periodic) program every 3 years thereafter. Part I. Industry and technical information (market fundamentals) Futures trading theory and basic functions terminology Futures margins, options premiums, price limits, futures settlements, delivery, exercise, and assignment Types of orders, customers’ accounts, price analysis Basic hedging, basis calculations, hedging commodity futures Hedging financial and monetary futures Spreading Speculating in commodity futures Speculating in financial and monetary futures Options hedging, speculating, spreading Part II. Regulations and compliance CPO/CTA disclosure documents, IB and FCM disclosure, Know Your Customer Rule, General account handling and exchange regulations, Discretionary account regulation Series 7: General Securities Registered Representative This test is a New York Stock Exchange generated exam accepted by the NASD for anyone employed by a broker/dealer who will trade all types of securities. This is the most comprehensive of the registered representative exams (i.e., it essentially covers the exams Series #6, #22, #42, #52, and the #62!!). The Series 7 exam is a six-hour test containing 250 four-option multiple choice questions. The Series 7 exam measures competence at the entry level, so questions are not so difficult so as to be answered by only the most able candidates. Successful completion of this examination qualifies a candidate to conduct a member’s business in stocks, bonds, mutual funds, and limited partnerships. The Series 7 exam determines whether a candidate has attained the level of competency required to function as a Registered Representative. Exam Questions involve the following duties of this representative: seeks business for the broker-dealer through customers and potential customers, evaluates customers in terms of financial needs, current holdings, and available investment capital, and helps them identify their investment objectives, provides customers and prospective customers with information on investments and makes suitable recommendations, open, transfers, and closes customer accounts and maintains appropriate account records, explains the organization, participants, and functions of various securities markets and the principal factors that affect customers, obtains and verifies the customer's purchase and sale instructions, enters orders, and follows up on completion of transactions, monitors the customer's portfolio and makes recommendations consistent with changes in economic and financial conditions as well as the customer's needs and objectives. Series 31: Futures - Managed Funds The Series 31 Futures Managed Fund Examination (Series 31) is required of individuals who have successfully completed the NASD's General Securities Representative Examination (Series 7) and who, among other investments, offer and sell interests in commodity pools. In order to earn trailing commissions on those interests, registrants must obtain a Series 3 or a Series 31 registration. This test is required for those who wish to receive trailing commissions on commodity limited partnerships or to raise money for CTAs and CPOs and who do not have or wish to take the Series 3. It is a limited registration and does not allow you to open regular commodity trading accounts The NFA's Series 31 examination requires a general knowledge of futures and options markets and their principal institutional characteristics, familiarity with the CFTC's and NFA's regulatory requirements, and knowledge of commodity pools and commodity trading advisors, including relevant disclosure and advertising rules. Series 33 Financial Instruments Examination The Series 33 Financial Instruments Examination (Series 33) is required of individuals who have successfully completed the NASD's General Securities Representative Examination (Series 7) and who are interested in soliciting or accepting customer orders for futures and options involving stock-index, currency, or interest-rate products. As of October 1997, U.S. securities industry registrants who want to offer or sell futures or options involving stock index, currency or interest rate products may register as futures industry Associated Persons (APs) by taking the Series 33 exam. This exam, as the Series 3, is offered by the NFA and administered through the NASD. The Series 33 is covers the following topics: futures and options terminology, hedging and speculation (theory and application), margins, options, types of orders, trading application, and regulations.

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