What is the standard settlement cycle for securities on the FINRA SIE exam?

Under SEC Rule 15c6-1 (amended May 2024 to T+1), regular-way settlement is T+1 (one business day after trade date) for equities, corporate bonds, municipal bonds, U.S. Treasuries, and listed options. Cash settlement occurs same-day by 2:30 p.m. ET.

What is the Regulation T payment deadline for cash and margin accounts?

Under Federal Reserve Regulation T, customer payment is due settlement plus 2 business days (S+2). Under the current T+1 standard, this equates to T+3 business days from the trade date.

What is the bond yield hierarchy for discount vs. premium bonds (See-Saw Rule)?

For discount bonds: Nominal < Current < YTM < YTC (Yield to Call is highest). For premium bonds: YTC < YTM < Current < Nominal (Yield to Call is lowest). FINRA rules require quoting Yield to Worst to customers, which means quoting YTC on callable premium bonds.

How do open-end and closed-end investment companies differ on the SIE?

Open-end funds (mutual funds) continuously issue unlimited shares, trade at forward-priced NAV plus sales load directly with the fund, and have no secondary exchange trading. Closed-end funds issue a fixed number of shares via an IPO, trade on secondary stock exchanges (e.g., NYSE) at market prices driven by supply and demand (at a premium or discount to NAV), and can utilize debt leverage.

When is an option contract in-the-money on the FINRA SIE exam?

Call options are in-the-money when market price is higher than strike price (Call UP). Put options are in-the-money when market price is lower than strike price (Put DOWN). At-the-money or out-of-the-money contracts have zero intrinsic value.

What are the core filing and CE deadlines for Form U4, Form U5, and FINRA registrations?

Firms must file Form U4/U5 amendments within 30 calendar days (10 days for statutory disqualifying events). Representatives have a 2-year grace period after termination before qualification exams expire. Regulatory Element Continuing Education (CE) must be completed annually by December 31.

FINRA SIE Cheat Sheet (Last-Minute Exam-Day Cram Guide)

Q: How do open-end and closed-end investment companies differ on the SIE?

Open-end funds (mutual funds) continuously issue unlimited shares, trade at forward-priced NAV plus sales load directly with the fund, and have no secondary exchange trading. Closed-end funds issue a fixed number of shares via an IPO, trade on secondary stock exchanges (e.g., NYSE) at market prices driven by supply and demand (at a premium or discount to NAV), and can utilize debt leverage.

Q: When is an option contract in-the-money on the FINRA SIE exam?

Call options are in-the-money when market price is higher than strike price (Call UP). Put options are in-the-money when market price is lower than strike price (Put DOWN). At-the-money or out-of-the-money contracts have zero intrinsic value.

Q: What are the core filing and CE deadlines for Form U4, Form U5, and FINRA registrations?

Firms must file Form U4/U5 amendments within 30 calendar days (10 days for statutory disqualifying events). Representatives have a 2-year grace period after termination before qualification exams expire. Regulatory Element Continuing Education (CE) must be completed annually by December 31.

OpenExamHub · Source-Cited Licensing Prep2026 Examination Standards

FINRA SIE Last-Minute Exam-Day Cheat Sheet

High-yield SEC & FINRA rules, T+1 settlement cycles, bond yield see-saw, options moneyness, and investment company comparison matrices for rapid cramming.

📌 Quick Summary / Core Test Principles:The FINRA SIE (Securities Industry Essentials) examination tests fundamental securities concepts: SEC Rule 15c6-1 regular-way T+1 settlement across equities, corporate bonds, and Treasuries; Federal Reserve Reg T payment deadline (T+3 / S+2); the bond yield see-saw (Yield to Worst on callable premium bonds); and structural distinctions across mutual funds, closed-end funds, and ETFs.

Updated SEC Standard

1. Settlement Cycles & SEC Rule 15c6-1 (T+1 Standard)

Security Type	Regular-Way Settlement	Cash Settlement	Key Governing Rule
Equities (Common & Preferred Stock)	T + 1 Business Day	Same Day (Trade Date by 2:30 p.m. ET)	SEC Rule 15c6-1 (amended May 2024 to T+1)
Corporate & Municipal Bonds	T + 1 Business Day	Same Day	FINRA Rule 11140 & MSRB Rule G-12 (T+1 standard)
U.S. Treasury Bills, Notes & Bonds	T + 1 Business Day	Same Day	Fedwire book-entry system; actual/actual day count
Options Trades (Buying / Selling Contracts)	T + 1 Business Day	Same Day	OCC cash settlement protocol
Regulation T Payment Deadline	T + 3 Business Days (S + 2)	Same Day	Federal Reserve Reg T: Payment due settlement + 2 business days

💡 Pro Tip:Memory Hook: If trade date is Thursday, T+1 settlement is Friday. Reg T payment (T+3) is due Tuesday.

Fixed Income Foundation

2. Bond Pricing, Yield Hierarchy & the See-Saw Rule

Pricing Relationship	Yield Hierarchy (Lowest to Highest)	Coupon vs Market Rate	Call Price vs Market
Bond at Par ($1,000)	Nominal = Current = YTM = YTC (All equal)	Coupon = Market Interest Rate	Call price typically par plus call premium
Bond at Discount (< $1,000)	Nominal < Current < YTM < YTC	Coupon < Market Interest Rate	Yield to Call (YTC) is highest yield
Bond at Premium (> $1,000)	YTC < YTM < Current < Nominal	Coupon > Market Interest Rate	Yield to Call (YTC) is lowest yield (quote YTC!)

💡 Pro Tip:Exam Rule: Always quote the LOWER of YTM or YTC to a customer purchasing a bond (Yield to Worst). On premium bonds, quote YTC.

Section 2 Core

3. Investment Company Types Comparison Matrix

Feature	Open-End (Mutual Funds)	Closed-End Funds	Exchange-Traded Funds (ETFs)	Unit Investment Trusts (UITs)
Capitalization	Continuous unlimited share issuance	Fixed number of shares via IPO	Creation units via Authorized Participants	Fixed number of units at inception
Secondary Trading	NO secondary market; redeem with fund	YES; trades on stock exchanges (NYSE)	YES; continuous exchange trading	NO active secondary market; held to maturity
Pricing Mechanism	Forward Pricing: 4:00 PM ET NAV + Load	Supply & Demand (Premium or Discount to NAV)	Intraday continuous market price	Net Asset Value computed periodically
Portfolio Management	Actively managed or index tracking	Actively managed with leverage	Predominantly passive index tracking	UNMANAGED; static fixed portfolio
Margin & Short Sales	NO (cannot buy on margin or sell short)	YES (marginable and shortable)	YES (marginable and shortable)	NO

💡 Pro Tip:Key Differentiator: Open-end funds NEVER trade on exchanges. Only Closed-End and ETFs trade intraday on exchanges.

Section 3 Priority

4. Customer Account Registrations & Survivorship

Account Registration	Survivorship on Death	Probate Avoidance	Special Restrictions
Individual Account	Passes to estate / will unless TOD is named	Subject to probate unless TOD filed	Only account holder has trading authorization
Joint Tenants with Right of Survivorship (JTWROS)	100% passes directly to surviving owner(s)	AVOIDS probate automatically	All checks made out to all names on account
Tenants in Common (TIC)	Deceased tenant percentage passes to their ESTATE	Subject to probate for deceased interest	Unequal ownership percentages permitted (e.g. 60/40)
Custodial (UGMA / UTMA)	Passes to minor estate if minor passes away	Minor owns assets indefeasibly	Strictly 1 minor and 1 custodian; NO margin or options

💡 Pro Tip:Exam Trap: JTWROS goes to the SURVIVOR. TIC goes to the ESTATE.

Formula & Credit Rules

5. Margin Accounts: Reg T vs. FINRA Minimum Equity Rules

Purchase Amount Range	Federal Reserve Reg T Requirement	FINRA Rule 4210 Minimum	Actual Cash Required
Purchase > $4,000	50% of purchase price	25% maintenance minimum	50% cash deposit
Purchase between $2,000 and $4,000	50% of purchase price	$2,000 minimum equity rule	$2,000 cash deposit (FINRA overrides Reg T)
Purchase < $2,000	50% of purchase price	100% of purchase price	100% cash in full (cannot borrow on margin)
Ongoing Long Maintenance	N/A	25% of current market value	Maintenance margin call if equity falls below 25%

💡 Pro Tip:Formula Hook: For a $3,000 stock buy in a margin account, 50% is $1,500, but FINRA requires $2,000 minimum!

Statutory Architecture

6. Major Federal Securities Legislation

Statute Name	Year Enacted	Primary Regulatory Mission	Key Enforcement Provisions
Securities Act of 1933	1933	Paper Act: Regulates primary market new issues	Full disclosure, S-1 registration, prospectus delivery, 20-day cooling off
Securities Exchange Act of 1934	1934	People & Places Act: Regulates secondary trading	Created SEC, regulates broker-dealers, exchanges, SROs, margin (Reg T)
Investment Company Act of 1940	1940	Regulates mutual funds, closed-end funds, and UITs	Defines 3 investment company classes, 75-5-10 diversification, 12b-1 fees
Securities Investor Protection Act (SIPA)	1970	Protects brokerage customers from firm bankruptcy	Created SIPC: $500,000 total protection per customer, up to $250k in cash
Insider Trading & Securities Fraud Act	1988	Prohibits trading on material non-public information	Treble civil damages (3x profits/losses), criminal fines up to $5M and 20 years
USA PATRIOT Act / Bank Secrecy Act	1970 / 2001	Anti-Money Laundering (AML) and counter-terrorism	Customer Identification Programs (CIP), CTR for cash > $10k, SAR for >= $5k

💡 Pro Tip:Summary Hook: 1933 = New Issues (Prospectus); 1934 = Secondary Trading & SEC; 1940 = Mutual Funds.

Ethical & Conduct Standards

7. Prohibited Trading Practices & Regulatory Violations

Prohibited Practice	Definition	Governing Standard	Regulatory Consequence
Free-Riding	Buying securities and selling before paying in full	Federal Reserve Reg T	Mandatory 90-day account freeze
Front-Running	Trading for personal/firm account ahead of client block order	FINRA Rule 5270	Disciplinary sanctions, fines, suspension
Selling Away	Executing private securities transactions without firm written consent	FINRA Rule 3280	Statutory violation; grounds for termination and bar
Churning	Excessive trading in client account to generate commissions	FINRA Rule 2111 / Reg BI	Restitution, disgorgement of commissions, industry bar
Marking the Open / Close	Executing trades at or near open/close to manipulate price	Exchange Act Section 9	Market manipulation criminal felony

💡 Pro Tip:Outside Business Activities (OBAs) require WRITTEN NOTICE. Selling Away requires WRITTEN APPROVAL.

Derivative Foundations

8. Options Core Fundamentals & Moneyness Matrix

Contract Position	Market Outlook	Moneyness (In-the-Money)	Breakeven Formula	Maximum Gain / Loss
Long Call (Buy Call)	Bullish (wants price to rise)	Market Price > Strike Price	Strike Price + Premium	Max Gain: Unlimited \| Max Loss: Premium paid
Short Call (Sell / Write Call)	Bearish / Neutral (wants price to drop/stay flat)	Market Price > Strike Price	Strike Price + Premium	Max Gain: Premium received \| Max Loss: Unlimited
Long Put (Buy Put)	Bearish (wants price to drop)	Market Price < Strike Price	Strike Price - Premium	Max Gain: Strike - Premium \| Max Loss: Premium paid
Short Put (Sell / Write Put)	Bullish / Neutral (wants price to rise/stay flat)	Market Price < Strike Price	Strike Price - Premium	Max Gain: Premium received \| Max Loss: Strike - Premium

💡 Pro Tip:Memory Anchor: Calls are In-The-Money when market price is ABOVE strike. Puts are In-The-Money when market price is BELOW strike (Call UP, Put DOWN).

Industry Rules & Timelines

9. Registration, Continuing Education & Form U4/U5 Timelines

Regulatory Event	Governing Rule / Agency	Required Action / Timeline	Key Consequence or Threshold
Form U4 Filing & Amendments	FINRA Rule 1010	File within 30 days of change (10 days for disciplinary events)	Failure to disclose is grounds for statutory disqualification
Form U5 Termination Filing	FINRA Rule 1010	Firm must file within 30 calendar days of termination	Copy must be provided to the terminating representative
License Validity / Two-Year Window	FINRA Rule 1210	2 years to re-associate with a member firm before exams expire	Parking a registration without a bona fide role is strictly prohibited
Regulatory Element CE	FINRA Rule 1240	Annual requirement completed by December 31 each year	Failure results in CE Inactive status (cannot conduct securities business)
Statutory Disqualification (SD)	Exchange Act Section 3(a)(39)	Automatic 10-year bar for any felony conviction or securities misdemeanor	Requires SEC/FINRA Rule 19h-1 eligibility proceeding to work in industry
Gifts & Gratuities Limit	FINRA Rule 3220	$100 per person per year maximum	Excludes normal business entertainment if rep accompanies the guest

💡 Pro Tip:Key Timelines: CE deadline is Dec 31 annually. U4/U5 filings: 30 days. Felony lookback: 10 years. Gift limit: $100/yr.

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