Foundations of the Chartered Financial Analyst program and the most heavily weighted topic of the entire CBOK.
The CFA Institute (Chartered Financial Analyst Institute) is a not-for-profit professional association founded in 1947 as the Financial Analysts Federation and renamed in 2004. Its global headquarters is in Charlottesville, Virginia (USA), with regional hubs in London, Brussels, Mumbai, Beijing, Hong Kong and Abu Dhabi. As of 2026 the Institute counts more than 190 000 Charterholders across 165+ Member Societies.
To earn the CFA charter, a candidate must (i) pass all three exam levels, (ii) accumulate at least 4 000 hours of qualifying professional work experience over a minimum of 36 months, (iii) submit two or three professional reference letters and (iv) join a local member society. Membership is renewed annually with the Professional Conduct Statement (PCS).
| Level | Format | Focus | Pass rate (2024-2025) |
|---|---|---|---|
| Level I | 180 MCQ (3 options) — 4.5h CBT | Tools, definitions, ethics | ~37 % |
| Level II | 22 item-set vignettes × 4 MCQ = 88 MCQ | Valuation of asset classes | ~47 % |
| Level III | Constructed-response (essays) + vignettes | Portfolio management, IPS, wealth | ~48 % |
The Code of Ethics is the cornerstone of the CFA program. Every candidate must "act with integrity, competence, diligence, respect, and in an ethical manner with the public, clients, prospective clients, employers, employees, colleagues in the investment profession, and other participants in the global capital markets". The six obligations cover (1) integrity, (2) primacy of client interests, (3) reasonable care and independent professional judgment, (4) practising and encouraging high ethical conduct, (5) promoting the integrity and viability of the global capital markets and (6) maintaining and improving professional competence.
"Members of CFA Institute (including CFA Charterholders) and candidates for the CFA designation must: Act with integrity, competence, diligence, respect and in an ethical manner with the public…"
Source: CFA Institute, Code of Ethics and Standards of Professional Conduct, 2025 edition — cfainstitute.org/ethics-standards
The Standards translate the Code into 7 enforceable areas (I to VII), each containing sub-Standards (A, B, C…). They are the most tested portion of Level I (frequently 30+ questions out of 180).
| Standard | Title | Key sub-rules |
|---|---|---|
| I | Professionalism | A. Knowledge of the Law · B. Independence and Objectivity · C. Misrepresentation · D. Misconduct |
| II | Integrity of Capital Markets | A. Material Nonpublic Information · B. Market Manipulation |
| III | Duties to Clients | A. Loyalty, Prudence, Care · B. Fair Dealing · C. Suitability · D. Performance Presentation · E. Preservation of Confidentiality |
| IV | Duties to Employers | A. Loyalty · B. Additional Compensation · C. Responsibilities of Supervisors |
| V | Investment Analysis & Recommendations | A. Diligence and Reasonable Basis · B. Communication · C. Record Retention |
| VI | Conflicts of Interest | A. Disclosure · B. Priority of Transactions · C. Referral Fees |
| VII | Responsibilities as CFA Member or Candidate | A. Conduct as Participants in CFA Programs · B. Reference to CFA Designation |
Maria, a junior analyst at a sell-side broker in Paris, has lunch with the CFO of Acme Pharma. The CFO casually mentions that Q3 EPS will beat consensus by 18% — the press release is scheduled for next Tuesday. Maria considers buying call options before the announcement.
Right answer: Maria must not trade and must not transmit the information. She should encourage Acme to disclose the information publicly. The "mosaic theory" cannot be invoked because the EPS beat is both material (likely to move the stock price) and nonpublic. Violation of Standard II(A) leads to PCP investigation, possible private censure, public censure, suspension or revocation.
Investigations are initiated by the Designated Officer based on (a) self-disclosure on the annual PCS, (b) written complaints, (c) media reports, or (d) regulatory action. The Designated Officer may dismiss, propose a Cautionary Letter, or refer the matter to a Hearing Panel of the Disciplinary Review Committee (DRC). Sanctions range from private censure to permanent revocation of the charter and a lifetime ban from future enrollment.
The Global Investment Performance Standards (GIPS®) are voluntary ethical standards governing the calculation and presentation of investment performance. Firms (not individuals) claim compliance. Key requirements include the use of composites (groups of portfolios with similar mandate), full disclosure, fair valuation, and a minimum 5-year compliant history (or since inception if shorter), building up to 10 years. The 2020 GIPS edition introduced separate provisions for asset owners and standardised reporting for pooled funds.
The four pillars of Professionalism are I(A) Knowledge of the Law, I(B) Independence and Objectivity, I(C) Misrepresentation and I(D) Misconduct. Each carries practical implications that surface repeatedly in exam vignettes.
I(A) Knowledge of the Law: members must comply with applicable laws and the most strict where multiple legal regimes apply. If an analyst based in Singapore advises clients in Switzerland, they must follow the stricter of Singapore MAS rules and Swiss FINMA rules, plus the CFA Standards. Dissociation from violations is mandatory — for example, refusing to participate in an audit-fee bidding designed to mask cross-subsidisation.
I(B) Independence and Objectivity: prohibits accepting gifts, benefits, compensation or consideration that could compromise judgment. The CFA Institute considers gifts above USD 100 as potentially compromising; many firms set internal limits at USD 50. Lavish meals, travel, sporting tickets and "research trips" funded by issuers must be disclosed and often refused.
I(C) Misrepresentation: covers plagiarism, false statements about credentials, performance or analytical capability. Common breach: cutting-and-pasting third-party research into a client report without attribution. Even paraphrasing without source citation violates I(C).
I(D) Misconduct: any act that reflects adversely on professional reputation, including fraud, dishonesty, deceit, or anti-competitive behaviour. Personal misconduct outside the workplace (e.g., DUI conviction, domestic violence arrest) may be reviewed by the DRC if it impacts professional standing.
II(A) Material Nonpublic Information is the most-tested standard at L1. "Material" means a reasonable investor would consider the information important. "Nonpublic" means not yet disseminated to the marketplace. The mosaic theory permits analysts to combine multiple pieces of public + nonmaterial nonpublic information into a material conclusion (e.g., calling 50 dealers about pricing trends, then publishing a sector-wide forecast).
II(B) Market Manipulation prohibits information-based manipulation (false rumours, pump-and-dump) and transaction-based manipulation (wash trades, pre-arranged trading, marking-the-close). Spoofing (placing orders without intent to execute) is explicitly prohibited and prosecuted under Dodd-Frank since 2010.
A composite is an aggregation of all discretionary portfolios managed according to a similar strategy or objective. Firms must include all such portfolios — they cannot cherry-pick. Carve-outs (subsets of larger portfolios) must be carefully treated. A firm may exclude portfolios for documented and disclosed reasons only (e.g., temporary management transition, asset value below threshold).
| Required disclosure | Standard |
|---|---|
| Composite description (strategy) | Mandatory |
| Benchmark description and total return source | Mandatory |
| Fee structure (gross or net of fees) | Mandatory |
| Currency used for reporting | Mandatory |
| Internal dispersion measure (asset-weighted Std Dev preferred) | Mandatory after 5 years |
| Three-year annualised ex post Std Dev (composite and benchmark) | Mandatory |
| Number of portfolios in composite (if ≥ 6) | Mandatory |
| Total firm assets and composite assets | Mandatory |
GIPS verification is performed by an independent third-party firm at the firm-wide level (not composite-level). Verification covers: (a) compliance with all the composite construction requirements of GIPS, (b) the firm's policies and procedures designed to calculate and present performance in compliance with GIPS. Verification is recommended but not required. Performance examinations of specific composites are an additional level of assurance.
Le programme CFA Institute compte une présence croissante en Afrique francophone, notamment au Cameroun, en Côte d Ivoire, au Sénégal et au Burkina Faso. La CFA Society Yaoundé a été créée en 2021, suivie de la CFA Society Abidjan en 2022. Les centres Prometric agréés pour le CBT couvrent Douala, Yaoundé, Abidjan, Dakar, Casablanca, Lomé et Cotonou.
Les coûts pour un candidat camerounais ou ivoirien sont les mêmes que pour un candidat européen : USD 900 d enregistrement initial unique + USD 1 250 par exam (early bird) ou USD 1 750 (standard). Avec le taux XAF/USD ≈ 600, cela représente environ 1 500 000 FCFA pour s inscrire au L1 — un investissement significatif. Le CFA Institute offre des bourses de scolarité (Access Scholarships) pour les pays en développement, réduisant les frais d examen à USD 350.
Pour un jeune analyste à Yaoundé ou Abidjan, l obtention de la charter CFA ouvre les portes des grandes institutions panafricaines : BICEC, Société Générale Cameroun, Afreximbank (Le Caire), African Development Bank (Abidjan), Ecobank (Lomé), BCEAO (Dakar). Le salaire moyen d un junior CFA en Afrique francophone se situe entre 1 200 000 et 2 500 000 FCFA brut/mois en première année, multiplié par 2-3 après l obtention de la charter complète.
Ethics représente 15-20% du L1 mais peut basculer la note finale. Plan condensé :
Maria, CFA, gérante de portefeuilles institutionnels chez Pinnacle Asset Management (Genève), reçoit un appel non sollicité du CFO d Acme Solar (entreprise dont elle suit l action publiquement). Le CFO lui glisse : "Off the record, our Q4 EBITDA will miss consensus by 15%, but our 2027 pipeline is huge. We will issue convertible bonds in two weeks. Want exclusive allocation for your funds?"
Analyse de violations potentielles :
Action correcte : Refuser poliment l information, demander au CFO de publier le profit warning, documenter l incident dans le journal de conformité, alerter le RCSI/Compliance Officer, ne pas tradera Acme Solar ni dériver de positions corrélées jusqu à dissémination publique.
| Question | Answer (2026) |
|---|---|
| Can I take Level I without a degree ? | Yes, but you must be in your final year (24 months from graduation) at registration. |
| How many times can I retake L1 ? | Maximum 6 attempts per level (no longer "twice a year" rule since 2022 CBT). |
| What if I fail by 1%? | No appeal mechanism on the score itself; you must retake the entire 4.5-hour exam. |
| Can I bring my own calculator ? | Yes, but only the BA II Plus (Standard or Professional) or HP 12C. |
| How long does the result take ? | Approximately 5-8 weeks after the exam window closes. |
| Are the results pass/fail or numerical ? | Pass/Fail with a topic-level performance summary (above/below MPS by topic). |
| Can I defer my exam ? | One free deferral per attempt (within the same calendar year) until 30 days before. |
Test your understanding of this lesson with the integrated quiz below. The quiz mirrors the official CFA L1 format (3-option MCQ).
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