PKMC Module 4: Risk Management & Basic Derivatives explained

What is PKMC Module 4?

Module IV is the last of the four Pasaran Kewangan Malaysia Certificate (PKMC) modules. AICB's specification describes it as covering the principles of risk management, particularly in a bank, and the mechanics of the major categories of derivatives (forwards, swaps and options) and how they are used to manage risk across asset classes.

It is a Level 2, self-study module offered on demand, so you can enrol and sit the exam at any time within your time limit.

Who must take PKMC Module 4?

Bank Negara Malaysia's Code of Conduct for Malaysia Wholesale Financial Markets requires dealers and brokers to be licensed members of ACI-Financial Markets Association of Malaysia (FMAM), and financial institutions must check that FMAM's professional requirements are met before appointing them. AICB states that FMAM members must pass all four PKMC modules before they are licensed to take part in the interbank foreign exchange and money market.

What does PKMC Module 4 cover?

Both specifications have six learning topics with the same exam weightings:

• Introduction to Financial Risk Management (9%): the risk management process, stakeholders, a typical risk organisation and risk appetite.
• Major Types of Risk: Definition, Causes, Risk Measurement and Control (15%): volatility and VaR, credit limits, duration and Basel III.
• Introduction to Derivatives (17%): types of derivatives, trading and settlement, mark-to-market, ISDA documentation and Islamic derivatives.
• Derivative Fundamentals: Forwards, Futures and Swaps (23%): FX forwards, non-deliverable forwards, futures, interest rate and cross currency swaps, credit default swaps and total return swaps.
• Derivative Fundamentals: Options (19%): option features, moneyness, payoff diagrams, pricing factors, the Greeks and hedging currency, interest rate and equity risk.
• Structured Products (17%): features and uses, principal-protected products with a ZNID component, callable, KIKO and barrier features, and common structured products.

What changes in the revised Module 4 syllabus?

The revised specification (version 2.0) applies to exams from 1 March 2027 and replaces version 1.2. Comparing the two documents:

• Exam format: still 80 questions, now split into 60 independent multiple-choice questions and 20 scenario-based ones.
• Topics and weightings: unchanged. The forwards and futures topic is renamed to include swaps, which it already covered.
• Fewer assessment points: the revised version no longer lists, for example, futures margin calculations, commodity futures, the pricing factors for interest rate swaps and credit default swaps, or the risks of a CDO structure.
• Learning outcomes: 21 learning outcomes in the current version are consolidated into six course learning outcomes, one per topic.

PKMC Module 4 exam format

• Duration: 2.5 hours on Pearson VUE.
• Questions: 80 multiple-choice questions. From 1 March 2027, 60 independent and 20 scenario-based.
• Pass mark: 75%. Fail bands are 65-74, 50-64, 30-49 and 29 and below.
• Closed book. You must use the online calculator and scratchpad in the exam; physical calculators and blank paper are not allowed.
• Online-proctored or at a test centre, in monthly exam windows, with results within 7 days.

How to plan your Module 4 study

AICB recommends a three-month study period, and registered candidates get the study text and mock exam questions online. Forwards, futures, swaps and options together make up 42% of the exam.

• Make sure your Module 2 and Module 3 foundations are solid. FX forwards, duration and ZNIDs all reappear here.
• Sketch payoff diagrams for each basic option strategy until you can recognise them quickly.
• Practise the calculations the syllabus names, such as FX forwards from spot and interest rates and the funding available for a principal-protected product.
• For each derivative, be able to explain who uses it, what risk it hedges and what risk it creates.
• If your exam is on or after 1 March 2027, study from the revised specification and practise scenario-style questions.

PKMC Module 4 textbook author at Ogos Learning

Founder and principal trainer Jin Yoong Chong, CFA, is an HRD Corp accredited trainer who has run accredited CPE courses for capital market licence holders since 2010. He has served as President of the CFA Society Malaysia and authored the PKMC Module 2, 3 and 4 textbooks with AICB.