Proposed FINRA Exam Restructure

FINRA plans to reduce the number of representative-level examinations, currently numbering 16, in order to simplify the examination program and reduce the amount of redundancy across exams. Continue reading

On May 28, 2015 at the FINRA annual conference in Washington, DC, a panel of FINRA and industry representatives discussed proposed changes to restructure FINRA’s representative-level qualification program and fielded questions from attendees present at the meeting.

According to Joe McDonald, Senior Director, Testing and Continuing Education Department, FINRA plans to reduce the number of representative-level examinations, currently numbering 16, in order to simplify the examination program and reduce the amount of redundancy across exams.  FINRA proposes to do this by restructuring the current exam program into a format whereby all potential representative-level registrants would take a core general-knowledge exam and then additional specialized knowledge exam(s).  The general knowledge exam is being called the Securities Industry Essentials Examination (SIE) or “essentials exam,” and the specialized exams are being called “top-off” exams.  According to McDonald, the proposed changes will restructure the exam program without rewriting registration rules.

The SIE, or essentials exam, content would include knowledge fundamental to working in the securities industry, such as basic product knowledge, structure and functioning of the securities markets, regulatory agencies and their functions, basic economics, professional conduct, and regulated and prohibited practices. A significant change in this restructure proposal is that individuals taking the SIE would not need to be associated with or sponsored by a FINRA member firm. Also, since the content of the essentials exam would be stable and less likely to change than the content on the top-off exams, a passing result on the SIE would be valid for 4 years, instead of the current 2 years for FINRA exams. This should make employment in the securities industry more accessible, flexible, and appealing.

Passing the SIE alone would not qualify an individual for registration with FINRA. To be eligible for registration, an individual who has passed the SIE would also need to pass the appropriate top-off exam pertaining to one’s job function. If, following an individual’s registration with a firm, the job functions for which the individual is registered change and one needs to become registered in an additional or alternative representative-level position, one would not need to pass the SIE again. Rather, the registered individual would need to pass only the appropriate top-off exam.

Each top-off exam would correlate to a current representative exam and registration position (e.g., Series 7 and General Securities Representative) and would test content specific to that registration category or job function. In addition, several of the current registration categories would be retired, reducing the number of representative-level qualification exams from the current 16 to the following 9:

Revised Exam Structure

 

 

The essentials exam is expected to be 75-100 questions in length and the specialized top-off exams are expected to be shorter than the current representative exams.  For example, the Series 7 is expected to be 150 questions in length, rather than the current 250 questions.

As part of the restructuring, FINRA is proposing to retire the current registration categories of Options Representative, Corporate Securities Representative and Government Securities Representative as well as the associated exams, the Series 42, Series 62 and Series 72, respectively.

FINRA is considering retiring the U.K. Securities Representative registration (Series 17) and the Canadian Securities Representative registrations (Series 37 & 38). Additionally, due to technological changes, FINRA is considering retiring the Order Processing Assistant registration (Series 11).

Under the proposal, representative-level registrants who are registered, or had been registered within the past 2 years, prior to the effective date of the proposal would be eligible to maintain those registrations without being subject to any additional requirements.  This means that most currently-registered individuals would be considered to have taken the SIE and it would be valid for 4 years after they leave the securities industry. Further, such individuals, with the exception of an Order Processing Assistant Representative, would be considered to have passed the SIE in FINRA’s CRD system; thus, if they wish to register in any additional representative category after the effective date of the proposal, they could do so by taking only the appropriate top-off exam. However, with respect to an individual who is not registered on the effective date of the proposal but was registered within the past two years prior to the effective date of the proposal, FINRA will administratively terminate the individual’s SIE status in the CRD system if such individual does not register with FINRA within 4 years from the date of the individual’s last registration.

FINRA says it will begin implementing changes in late 2016, starting with the SIE exam and 3 specialized exams that make up the majority of all registrations: the Investment Company and Variable Contracts Products Representative (Series 6), the General Securities Representative (Series 7), and the Investment Banking Representative (Series 79) registration categories.  FINRA says the remaining top-off exams will be implemented in the first half of 2017.

Panelists at the FINRA meeting said that they are beginning to look at the principal-level qualification exam program to identify an opportunity for similar restructuring.


Questions and answers from the 2015 FINRA Annual Conference audience included:

Q. Will it be possible to take the essentials and top-off exams on the same day?

A. Yes.

Q. What about failing and retaking?

A. If you fail the first time, FINRA says it will keep the same 30/30/180 day requirement.

Q. Will the exam question style change? 

A. No, FINRA says the current question and answer style will remain the same: a multiple-choice question with four answer choices.

Q. Will the essentials content be on the top-off exams?

A. No.

Q. Will there be a CE requirement for the essentials exam?

A. No.

Q. How will you keep the essentials exam questions secure?

A. New security measures to prevent questions from being stolen are being developed.  Also, FINRA says it has exam question pool rotation will be increased, meaning the exam questions will cycle faster than they have historically.

Q. What about the FINRA exam waiver program, will it be affected?

A. Yes, it will affect the program, but FINRA is not sure exactly how.

Q. Will the restructure affect state registration?

A. FINRA has been in touch with NASAA about the proposed exam changes and since FINRA, with the exception of retiring some registration categories, is not modifying registration rules, state registrations should not be affected much if at all.


You can find more information about the proposed restructure at: http://www.finra.org/sites/default/files/notice_doc_file_ref/Notice_Regulatory_15-20.pdf

The FINRA Notice seeks comment on the proposal from the industry and other interested persons.  You can email comments to pubcom@finra.org. The comment period ends July 27.

Before becoming effective, the proposed rule change must be authorized for filing with the Securities and Exchange Commission (SEC) by the FINRA Board of Governors, and then must be filed with the SEC.

New Securities Trader Qualification Exam (Series 57)

FINRA recently announced that it plans to file a proposed rule change with the SEC to replace the Equity Trader Limited Representative Exam (Series 55) with a new exam to be called the Securities Trader Qualification Exam (Series 57). Continue reading

Exam Alert FINRA recently announced that it plans to file a proposed rule change with the SEC to replace the Equity Trader Limited Representative Exam (Series 55) with a new exam to be called the Securities Trader Qualification Exam (Series 57). FINRA will file this proposed rule change in conjunction with the national securities exchanges proposed rule changes to similarly replace the Proprietary Trader Qualification Exam (Series 56) with the Securities Trader Qualification Exam (Series 57). In preparation for the Series 57—a merger of the Series 55 and Series 56—FINRA will conduct a detailed job-analysis survey to gather information from individuals currently Series 55 and Series 56 registered regarding their present roles and responsibilities to ensure that the Series 57 exam accurately covers their day-to-day job functions.

You can read the official announcement on FINRA’s website: http://www.finra.org/industry/information-notice-033115

SEC wants off-exchange broker-dealers to become members of FINRA or other securities association

On March 25, the Securities and Exchange Commission proposed rule amendments to require that broker-dealers trading in off-exchange venues become members of a national securities association. Continue reading

On March 25, the Securities and Exchange Commission proposed rule amendments to require that broker-dealers trading in off-exchange venues become members of a national securities association. According to SEC Chair Mary Jo White, “today’s proposed rules would close a regulatory gap by extending oversight to a significant portion of off-exchange trading.”

The proposed amendments to Rule 15b9-1 under the Exchange Act would eliminate the proprietary trading exemption and replace it with a narrower one that will permit a floor-based dealer to engage in off-exchange transactions only if such transactions hedge the broker-dealer’s floor-based trading. The proprietary trading exemption originally was designed to accommodate exchange specialists and other floor members that might need to conduct limited hedging or other off-exchange activities ancillary to their floor-based business. Over time, the markets have undergone a substantial transformation, including the emergence of active cross-market proprietary trading firms, many of which engage in so-called high-frequency trading strategies. Although the business of these firms may not be focused on an exchange floor, and they may be responsible for a substantial percentage of the trading volume in the off-exchange market, many are not members of a national securities association because they have been able to rely on the broad proprietary trading exemption in Rule 15b9-1.

The proposed amendments would amend the exemption to target the broker-dealers for which it was originally designed – those with a business focused on an exchange floor and over which that exchange is positioned to oversee the entirety of their trading activity. They also would update the exemption that permits off-exchange transactions necessary to comply with regulatory requirements restricting trade-throughs, under Rule 611 of Regulation NMS.

The SEC will take public comment on the proposed rule amendment for 60 days following publication in the Federal Register.

Increase in FINRA & MSRB Exam Fees

Next month both MSRB and FINRA exam fees will increase. Effective April 1, 2015, individuals who register for one of the following exams will be charged the new rates… Continue reading

Next month both MSRB and FINRA exam fees will increase. The Municipal Securities Rulemaking Board (MSRB) will raise their development fee for professional qualification exams from $60 to $150. In addition, the Financial Industry Regulatory Authority (FINRA) will also raise their exam fees by approximately $5-$15 per exam. Effective April 1, 2015, individuals who register for one of the following exams will be charged the new rates:

[Old rate] new rate

Series 4 – Registered Options Principal [$100] $105

Series 6 – Investment Company Products/Variable Contracts Representative [$95] $100

Series 7 – General Securities Representative [$290] $305

Series 9 – General Securities Sales Supervisor – Options Module [$75] $80

Series 10 – General Securities Sales Supervisor – General Module [$120] $125

Series 11 – Assistant Representative – Order Processing [$75] $80

Series 14 – Compliance Official [$335] $350

Series 16 – Supervisory Analyst [$230] $240

Series 17 – Limited Registered Representative [$75] $80

Series 22 – Direct Participation Programs Representative [$95] $100

Series 23 – General Securities Principal Sales Supervisor Module [$95] $100

Series 24 – General Securities Principal [$115] $120

Series 26 – Investment Company Products/Variable Contracts Principal [$95] $100

Series 27 – Financial and Operations Principal [$115] $120

Series 28 – Introducing Broker-Dealer Financial and Operations Principal [$95] $100

Series 37 – Canada Module of S7 (Options Required) [$175] $185

Series 38 – Canada Module of S7 (No Options Required) [$175] $185

Series 39 – Direct Participation Programs Principal [$90] $95

Series 42 – Registered Options Representative [$70] $75

Series 51 – Municipal Fund Securities Limited Principal [$95] $105 + $150 = $255

Series 52 – Municipal Securities Representative [$120] $130 + $150 = $280

Series 53 – Municipal Securities Principal [$105] $115 + $150 = $265

Series 55 – Limited Representative – Equity Trader [$105] $110

Series 62 – Corporate Securities Limited Representative [$90] $95

Series 72 – Government Securities Representative [$105] $110

Series 79 – Investment Banking Qualification Examination [$290] $305

Series 82 – Limited Representative – Private Securities Offering [$90] $95

Series 86 – Research Analyst – Analysis [$175] $185

Series 87 – Research Analyst – Regulatory [$125] $130

Series 99 – Operations Professional [$125] $130

 

This information came from http://www.finra.org/sites/default/files/rule_filing_file/SR-FINRA-2015-006.pdf and http://www.msrb.org/~/media/Files/SEC-Filings/2015/MSRB-2015-01.ashx?la=en

FINRA Proposes Upcoming Exam Changes

A FINRA spokesperson at the 2015 ARM Annual Education Conference recently proposed some important changes to securities exams. FINRA recently released the accompanying PowerPoint slides that cover the upcoming changes and outline other plans for the coming year. Continue reading

A FINRA spokesperson at the 2015 ARM Annual Education Conference recently proposed some important changes to securities exams. Solomon Exam Prep previously covered the main points made in FINRA’s address in our original blog post: FINRA Says Big Changes Coming to Securities Exams.

FINRA recently released the accompanying PowerPoint slides that cover the upcoming changes and outline other plans for the coming year. You can view the slides from FINRA’s presentation here (with the exam restructure information starting on slide 64): ARM 2015 Annual Educational Conference – FINRA Registration & Disclosure Systems and Policy Updates.

*Solomon Exam Prep will continue to keep you up-to-date on the latest information regarding these changes. Make sure to follow us to be alerted of any new developments.

FINRA Says Big Changes Coming to Securities Exams

Solomon Exam Prep has learned that FINRA is considering making the following changes to the securities exam system… Continue reading

Solomon Exam Prep has learned that FINRA is considering making the following changes to the securities exam system:

  • In 2015, the Series 55 and the Series 56 will be combined to become the Series 57. The Series 57 will not have a prerequisite.  A Series 57 rep will need the Series 24 to become a principal.
  • In 2016, FINRA will begin a new exam, to be called the Securities Industry Essentials exam (SIE).  The SIE will cover basic security industry knowledge and will become a prerequisite to the Series 6, Series 7, Series 22, Series 57, Series 79, Series 82, Series 86/87, and Series 99. You will not need be sponsored by a FINRA member firm to take the SIE.  SIE exam results will not appear in BrokerCheck.
  • After passing the SIE, individuals can continue on to what FINRA is calling a “top-off exam” for the Series 6, Series 7, Series 79, Series 82 and Series 99.  So, for example, if someone wants to be Series 7 and Series 79 registered, the individual will take and pass the SIE then take and pass the top-off exams for the Series 7 and Series 79. FINRA says the SIE is estimated to be 100 questions, and the top-off exams will consist of the remaining balance of questions (i.e. Series 7 currently has 250 questions, so the Series 7 top-off would contain 150 questions.)
  • Those who are currently registered will be grandfathered in and will not need to take the SIE.
  • Individuals who have been out of the industry 2-4 years will only need to take the top off.  Individuals who have been out of the industry for more than four years will need to take the SIE and top off.
  • FINRA will be retiring the Series 62 exam.

Follow Solomon Exam Prep as we keep you up-to-date on these important changes.

Testimonial Tuesday: February 10, 2015 Edition

“I passed my Series 63 today with an 85% and Series 6 two weeks back with an 80%…” Continue reading

“I passed my Series 63 today with an 85% and Series 6 two weeks back with an 80%. I was very nervous, but studying was made easy with Solomon Exam Prep; their simple Plain English explanations helped fight that legalese on the Series 63 especially. I totally owe this to the Solomon team, their awesome question bank, and friendly staff. “Ask the Professor” is prompt in answering all your queries. I’m definitely recommending their program to my employer.”  

-Priya R., PA

 — Read more reviews here: Solomon Exam Prep Reviews —

Testimonial Tuesday: January 20, 2015 Edition

“Solomon Exam Prep was the ticket to passing my Series 26 test…” Continue reading

“Solomon Exam Prep was the ticket to passing my Series 26 test. I would like to thank you all for your help! I would highly recommend their study material for the FINRA exams.”  -David H. Viar

 

— Read more reviews here: Solomon Exam Prep Reviews —

Solomon’s Industry News: November 2014 Edition

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Continue reading

Solomon Exam Prep is happy to release this month’s edition of “Solomon’s Industry News.” Every month we will send out industry updates from the past month, so you can stay current and up-to-date on everything that is happening here at Solomon Exam Prep and in the industry.

Check out this month’s edition here: Solomon’s Industry News – November 2014.

To be added to our monthly mailing list, please click here.

MSRB Rule Changes: Series 51, 52, and 53

The MSRB has added two new rules effective July 9, 2014. They are Rule G-47 (Time of Trade Disclosure) and Rule G-48 (Transactions with Sophisticated Municipal Market Professionals). MSRB has also amended Rule G-3 (Classification of Principals and Representatives) and Rule G-19 (Suitability), effective September 30, 2014. These four changes coordinate MSRB rules with FINRA rules and remove regulatory redundancies. Continue reading

The MSRB has added two new rules effective July 9, 2014. They are Rule G-47 (Time of Trade Disclosure) and Rule G-48 (Transactions with Sophisticated Municipal Market Professionals). MSRB has also amended Rule G-3 (Classification of Principals and Representatives) and Rule G-19 (Suitability), effective September 30, 2014. These four changes coordinate MSRB rules with FINRA rules and remove regulatory redundancies.

MSRB Rule G-3.  MSRB narrows the definition of Limited Representative – Investment Company and Variable Contracts Products (Series 6). Under FINRA rules, a Series 6 license only allows individuals to be involved in the purchase and sale of funds and variable products. The new MSRB rule will now be consistent with the FINRA rules. Representatives who want to participate in broader activities, such as underwriting, research and investment advice must now take and pass the Municipal Securities Representative Qualification Examination (Series 52).

Amended Rule G-3 also eliminates the designation of Municipal Securities Financial and Operations Principal (FINOP). Since municipal securities dealers that require a FINOP are also FINRA members and since FINRA has similar FINOP requirements, Rule G-3 eliminates the redundancy by removing its separate FINOP designation.

MSRB Rule G-19.  MSRB’s amended suitability rule conforms to FINRA’s own recent changes to its rule. Specifically, the amended rule recognizes three components to a broker-dealer’s suitability obligations. First, a broker-dealer must understand the complexity and risks of a security or investment strategy and consciously decide its suitability for at least some investors. Second, it must reasonably believe that a recommendation is suitable for a particular customer based on the customer’s personal and investment profile. Third, when a broker-dealer has control over a customer account, it must reasonably believe that a series of recommended securities transactions are not excessive.

MSRB Rule G-47.  This new rule requires broker-dealers to disclose to its customers all material information about a transaction and the security at or prior to the time of trade. Information is considered “material” if a reasonable investor is likely to consider it important in making an investment decision. Disclosures must include a complete description of the security and any facts important to assessing the potential risks of the investment.

MSRB Rule G-48.  Rule G-48 exempts broker-dealers from any obligation to disclose material information to customers who are sophisticated municipal market professionals (SMMPSs). It also exempts broker-dealers from informing an SMMP that the price of a secondary market agency transaction is fair and reasonable, as long as the broker-dealer has not recommended the transaction or exercised discretion as to its execution. Finally, Rule G-48 exempts broker-dealers from the obligation to perform a customer-specific suitability analysis for an SMMP.