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Securities Industry Essentials (SIE) Exam


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Overview

Beginning March 2018, according to a FINRA proposal, anyone seeking to enter the securities industry must take FINRA’s Securities Industry Essentials (SIE) exam, which will test applicants’ general knowledge of the securities industry. Applicants will also be required to pass a specialized knowledge exam that is tailored to the applicant’s desired job, if that job is at the representative level. For instance, the specialized Series 79 will allow an applicant to work as an investment banker. These specialized knowledge exams are also known as top-off tests.

Unlike with current securities licensing exams, test-takers will not be required to be sponsored by a firm in order to sign up for the Securities Industry Essentials exam. This will mean that even if you don’t have a job at a FINRA member firm, you will be able to take the SIE exam. However, before signing up for a specialized exam, the applicant will need to be sponsored by a FINRA member firm. This new system will allow people with little or no experience in the securities industry to demonstrate their knowledge before applying for securities jobs, and then to pursue a specialized exam after being hired.

How Long Will Scores Be Valid?

Once an individual has passed the SIE exam, his scores will remain valid for four years. If an individual does not register with a firm within four years of passing the SIE exam, that individual will be required to retake the exam. The same will be true of an individual who leaves the industry and returns. If he returns within four years, he will not have to retake the SIE exam. However, according to the FINRA proposal, this will only be true of the SIE exam, not any of the specialized exams. Specialized exam results will expire two years after an individual leaves the industry.

What If You Change Jobs?

The SIE exam is part of a larger set of changes that FINRA has proposed that will affect all of the FINRA securities licensing exams. For instance, under the current system, if you are registered with a firm and you transfer to a financial services affiliate (that is, an affiliate that is not regulated by FINRA) and you stay with the affiliate for two years or more, then you must retake all of your securities licensing exams before returning to the FINRA-regulated firm. FINRA’s proposed changes will allow an individual to return to a firm within seven years without having to retake his exams.

Once an individual has taken the SIE exam and a specialized exam, if his job changes and he needs to take another specialized exam, he will not need to repeat the SIE exam. This is yet another way in which the new proposal will avoid individuals being tested on the same concepts repeatedly.  

What Will the Exam Cover?

FINRA has divided the content that the SIE exam covers into four sections:

  • Knowledge of Capital Markets
  • Types of markets and offerings
  • Broker-dealers and depositories
  • Regulated and prohibited practices
  • Understanding Products and Their Risks
  • Securities products
  • Associated investment risks
  • Understanding Trading, Customer Accounts and Prohibited Activities
  • Accounts
  • Orders
  • Settlement
  • Prohibited Activities
  • Overview of the Regulatory Framework
  • Self-regulatory organizations (SROs)
  • Registration requirements
  • Specified conduct rules

How Many Questions Will Be on the SIE Exam?

According to the FINRA proposal, the SIE exam will consist of 75 questions, with an additional 10 questions that will not be scored. That means you can expect to see 85 questions on the actual exam. The 10 unscored questions help FINRA to test out new questions before they are permanently added to the exam database.

Because the SIE exam will cover much of the material that is covered in the existing exams, the specialized exams will be considerably shorter than the existing exams. Here is FINRA’s proposed number of questions for each exam:


Currently Required Test


Proposed Tests


Series 6—100 questions


SIE (75 questions) + Specialized Series 6 (50 questions)


Series 7—250 questions


SIE (75 questions) + Specialized Series 7 (125 questions)


Series 79—175 questions


SIE (75 questions) + Specialized Series 79 (75 questions)


Series 82—100 questions


SIE (75 questions) + Specialized Series 82 (50 questions)


Series 99—100 questions


SIE (75 questions) + Specialized Series 99 (50 questions) 

For more information about the Securities Industry Essentials Exam or any other securities exam please contact Jeremy Solomon (jeremy@solomonexamprep.com) or call 503-601-0212.