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FINRA Exam Restructuring to Affect Proprietary Trader Licensing

Securities Industry Essentials (SIE): FINRA’s New Exam Structure

Starting October 1st, 2018 FINRA’s exam restructuring will take effect. The restructuring includes the addition of the Securities Industry Essentials (SIE) exam, an introductory-level exam that evaluates the candidate’s competency in fundamental securities industry information. The SIE is open to any prospective securities industry professional and does not require sponsorship from a member firm.

What does the Securities Industry Essentials cover?

The exam focuses on industry terminology, securities products, the structure and function of the markets, regulatory agencies and their functions, and regulated and prohibited practices. Several federal laws and regulations serve as the foundation for the information covered by the SIE, which includes but is not limited to rules and regulations under the following acts:

  • The Securities Act of 1933
  • The Securities Exchange Act of 1934
  • The Investment Company Act of 1940
  • The Investment Adviser Act of 1940

Exam Structure

The exam consists of 75 multiple-choice items, and each item consists of four answer choices. The allocation of test items is as follows:

SectionDescriptionPercentage of Exam QuestionsNumber of Questions
1Knowledge of Capital Markets16%12
2Understanding Products and Their Risks44%33
3Understanding Trading, Customer Accounts, and Prohibited Activities31%23
4Overview of the Regulatory Framework9%7

When is the Essentials exam required?

The SIE is a corequisite for representative exams which includes the Series 6, Series 7, Series 22, Series 57, Series 79, Series 82, Series 86/87, and Series 99. Each of these exams is revised to better reflect the industry-specific responsibilities in these registration categories.

Key Information

  • The Essentials exam is open to anyone aged 18 or older, including students and prospective candidates interested in demonstrating basic industry knowledge to potential employers.
  • Association with a firm is not required, and individuals are permitted to take the exam before or after associating with a firm.
  • Individuals applying for registration with FINRA as a representative can schedule both the SIE and the applicable representative-level qualification examination(s)33 for the same day,
  • Results are valid for four years

Our View

The current licensing process can seem like an intimidating task to successful retail traders who have never had professional experience in the financial industry before. The availability of the SIE will give retail traders the ability to demonstrate basic industry knowledge to potential employers on their own time and speed up the onboarding process for new traders at our firm. An SIE licensed retail trader is attractive in our membership process. Learn more about our application process and career opportunities.

For successful traders looking to join Avatar Securities before October 2018, we have extensive and thorough study material that was developed in-house available.

After October 2018, even though you can take the SIE and Series 57 we recommend you take the Essentials exam on your own before applying for association with Avatar Securities. The restructured series 57 is a much shorter exam with 50 questions, 82% trading practices and 18% maintaining records, trade reporting, clearance, and settlement.

If you are an experienced, profitable trader and have any questions about the licensing process contact us.

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