If you are working or aspiring to become a securities sales agent, an investment banker, a broker or another professional within the securities industry, then you will most likely need to become licensed through FINRA – The Financial Industry Regulatory Authority. Note these types of licenses were formally administered by NASD (National Association of Securities Dealers); FINRA was formed in 2007 when NASD merged with the New York Stock Exchanges’ regulatory operations.
FINRA offers a variety of licenses, depending on the financial professional’s scope of practice. The first thing you should know as part of your Guide to FINRA Licensing is that for numerous of FINRA’s licenses, you need to be sponsored by a firm (i.e. one you are interning at or employed with) that is a member of FINRA. To become licensed you need to sit for an exam. If you are working for a reputable employer, they will generally pay for the licensing exam and may also provide some in-house training to help you prepare.
Examples of Professionals Requiring FINRA Licensing
“Everyone from Investment Bankers, S&T Folk, Portfolio Managers, Equity Research to the Wealth Management guys…and even the guys in the Back Office are required to take these exams,” states the Wall Street Oasis article, “Licensing for Dummies”.
Various professionals within the securities, commodities and other financial service industries require one or more FINRA licenses. Examples of professionals that are required to be licensed include:
- Financial Advisers
- Investment Bankers
- Financial Services Sales Agents
- Securities Sales Representatives
- Insurance Agents
- Financial Analysts
- Futures Traders
- Investment Advisers
- Commodity Trading Advisers
- Equity Traders
- Retail Broker-Dealers
- Stock Brokers
Examples of FINRA Exams
FINRA administers approximately 50 or so licensing exams. Some examples include:
Series 7 – General Securities Representative
The Series 7 General Securities Representative Exam is considered an “entry-level examination” and serves as a pre-requisite for many of the subsequent FINRA exams. Those who succeed in passing the exam become qualified to purchase and/or sell various kinds of securities, including corporate bonds and stocks, investment company products and municipal fund securities. The exam takes six hours to complete (with a break in the middle) and consists of 250 multiple choice questions.
Series 24 – General Securities Principal
This exam qualifies a person to supervise all of their member firm’s activities related to securities business and investment banking transactions. It takes a little less than four years to complete and consists of 150 multiple choice questions.
Series 55 – Equity Trader Limited Representative
Those who plan on trading equity securities “over-the-counter”/“on a trading desk” or as part of the NASDAQ Stock Market must pass this licensing exam. It is allotted three hours and consists of 100 multiple choice questions.
Series 63 – Uniform Securities Agent State Law Examination
Those who wish to be securities agents in most states need to take this licensing exam. It is administered by FINRA but designed by NASAA (the North American Securities Administrators Association). The exam includes 60 multiple choice questions and lasts for one hour and fifteen minutes.
Series 65 – Uniform Investment Adviser State Law Examination
“This exam is required for money managers, investment advisors and anyone that manages funds on a non-commission basis,” states Wall Street Oasis. It, like Series 63, is administered by FINRA but designed by NASAA. The exam is three hours long with 130 multiple choice questions.
Visit FINRA’s website to view more detailed descriptions on each of its licensing exams.