To become an entry-level broker, one must pass the Series 7 exam, also known as the General Securities Representative Exam.The Financial Industry Regulatory Authority (FINRA) administers the exam. The organization has not placed any limits on the number of times you can attempt to pass the Series 7 exam, and there isno specific educationrequired to take the exam.
Key Takeaways
- The Series 7 exam is a test a stockbroker must pass if they want to be licensed to trade a variety of securities.
- The test is administered by FINRA and a candidate who wants to take the test must be sponsored by a FINRA member firm; there are also other Series 7 eligibilityrequirements.
- In addition to the Series 7, candidates also have to pass the Securities Industry Essential (SIE) exam, which tests basic knowledge of the securities industry; it is also administered by FINRA.
- A candidate can take the Series 7 exam as many times as they like; however, for the first three times, the candidate has to wait 30 days before trying again; after the first three attempts, the candidate has to wait six months.
Time Restrictions
However, there are restrictions on the amount of time that must pass between exam attempts. For your first three attempts at passing the exam, you must wait 30 days after each attempt before trying to pass the test again. For every new attempt after the first three, you must wait a period of six months.
You can take the exam as many times as you want, provided you wait the appropriate amount of time before retaking the test.
The SIE Exam
As of October 2019, candidates are alsorequired to pass the Securities Industry Essential (SIE) exam in addition to the Series 7 exam to become a general securities representative.
The SIE tests a candidate's knowledge of the more basic securities industry information, including the fundamentals of working in the industry.
According to FINRA, the SIE is an introductory-level exam that "assesses a candidate’s knowledge of basic securities industry information including concepts fundamental to working in the industry, such as types of products and their risks; the structure of the securities industry markets, regulatory agencies and their functions; and prohibited practices."
The Series 7 exam is known formally as the General Securities Representative Qualification Examination.
What Is the Series 7?
Stockbrokers in the United States have to pass the Series 7 exam if they want to earn their license to trade securities. Passing the Series 7 exam allows the stockbroker to trade a variety of securities, except commodities and futures.
Specifically, candidates who pass the Series 7 can trade stocks, mutual funds, options, municipal securities, and variable contracts. Selling real estate or life insurance products would require different licensing.
While having the Series 7 license is important, many states require that registered representatives also pass theSeries 63exam, also called the Uniform Securities Agent State Law Exam.
As an expert in financial services and securities industry regulations, I can attest to the critical importance of the Series 7 exam in the process of becoming an entry-level broker. The Series 7, officially known as the General Securities Representative Qualification Examination, is a prerequisite for obtaining a license to trade a variety of securities in the United States. This exam is administered by the Financial Industry Regulatory Authority (FINRA), a key regulatory body overseeing the securities industry.
To gain entry to the Series 7 exam, a candidate must be sponsored by a FINRA member firm, highlighting the industry's commitment to ensuring individuals seeking this license are associated with reputable organizations. Furthermore, there are specific eligibility requirements beyond sponsorship that candidates must fulfill. Understanding these requirements is crucial for anyone aspiring to navigate the intricacies of the financial markets as a licensed broker.
In addition to the Series 7 exam, candidates are now required to pass the Securities Industry Essential (SIE) exam as of October 2019. The SIE serves as a foundational assessment of a candidate's knowledge regarding basic securities industry information, covering essential concepts fundamental to working in the industry. This includes understanding various types of products, their associated risks, the structure of securities industry markets, regulatory agencies and their functions, and prohibited practices.
One notable aspect is that candidates have the flexibility to take the Series 7 exam multiple times to achieve a passing score. However, there are time restrictions imposed by FINRA. For the first three attempts, a candidate must wait 30 days after each unsuccessful try before making another attempt. Subsequently, for every attempt beyond the initial three, a waiting period of six months is mandated. This structure ensures a balance between allowing candidates the opportunity to improve and demonstrating a requisite level of knowledge and commitment.
The Series 7 license empowers stockbrokers to trade various securities, excluding commodities and futures. This encompasses the ability to trade stocks, mutual funds, options, municipal securities, and variable contracts. It's important to note that different licenses are required for activities such as selling real estate or life insurance products, emphasizing the specificity of licensing within the financial industry.
Moreover, many states mandate that registered representatives also pass the Series 63 exam, officially known as the Uniform Securities Agent State Law Exam. This exam focuses on state securities regulations and laws, adding an additional layer of expertise required for those operating within specific jurisdictions.
In conclusion, the Series 7 exam is a pivotal step in the journey to becoming a licensed stockbroker, reflecting a comprehensive understanding of securities trading and industry regulations. Aspiring professionals must navigate not only the Series 7 but also the SIE exam, recognizing the importance of a multifaceted approach to acquiring the necessary qualifications for success in the financial services sector.
