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The new exam you'll need to pass to sell securities on Wall Street

Finra will release an entry-level exam, known as the Securities Industry Essentials Exam (SIE), or the “Essentials” exam.

In early 2015, the Financial Industry Regulatory Authority (Finra), the largest U.S. securities regulator, published a concept release detailing a proposed restructuring to the securities qualification exam process. Currently, individuals seeking to become registered to sell securities in the U.S. are required to be sponsored by a broker-dealer and subsequently pass an exam. It is not currently possible to take a Finra exam without sponsorship.

Starting October 1, there's a new test that you'll need to take before you can sit for the Series 7 or any other Finra exam.

A major change in Finra exam structure

Under the proposed restructuring, Finra will release an entry-level exam, known as the Securities Industry Essentials Exam (SIE), or the Essentials exam. Significantly, anyone 18 and older will be able to take the Essentials Exam – it will not require sponsorship by a U.S. broker-dealer.

The SIE exam will be a multiple-choice test with four answer choices per question. The exam will test your general securities knowledge, and the exam results will be provided immediately upon completion. Those who do not pass the SIE Exam will need to wait 30 days to take it again.

You will be able to prepare for the SIE Exam with dedicated study materials and practice exams. And you will need to demonstrate your mastery of the testable content and answer questions that test your ability to apply your knowledge of the content in a variety of scenarios.

Next step after passing the SIE exam

Upon successfully completing the SIE, you will need to take a specialized knowledge examination in order to become fully registered with your Finra member firm employer. Different specialized knowledge examination exams will be available, depending on the area or role the individual will be working in.

For example, if you are seeking to become a stockbroker or financial adviser, you would need to pass the SIE plus the Series 7 top-off exam.

For institutional and investment banking positions, some firms will mandate that candidates take the SIE before starting while others will encourage candidates to do so but not mandate it.

The Essentials exam will serve as a prerequisite for several Finra registration categories, including the Series 7 and 79, as well as the Series 6, 22, 57, 82, 86/87 and 99.

Once you successfully complete the SIE exam, you will have four years to complete the appropriate specialized knowledge exam to associate with a member firm and hold a registered position.

Potential benefits

The Essentials exam has potential benefits for aspiring and current financial services professionals. It will open up the door to people who may be looking to stand out and demonstrate their interest in the securities business to potential employers, including college students, career-changers, people who have been out of the industry for a few years, and current employees who want to raise their profile for promotion.

Getting back in the game by taking a new exam

What about those who were previously employed in the securities industry and have since left but wish to return? There are rules that apply to people who may have recently left the business.

  • If it’s been less than two years since your last registered position, you will not need to take additional examinations.
  • If you have been away from the industry for more than two years but less than four years, you will need to take the appropriate specialized knowledge exam, but not the SIE.
  • If you have been away from the industry for more than four years, you will need to take both the SIE Exam and the appropriate specialized knowledge exam.

Registration for the Essentials Exam will open on October 1.

If you're already registered to take one of the old exams before October, then you can still do so even if your exam date is after the October 1st implementation.

Length of the SIE Exam and top-offs

• SIE Exam – 75 questions, one hour and 45 minutes

• Series 6 – 50 questions

• Series 7 – 125 questions

• Series 22 – 50 questions

• Series 57 – 50 questions

• Series 79 – 75 questions

• Series 82 – 50 questions

• Series 86/87 – 100/50 questions respectively

• Series 99 – 50 questions

Brian Marks is a managing director at Knopman Marks Financial Training, a qualification exam training firm.

Photo credit: LuckyBusiness/iStock/Thinkstock

AUTHORBrian Marks Insider Comment
  • Se
    6 June 2018

    I thought the old system was working just fine. The series 6 and 7 exams are entry level tests. Now we are going to a prerequisite for an entry level exam. The SIE might help broker dealers because they may now only hire people who have passed the SIE. This test may serve as a screening tool for the human resources department. The SIE is good and bad for test takers. It is bad that they have to take two exams and likely have to pay for one of them. It might be good for test takers because it might give them an advantage over people who have not taken and passed the exam. It also would look good on a resume....Http://

  • pb
    15 June 2016

    I wonder how much of this proposal is really about creating a new revenue stream for FINRA and allied testing agencies. While having passed it does suggest to an employer that an applicant is not a total dud, it dumps a new financial burden on those trying to get into the industry, probably not working at the time, and ought to provide significant new revenue and profit to FINRA.

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