The Series 7 exam licenses the holder to sell all securities products except commodities and futures. The Financial Industry Regulatory Authority (FINRA) administers the Series 7 exam, formally known as the General Securities Representative Qualification Examination.
To be licensed to trade, stockbrokers in the US must pass the Series 7 test. For aspiring securities industry professionals, the Series 7 test covers investment risk, taxes, equity, and debt instruments; packaged securities; options; retirement plans; and client contacts. This introductory test aims to evaluate a candidate’s understanding of the fundamentals of the securities business, including the principles necessary to operate in the field.
Setting a standard of proficiency for a registered representative or stockbroker to operate in the securities sector is the goal of the Series 7 license. A prerequisite for entry-level brokers is the Series 7 license. Securities legislation and a wide variety of financial concepts and subjects are covered in the license test.
After passing the Series 7 test, candidates may trade various instruments, including variable contracts, equities, mutual funds, options, and municipal securities. The Series 7 license does not cover the marketing of real estate or life insurance products. 1. Many jurisdictions mandate that registered representatives complete the Series 63 test, often known as the Uniform Securities Agent State Law test, in addition to earning the Series 7 license.
Series 7 Requirements
As of October 1, 2018, applicants for the Series 7 test must pass both the Securities Industry Essentials (SIE) and Series 7 exams to get General Securities registration. The SIE, as defined by FINRA, is an introductory “assessment of 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.” If you require more details, the FINRA-provided SIE test curriculum outline has additional information.
Candidates must have a sponsoring company that is a member of FINRA or another pertinent self-regulatory organization (SRO) in order to take the Series 7 test. To register a candidate for the licensure test, the member company has to submit a Form U4 (Uniform Application for Securities Industry Registration or Transfer Form). Non-FINRA members should utilize the Test Enrollment Services System (TESS) to register for the test. To ensure that all individuals who offer securities products are correctly qualified and vetted, FINRA oversees the operations of registered brokers and securities companies.
Candidates must have a sponsoring company that is a member of FINRA or another pertinent self-regulatory organization (SRO) in order to take the Series 7 test.
Exam Structure for Series 7
The format of Series 7 is as follows:
- Asks Customers and Future Customers to Do Business with the Broker-Dealer: Nine Questions
- Opens Accounts after the Acquisition and Assessment of Clients’ Investment Goals and Financial Profiles: 11 inquiries
- Answers 91 questions on giving customers information about investments, transferring assets, making appropriate recommendations, and keeping appropriate records.
- Acquires and authenticates Purchase and Sales Instructions and Agreements from Customers; Manages, Finalizes, and Verifies Transactions: 14 inquiries
- The $300 Series 7 test consists of 125 multiple-choice questions and lasts 225 minutes. 72% is the passing grade.
- Before October 1, 2018, 250 questions on the Series 7 test covered the five main job tasks. The test cost $305, lasted six hours, and required no prior knowledge. To pass, one had to get a 72% score.
- Candidates need a tangible certificate from FINRA attesting to their exam passing. To see evidence of completion, prospective or current employers must go into FINRA’s Central Registration Depository (CRD).
- Many additional securities licenses, including the Series 24, which enables the applicant to oversee and manage broker activity, require passing the Series 7 test.
Conclusion
- Besides commodities and futures, the Series 7 test and license allow the bearer to sell every financial product.
- Investment risk, taxes, debt and equity instruments, packaged securities, options, and retirement plans are all covered in the Series 7 test.
- Setting a standard of proficiency for registered representatives in the securities business is the aim of the Series 7 license.
