Series24 – What is the Series 24 Exam and License?

Series24 – What Is the Series 24 Exam?

Series24Series24 licensing is required for general securities principals to manage or supervise investment banking or securities business activities.  The Series 24 is an exam and license entitling the holder to supervise and manage branch activities at a broker-dealer. It is also known as the General Securities Principal Qualification Examination.  It was designed to test the knowledge and competency of candidates aiming to become entry-level securities principals. Supervisory activities allowed after passing the exam include regulatory compliance over trading and market-making activities, underwriting, and advertising.

In order to be eligible for a principal registration, a candidate must pass the Series 24 exam, the securities industry essentials (SIE) exam, and one of the following five representative-level qualification exams: Series 7, 57, 79, 82, or 86/87. Candidates can also pass the Series 24 and Series 16 exams but not the SIE and qualify for the research principal registration. (Source:investopedia)

The Series 24 examination contains 150 scored questions and 10 questions that are not scored.  The non-scored questions randomly distributed throughout the exam. To pass, a candidate must score 70% or better.  This works out to correctly answer at least 105 questions of the 150 scored questions. The test administrator provides electronic calculators and dry-erase boards and markers. No other calculators, reference, or study materials are permitted in the examination room.  Candidates have a maximum time of three hours and 45 minutes to complete the exam. A FINRA member firm or other applicable firms can register a candidate to take the exam by filing a Form U4 and paying the $120 examination fee.  The Series 24 content is grouped into the five main job functions that a general securities principal engages in regularly at work for a broker-dealer.

Remember, the computerized exam includes 10 random, unscored questions throughout the entire test. That means the total number of questions is 160, but 10 of them don’t count towards your final score.  You’ll have access to a whiteboard with dry-erase markers as well as simple electronic calculators. You won’t be allowed to take any of your personal belongings with you and reference materials are prohibited.

What Is On The Series24 Exam?

The Series 24 exam is administered by the Financial Industry Regulatory Authority (FINRA) and covers topics such as supervision of investment banking, trading, customer accounts, and the primary/secondary markets. The Series 24 exam covers the five main supervisorial job functions of a general securities principal:

1 Supervision of Registration of the Broker-Dealer and Personnel Management Activities (9 questions)

This includes regulatory requirements and exemptions, differences between various registrations, hiring and registration of associated persons, and maintenance of registrations.  Candidates must differentiate between Registered Investment Advisers (RIA) and broker-dealers, as well as their required registrations. Theyl’ll also need to know registration requirements, exemptions and hiring requirements for specific positions.

2 Supervision of General Broker-Dealer Activities (45 questions)

This includes development, implementation, and updating of firm policies; written supervisory procedures; and controls. It also includes supervision of the conduct of associated persons; disciplinary action; supervision of compensation; and development, evaluation, and delivery of products and services.  Candidates develop and implement a firm’s policies and procedures. Also, they turn to regulatory requirements to manage conflicts of interest, develop and deliver broker-dealer products, and manage a firm’s disciplinary actions, books and records.

3 Supervision of Retail and Institutional Customer-Related Activities (32 question)

This includes the supervision of new account opening and maintenance of existing accounts, as well as monitoring of speaking engagements and other public communication. In addition, it includes the review of transactions, recommendations, and account activity for proper disclosures. Candidates handle new account openings, maintenance of existing accounts, review public-facing communications, review securities transactions and make sure the appropriate disclosures are made.

4 Supervision of Trading and Market-Making Activities (32 questions)

This includes supervision of order entry, routing, and execution, as well as the proper booking and settlement of trades, and the review of executions for compliance.  Candidates, must detail supervision of order entry and execution, confirm bookkeeping and settlements of trades are accurate and go over executions to check for compliance.

5 Supervision of Investment Banking and Research (32 questions)

This includes the development and maintenance of policies, procedures, and controls related to investment banking activities and research. It also entails the review and approval of investor disclosures, pitch books, and marketing materials. Finally, candidates develop and maintain the firm’s policies, procedures and controls. Also, the supervise related investment banking activities, review investor disclosure materials, and supervise research. 

Source: finra.org

Series24 vs Series 9 & 10 

  • Series 9 & 10 – The General Securities Sales Supervisor Exams (Series 9 and 10) are limited principal exams. They qualify an individual to supervise the sales activities of a broker-dealer. They satisfy the testing requirements of the NYSE, Cboe, the MSRB, FINRA, and Nasdaq. Series 9 and 10 qualify the branch manager to supervise sales activities in corporate securities (equity and debt), investment company products and variable contracts, municipal securities, options, government securities, and direct participation programs (DPPs). The General Securities Sales Supervisor Exams do not allow the sales supervisor/branch manager to supervise other areas of a member’s securities business.  Areas such as underwriting, trading, advertising, or overall firm compliance with financial responsibilities.
  • Series 24 – Qualifies a candidate as a general securities principal for FINRA only. By passing Series 24, the candidate can supervise all areas of the member’s investment banking and securities business, such as underwriting, trading and market making, advertising, or overall compliance with financial responsibilities. While the scope of the general securities principal’s supervisory authority is broader than the Series 9 and 10, the Series 24 is limited in the products that it covers. The general securities principal qualification does not cover municipal securities or options.

Series24 Exam – Frequently Asked Questions

Who Needs a Series24 License?

Series 24, General Securities Principal Qualification Exam is required of individuals responsible for the management or supervision of a member’s investment banking or securities business. The Series 24 qualifies an individual as a General Securities Principal.

What does a Series 24 allow you to do? 

Passing the Series 24 entitles the candidate to supervise all areas of the member’s investment banking and securities business.  This includes underwriting, trading, and market-making, advertising, or overall compliance with financial responsibilities.

How many times can you take the Series 24 Exam? 

There is no limit to the number of times a candidate may take the Series 24. However, for all retakes, the candidate’s firm must re-request the examination.  Also, another examination fee will be charged

Up Next: What Does No Taxation Without Representation Mean?

The phrase taxation without representation describes a citizenry that is required to pay taxes to a government authority without having any say or advocate in that government’s policies. The term traces back to a slogan of the American colonials against the British Parliament.  The slogan was – Taxation without representation is tyrannyMany colonists believed that their interests were not represented in the distant British Parliament.  As a result, they believed any taxes it imposed on them such as the Stamp Act and the Townshend Acts were unconstitutional.  Colonists were British Subjects.  So, the British Parliament’s actions were seen as a denial of the colonists’ fundamental rights as Englishmen.

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