Series 24 Exam for Financial Industry Regulatory Authority (FINRA) Latest Update

Series 24 Exam for Financial Industry Regulatory Authority (FINRA) Latest Update

The Series 24 Exam, officially known as the General Securities Principal Qualification Exam, is a pivotal certification test administered by the Financial Industry Regulatory Authority (FINRA). It is designed to assess the competence of candidates in their role as principals responsible for supervising broker-dealer operations. The exam focuses on ensuring candidates have a deep understanding of regulatory and operational responsibilities critical to maintaining compliance and operational efficiency in the financial securities industry. Below is a detailed overview of the latest updates, structure, requirements, and preparation strategies for the Series 24 Exam.

Recent Updates to the Series 24 Exam

One of the most significant recent updates to the Series 24 Exam is the incorporation of regulatory changes related to the Securities and Exchange Commission’s (SEC) decision to shorten the settlement cycle for most securities transactions. Effective May 28, 2024, the settlement cycle moved from T+2 (trade date plus two business days) to T+1 (trade date plus one business day). This change aims to mitigate market participants’ exposure to credit, market, and liquidity risks. Consequently, questions on the Series 24 Exam now reflect the new T+1 settlement cycle, emphasizing the need for candidates to understand its implications on operations and compliance.

FINRA’s continuous commitment to aligning exam content with current industry practices ensures that candidates are tested on relevant and up-to-date knowledge. This means aspiring principals must stay informed about changes to rules, regulations, and industry practices to succeed in the exam.

Structure of the Series 24 Exam

The Series 24 Exam consists of 150 multiple-choice questions, and candidates are given 3 hours and 45 minutes to complete it. The exam covers five major job functions that are essential to the role of a general securities principal:

1. Supervision of Registration of the Broker-Dealer and Personnel Management Activities (9 questions): This section evaluates candidates’ knowledge of the procedures for registering a broker-dealer and its personnel, maintaining records, and overseeing the firm’s compliance with licensing and registration requirements.

2. Supervision of General Broker-Dealer Activities (45 questions): This is the most extensive section and tests candidates’ understanding of policies and practices related to recordkeeping, financial responsibility, anti-money laundering (AML) compliance, and maintaining operational integrity within a broker-dealer.

3. Supervision of Retail and Institutional Customer-Related Activities (32 questions): This section focuses on compliance with regulations governing customer interactions, including communication standards, suitability requirements, and protection of customer information.

4. Supervision of Trading and Market Making Activities (32 questions): Candidates are tested on their knowledge of market-making practices, trading regulations, and compliance with rules governing equity and fixed-income securities trading.

5. Supervision of Investment Banking and Research (32 questions): This section evaluates candidates’ understanding of rules related to public offerings, private placements, research activities, and the management of conflicts of interest.

To pass the Series 24 Exam, candidates must correctly answer at least 105 questions, achieving a minimum passing score of 70%.

Eligibility and Prerequisites

To be eligible for the Series 24 Exam, candidates must be sponsored by a FINRA-member firm or another applicable self-regulatory organization (SRO). Additionally, they must meet the following prerequisites:

1. Securities Industry Essentials (SIE) Exam: While the SIE Exam is not a direct prerequisite for the Series 24, it forms the foundational knowledge required for many securities qualification exams.

2. Representative-Level Qualification Exam: Candidates must pass a representative-level exam, such as the Series 7 (General Securities Representative), Series 57 (Securities Trader), Series 79 (Investment Banking Representative), Series 82 (Private Securities Offerings Representative), or Series 86/87 (Research Analyst), to qualify for a principal registration.

Key Topics Covered

The Series 24 Exam encompasses a wide range of topics critical to the oversight of broker-dealer operations. Some of the key areas include:

• Regulatory Framework: Understanding FINRA, SEC, and other regulatory bodies’ roles in supervising broker-dealer activities.

• Supervisory Responsibilities: Implementing and overseeing compliance programs, managing risk, and ensuring adherence to regulatory standards.

• Customer Protection: Safeguarding customer assets and maintaining the integrity of financial transactions.

• Trading and Market Activities: Supervision of trading practices, market manipulation prevention, and compliance with reporting requirements.

• Investment Banking and Research: Managing conflicts of interest, supervising underwriting activities, and adhering to research disclosure standards.

Preparation Tips for the Series 24 Exam

1. Understand the Exam Content Outline

The FINRA Series 24 Content Outline is the definitive guide for understanding the scope of the exam. It provides a detailed breakdown of the topics and functions covered, allowing candidates to prioritize their study efforts.

2. Leverage Study Materials

High-quality study materials, including textbooks, practice exams, and online courses, are essential for effective preparation. Many FINRA-approved training providers offer comprehensive study programs tailored to the Series 24 Exam.

3. Practice Time Management

With 150 questions to complete in 3 hours and 45 minutes, time management is critical. Practicing with timed exams can help candidates build the stamina and pacing needed to complete the test within the allotted time.

4. Stay Updated on Industry Changes

Regulatory updates, such as the shift to the T+1 settlement cycle, highlight the importance of staying current with industry developments. Regularly reviewing FINRA bulletins and regulatory notices ensures candidates are well-prepared for new content.

5. Take Practice Exams

Practice exams are invaluable for assessing readiness and identifying areas that need improvement. They also familiarize candidates with the format and types of questions they can expect on the actual test.

6. Join Study Groups

Collaborating with peers can enhance understanding and provide additional perspectives on challenging topics. Study groups also offer moral support and motivation.

Importance of the Series 24 Exam

Passing the Series 24 Exam is a critical step for professionals aspiring to hold supervisory roles within broker-dealer firms. The certification signifies that individuals possess the knowledge and skills necessary to oversee compliance, manage operations, and mitigate risks in a highly regulated industry. General securities principals play a vital role in maintaining the integrity of financial markets and ensuring that firms adhere to ethical and legal standards.

Conclusion

The Series 24 Exam is a rigorous assessment designed to validate candidates’ expertise in supervising broker-dealer activities. With recent updates incorporating regulatory changes such as the T+1 settlement cycle, it is essential for candidates to stay informed and adequately prepared. By leveraging comprehensive study materials, understanding the exam’s structure, and staying updated on industry trends, candidates can enhance their chances of success.

As the financial industry continues to evolve, the role of general securities principals remains indispensable. Passing the Series 24 Exam not only opens doors to advanced career opportunities but also ensures that professionals are equipped to uphold the highest standards of compliance and operational excellence in the securities industry.