What Is the Series 3?
Let me tell you about the Series 3—it's an exam, formally called the National Commodities Futures Examination, that FINRA administers for the NFA. If you pass it, you're eligible to register with the NFA and start selling commodity futures contracts and options on those contracts. This is one of several exams FINRA handles for investment pros, like the Series 7, which you need if you're selling corporate, government, or other securities.
Key Takeaways
Here's what you need to know: The Series 3 is run by FINRA on behalf of the NFA, which oversees the U.S. derivatives market as a self-regulatory body. Passing it lets you register with the NFA to handle commodity futures and options sales. And if the Series 3 isn't right for you, there are other exams that can get you into the commodities and futures markets.
How the Series 3 Works
The exam dives into what commodities brokers must understand, including options, futures, hedging, margin rules, and both market and regulatory guidelines. You'll face 120 multiple-choice questions split into two parts, and you get two hours and 30 minutes to finish. Unlike the Series 7, you don't need a firm's sponsorship to sit for this one.
Aim for about 70% in each part to pass—there's no official rate, but that's the common benchmark. If you don't make it, you can retake it after a possible waiting period. The fee is $130.
Important Details on Requirements
If you're looking to sell commodity futures contracts, you generally have to pass the Series 3. The NFA requires it for anyone applying as a futures commission merchant, retail foreign exchange dealer, introducing broker, commodity pool operator, commodity trading advisor, leverage transaction merchant, or as an associated person of these.
You need to pass within two years before applying, unless you're already registered as a floor broker, or if you passed more than two years ago but haven't had a registration gap longer than two years as an associated person, floor broker, or similar NFA member role.
To sign up, apply online via FINRA's site. FINRA usually notifies the NFA of your pass, but sometimes you'll need to provide proof yourself.
Alternatives to the Series 3
Depending on your situation and business, you might opt for other exams instead of the Series 3. These include the Series 31 for Futures Managed Funds or the Series 32 for Limited Futures Examination-Regulations.
There are also related exams like the Series 30 for NFA Branch Managers and Series 34 for Retail Off-Exchange Forex. None of these require the Series 3 as a prerequisite.
For more on the Series 3 or other futures exams, check the NFA's Proficiency Requirements page. And for test day details, see FINRA's On the Day of Your Qualification Exam resource.
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