What Is Series 57?
Let me explain to you what Series 57 is. It's also called the Securities Trader Representative Exam, and it's run by the Financial Industry Regulatory Authority, or FINRA. If you want to become a professional trader dealing with equities or convertible debt securities, you have to pass this exam.
Key Takeaways
You need to know that the Series 57 exam is crucial for financial professionals. It's a must-have if you're aiming to trade equity and convertible debt securities. FINRA administers it, and it includes 50 multiple-choice questions. The content gets updated regularly to keep up with new regulations and tech changes in the industry.
How Series 57 Works
The main goal of the Series 57 exam is to protect the public by making sure professional traders have the right level of knowledge and competency. Besides this exam, if you're starting out as a trader, you also need to pass the Securities Industry Essentials (SIE) exam. Once you've cleared both, you can handle trading on the Nasdaq exchange or over-the-counter (OTC) transactions, and even do proprietary trading.
This exam is built to match the latest technologies and practices in securities trading. The questions come from interviews with actual practitioners and trading firms. FINRA keeps updating it based on industry developments, so passers are ready to work competently and ethically with the public.
Important Requirements and Updates
To take the Series 57 exam, you must be affiliated with and sponsored by a FINRA member firm or another self-regulatory organization (SRO). You also have to pass the SIE to get registered as a securities trader.
The exam has seen several updates over the years to match industry shifts. The biggest recent change was in January 2017, when they added sections on high-frequency trading (HFT) following stories about unethical practices in that area. This update only applies to new candidates; if you passed an earlier version, you don't need to retake it for the new material.
Example of Series 57
Consider Dorothy, who's interning at a financial firm that manages investments for clients. During her internship, she learns from the authorized traders and gets interested in trading stocks, convertible debt securities, and even algorithmic techniques like HFT.
As an intern, she can't do these trades herself yet. To advance her career, she decides to take the Series 57 and SIE exams. For Series 57, she has to answer 50 multiple-choice questions in 105 minutes, getting at least 70% right. Each question has one best answer, and they vary in difficulty. About 82% are on trading activities, and 18% on administrative tasks like keeping records and reporting trades.
After getting her Series 57 and SIE certifications, Dorothy can take on professional trading roles in equities and convertible-debt securities. That's why she sees these exams as key steps in her career path.
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