What is the 'Series 7'
The Series 7 is the general securities registered representative license administered by the Financial Industry Regulatory Authority (FINRA) that entitles the holder to sell all types of securities products with the exception of commodities and futures.
BREAKING DOWN 'Series 7'
The purpose of the Series 7 license is to set a level of competency for a registered representative or stockbroker to work in the securities industry. The Series 7 license is a basic requirement for an entry-level broker. The Series 7 licensing exam covers an extensive range of financial terms and topics as well as securities regulations.
Those candidates who pass the Series 7 exam are able to trade many securities such as stocks, mutual funds, options, municipal securities and variable contracts. The Series 7 license does not cover the selling of real estate or life insurance products. In addition to the obtaining the Series 7 license, many states require that registered representatives pass the Series 63 exam, also called the Uniform Securities Agent State Law Exam.
Requirements for Taking the Series 7 Exam
Candidates who want to take the Series 7 exam must be sponsored by a financial firm that is a member of the Financial Industry Regulatory Authority (FINRA). The firm must file a Form U4 (Uniform Application for Securities Industry Registration) for the candidate to be registered for the licensing exam. FINRA governs the activities of securities firms and registered brokers, making sure that anyone who sells securities products is qualified and tested. The mission of FINRA is to safeguard investors.
The Series 7 Exam
The Series 7 exam is known as a General Securities Representative Exam (GS). It is a six-hour comprehensive test that is administered by FINRA, and it covers topics such as suitability of recommendations, mutual funds, municipal bonds, securities regulations and customer accounts. There are 250 scored questions in the exam with a passing score of 72%. The format for the test is a written exam that is timed beginning with a three-hour segment then a one-hour break followed by another three hours. Each segment offers 130 questions, so 10 questions are not scored.
Completions of the Series 7 exam is a prerequisite for many other securities licenses such as the Series 24, which permits the candidate to supervise and manage branch activities. In 2018, there will be a pre-requisite for the Series 7 exam called the Securities Industry Essentials (SIE) exam.