On March 8, 2017, FINRA submitted a rule filing with the SEC to restructure the current representative-level qualification examinations and create the Securities Industry Essentials (SIE) Exam. The public now has the opportunity to submit comments on the filing, which may result in amendments to the final rule. The best-case scenario is that the SEC will approve the rule filing in the next 90 to 120 days.

Once the final rule is approved, as early as June or July of this year, FINRA will publish the content outlines for both the SIE and specialized knowledge exams with the goal to formally launch them in March of 2018.

This week FINRA met with several member firms and training partners to discuss the SIE exam rule filing, its timeline, and the exam restructuring initiative. FINRA is hopeful that these will not be impacted by the current administration, as the new exam regime will simplify and reduce the regulatory burden the industry faces.

The launch is likely to be a knife-edge cutover. This means that once the new exams officially launch, the legacy exams will be retired. However, candidates with previously scheduled exams (e.g. the full Series 7), will be permitted to take their exam as scheduled.

In addition to providing guidance on the timeline, FINRA also released the number of questions for the SIE and specialized knowledge exams, which are listed below.

  • SIE Exam – 75 questions
  • Series 6 – 50 questions
  • Series 7 – 125 questions
  • Series 22 – 50 questions
  • Series 57 – 50 questions
  • Series 79 – 75 questions
  • Series 82 – 50 questions
  • Series 86/87 – 100/50 questions respectively
  • Series 99 – 50 questions

50-question exams will include five additional experimental questions and all exams with at least 75 questions will include ten additional experimental questions.

FINRA is in discussions with the Municipal Securities Rulemaking Board (MSRB) to include the Series 52 in the exam restructuring and convert it into a specialized knowledge exam.

Of note is that most test-takers will answer fewer total questions under the new SIE-plus-specialized-knowledge-exam regime. For example, the Series 7 currently has 260 total questions (250 graded + 10 experimental). Once the new format is launched, a candidate will complete the SIE exam, which will have 85 total questions (75 graded + 10 experimental questions) plus the Series 7 specialized knowledge exam, which will have 135 total questions (125 graded + 10 experimental questions) for a total of only 220 questions. This reduction will be most significant for candidates who must obtain multiple registrations (e.g. a Series 7 and 79, or Series 7, 86 and 87).

Another change FINRA is exploring is to grade the SIE and specialized knowledge exams on a pass/fail basis. Students who pass the exam will receive a report showing that they passed, but not what score they achieved. Candidates who do not pass will receive a report showing they failed as well as feedback on areas for improvement. The exact information a failing candidate will receive is still under discussion, but its purpose is to help candidates better prepare for their next attempt. Member firms will be able to look up potential employees to see if they have previously passed or failed the SIE exam.

FINRA did not release any information on the exams’ passing scores, allotted time, or cost. As these details emerge we will continue to share updates and guidance on the SIE exam and specialized knowledge exams.

Knopman Marks Financial Training is a leader in providing training for FINRA qualification exams. 

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