What Is the Series 24?
The Series 24 is an exam and license entitling the holder to supervise and manage branch activities at a broker-dealer. It is also known as the General Securities Principal Qualification Examination and was designed to test the knowledge and competency of candidates aiming to become entry-level securities principals. Supervisory activities allowed after passing the exam include regulatory compliance over trading and market-making activities, underwriting, and advertising.
The Series 24 exam is administered by the Financial Industry Regulatory Authority (FINRA) and covers topics such as corporate securities, real estate investment trusts, trading, customer accounts, and regulatory guidelines. In order to be eligible for a principal registration, a candidate must pass the Series 24 exam, the securities industry essentials (SIE) exam, and one of the following five representative-level qualification exams: Series 7, 57, 79, 82, or 86/87. Candidates can also pass the Series 24 and Series 16 exams but not the SIE and qualify for the research principal registration.
Understanding the Series 24 Exam
The examination contains 150 scored questions and 10 questions that are not scored, with the non-scored questions randomly distributed throughout the exam. To pass, a candidate must correctly answer at least 105 questions of the 150 scored questions. This equates to a score of 70%. The test administrator provides electronic calculators and dry-erase boards and markers. No other calculators, reference, or study materials are permitted in the examination room.
Candidates have a maximum time of three hours and 45 minutes to complete the exam. A FINRA member firm or other applicable firms can register a candidate to take the exam by filing a Form U4 and paying the $120 examination fee.
The Series 24 content is grouped into the five main job functions that a general securities principal engages in regularly at work for a broker-dealer. Those job functions include:
- Supervision of Registration of the Broker-Dealer and Personnel Management Activities (nine questions): This includes regulatory requirements and exemptions, differences between various registrations, hiring and registration of associated persons, and maintenance of registrations.
- Supervision of General Broker-Dealer Activities (45 questions): This includes development, implementation, and updating of firm policies; written supervisory procedures; and controls. It also includes supervision of conduct of associated persons; disciplinary action; supervision of compensation; and development, evaluation, and delivery of products and services.
- Supervision of Retail and Institutional Customer-Related Activities (32 questions): This includes supervision of new account opening and maintenance of existing accounts, as well as monitoring of speaking engagements and other public communication. In addition, it includes the review of transactions, recommendations, and account activity for proper disclosures.
- Supervision of Trading and Market-Making Activities (32 questions): This includes supervision of order entry, routing, and execution, as well as the proper booking and settlement of trades, and the review of executions for compliance.
- Supervision of Investment Banking and Research (32 questions): This includes the development and maintenance of policies, procedures, and controls related to investment banking activities and research. It also entails the review and approval of investor disclosures, pitch books, and marketing materials.